WHATS WRONG WITH THE THEORY OF RACIAL-INEQUALITY - TOWARD A MORE EFFECTIVE THEORY OF RACIAL-INEQUALITY IN ECONOMIC LIFE

Explaining or resolving the apparent incompatibility between traditional economic theory and the persistence of racial inequality or discrimination in economic life has been the most significant motivation for conventional studies of race and economics. The conventional theory that resulted from this interest, however, has been of limited utility in advancing understanding of racial inequality in economic life. This essay discusses an alternative to the conventional theory that is intended to facilitate a better understanding of racial inequality. It is also designed to provide a more effective tool for the evaluation and design of policy. The alternative model takes the existence of racially distinct groups and initial racial difference in the ownership of resources as given and exogenous. It is specified in a manner that allows the evolution of racial inequality over time to be explained. The structure of the model responds to challenges posed by Robert S. Browne to develop viable economic theories useful in the study of the interaction of race and economics.