Below is a column that Mark Schug and I have in the April 12 Milwaukee Journal-Sentinel. It uses the premiere of a movie about Jackie Robinson (42) to make a point about Adam Smith and the economics of ending racial discrimination. (For the book that Mark and I wrote together, Economic Episodes in American History, the Jackie Robinson story was the pilot chapter). Here’s the column, (c) 2012 by the Milwaukee Journal-Sentinel.
The story is well-known to baseball fans, and it is now the subject of the new movie 42. In 1947, Branch Rickey, president of the Brooklyn Dodgers, signed Jackie Robinson to be the first African-American baseball player in the major leagues.
Adam Smith could not have been a fan of baseball, since the game had not yet been invented when he lived (1723-1790). But Smith, as the founder of modern economics, set forth ideas that were vital to Robinson’s breaking of the color barrier.
As Smith explained in his classic The Wealth of Nations, written 143 years before Robinson was born, individuals acting in their own self-interest in competitive markets can produce good outcomes for others, guided as if by an “invisible hand.” The release of “42” on Friday provides an opportunity to re-examine the role that free markets played in this milestone of the civil rights movement and continue to play.
It took years (and sometimes decades) after the 1954 Supreme Court decision in Brown vs. the Board of Education for most American institutions to achieve racial integration. Yet, Major League Baseball moved earlier and more quickly than other institutions – but why? As Smith explained, business owners seek profits, and thus it is advantageous for business owners to hire the most talented workers.
Before 1947, baseball club owners had agreed to not sign African-American players. This decision almost certainly was influenced by racist views among some club owners; nonetheless, it probably was based on two economic considerations as well.
First, club owners were unsure how baseball fans would react to racially integrated teams. Would white fans pay to see black players play baseball with white players?
Second, some white players had made it clear that they did not want to compete with Africa-American players. Some feared losing their jobs. Some threatened strikes or violence.
Despite the fact that Major League Baseball operated as a legal cartel, club owners faced competition. There was an ample supply of talent outside the cartel. Dozens of African-American professional and semi-professional baseball teams operated from 1887 to 1950. The Negro National League, founded in 1920, was especially successful.
Then there was also competition from the barnstorming African-American teams. The most famous barnstormers were the Satchel Paige All Stars (all African-American players) and the Dizzy Dean All Stars (all white players). They toured the nation every October from 1934 to 1945; they were watched by thousands of fans.
Competition in big baseball markets such as New York City was especially intense. After World War II, New York City had three professional baseball teams: the Brooklyn Dodgers, the New York Yankees and the New York Giants. Mass transit in New York enabled fans to shift loyalties easily from a losing club to a winning club. Owners were obliged to attract fans to their ballparks. Having a winning team was one way to attract fans. Having spectacular players was another. What if you could offer both?
Enter Rickey and Robinson. In 1946, Rickey signed Robinson, who played that year for the Montreal Royals. Rickey saw in Robinson a player who could both excite the fans and help the team get to the World Series. For that reason, he was willing to take on the social and the economic risks of signing an African-American player. Rickey calculated that the economic benefits were greater than the risk.
And Rickey and Robinson were proven right. Robinson played his rookie season with the Brooklyn Dodgers in 1947. The Dodgers won the National League pennant in 1947, and they won it again in 1949, 1952, 1953, 1955 and 1956. Robinson was selected as the Rookie of the Year in 1947 and was the National League’s Most Valuable Player in 1949. He helped the Dodgers win a World Series in 1955.
Teams that signed African-American players were rewarded on the field and in their pocketbooks. Two economists – James Gwartney and Charles Haworth – studied the impact. They found that the number of African-American players was a significant factor related to the number of games a team won.
From 1950 to 1955, the inclusion of an African-American player on a major-league team resulted, on average, in an additional 3.75 wins per year. Fan attendance was helped, too, with each additional African-American player on a team associated with 55,000 to 60,000 additional home-team admissions annually during the 1950s.
The story of racial integration of Major League Baseball is one of courage displayed by Robinson and Rickey. A feature length movie was overdue. However, we think that the economist Smith should get some credit as well.
He was the umpire whose “invisible hand” helped establish the framework that rewards talent.
Mark C. Schug is professor emeritus at the University of Wisconsin-Milwaukee. William C. Wood is professor of economics at James Madison University in Harrisburg, Va. They are co-authors of the textbook supplement Economic Episodes in American History, published by Wohl Publishing.