According to the received account of the Progressive Era, an enlightened government swept in and regulated markets for goods, labor, and capital, thereby protecting the hapless masses from the vicissitudes of unrestrained laissez-faire capitalism. The Progressives had faith that experts would rise above self-interest and implement wise plans to create a great society. The resulting state-level workplace safety regulations, restrictions on child labor, and minimum wages restored dignity and safety to the trod-upon and exploited workers.
Despite the widespread acceptance of this narrative, there are many reasons to question whether it accurately portrays the motivations and hopes of some Progressive-Era reformers. In a 2005 article in the Journal of Economic Perspectives, â€œEugenics and Economics in the Progressive Era,â€ the economist Thomas C. Leonard offered a completely new historical account of the sources of Progressive-Era labor legislation and the intentions of its supporters. Leonardâ€™s work, including an important 2009 article coauthored with legal scholar David E. Bernstein for Law and Contemporary Problems, â€œExcluding Unfit Workers: Social Control Versus Social Justice in the Age of Economic Reform,â€ indicates that lurking behind what many people see as humanitarian reforms was something much uglier.
Leonard and Bernstein argue that some of the most prominent of the Progressive reformers were â€œpartisans of human inequality.â€ They supported interventions as ways to forward their eugenic goal of a purer (that is, whiter) human race by eliminating the opportunities for the â€œunfitâ€ to get meaningful work. The â€œunfitâ€ here included not just nonwhites (especially African-Americans) but also the â€œinsane,â€ immigrants (especially from central and eastern Europe), and in a somewhat different way, women.
In other words, what we today think of as the unintended consequences of laws supported by todayâ€™s well-meaning but economically uninformed Progressives were actually the intended goals of some of their intellectual ancestors a century ago. Early Progressive economists understood the effects of these interventions, but they thought those effects were desirable.
The Progressive economists of the late nineteenth and early twentieth centuries saw social science not merely as a means of inquiry and understanding but as a guide to social management and control. The advent and broad acceptance of Darwinism in the late nineteenth century, combined with a more general belief in the power of science and scientific management to solve social problems, led to a fascination with eugenics and the possibility of using public policy to ensure the â€œsurvival of the fittestâ€ and the purity and strength of the human race. In the hands of many thinkers at the turn of the twentieth century, Darwinian theory became a rationale for using the power of government to weed out the â€œundesirableâ€ and â€œunfitâ€ in much the way that the new understanding of evolution was changing agriculture and animal husbandry. Eugenics clubs and societies grew rapidly and many of the leading intellectuals of the early twentieth century, including a number of well-known economists (such as John Maynard Keynes and Irving Fisher, perhaps the most famous American economist of the time), were active in these groups and saw their work through the lens of eugenics.
Eugenics and Intended Consequences
We look back on the eugenics movement with proper horror. Yet the same ideas that led to forced sterilization also led to restrictions in the workplace, because labor markets were one place where eugenics-oriented economists could combine their two interests. They recognized early on that legislation whichÂ excluded the â€œunfitâ€ from labor markets would advance their eugenic goals. Most of these laws were enacted at the state level during this period, but the New Deal era saw many of the same arguments applied at the national level.
Consider minimum wage laws, for example. Today we tend to think people support them because they believe a minimum wage is a free lunch that will help the poor. Classical-liberal economists have long criticized such regulations, arguing they are a perfect example of the law of unintended consequences and of the disconnect between intentions and outcomes. In a competitive labor market any worker who can produce value is hirable at some wage up to that value. Even workers with limited skills are employable. What the minimum wage and other mandated benefit laws do is create a minimum productivity criterion for hiring, closing off the labor market to workers whose productivity is too low to justify that cost.
Leonardâ€™s work shows that some advocates of the minimum wage, including many giants of the early days of the economics profession, such as John R. Commons and Richard T. Ely, understood exactly what minimum wage laws would do and liked it. In addition, various Progressives and socialists who were not economists, such as Eugene Debs and Beatrice and Sidney Webb, also supported minimum wage laws and other interventions into the labor market precisely because they would weed out those who were deemed too stupid or lazy to compete in a market economyâ€”in particular, women, immigrants, and blacks.
Leonard writes, â€œthe progressive economists . . . believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the â€˜unemployable.â€™â€ He quotes the Webbsâ€™ statement that â€œthis unemployment is not a mark of social disease, but actually of social health.â€ Further, he quotes Henry Rogers Seager of Columbia University, who suggested that minimum wages were necessary to protect workers from the â€œwearing competition of the casual worker and the drifter.â€
A. B. Wolfe, who would one day be a president of the American Economic Association, wrote in the American Economic Review in 1917 (quoted in part by Leonard and Bernstein): â€œIf the inefficient entrepreneurs would be eliminated [by minimum wages,] so would the ineffective workers. I am not disposed to waste much sympathy upon either class. The elimination of the inefficient is in line with our traditional emphasis on free competition, and also withÂ the spirit and trend of modern social economics.Â There is no panacea that can â€˜saveâ€™ the incompetents except at the expense of the normal people. They are a burden on society and on the producers wherever they are.â€
In the context of the early twentieth century this group largely included nonwhites, immigrants, and women, as well as white males with physical or mental disabilitiesâ€”the very same groups the Progressive eugenicists thought were diluting the quality of the human gene pool. Unlike their modern successors, these supporters of minimum wage laws were under no illusion about the effects of their proposed policies; they understood and intended the negative consequences that economists now go to great lengths to argue will be the outcomes of the policies favored by contemporary Progressives. A great irony of the Progressive movement for a minimum wage is that while it aimed at eliminating the â€œunemployable,â€ it in fact created a group of â€œunemployables.â€
Leonardâ€™s research shows that even professional economists, including some for whom distinguished prizes and lectures are named today, engaged in a manner of thinking about issues like minimum wages that was profoundlyâ€”even obscenely, given their explicitly racist goalsâ€”anti-economic. According to some Progressives, wages were determined not by marginal productivity but by the living standards to which a particular worker was accustomed. Competition from women, children, and members of â€œlow-wage racesâ€ threatened the dignity of white male heads of households, the robustness of the white genetic stock, and ultimately the social fabric. Leonard and Bernstein quote sociologist Edward A. Ross, who wrote that â€œthe coolie, though he cannot outdo the American, can underlive him.â€ If society was to endure, white male breadwinners needed protection from outside competition.
Economists today sometimes argue that subsidies or expansion of negative income tax programs like the earned income tax credit are far more efficient ways to help the poor than policies like minimum wages. Leonard and Bernstein point out that according to Progressive economist Royal Meeker, wage subsidies were undesirable precisely because they would create more employment, particularly among â€œunfortunates.â€ The virtue of the minimum wage was that it increased the supposed dignity of white labor while separating â€œunfortunatesâ€ and â€œdefectivesâ€ from jobs they would have otherwise had. Minimum wages were supported by explicit racists seeking explicitly racist ends.
Fast-forward a few decades and the results are still the same even if the intentions are more noble. In a recent paper, â€œUnequal Harm: Racial Disparities in the Employment Consequences of Minimum Wage Increases,â€ William Even and David Macpherson argued that in states fully exposed to the most recent minimum wage increases, the law cost young African Americans more jobs than the recession has. We should judge policies by results, not intentions. As the economist ThomasÂ Sowell might say, whether a policy is deemed â€œcompassionateâ€ or not should depend on its effects rather than the stated goals of its advocates.
Other Labor Market Interventions
Eugenics provided an allegedly scientific pretext for protectionist legislationâ€”specifically, restrictions on immigration. The eugenicists supported immigration restrictions because they believed that members of â€œlow-wage racesâ€ would compromise not only whitesâ€™ living standards but also whitesâ€™ genetic stock through miscegenation. According to them, immigrants and other outsiders (read: African-Americans) would degrade the labor force and debauch the species. The Progressives proceeded on a model of society in which a (white male) breadwinner earned a â€œfamily wageâ€ sufficient to support a (white) wife and (white) children. Women were to fulfill their roles as â€œmothers of the race,â€ and children were to be trained to do the same in the following generation.
In his 2005 article Leonard pointed out that restrictions on child labor were enacted specifically to prevent the lower classes from putting their children to work. Presumably this would then cause them to think twice about procreating as well as limit their incomes.
The Progressives used the same techniques to reduce the labor market opportunities of women. Women were seen both as fragileâ€”in need of protection from the rigors of the workplaceâ€”and as having a special role in bearing children and managing the household as â€œmothers of the race.â€ This was in contrast to the perceived â€œoverbreedingâ€ of nonwhites and immigrants from places like eastern and southern Europe. Progressive reformers tried to keep women out of the labor force by enacting a variety of â€œprotectiveâ€ legislation at the state level, including maximum hours and minimum wage laws for women, both of which were set differently from those for men. Such laws made women less desirable and more expensive employees, which limited their labor force participationâ€”precisely the goal of the reformers.
The perils of the 1930s provided an opening for additional burdens on the labor market designed to exclude â€œunfitâ€ workers. Leonard and Bernstein report that the Davis-Bacon Act, for example, was â€œpassed with the intent of preventing itinerant African American workers and others from competing with white labor unionists for jobs on federal construction projects.â€ The amplification of interest-group politics was evident in the relatively transparent attempts by New Deal Progressives to protect special interests from low-wage competition from the Southâ€”from African-Americans and other â€œlow-wage races.â€
In the 1930s U.S. Rep. John Cochran (D-Mo.) said he had â€œreceived numerous complaints in recent months about southern contractors employing low-paid colored mechanics getting work and bringing the employees from the South.â€ Rep. Clayton Allgood (D-Al.) joined in: â€œReference has been made to a contractor from Alabama who went to New York with bootleg labor. This is a fact. That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country.â€
The disemployment effects, for example, of the National Industrial Recovery Act (NIRA) were stark. Leonard and Bernstein cite one estimate that the NIRAâ€™s â€œwage provisions directly or indirectly led to the dismissal of 500,000 African American workers.â€ They also write that â€œthe American Federation of Labor took credit for the failure of the FLSA [Fair Labor Standards Act] to provide for a lower minimum wage in the South,â€ preventing southward capital flows.
The Progressives, the Modern Left, and the Dismal Science
This history can be read as the American version of what happened earlier in England. David Levy has shown that economics became known as the â€œdismal scienceâ€ because classical-liberal economists (such as J. S. Mill) favored racial equality in a free labor market. Reactionary, elitist British Romantics such as Thomas Carlyle and John Ruskin argued that the free market, with its underlying assumption of equality, would eliminate racial hierarchies and bring a â€œdismalâ€ future of racial mixing. It was the classical-liberal economists who were providing the intellectual support for that future.
The moral of the story is that, despite the modern leftâ€™s continued claim that the pro-market philosophy is racist, sexist, and xenophobic, history demonstrates that classical liberals/libertarians were proponents of equality and opponents of racism, and that those who viewed the races as unequal were likely to seek backing from the State, particularly in labor markets. The historical record of the left on these counts is much more mixed than it is willing to acknowledge.
Despite their odious views on race and the use of the State to enforce their eugenically informed vision of the future, Progressive-Era reformers were ahead of their modern liberal counterparts in one important way. They understood that free markets, especially free labor markets, are the enemy of racism.