Social consequences of economic evolution

The role cultural evolution may play in racial disparities

I contend that the current neoliberal economic order is based on what I call shareholder primacy (SP) culture, which is very different from the stakeholder capitalism (SC) culture that underlay the preceding New Deal Order. These cultural shifts are the driver of Peter Turchin’s secular cycle as applied to America. The secular cycle is an example of what Turchin calls cliodynamics, which is the study of historical dynamics. History includes everything that happened in the past. Even when we restrict historical analysis to a small subset of events believed to be important for the development of our times, we are still talking about important happenings in all the realms of human affairs studied by social scientists. Any presentation of such a cycle necessarily involves looking at the same period with various lenses informed by various social science disciplines. These lenses involve economic, financial political, and foreign policies, in addition to the prospects for large-scale sociopolitical disorder predicted by cliodynamics. This post talks about impact of the evolution of our current secular cycle on selected social issues, specifically marriage, incarceration, and education. More on this can be found in section 7.1 of America in Crisis.

Once such impact was on marriage patterns for American men as shown in Figure 1. This figure shows a plot of the percent of black and white men who have been married by age 35 at decade intervals from 1890 to 2010. It also shows a measure of the prospects for household income growth brought to a woman by marrying a man. Prospects are defined as the income increase expected after four decades based on an unskilled wage series. That is, it is the ratio of income a young man would earn after four decades of work if he stayed at the entry-level level, such as a person working as a custodian, bus driver, or security guard for his entire career. More ambitious or talented individuals would do better than the ratios given in the figure.

This figure shows that, for half a century after 1890, working class black men could expect to see a greater percent income rise over their career that did their white peers, reflecting partial catch up from their much lower starting position. The higher ratio implies that black men had better marriage prospects than their white peers over this time, which is consistent with the higher marriage rate for black men than for whites over this period. Under the New Deal economic order, economic prospects for both black and white men soared. Black men maintained their pre-existing high marriage rate, while those of white men rose.

Worst-case economic prospects for black and white working-class men under the New Deal Order were 3.7 and 2.7-fold career income growth, respectively, and fell to about 1 (no growth and so no prospects) with the ascent of the Neoliberal Order. Marriage rates for both black and white men have fallen since 1980, with the impact falling more heavily on black men, reflecting both the size in the decline in prospects and the larger fraction of affected men (64% of black households in 1970 earned less than $25K compared to 36% of white households).

Figure 1. Projected career income gains (lagged) with marriage rates for young men

Support for the idea that declines in lower-income men’s economic prospects on declining marriage rates comes from a Brookings report examining trends in marriage rates from 1979 to 2018 based on income quintile. For the bottom quintile, fraction married fell from 60% to 38%, while the rate from the top quintile remained at 80%. The fraction married among the middle fell from 84% to 66%. American research in the late 1990’s and early 2000’s generally supports the view that poor economic prospects for men are associated with a delay in marriage. There is also evidence in the United States that cohabitation is less strongly influenced by men’s economic position than marriage.  Furthermore, in the United States, the income effect on marriage timing appears to be stable over time. Men’s income had an equally strong positive effect on the entry into marriage during the 1980s and 1990 as during the 1960s and 1970s. This analysis implies a significant contributor to absent fathers in lower-income households today was fiscal irresponsibility on the part of governing elites sixty years ago.

Marriage and fatherhood tends to reduce testosterone levels, and may reduce propensity towards criminal behavior.  This suggests declining marriage prospects in the 1970’s and afterward may have contributed to more single men pursuing crime, while those still pursuing legitimate work were less likely to acquire the prestige symbolic markers leading to their example being preferentially emulated over criminal role models. The result would be a reduced tendency for young men to acquire the cultural information needed for success.

Support for this idea is provided by a landmark study by Raj Chetty and co-workers.  They found that, controlling for parental income, the black-white income gap is driven entirely by large differences in wages and employment rates between black and white men. There are no such differences between black and white women. These differences are not explained by family characteristics such as parental marital status, education, or wealth. The authors note that “reducing racial disparities requires policies that reduce black-white gaps in children’s outcomes conditional on parental income, such as changes in human capital acquisition or childhood environment.”

From a cultural evolutionary viewpoint, the key finding in the study is that in low-poverty neighborhoods, “black father presence at the neighborhood level strongly predicts black boys’ outcomes irrespective of whether their own father is present or not, suggesting that what matters is not parental marital status itself but rather community-level factors.” That is, a big difference between black boys and their sisters is the number of suitable cultural role models that are present in the neighborhood. Suitable models would be black men perceived to be successful. Since almost all households will have a mother, but only some will have a father present, there will be more adult women than men to serve as potential models, meaning girls will have a better chance of acquiring the cultural knowledge necessary for success than their male counterparts.

Lacking suitable role models and economic prospects, more adolescent males will experiment with crime and acquire symbolic prestige markers that enable them to serve as cultural models in competition with those still attempting to pursue legitimate avenues towards success. The higher the ratio of successful young working men to successful young criminals, the greater the probability boys will pick the legitimate path and avoid incarceration and lower economic status. Had the New Deal economic order not been allowed to wither, non-academic routes to success might have continued to be readily available to young men. All this would likely have made young men more likely to get a job and start a family rather than pursuing crime, possibly affecting the trajectory of incarceration rates.

Looking into this idea further, I constructed an economic advancement index as the ratio of black wage to per capita GDP. Wages were unskilled wages multiplied by a black:white wage ratio. Wage ratios after 1940 were obtained from Bayer and Charles and backed-extrapolated before 1940 using wealth ratios. Figure 2 shows a plot of “economic progress”, defined as a trailing four-decade growth rate in the economic advancement index normalized to a 0-100 scale. Also shown are black prisoners as a fraction of the population normalized with the maximum value set at 100.

Incarceration rate was regressed against economic progress to obtain a good fit. An r² of 0.91 was obtained with this three parameter structured model compared to values for r² of 0.75, 0.81, and 0.94 obtained with an unstructured polynomial models with 3, 4 and 5 parameters, respectively, indicating excellent model parsimony. A single variable, processed with a 40 year moving average, was able to explain the facts of a relatively constant incarceration rate until the 1970’s, a rising trend afterward to an early 21^st century peak and subsequent decline.

Figure 2. Black incarceration rates are inversely related to degree of economic progress.

This is not to say that economic factors caused the incarceration rate. As previously described, rising and falling economic fortunes appear to affect marriage rates, which in turn has effects on testosterone levels and possibly criminality.  In addition, changing economic fortunes a can affect the ability of young men to find gainful employment and so act as role models for others, making the cultural transmission of prosocial values and behaviors more likely. The correlation shown in Figure 2 is an expected consequence of these sort of causal mechanisms and maybe others as well.

Another example of a social consequence of the shift from SC to SP economic culture is the trajectory of black educational attainment. To proxy this, I began with the percent of people aged 25-35 with 4+ years of college education over 1940-2015. I then calculated the ratio of the prevalence of college-education for young blacks relative to that for young whites. I obtained NAEP reading test scores for black 17 year-olds and constructed an annual series between 1971 and 2015 using interpolation. Finally, I constructed an annual series for the number of black colleges and universities (HBCUs) as a percent of all colleges and universities over 1865 to 1940. Starting with a value in 2015 of 51.6, which is the ratio of black to white college graduates, I stepped the index back in time using the geometrical average of the change in the black graduate series and the change in the reading test score series back to 1971. Before that I used the college grad index back to 1940 and before that the number of colleges index. The result is shown in Figure 3 as the red symbols. It represents a crude measure of African American progress in terms of education.

Figure 3. Results of a cultural evolutionary analysis of black educational progress

I attempted to explain the evolution of black educational attainment using the same kind of cultural evolution analysis I used to describe the trajectory of inequality. The two variables I chose to represent the “education environment” were black male wages relative to white males and a “Jim Crow” measure, defined as 100 in 1865, 0 over 1866-84, rising to 80 over 1885-1908, in proportion to the gradual elimination of black suffrage in the South, and then to 100 in 1913 with the establishment of segregation at the Federal level. This measure remained at 100 until after 1950 when it falls to 80 with the integration of the Armed Services, to 60 after the 1954 Brown decision, to 20 after the Civil Rights Act in 1964 and to 0 after the 1968 Fair Housing Act. I assume the effect of income is purely environmental. That is, it directly affects educational achievement, which makes sense, higher income is associated with success in school. The Jim Crow is a proxy for an environment that punishes black people who in trying to achieve a higher socioeconomic status threaten the social position of whites. The effects of such an environment are assumed to be mediated through culture (e.g., parents discouraging their children from expressing too much ambition as that could make them a target of violence).

An excellent example of the cultural impact of what is represented by the Jim Crow measure is the concept of “woke” as expressed by the Blues singer Leadbelly in the late 1930’s. After recording a protest song about the Scotsboro boys he said: “I advise everybody, be a little careful when they go along through there—best stay woke, keep their eyes open.” The Scotsboro boys were nine black teenagers who served six years in prison for being insufficiently woke. As Leadbelly tells it, these boys were riding the rails and ending up in a boxcar with two white women who were also riding the rails. Being “along through there” meant being in the Deep South (Alabama), where simply being in the presence of a white women meant the possibility of very bad things happening to you if you were a black male. That is, being “woke” to this state of affairs was a survival strategy for black men in the Deep South. This dynamic played out more tragically in the case of Emmet Till, a black teenager from Chicago who apparently whistled at a white woman, an edgy behavior for a 14 year-old black teenager in Chicago in 1955, but a much more serious thing in Mississippi. Not being woke could get you killed.

These examples show that “wokeness” was originally a cultural adaptation to a sociopolitical environment hostile to African Americans, particularly in the Deep South, but once throughout the entire Confederacy. Those not possessing it did not fare as well as those who did. Once Jim Crow was dismantled (shown by the rapid rise in the “environment” in Figure 3) wokeness no longer served its original purpose and have become applied to mostly harmless “microaggressions” or awareness of racial socioeconomic disparities and is no longer beneficial to individual flourishing. Such concerns consume mental resources that could be better applied to personal advancement, and so are maladaptive in more recent times. But evolution takes time, which is represented by the gradual cultural evolutionary response to the changed reality shown in Figure 3.

Black people made dramatic progress in the wake of the collapse of Jim Crow while the favorable economic environment provided under the New Deal Order persisted (note that roughly half of the improvement in the educational environment in Figure 3 was achieved before the 1964 Civil Rights Act). Evidence for the reality of the improved environment for African Americans before 1964 is shown by their voting behavior. Fifties Democrats, as the party of the Confederacy, had the support of racist Southern whites, but they also had the support of Northern blacks because they were also the party of the New Deal Order, which was responsible for the pre-1964 rise in the dotted line in Figure 3.

This dotted line representing the African American sociocultural environment drives the cultural evolution depicted by the solid line in Figure 3. This evolution was in response to the Jim Crow aspect of the environment, the income aspect is a direct effect. The parameter α controls the rate of evolutionary change. Alpha has a value between 0 and 1 and is the fraction of next year’s culture than is unchanged from this year, so values close to 1 indicate a conservative response. The best fit value for α was 0.97, showing that the effect of past discrimination (as represented by high values of the Jim Crow parameter) is long lasting, consistent with a 23-year half-life. This delayed effect of a past Jim Crow environment is an example of what is commonly called systemic racism. The term implies the existence of some environmental “force” that is keeping black people down, when it may be their cultural evolutionary response to past racism, such as wokism or “acting white” that is exerting an effect in the present. The actual processes involved are enormously complex, the simple toy models presented here are simply indicators of how policy choices can have effects that persist long after the policies changed, that is, historical dynamics exhibits considerable hysteresis.

The other major driver examined in Figure 3 is the trajectory of black male wage relative to those of white men, which stopped rising after 1980. This is an example of structural racism, in that the cause of the impact of the end of rising wages on black educational achievement (and incarceration rate) resulted from a decision by 1960’s liberals to prioritize the pursuit of hegemony over maintenance of the economic conditions that underlay the New Deal Order, conditions black Americans needed to continue in order to recover from the effects of slavery and Jim Crow. Of course, Republicans have had a bigger role in this kind of structural racism, but given they were trying to appeal to racists in the 1970’s, and 90% of African Americans voted for the other party, structural racism was more of a feature rather than a bug for them at the time.

There has been some discussion in liberal circles about reparations for slavery and Jim Crow for African Americans. These often make an argument for reparations for wealth losses incurred. For example, the average cost of a slave in 1860 was about $200K today, which represents the excess labor value extracted from that slave and so is an asset they can bequeath to descendants. This sum, if split among they roughly ten descendants of African Americans in 1860, amounts to a cash payment of about twenty thousand dollars per African American adult. Awarding this, or some other calculated payment would not really serve as reparations for the damage done to modern people, which has largely been transmitted though cultural evolution. As Figure 3 shows black Americans were well on their way to achieving reparations through their own efforts when the imposition of Jim Crow over 1885 to 1913 (see dotted line in Figure 3) by racist whites, stalled, and partly reversed black progress.

The successful resolution of the post-Civil War secular cycle by the New Dealers began to ameliorate some of the effects of Jim Crow, which when combined with the end of Jim Crow created a new possibility for African American advancement. Yet the job was not done. As Figure 3 shows, Black educational advancement is predicted to eventually stall out at about 60% of the white level. The reason for this, according to the analysis above, was the collapse of the New Deal order. Just four years after the complete removal of Jim Crow with the Fair Housing Act, the “escalator to the middle class” was shut down with the end of the Bretton Woods system, leaving many African Americans still waiting to get onboard.

The best reparations, it seems to me, would be to restore that escalator by restoring economic policy that selects for SC culture as described in chapter 8 of America in Crisis. Doing so would not just benefit working-class African Americans, but Latinos, Asians, and whites. One could build an electoral majority around such a coalition as the New Dealers did. This is the not the sort of resolution our ruling elites would prefer. They would prefer to keep SP culture intact because their status derives, at least in part, from this culture. According to Peter Turchin, resolution of the secular cycle crisis requires that the problem of elite proliferation be addressed. Shifting to SC culture does this by reducing the status of those most dependent on SP culture for their status, converting many former elites (under SP) to nonelites (under SC) resulting in a reduction of polarization and the threat of civil war/revolution. The subsequent expansion period then makes the effort to deal with such pressing problems as climate change quite doable and even profitable.

But our current elites are trying to address the issues facing our country using measures that keep SP culture intact. What most Democratic intellectuals appear not to realize is that as long as the preserve SP culture intact, they preserve the Reagan dispensation, also known as neoliberalism. As I argued in my previous post, even if Democrats achieve a new dispensation through Republican incompetence, it will strongly resemble the Reagan dispensation and so it will accomplish nothing beyond what it already possible (which is already inadequate to deal with the challenge from global warming). It’s one positive is it creates the possibility for a political restructuring that can allow for an actual challenge to SP culture and a resolution of the American Crisis.