Neo-Classical and Political Economy View of Discrimination - Coursework Example

In political economy view, behavior is not individualistic but is social as well. People belong to social groups (such as women, workers or whites) and are individuals themselves. The behavior portrayed represents the individualistic values of people and the values the groups we belong to belief. `Political` enters at this juncture since political economists can perceive the relationships between different social groups as having uneven access to resources and unequal power. Political economists tackle the analysis of discrimination through the application of political economy`s `four Cs`. Collective behavior, context, change, and conflicting interests. Political economy theory thinks of discrimination as a way in which our collective present connects with collective past. Issues such as slavery, genocide, poverty, segregation are the core of contemporary discrimination (Ashenfelter and Rees, 2015).

Political economists attempt to analyze discrimination and racial profiling in the labor market in the metrics of how the present reflects the past. The theory views discrimination occurrence as part of a historical process and hence it is easy to connect it to historical gender and racial oppression (Ashenfelter and Rees, 2015). By paying women or blacks less than men or whites, capitalists not only further the exploitation of workers but also maintain oppression systems that exist outside the company and labor market. Additionally, paying blacks and women low wages that cannot aid them to be self-supporting will lead this group to have limited economic options which will make their escape from oppression more difficult. The elimination of discrimination in labor markets is difficult since it serves a significant role in upholding the long-standing firmly held notion regarding race and gender (Ashenfelter and Rees, 2015).

Neo-classical economists focus on individual discrimination and racial profiling in the labor market that occurs due to conscious decisions made by individuals. In this framework, discrimination is defined by measuring the differences of how equally qualified workers are treated. The theory presumes that there is an unambiguous ranking of workers depending on their qualifications and that wages reflect productivity (England and Lewin, 1989). The qualifications, however, vary in subtle ways between different job applicants as the characteristics of individuals come in `bundles`. An individual may have a slight edge due to their interpersonal skills, another might be a better leader, and another may process words well while another might be better organized. These characteristics `bundling` opens doors of subjective interpretations of the kind of job an applicant is most qualified. Employers can often hence rely on first impressions when comparing job applicants that look to be more or less objectively comparable (England and Lewin, 1989).

Employers can be said to discriminate when they consistently choose white men as opposed to black men that have similar qualifications. The rules and incentives of an organization such as markets, the government and firms can systematically disadvantage women or minorities. For instance, the government passing segregation laws or banks redlining the neighborhoods of minorities. In all these cases, the decisions of individuals do not cause discrimination but rather the incentives and rules that direct how economic institutions behave (England and Lewin, 1989).

Organization Adaptation and Economic Incentives to Discriminate

Gary Becker`s idea of discrimination forms one of the most prominent neoclassical school of thought regarding discrimination (Ashenfelter and Rees 2015). The idea was that some customers, workers, and employers do not desire to have any contact with members of the other gender or race. Becker fails to offer any explanation as to what causes the existence of this prejudice. It is assumed simply that a `taste` or some preference exists towards people of similar gender and race. Neoclassical economists similarly treat this taste as to how they would analyze individual preferences toward goods and services. In the instance, that an employer does not want to employ members from perceived disadvantaged groups they would have to discriminate and employ the employees from the high wage groups. This will have to sacrifice profitability and lower wages. In this case, engaging in discrimination and racial profiling imposes a cost on the firm. The neoclassical school of thought that indicates that the discriminator pays to discriminate is turned on its head when one considers the political economy framework. Here, the discrimination serves the interests of those that practice it hence completely disowning the view that discrimination depends on personal prejudice (Lundahl and Wadansjo, 2015).

Discrimination, in this case, is self-sustaining since it generates and offers rewards to those that are willing to discriminate. The forces of competition work to perpetuate discrimination. Discrimination and racial profiling is driven by the potential monetary gains that will be derived from the practice. Class struggle effects enable employers to benefit from discrimination. Class struggle effects are the conflict employers, and employees have regarding work organization and income distribution. Employers target to keep wages low while maximizing control over labor processes. These goals are difficult to maintain when employees are united as a group hence employers use a strategy of `divide and conquer`. The strategy is used to make it difficult for workers to perceive and unite to act on their common interests. Employers may engage in systematic discrimination to maintain employees socially and physically separated and stratified. For instance, the employer can offer whites and males the best jobs to help in reducing the chances of cooperation with other minority workers. The exclusion of people from certain `top` positions based on gender and race creates job competition effects. With such inequalities, a fight based on gender and race may ensue between the two groups which will make it tough for the employees to unite and fight to achieve their common targets. In such a setting, managerial control will be ensured, and low wages will be maintained (Lundahl and Wadansjo, 2015).

Organizational adaptation is the propensity of firms to adopt the prevailing social conventions in society. In this format, society determines jobs and wages. Firms and organizations must cooperate with their external environment. Thus they tend to establish a division of labor structure that mimics the social hierarchies that exist. For instance, if traditionally white men have authority over black men and other minorities in society, then the firm will follow the same pattern. As changes occur in gender and race patterns, then the firm can change the hiring framework. Risks and costs await them if they fail to follow existing social conventions (Rycroft, 2013).

How Forces in Neoclassical and Political Economics Erodes Discrimination

Neoclassical economists believe that discrimination and racial profiling in the labor market has a short-shelf life due to the forces with competitive markets. Competitive markets in economics mean that there some sellers for each buyer and vice versa (England and Lewin, 1989). In such a scenario, suppose discrimination occurs as a result of employer`s tastes and there exists dispersion of tastes amongst employers. The non-discriminating employers will gain an incentive to hire similarly qualified labor from perceived disadvantaged groups whose labor has been made cheaper due to the discriminatory actions of other employers. The employers with least discrimination will contribute to the erosion of discrimination due to their relatively lower product prices that allow them to generate higher profits. They would also gain higher share of their product markets hence expansion of labor. The discriminatory firms will be driven out of the markets. In the political economy, discrimination can only decline through society is driven collection action. It has two phases: discrimination in the short and long-run. In the short run, political economists suggest that government and market pressures can cause the costs of discriminatory firms to rise (England and Lewin, 1989).

For instance, when a firm refuses to hire qualified women and blacks they will incur higher search and wage costs in the pursuit to find qualified white males. This will create an inefficient use of human resources. However, in the short-run discriminatory tendencies are risky and costly to change which makes the vice prevalent. In the long-run, institutional discrimination patterns are shaped by economic ups and downs as well as the labor markets themselves. However, some contextual factors influence discrimination. In the long-run, there will be a coursed effort to change laws, traditions, and customs. This will be a collective struggle as people attempt to reduce distinct forms of oppression at work, home and in the community. The efforts can significantly cause the rise of costs of discriminating and alter organization`s adaptation measures (England and Lewin, 1989).

Conclusion

There is a stark difference between the approach adopted by neoclassical economics and political economy to explain the element of discrimination in the labor market. Neoclassical economists believe that many problems in the world such as discrimination would be solved if the neoclassical model of perfectly competitive markets is used. In particular, promoting competition will ensure that discriminatory employers exit the market, while statistical discrimination can be removed by improving information regarding individual workers. In this case, group stereotypes are not used when employing people. Political economists, on the other hand, believe that discrimination in the labor market is structural and built into the economy`s institutions. Efforts, hence, must be made to tackle the poor pay and poor working conditions of discriminated workers. Competition by itself cannot achieve this. It calls for collective government intervention that will ensure the progressive and cumulative decline of discrimination in the long-run.