The Exclusionist Legacy of Progressive Economics

Yes, Progressives of a century ago had backward views on race. That doesn’t discredit their economic ideas.

By Bernard A. Weisberger Marshall Steinbaum

Tagged Economicsprogressivism

Our article “Economists of the World, Unite!” focuses on the intellectual and ideological legacy of the cohort of economists who founded the American Economic Association (AEA) in 1885, especially their ringleader, Richard Ely. Ely maintained a public profile as a pro-labor progressive, “social gospel” enthusiast, and advocate for labor market reforms. From professorial chairs at Johns Hopkins and, later, the University of Wisconsin, he trained a number of influential disciples in academia, including John Commons, Edward A. Ross, Frederick Jackson Turner, and, most prominently, Woodrow Wilson, who won the presidency on the strength of the Progressive movement, which he had embraced upon entering political life.

In recent years, a body of scholarship and derivative propaganda—ranging from the recent book Illiberal Reformers by Thomas Leonard, to the 2007 book Liberal Fascism by Jonah Goldberg, to a recent blog post by Tyler Cowen of George Mason University—has vigorously disputed the long-admired legacy of Progressive economists. It charges them with promoting racist views, even in some cases signing on to the bogus “science” of eugenics that advocated involuntary sterilization of the “unfit.” Ely and his circle also supported restrictions, if not outright bans, on immigration and labor-market regulations to bar the entry of “less efficient” laborers who could undersell upstanding American (meaning white) workers.

But this version of events, while not wholly baseless, is revisionism at its most tendentious. And while we briefly addressed this revisionist history of Progressive economics in our longer essay, the issue merits a more careful and thorough rebuttal. Yes, Wilson and other Progressives did hold racist views that were common at the time. But they shared those views with their intellectual rivals among “free market” economists and journalists, although each group was motivated by different assumptions in arriving at those views. Moreover, Progressives were motivated not simply by racism as the revisionists imply, but by more generous tendencies—motivations that have been written out of the revisionist narratives by Leonard, Goldberg, Cowen, and other critics.

A core idea behind the “new school” of institutional economics, which came to be a bedrock of Progressivism, was that the field could furnish policy tools that would help to soften the harsh effects of an unregulated market, which orthodox economics contended operated efficiently to the benefit of all. The institutionalists believed that laissez-faire theory was simply irrelevant to the modern, industrial economy based on wage labor. The focus of Ely’s groundbreaking 1886 book, The Labor Movement in America, was the conflict between capital and labor over what share of output would be earned by each. He argued it was not a competition between equals, because labor is dealt an inherently weaker hand: Capital is an abstraction, but labor consists of people, and people can be and are exploited. To Ely, the endless stream of immigration, the inability of individuals to regulate the birthrate, and the impunity with which owners crushed any attempt at unionization stymied labor’s power to claim its just reward. Any attempt to lift the fortunes of labor, Ely felt, had to come through strengthening its hand at the negotiating table.

It’s easy to see where exclusionary attitudes could develop here. By restricting the supply of labor, incumbent workers face less competition for jobs, and employers have fewer outside options, so in turn must compromise with labor’s demands. This was why Ely favored immigration restrictions, collective action to control the birthrate, child-labor bans, and other barriers to entry into the labor market. Even the idea of a minimum or “living” wage took on an exclusionary hue. By preventing a “race to the bottom,” it would disallow the employment of supposedly less “productive and efficient”—meaning cheaper and more exploitable, as, for example, Chinese—workers, to the benefit of upstanding white American males. Traces of this mindset linger in today’s resistance by progressives and labor activists to international trade agreements that encourage outsourcing jobs and an international race to the bottom.

But this was not just a Progressive attitude. Classical liberals, no less than Progressives, also advocated immigration restriction policies in the 1870s and 1880s. They were frightened by the increasing class antagonism of radical labor advocates, many of them socialist or anarchist immigrants fleeing persecution at home. The Paris Commune of 1871 loomed large in their minds.

Even men of good will among them turned a blind eye to the miseries that provoked radical revolt, thanks to their faith in Social Darwinism as preached by its chief American exponent, William Graham Sumner. He taught that the hand of evolution was harsh but irresistible. Intervention by government designed to relieve the plight of the “weak and unfit”—that is, the poor—only inculcated dependence, laziness, and an insatiable desire for yet more “gifts” from worthy and hardworking taxpayers. Multi-generational families or races of “losers” had only themselves to blame, and any kind of “class legislation” was bound to do more harm than good to society and the economy. Such views were standard fare in The Nation (then a classically liberal magazine) under the editorship of Ely’s chief critic Edwin Godkin, after he turned against Southern Reconstruction and supported the surrender of the South to white supremacy on the grounds that freed blacks were unfit to govern themselves.

The point of the anti-Progressive-economics revisionism is to discredit its academic and political legacy. But in fact it does not, because the exclusionary aspects of that scholarship are essentially absent from today’s progressivism. Nazism forever discredited eugenics and removed it from any progressive intellectual or political platform. It did not have that effect, alas, on “classical liberal” or what might be called “free market” scholarship, where such racist tropes linger in the writings of Charles Murray. Murray’s works, beginning with The Bell Curve,  insist that liberal remedies for the disadvantages under which low-income  African-Americans struggle have failed, and in fact are themselves responsible for continued racial inequality, since they have only imbued their intended beneficiaries with hereditary, self-destructive social practices. Certainly the remedy suggested is not sterilization, but a policy of not-so-benign neglect, which amounts to government acquiescence to recurrent exploitation and multi-generational deprivation. That is racism pure and simple and needs to be called out for what it is.

It’s also important to remember that exclusionist ideas did not command anything like universal acceptance among the multitude of Americans who enlisted in Progressive ranks. We can cite two revealing instances in which Progressive economists took public positions at odds with the portrayal of the movement’s adherents by current critics like Goldberg and Cowen. In The Labor Movement in America, Ely spares an aside for the Dawes Act, then under discussion in Congress and eventually passed in 1887. The law aimed at breaking up Indian reservations by converting them into individual farmsteads. Ely wrote:

The inequality of men in economic affairs, and the inability of those who occupy a lower grade in economic development to obtain a satisfactory share of the products of industrial activity, is seen most vividly in the case of our native Indians. This was demonstrated in the case of the Chippewa Indians in Michigan. . . . When their reservation was divided and given to them in severalty, white scoundrels soon got it away from them, and it is said that designing men who have covetous eyes fastened on the Indian reservations are at the bottom of the present agitation to have land granted to the Indians in severalty.

This is a telling passage because while Ely’s paternalism toward the gullible “natives” is clear, he is also advocating for the interests of Indians against white people. Specifically, he is criticizing an effectively racist policy of privatizing reservation land, ostensibly to bring Indians into the modern economy, but which would in fact impoverish them further. Ely maintains that that is the aim of the policy: to swindle the Indians out of their land for a pittance and use a convenient ideology to do it.

Then there is Henry Carter Adams, the Cornell professor ousted from his position at the behest of an important benefactor of the university for his rhetorical support of the grievances of the Haymarket protestors and for heaping scorn on industrial magnates who violently put down labor unrest. According to Adams, these super-capitalists were using xenophobia strategically against the labor movement’s leaders in a way that undermined the free speech and other civil rights of all people, including radical immigrants. That linkage between pro-labor advocacy, a key Progressive project, and the free speech rights of an almost universally despised group is a powerful argument against the notion that Progressives in general were uninterested in individual rights and freedoms. To be sure, not all Progressive economists were as principled as Adams when it came to including immigrants within the bounds of constitutional protection: Edward A. Ross’s dismissal from Stanford resulted from his outspoken advocacy for closing the door on Chinese and Japanese immigration. Unluckily for him, the Stanford family found these Asian workers useful and the professor’s heresy got him the pink slip.

How did Progressives actually operate when in positions of influence? Ely and his disciples eventually had a major hand in labor market regulations enacted in Wisconsin and many other states as part of the American Labor Reform League. Their theory was that legislated elimination of abuses of employer power would create a more equal and just American society. But the network of improvements that they put in place looks far different in the eyes of their critics.

Viewed through a libertarian lens, minimum wage laws were intended to drive workers from freely chosen employment at low wages. Laws setting maximum work hours for women, allegedly to protect the health of “mothers of the race,” not only demeaned them but barred them entirely from—once again—their right to work on terms of their choice. In this view of things, no one was ever driven to be overworked or underpaid by sheer need—a fanciful conception of “freedom” in the economic sense. Furthermore, the critics allege, “living wages” for a family were impossible to fix with certainty, and single women were surely not entitled to equal pay with male breadwinners for entire households. Mandatory wages or expenses on safety equipment or compensation for injuries forced small employers out of business and so harmed the poor—the “job killer” argument still alive in the writings of conservative economists and their camp followers.

These critics who see Progressivism as an assault on individual freedoms appear to have overlooked an important element in Progressive thought—namely, simple indignation at problems that were clearly intolerable in an America founded on the principle that all men are created equal, inequalities that the “invisible hand” of the free market was allowing, even encouraging, to flourish. Their invocation of the supposed harm Progressive policies do to the interests of those they intend to benefit noticeably lacks appreciable support from any such individuals, beyond a few test cases recruited (and paid) to serve as plaintiffs for elite-generated constitutional challenges.

Can anyone believe that decent people were not disgusted by the sight of small children standing in front of textile looms ten hours a day? Of crippled men, victims of workplace accidents or industrial diseases, begging in the streets where they had been thrown like discarded tools? Where were the workers begging to put in ten to 14 hours six days a week? The parents demanding that their children be forced to work to supplement pitiful family incomes instead of playing and attending school? The consumers demanding the right to take their chances in a caveat emptor market on poisonous meat or addictive narcotics labeled as medicine? It is easy to overlook the impact on the public conscience of abuses like these when libertarian philosophy assures us that the reforms championed by Progressives were in fact tyranny in disguise, while somehow neglecting to bring forward any testimony from that tyranny’s ostensible victims.

Flaws and shortcomings in Progressive economic thought there certainly were, and contradictions and weaknesses showed up as their policy agenda was gradually enacted into federal and state law. But that doesn’t devalue the contribution they made to academic economics as they found it, nor does it fully discredit their ambitions for what the field could achieve once its ideas and people were ensconced in positions of bureaucratic power, and even in the Presidency. Operating an egalitarian economic policy through the levers of government and of collective action is just as necessary to secure well being for all now as Ely and his compatriots thought it was when they set to work. To argue that their intellectual contribution should not just be ignored, but actively opposed, solely on the grounds of their exclusionary and retrograde views, is short sighted and mistaken. The fact that prominent Progressives advocated ideas like imperialism or the supremacy of one race over another does not discredit their other ideas or their overall ideology or political agenda. Then, as now, there is tension between what might be termed a class-first vs. a race-first protest against the status quo, seen in the current presidential campaign when, for instance, Ta-Nehisi Coates criticized Bernie Sanders for failing to advocate for reparations for white supremacy. This tension is real and relevant, thanks to the historical failure to integrate elite white activism with minority voices, but it doesn’t mean that Progressivism’s legacy is all for the bad. On the contrary, it is more alive and needed than ever in this, our second Gilded Age.


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Bernard A. Weisberger is the author of The LaFollettes of Wisconsin: Love and Politics in Progressive America and many other books and articles. He was formerly a professor of history at the University of Chicago and the University of Rochester. 

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Marshall Steinbaum is a Senior Economist and Fellow at the Roosevelt Institute and co-editor of the forthcoming After Piketty: The Agenda for Economics and Inequality (2017).

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