The market process has often played an important role—a positive as well as negative one—in the development of gay and lesbian communities. It has helped to expand the goods and services available to gay men and lesbians, particularly for those products and services uniquely desired by homosexuals. But it has also reified and limited the needs satisfied by those goods. Bars are one example of an economic institution that has had immense historical significance in gay and lesbian life. There is a body of scholarship and opinion about the development of lesbian and gay communities, but apart from practical matters, little attention has been devoted to understanding the “homo economy.” Large corporations and mainstream businesses are increasingly catering to a lesbian and gay market, making it harder for small gay- or lesbian-owned businesses to stay afloat. Now more than ever, it is therefore imperative to explore the interdependencies, as well as the tensions, between the growth of lesbian and gay markets and our goals as communities.
We have only the barest sense of the economic history of the lesbian and gay communities. It is marked, as are the economic lives of many oppressed populations, by the economic domination of outsiders. Because so many homosexuals have lived in secrecy, lesbian and gay businesses have often existed on the margins of illegality. We do know that the homo economy has always catered more to men because they have had more employment opportunities and greater income and mobility.
I believe that there are four broad periods or phases (with considerable overlap) in the post-World War II economic history of homosexual communities. We are, however, currently moving into a new phase—hypercommodification—as mainstream corporations target the homo market niche. The first phase is the Closet Economy. The primary economic institutions were bars, supplemented by adult bookstores, bathhouses, and mail-order services—most of which operated on the margins of legality. The second period, initiated by Stonewall, might be called the Liberation Economy. Its dominant economic institutions were the proliferating retail businesses; bars, bookstores, bathhouses, and consumer services emerged from the confines of semile-gality. Political and other voluntary organizations also provided previously unavailable public services. The third phase of the homo economy was the Territorial Economy of the late 1970s, marked by the spread of gentrification and community development. This process was cut short by the emergence of AIDS and development of the AIDS Economy; in this fourth period, aside from educational and other nonprofit organizations, the largest institutions of the homo economy provide AIDS services.
In this essay, I want to sketch out some economic aspects of gay and lesbian community life—in particular, the period before visible gay and lesbian communities emerged in American cities, or roughly between 1945 and 1969. For the most part, the economic history of lesbian and gay collective life is unknown territory. All economic research on gay and lesbian life suffers from the virtual nonexistence of empirical information. No systematic or periodic social surveys have ever been undertaken, nor have statistics of gay and lesbian life been routinely collected, because homosexuals, historically stigmatized, have been invisible to “the gaze” of the random sampling methodology of American social science. In part, this invisibility results from the fear many lesbians and gay men have of being identified as homosexuals.
Nevertheless, economic research about lesbians and gay men has slowly accumulated. Since the mid-1970s, social surveys and market researching have begun to provide some economic information about homosexuals. Economists, lawyers, and other social scientists have also begun to study the effects of economic discrimination, especially in the workplace. Only recently has research on employment discrimination and the growth of a gay market for consumer goods begun to appear. A number of writers have also explored the impact of economic change on the emergence of gay and lesbian identities.
According to historians of gay and lesbian life, homosexual communities have existed in some U.S. cities at least since the end of World War II. An economic history is therefore conceivable, because homosexual communal life cannot have existed without economic resources or without lesbians and gay men engaging in economic decision making. The economic history of homosexual communities has to be pieced together on the basis of fragments and anecdotes embedded in personal narratives, historical works, or older sociological research. Like an archaeologist or paleontologist, the homo economic historian has to work from the slenderest of facts to imagine and identify larger economic forces. Almost all homo economic research today is at a stage that requires ingenuity, speculation, and, of course—to paraphrase Gwen Ver-don in Damn Yankees—“a little thisa, a little data.” I will try to delineate gay and lesbian economic history by bringing together some of these historical fragments and by drawing on the theory of institutional development in the work of economic historians and theorists.
The Economic Consequences of the Closet
Before Stonewall, two decisive factors shaped gay and lesbian socioeconomic life. The first was the social stigma attached to homosexuality, which was so severe that millions of homosexual men and women feared even engaging in sexual relations with people who attracted them sexually and appealed to them emotionally. In 1963, in his book on stigmas, Erving Goffman explored the structural consequences of being homosexual. He identified two kinds of stigmas that had radically different effects on those stigmatized. One sort of stigma was visible—for example, race. People often respond to visible stigmas by feeling tense. Therefore, those with visible stigmas have frequently had to manage others’ tension. As history demonstrates, social tension provoked by racial difference has frequently sparked violence toward African Americans.
The other sort of stigma that Goffman identified was not visible or obvious. Such a stigma poses an altogether different challenge to those who could be stigmatized by some “discrediting” piece of information. Out of fear of a ruined reputation, people who could be stigmatized in this way were vulnerable to intimidation and threats of blackmail. Members of this group often tried to manage information about themselves closely.
Homosexuality was not usually a visible, stigmatizing trait. Of course, this was not exclusively true. Frequently, drag queens and butch lesbians were visible representatives of the stigmatized population. As with racial minorities or other visible stigmatized groups, they constantly encountered tense social situations that often resulted in violence. As open homosexuals and as targeted victims, drag queens and butch lesbians marked the outer perimeter of tolerance by which society was able to contain homosexuality. During the late 1940s and 1950s at least, the homosexual closet was constructed by the dialectic between the management of information and the threat of violence posed by visibility.
In addition to homosexuality’s stigma, the second factor shaping gay and lesbian life before Stonewall was homosexuality’s illegality throughout the United States. As with liquor during Prohibition or drugs today, criminalization shaped the provision of goods and services and the related social institutions of the homo economy. The unlawfulness made it all the more necessary for homosexuals to control information about themselves. Together, these two factors—the social stigma and the criminalization of homosexuality—contributed to the construction of what we now call “the closet.”
The economic repercussions of social stigma have varied considerably, of course, in different historical periods, communities, and geographical regions. Characteristics such as age, gender, physical traits or abilities, class, and race also come into play. In this essay, I will explore broadly the economic consequences that the twin challenges of managing information and the threat of violence posed for the homosexual community.
Organizing a social world around the strict segregation of information generates a number of outcomes. First, managing secrets shapes individuals’ lives, bifurcating public and private, and generating a trade-off between space and time. Second, many people with strong homosexual desires tended to migrate to large cities, whose anonymity offered more room for stigmatized activities and identities. Third, whatever social life there is takes place in the shadow of protection rackets. Fourth, cultural codes became necessary. All these dimensions of lesbian and gay life have had economic consequences.
The High Cost of a Double Life
Until 1969, the severe stigma caused homosexual activity to be profoundly “asocial”—that is, it had few social institutions and existed outside mainstream society. In the vast majority of cases, male homosexuals engaged in sexual relationships with other isolated men in private or anonymous social spaces (such as restrooms), whereas lesbians often formed isolated couples or small social circles. Nonetheless, homosexuals were able to find one another and establish shared social patterns and institutions.
Before Stonewall, the overwhelming power of the stigma fostered homosexual social institutions premised on the segregation of information between the gay and straight worlds. It was possible to participate in institutionalized homosexual social life while continuing to remain in the closet. This meant living a double life, being divided between two worlds. At work, with their families, and in public, lesbians and gay men appeared “straight.” In another world, they might have sex with someone of the same gender, dress or act like the opposite gender, know other people only by a first name, or even an alias, and have no idea where others lived or worked. They lied to their families and heterosexual friends—often to their sexual partners. These deceptions, along with the strict bifurcation in their lives, created enormous emotional stress for lesbians and gay men.
The closet had a tremendous impact on gay men’s and lesbians’ work lives, in particular. Lesbians and gay men did not take their lovers to the company Christmas party, nor did they discuss their vacations with coworkers or the boss. To the degree that this sort of rapport in the workplace helps grease the wheels and leads to employment and promotion opportunities, gay men and lesbians lost out. If they were not married, they often failed to win certain promotions. Many homosexuals responded to these barriers by scaling back their career expectations and, thus, their earning potential.
Maintaining this strict separation between the straight and gay worlds implied strict separations in terms of time and space. Lesbians and gay men completely sequestered their social-sexual life from their work, hid “friends” (one of the traditional ways to refer to partners) and lovers from family and employers, and frequented gay or lesbian gathering places such as bars or bathhouses that were often quite a distance from their homes and workplaces.
This dramatic segmentation of private life from public life made everyday “transaction costs”—essentially the price of concealing one’s homosexuality—quite high for homosexuals. In contrast, heterosexuals had no such costs. Closeted homosexuals spent more of their individual income and resources than heterosexuals on routine adult activities. Such costs may have included the extra costs of transportation, liquor, multiple sets of clothing, and even the expense of maintaining separate households instead of living with a lover. Concealment made it harder to have stable sexual/emotional relationships, manage an ambitious career, or create political and social organizations.
Whereas the closet generated substantial transaction costs in this period, so did being out and known (particularly if one was a butch lesbian, drag queen, or even an effeminate gay man). Managing a public identity as a homosexual also created considerable stress. Nevertheless, in strictly economic terms, the benefits of a closeted life that was sexually active or emotionally expressive exceeded the costs imposed by concealment. By remaining in the closet, homosexuals were able to maintain career and employment opportunities. Being publicly gay often meant forfeiting jobs and economic security. Only when political developments made it easier to come out could those transaction costs cease to be an obstacle to leading a socially and psychologically rich gay or lesbian life.
Lesbians and gay men could reduce some of these concealment costs by living in or migrating to large cities.The socially and ethnically diverse populations allowed homosexuals to blend in and be anonymous. The population density and scale of large cities also allowed for spatial separation of homosexual activities from residences and workplaces.
The Protection Business:
Bars, Baths, and Bookstores
The most significant factor in the development of early lesbian or gay social institutions was that homosexual behavior was illegal. As long as those laws were enforced, they imposed not only severe psychological and social burdens on bisexuals, gay men, and lesbians but also economic ones. In the 1950s and 1960s, police raids of bars, tearooms, and parks led to arrests, legal fees, and public humiliation, as well as the loss of jobs, blackmail, and physical harm—all of which added to the economic burden of being homosexual.
From 1945 through 1969, the bar was at the center of gay or lesbian communal life, and therefore economic life. Baths and certain same-sex venues, however, also provided institutional contexts for socializing, engaging in sex, and establishing intimate relationships. Although bars were often raided, they afforded some protection against entrapment, physical assaults, and blackmail. Because gay and lesbian bars catered to people who were stigmatized or who engaged in “criminal acts,” bar owners in most American cities were forced to pay the police or organized crime for “protection.” Any businesses that catered to gay men and lesbians implicitly promised customers freedom from harassment; for this reason, bars had to pay for protection. Bar owners sought to recover this cost by charging higher prices for drinks.
Gay men’s greater social and economic freedom during this period, as well as men’s ready access to public space, led to a far greater number of gay male institutions and venues. Men tended to transform certain “public” spaces into sexual cruising venues: gyms, “Y”s, public parks, and restrooms. For women, same-sex social situations enabled lesbian socializing, primarily in all-female rooming houses, shops, girls’ schools, colleges. Thus, an institutionalized social world emerged earlier for male homosexuals than for lesbians. Most likely, the social and economic costs of gay male cruising (time, riskiness, and inconvenience) also prompted men to seek and patronize “protected” environments such as bars.
The bifurcation of homosexual life, along with the need for “protection,” often meant that gay and lesbian bars, bathhouses, or other businesses sought to be as inconspicuous as possible—their outside appearances were often muted, their signs cryptic or insignificant. Bouncers often “screened” customers in order to minimize the intrusions of hostile outsiders or undercover police. Bars, adult bookstores, and bathhouses maintained a certain degree of anonymity. Therefore, they were located in neighborhoods that were segregated from everyday businesses and residential activities—industrial areas, red-light districts, waterfront bars catering to sailors, or isolated roads in rural areas.
Although the bars may have been economic institutions, they provided few jobs or little income to homosexuals. Businesses catering to lesbian and gay men were essentially “black-market” operations. They operated under the guise of being some other legitimate business: a neighborhood bar, a men’s health club, a women’s residence, a bookstore. Lesbians or gay men rarely owned gay and lesbian bars. Selling alcohol to an illegal population would have made homosexual owners vulnerable to both legal and illegal pressures. The pattern of bar ownership did, however, vary from one region or city to the next. In the East, bars tended to be owned and controlled by organized crime—the Mafia, whereas in cities such as San Francisco, gay men and lesbians owned perhaps 25 to 30 percent of the gay bars in the mid-1960s. Thus, most of the profits and income generated by gay and lesbian customers went to straight owners and was not reinvested in activities catering to other lesbian and gay needs or to develop communal institutions. Despite their importance as homosexually oriented business activities, bars did little to create economic surplus in the gay and lesbian community.
Probably the most powerful obstacle to the development of communal economic or political institutions has been the potential cost to individual gay men and lesbians of publicly disclosing homosexual identity. The ubiquity of “extortion” in gay and lesbian economic life—ranging from crude efforts at blackmail to the refined “protection” provided when a gay bar paid off police and organized crime—was supplemented by the emergence of strong lesbian and gay social norms against revealing names and identities of fellow homosexuals. Extortion depended on homosexuals’ desire to keep their identities secret. Blackmail or extortion threatened to reveal those identities unless homosexuals were willing to pay the price. Thus, their collusion in maintaining the secrecy of their fellow lesbian and gay men’s names and identities reinforced the extortionate economy. Nevertheless, the effectiveness of the norm frequently broke down under the pressure of arrests, raids, and health officials’ tracking down former partners after discovering a sexually transmitted disease.
The Production of Desire
Codes and Commodification
Many early commentators on “the homosexual community,” which emerged slowly in the 1950s and 1960s, wondered whether or not lesbians and gay men actually had anything that could be called “gay culture.” Even observers as sympathetic as Gagnon and Simon adopted a thesis of “cultural impoverishment” based on the belief that “community members often have only their sexual commitment in common.”
Indeed, the stigma and the closet’s discipline meant that very few public representations of homosexuality circulated within mainstream culture. In 1926, for instance, the British government banned Radclyffe Hall’s novel The Well of Loneliness on the grounds of obscenity, although it was a serious literary exploration of lesbianism as a social problem and although it contained no sexually explicit passages. Thus, in many works, homosexual themes were often heavily coded and expressed through euphemism and double entendre.
Certain artworks and erotic commodities, however, were produced and circulated even before the well-developed communities existed. Men in Europe and North America purchased and circulated erotically suggestive and sexually explicit drawings and photographs ever since the nineteenth century. Such early forms of pornography not only satisfied the need for sexual fantasy but they also stimulated, defined, and multiplied those fantasies.
The businesses formed to market “cultural commodities” to homosexuals tended to operate in the same margin of illegality as bars and bathhouses. For instance, such businesses sold erotic photographs or drawings in the early twentieth century, nude magazines after World War II (sexually explicit commercial pornography developed in the 1970s), cheap pornographic fiction, and sex toys (vibrators).
The cultural impoverishment thesis not only underestimated the value and significance of limited sexual representations, but it also overlooked the coded cultural representations that circulated in mainstream culture: Walt Whitman’s Calamus poems, Frank Marcus’s The Killing of Sister George, Tennessee Williams’s Cat on a Hot Tin Roof, Emily Dickinson’s poems, Colette’s Claudine novels, and Judy Garland’s singing. Members of homosexual audiences, in the midst of personal struggles to interpret their own desires, were frequently able to identify homosexual leitmotifs in mainstream culture. Such works helped readers and viewers to recognize their erotic desires and perhaps come to identify as homosexual. The cultural impoverishment thesis was plausible only as long as it was not possible to market these cultural goods openly to lesbians and gay men.
Eventually, the creation of gay and lesbian social institutions and businesses provided an economic framework for the production and distribution of cultural goods. This new homosexual market was first identified in the Mattachine Review, One, and the Ladder, publications of the early homophile organizations. Consequently, a series of mail-order businesses developed that catered to gay men and lesbians. One of capitalism’s most ambiguous characteristics is its liberatory ability to stimulate and shape desire, in addition to crassly exploiting it. Analogously, the supply of any gay- and lesbian-oriented commodities, services, and cultural works contributed to the discursive process of identity formation, thereby creating the basis for political action, at the same time rigidly defining it.
The Economic Origins of the Gay Ghetto
Gay ghettos in large American cities (for example, Greenwich Village in New York City and North Beach in San Francisco) developed over fifty years. As a complex of social and economic institutions, the gay ghetto reached its maturity in the Territorial Economy of the late 1970s. It owed its economic foundations to the spatial dynamics of gay and lesbian social institutions in the period before Stonewall—the location of homosexually oriented businesses in industrial, shipping, red-light, or immigrant neighborhoods somewhat distant from middle-class residential areas. The ghetto, whether in its origins in Jewish history or in more modern forms such as racially segregated communities, is a spatial and socioeconomic form of containment—in other words, it tends to function as a collective closet.
A number of factors came together to establish the spatial concentration later called “the gay ghetto.” The massive social dislocations occasioned by World War II created the demographic basis for the economic and social development of gay and lesbian communities. Young men enlisted or were drafted into the armed services, and young women moved to the cities to work in war plants. As these young men and women left their hometowns, they established new social relations outside the purview of their families and local communities. The young men moved into military housing, and the young women often set up households with other young women. These social conditions set the stage for these young men and women to explore their sexuality and emotional capabilities. These wartime developments only reinforced other long-term postwar trends, such as the increasing number of individuals living alone and households of unrelated adults. These developments created the residential base for homosexual communities.
In the emerging gay and lesbian communities of the 1950s and 1960s, a cluster of bars, baths, adult bookstores, and cruising areas developed in certain districts or neighborhoods. Homosexuals also began to settle in certain bohemian neighborhoods in cities such as New York and San Francisco, because they offered higher degrees of tolerance as well as proximity to gay or lesbian gathering places. This process of spatial concentration reduced some of the everyday transaction costs imposed by the closet. The coming together of residential and social institutions permitted a slightly greater degree of openness—thus, certain lesbian and gay cultural traits became more visible within those neighborhoods.
In capitalist societies, markets can only develop when adequate information exists about the number and location of customers, potential goods and services that can be sold, and the profits that can be made. Customers who conceal important information about their needs, identities, and whereabouts pose significant obstacles to the organization of a market. Thus, homosexual communities only developed into full-fledged gay ghettos as their economies changed from “black-market” or “protected” operations to conventional markets. The proliferation of political organizations, nonprofit service organizations, gay churches, community newspapers, and other publications and cultural institutions after Stonewall enabled the lesbian and gay communities to make this economic transition. In the process, gay men and lesbians gained greater economic control of community institutions and businesses from outsiders.
Identity Politics and Public Goods
The emergence of a gay and lesbian political movement in the wake of the Stonewall riots decisively transformed the organization of the homo economy. The centerpiece of the new movement’s political strategy was to encourage lesbians and gay men to come out. At the time, and even now, the movement put most of its efforts toward seeking legal and social protection for those who were openly homosexual. Such a strategy challenged the black-market character of the homo economy. The extortionist dimensions of bars, bathhouses, and police harassment were greatly mitigated and have slowly declined as an important element in many of the largest urban gay and lesbian communities. The weakening of the closet’s extortion economy fostered greater social solidarity within the lesbian and gay communities. Political mobilization also had a substantial impact on the “transaction costs” in the lives of many lesbians and gay men.
Thus, the gay and lesbian movement dramatically changed the framework within which lesbian and gay economic decisions were made. In terms of economic analysis, the movement allowed for the provision of public goods—that is, intangible goods and services that more than a single individual could enjoy at the same time. For example, governments supply such public goods as national defense, police services, and public parks. The gay and lesbian movement sought to provide “protection” for openly identified homosexuals—thus it became easier (and cheaper without the old exorbitant transaction costs) to start businesses and organizations (for example, nonprofit counseling services) that catered to gay and lesbian communities.
Organizing to create protection for all lesbians and gay men reinforced a sense of community. It became more comfortable to purchase goods and services specifically “comfortable to purchase goods and services specifically addressing homosexual needs—clothing and jewelry, books and magazines, dildos and other sex toys, entertainment and travel. Thus, another consequence of the political movement was to reorganize the homo economy into a full-fledged gay ghetto—which has never ceased to incite tensions between community and market. The irony of that transformation is that the ghetto is another sort of closet.
Although the organization of gay and lesbian economic life has changed radically, the economic history of the closet is not simply arcane knowledge. Even today, the closet continues to play an important role in the political limitations that lesbians and gay men encounter in contemporary life. The enemies of homosexual emancipation want to push lesbians and gay men back into the closet; “Don’t ask, don’t tell” is symptomatic. It is the contemporary formulation of containment, the attempt to reimpose an economic burden. The visible existence of gay and lesbian communities is an important bulwark against the tide of reaction. The economic vitality of contemporary lesbian and gay communities erodes conservatives’ ability to revive the closet. The specter of the closet haunts lesbian and gay politics—and lurks in every social and political action that seeks to isolate and contain lesbian and gay communities.
This essay is a slightly revised version of an essay originally published in Amy Gluck-man and Betsy Reed, eds., Homo/Economics: Capitalism, Community and Lesbian and Gay Life in the United States (New York: Routledge, 1997).