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The Root of the Problem

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The Root of the Problem

The very concept of black economics is flawed, and this problem lies at the very core of capitalism. The current issues we see with African Americans are in part due to historical slave trade, and poor representation within the government, but even more so on the effects of capitalism on black economics. You could write pages and pages about how capitalism has held African Americans back economically, socially, and politically (and you should) but here I will focus on how capitalism has held African Americans back economically and how that came to be.


Introduction

Black Americans are less likely to be invested in equity. The reasons for that are unclear. Black-owned banks were shut down after Reconstruction, and starting a business has never been an easy venture. Given these obstacles, it's no surprise that black investors and entrepreneurs didn't appear in high numbers until civil rights leaders started forcing white businesses to stop discriminating against African-Americans during the mid-20th century. Black people also didn't have a lot of money, which makes sense when you consider slavery robbed them of both their hard-earned savings and centuries' worth of compounded interest on those savings over time. It wasn't until affirmative action laws passed that many blacks received substantial paychecks or investment opportunities. Today, some blacks make up part of America's top 1 percent—but they're still vastly underrepresented. Despite making up nearly 13 percent of America's population, they account for only 2 percent of its wealth. Blacks hold just 1 percent of America’s stocks and bonds; one recent survey found only 3 percent had even tried to start a new business; and only 5 percent believed owning real estate was even possible for them—though 28 percent said they dreamed about it at least once a week, according to reports from 2011 by ProPublica (and others). On average, however, blacks tend to give more than whites to charity—and continue doing so even as income increases.

Women in Black Dress

Commodities and Economics

Everything you need to start a business is available, but it’s often not within an African-American’s economic reach. Communities of color and poor communities are systematically denied access to capital and opportunities because capitalism favors those with wealth—and creating wealth has traditionally been impossible for blacks in America. The reason for capitalism's anti-blackness can be traced back to its roots: America was built on black slavery, and upon emancipation, blacks had little choice but to work as cheap labor. This system worked until recent efforts from government agencies and private companies attempted to alleviate poverty by subsidizing housing and providing welfare checks; these pro-capitalist actions only further distorted what could have been an equal economic playing field by encouraging dependence on such handouts instead of hard work. Though many economists argue that free markets provide more prosperity than regulated ones do, there is still no denying that true freedom and equality will never exist unless racism ends completely.

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History

It’s no secret that blacks in America have had a difficult time progressing economically. Many reasons for this are discussed, but many people aren’t aware that black entrepreneurs were systemically shut out by various groups with interests in maintaining a status quo. From slavery to segregation to racial discrimination to banking (or lack thereof), African Americans have been disproportionately affected by policies implemented to maintain capitalism as it is. This post looks at how and why these effects have occurred, and what can be done to move forward positively.

A Portrait of Afro

Corporations

United States and European colonial powers not only introduced slavery to Africa, but colonialism planted a system on top of it that still has its roots in slavery. In many ways, today’s global economic system is a direct continuation of an economic model based on white exploitation for personal gain. This manifests itself in various forms including international trade agreements and free market globalization (i.e. spreading capitalism around the world). Slavery was technically abolished in 1833, but no effort was made to account for those people who had been forcibly removed from their homes with nothing. People now known as black Americans were simply left to fend for themselves.

A Woman

Can Capitalism Support Black People?

The history of black economics is one that's troubled, to say the least. As a result, some economists argue that capitalism has helped contribute to economic inequality in America and can't help ensure equality for people of color. Others, like Arne Duncan (Secretary of Education) disagree with those arguments and think it's possible to have a capitalistic society where people thrive regardless of race or ethnicity. No matter which side you fall on in that debate, it's clear that there are some fundamental differences between black economics and white economics. We're seeing a shift today with technology providing more opportunities for blacks than ever before, but we also need to ensure that these new ways to get ahead don't become another way for blacks and other minorities (or women) to be left behind by society.


A New Model

It is clear that capitalism in its current form isn’t working. If a better alternative exists, we should seek it out, but it shouldn’t be created from scratch. Instead, we should look to history for guidance on how to move forward with our current political and economic systems intact. The solution can be found in a new model of capitalism: one based on justice for all people and self-determination for each nation. This fair capitalism will keep national governments within their borders, provide every citizen with a healthy environment, give all workers equal rights regardless of citizenship status or gender, encourage quality over quantity and most importantly promote equality among all members of society. This system would not only reduce world poverty and expand free trade, but also improve job security for citizens and allow US.-based companies to compete more easily across international markets.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2022 Ghulam Nabi Memon

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