The Causes of Racism

This chapter examines the economic causes of racism, as argued by diverse theoretical traditions. Building on the summary of the historical roots of racism provided in the previous chapter, this chapter looks at the neoclassical rational theory explanations of racism, and the interpretation of racial discrimination as a cost minimising and profit maximising choice of economic agents that result in unfair inequalities. This conception differs from the psychological prejudice-based or unconscious bias interpretation of racism, and explains racism as an economic phenomenon. Economic theorisation of racism has primarily focused on taste-discrimination, statistical discrimination and occupational segregation. Yet, other than documenting statistical evidences of discrimination, research on racism in economics has not adequately explained why racism continues to be pervasive and engrained in the societal system, as is argued by Critical Race scholarship. Within structural inequality research, social stratification and intersectionality provide analytical tools to understand the relationship among different contours of inequalities (race, gender and class), and locate the economic dynamics of racism. We highlight in the chapter the growing recognition in contemporary research that redressing the injustices of racism may require redistribution and recognition, given racism has both class and status as intersecting dimensions. The chapter therefore explores the racism and structural inequalities literature to examine how race, gender and class interplay, and understand the extent to which particular groups in society stand to benefit from continued prevalence of racial discrimination and consequent inequalities.