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We must come out of the racial closet and confront the cultural, political and economic legacies of white racism. We must do so in ways that critically address class, gender, nationality and sexuality. We must do so in ways that name the psychological, economic and social fear involved for whites in identifying too closely with black lives. And we must do so in ways that allow each of us to choose the path toward reconciliation and a full embracing of one another's humanity. (1)
In November of 2000, we lost one of the preeminent political economists of our era, Rhonda M. Williams. As the above quote illustrates, her research, as well as her life's commitment, was dedicated to eradicating inequality by race, ethnicity, gender, sexual orientation, and class. A broadly trained economist in both neoclassical and heterodox economic theories, Williams received a B.A. in Economics from Harvard (Radcliffe College) in 1978 and a Ph.D. from the Massachusetts Institute of Technology in 1983. When she passed away, she was Associate Professor and Acting Director of the Afro-American Studies Program at the University of Maryland. Her prior academic experience included positions on the political economy faculty of the New School for Social Research and the University of Texas at Austin.
The purpose of this article is to thematically summarize and assess Williams' contribution to political economy. This is a daunting task. Williams' life and work reflect both her intellectual growth and engagement. Williams' interests ranged from theory to empirical testing to advocating race- and gender-conscious public policies. In fact, her work bridged theory and praxis. In 1999, Williams contributed a chapter to the National Urban League's The State of Black America. She was not averse to reveal that her agenda, while moving the discipline forward, was also thereby a political one. Williams vehemently rejected the conservative claim that "the nation's race work is done." (2)
Rhonda Williams was herself a bridge because of who she was, who she worked with, and what she fought for. She linked white scholars from the left with black scholars, feminist economists with feminists in other disciplines, lesbians with heterosexuals, and postmodernists with modernists. In her profession and in her own life she tried to unite these communities. One fine example of this is Williams' own "coming out" story; (3) in this well-written and moving essay, she explains her own effort to explore the nexus of race and sexual orientation. Williams was active in several of the economics discipline's organizations--the National Economics Association, the International Association for Feminist Economics, and the American Economics Association's Committee on the Status of Minority Groups in the Economics Profession. She served as an Associate Editor of Feminist Economics and was on the Board of Editors of Feminist Studies, and reviewed for journals such as The Review of Black Political Economy and the Review of Radical Political Economics.
In a short biography in her 1997 co-edited volume with Patrick Mason, Race, Markets, and Social Outcomes, (4) Williams self-describes her interests as the race-gender dimensions of economic restructuring, the nexus of cultural studies and economic policy, race ideology, discrimination theory and antidiscrimination policy. I would agree that this serves as an excellent summary of Williams' research. For the purposes of discussing the political economy of Rhonda M. Williams in this article, this author aggregates Williams' contributions in three major areas: (1) an evolving and compelling critique of the human capital theory of wages and wage differentials; (2) development of a new, political economy theory of wage-setting and earnings discrimination; and (3) analyses of the effects of the macro economy and socioeconomic policies on racial, ethnic, and gender inequality. Within modern labor economics, the neoclassical theory of wage determination is reliant upon human capital theory. But for Williams, the political economy tradition within Marxism, though not orthodox Marxism, held much more promise to explain the persistence of discrimination. Continuously perfecting her criticisms of mainstream theory, formulating and refining her own original contribution, the theory of competition between capitals, were defining moments in Williams' career. So was her work on securing economic justice for the disadvantaged. While Williams never wanted to leave out class or gender, her main intellectual engagement was with the economics of race. In a phrase, Williams' work tells us that "race matters" in the economy.
Any divisions such as the three areas of research mentioned above are necessarily artificial. Theory and policy were necessarily linked. Williams always had in mind a critique of neoclassical economists' analysis of race as well as a defense of race-based policies such as affirmative action. Her policy agenda was long with one, overriding concern: the eradication of economic injustice and the pursuit of racial equality. Therefore, consider the following sections interrelated and complementary.
CRITIQUE OF HUMAN CAPITAL AND OTHER NEOCLASSICAL THEORIES OF DISCRIMINATION
Williams was a sound theoretician, econometrician, and logician. She pointed to internal inconsistencies, as well as specification and measurement errors, as evidence of the weakness of neoclassical explanations of wage inequality. Soon after completing her dissertation, Williams penned an eloquent, critical appraisal of the methodology and practice of neoclassical labor economics, concentrating on a serious gap between the principles espoused by economists and the actual methods used in their research. (5) Although professing adherence to Popperian positivism, orthodox economists fail to reject theories that are contradicted by empirical evidence. (6) In terms of methodology, Williams generally evaluated the extent to which theories of the demand for schooling, on-the-job training, earnings functions, and racial income equality could be falsified or explained by rival theories. For example, many variables thought to be exogenous (subject to individual choice), such as years of schooling, are actually endogenous--better suited to a structural model of earnings determination.
The model of wage differentials based upon employer or employee "tastes and preferences" for discrimination failed to adequately explain the persistence of discrimination, according to Williams. Employers who engaged in a taste for discrimination themselves or tolerated discriminatory tastes of coworkers would allegedly pay white men a "wage premium" to secure their employment. The discriminator's competitors would therefore have a cost advantage. Nobel laureate Gary Becker argued that such competition …