This post was written before the passing of Thomas Schelling on 12 December 2016. It is not an obituary.
When I was an undergraduate student I took a political economy class in which we read exclusively white, male, mostly US American scholars. One of them was Thomas Schelling. Remembering my two childhood years in a mixed Philadelphia suburb I was particularly intrigued by his model of neighbourhood segregation. According to Schelling, not one group in a society wants to be a minority and hence, once a neighbourhood becomes predominantly ‘red’ or ‘green’ the minority neighbours will move away…to a neighbourhood where their group is strong and likely to become a majority, hence, pushing out the other group that is becoming a minority. Obviously enough, this model is easy to criticize from within its own thinking, most particularly with respect to the presumption that clearly delineated groups exist, that people think in racial/ethnic patterns and that what is supposed to be an autonomous ‘rational’ choice is, in fact, an intersubjective and socially constructed reaction to social dynamics…
Yet, Schelling also missed (or ‘forgot’) that a pretty hard materialist political economy that makes racial segregation possible in the first place, especially in the USA, as Keeanga-Yamattha Taylor’s research shows. Before the 1960s, ethnic minorities in the US, and in particular African Americans, were barred in various ways of buying houses, either because they were simply denied the right to move out of their designated neighbourhoods (Chinatown!), or because they had no access to mortgages. In many places, public authorities in the 1960s set up public-private partnerships to offer finance for low-income house buyers, most notably from ethnic minorities — Fannie Mae and Freddie Mac for example, two key actors of the 2008 financial crisis were such organizations, were transformed from entirely federal public institutions into public-private enterprises which needed to produce profit. This had at least two effects on the housing market: first, these mortgage companies had a huge influence on where lenders could buy, hence, playing on the market value of neighbourhoods; second, many of these organizations became deeply marred in corruption and speculation, hence, creating repeated mini-crises which led to default and dispossession, again dragging down the housing market in those neighbourhoods where these occurred (think The Wire).
Schelling’s assumption that moving in and out of a neighbourhood based on ethnic preferences (birds of a feather flock together) is an example of rational choice is, in the light of the political economy of the segregated market for mortgage lending and house buying, not tenable. Of course, one can argue that the individual decision of a white houseowner to sell their houses in those neighbourhoods where filthy financed new homeowners move in might be rational in the indivdualistic and utilitarian sense of rational choice theory. However, that the market is segregated, i.e. the structural precondition of this kind of market, and that, a priori, black home ownership (or Asian or Italian or…) devalues a neighbourhood is the result of the political institutions of excluding ethnic minorities and its associated political economy of finance.
That someone like Schelling would have not taken racial segregation into account can only be explained by either ignorance or arrogance. He either didn’t know about the political economy of segregation, or he decided that it was simply not relevant to his thinking. In either case, Schelling could develop his argument about rational choice house buying only because he moved intellectually (and personally) in a white, male bubble (we can make the same argument about the political economy of housebuying for female home owners, by the way, as women’s right to own property in their own name is relatively recent, yet earlier than for ethnic minorities in the US). We can only imagine that he would have thought differently if he had been exposed to colourful reading lists which take racial and gendered political economies into account.