(ThyBlackMan.com) In light of what most of us know about the economy and where Black people fit, mostly as consumers rather than producers, a discussion of Black Capitalism is in order. The term was promoted by Stokley Carmichael in 1966 as part of the “Black Power” movement, but came into vogue in 1968 when the Nixon administration adopted it from a proposal by Robert Kennedy. Black Capitalism originally called for loan assistance, credit guarantees, and technical assistance for Black owned businesses in an effort to stimulate economic development in the ghettos.
Black Entrepreneurship in America, by Shelly Green and Paul Pryde, cites, “[Black capitalism] constituted a movement by Blacks to gain control over the business development of their own communities…Directing business growth in the Black community was considered the first step toward achieving a powerful Black economic presence in the larger American economy. [It] called for a new kind of social contract among racial groups in America—one based on mutual self-interest rather than integration.”
Andrew Brimmer, noted economist and Lyndon Johnson appointee to the Federal Reserve Board, had a different perspective on Black Capitalism. In the book, A Different Vision: African American Economic Thought, edited by Economist, Thomas Boston, Brimmer wrote, “…the strategy of Black capitalism offers a very limited potential for economic advancement for the majority of the Black population.”
In support of his contention, Brimmer posited, “The ghetto economy…does not appear to provide profitable opportunities for large scale business investment.” He noted a large part of the problem was due to “a tendency for affluent Blacks to shop in the more diverse national economy.”
Brimmer suggested that Black Capitalism fails because it is founded on the premise of self-employment, as opposed to employment in salaried positions where the rewards are greater and the risks are much lower. (That reality gives credence to Thomas Boston’s “20 by 10” strategy of Black businesses hiring Black employees.) Brimmer suggested that Black Capitalism “may retard Blacks’ economic advancement by discouraging many from the full participation in the national economy…” His position assumed that corporations would hire Blacks; but his concern about the greatest risk being placed on those who can least afford to take risks is quite valid. We have several examples of that reality in Black businesses today.
Has Black Capitalism worked? Is it working? One thing is certain: Korean Capitalism is working. They control the Black hair care market via their stores in the ghettos, where Black folks are their only customers; and Koreans hire their own people as well. This is a great example of how “segmented” capitalism can and does work.
Economist, Milton Friedman said, “History suggests only that capitalism is a necessary condition for political freedom [since many nations can be identified that have] economic arrangements that are fundamentally capitalist and political arrangements that are not free.”
History Professor, Dr. Juliet E.K. Walker, wrote, “The existence of Black entrepreneurship… provides an example of an economic arrangement in this nation’s antebellum free enterprise system that was fundamentally capitalistic, but within which some of the capitalists, the African Americans, were not fundamentally free.”
The problem with Black Capitalism is structural inequity due to a paucity of government support. Just as the government has subsidized large corporations, it should do the same for Black businesses. The International Journal of Humanities and Social Science (November 2012) carried a paper written by Ryan Very, titled, Black Capitalism: An Economic Program for the Black American Ghetto, in which Mr. Very made a good case for government support of Black Capitalism.
Here is the Abstract from that paper: “The American federal government supported the creation and expansion of economically depressed urban residential areas where blacks live in segregation from whites. These ghettos face barriers to economic development including high unemployment, a low wage labor market, capital drain, and market dualism. Three popular ghetto economic development strategies are ghetto dispersal, corporate branch planting, and black capitalism. Black capitalism breaks the ghetto’s economic barriers better than ghetto dispersal and corporate branch planting, but it will only be possible with significant support from whites and the federal government.” In other words, the government caused the problem, and the government should fix it.
Mr. Very continued, “Black access to capital coupled with subsidized entrepreneurial training services would…allow more residents to start their own potentially successful businesses in the ghetto. With a sizeable government subsidy, ghetto residents could even build manufacturing plants. If ghetto residents would export enough manufactured goods, both the drain of capital and the (neighborhood) trade deficit would decrease.”
Until Blacks understand our economic and political positions in this country, we will continue to languish in what Dr. Ron Daniels calls, the “Dark Ghettos” of either or, and we will never move to the land of both and.
Written By James E. Clingman
Official website; http://www.blackonomics.com/
@ Julie
What I meant by my comment was the fact that, most major cities with a large Black community were pretty much self sufficient. They had no choice. Some were better than others, like in Harlem, Detroit, Chicago, Oakland, South Central LA., and many other cities in the south. Part of what happen was as I said in my last comment; we chose a job over ownership, which to this day, keeps us dependent on people outside our community.
The other major reason was the threat of violence, which is why we left the south in droves for factory jobs in the north and Midwest. I truly believe that our future lies in our hands. As I’ve said many times before, no one can do more for us, than we can do for ourselves. Until we realize this most important fact, we will continue to struggle as a community.
Amen you wrote “Oklahoma wasn’t the only Black wall st”, Can you please, name us the different places in the U.S. where we could find a Black Wall St and let us know what happened to these places because most of the time we only hear about Rosewood and Oklahoma?
I watched a 1992 video on c-span, on the state of African Americans, by the Urban League. It was the same thing they’re talking about now. There was a recession then, as there is now, only now it’s worse. The Urban League had a great idea, not only for African Americans, but for the entire country.
Unfortunately the government didn’t listen. My point is just as then, we can’t rely on the government to solve our problems.
Twenty plus years of waiting for the government has failed. It’s only gotten worse and not only for us, but for everyone. We have to solve them ourselves.
It won’t be easy because of the lack of unity within our community.
But for the first time, I have to disagree with Brother Clingman. There are many examples of us working together to create successful opportunities in our community. Oklahoma wasn’t the only Black wall st. We had Black wall streets across the country. But we stop relying on ourselves and started relying on others for our opportunities. This is the problem and will always be the problem, until we realize, together, we are the solution.
Black Unity means financial independence and happiness
Business Creation Requires Access To Venture Capital!
The business of seriously seeing the black race advance through the creation of businesses is one not to be taken lightly as your article does. You wrote, “The problem with Black Capitalism is structural inequity due to a paucity of government support. Just as the government has subsidized large corporations, it should do the same for Black businesses.” The battle to create black businesses begin with the federal government supporting ( subsidizing if you will ) the creation and expansion of black businesses in 1865 with the creation of Freedmen’s Savings and Trust Company. “The bank’s business,” per Ebony’s book on “Black America,” was to be confined to blacks and two-thirds of its deposits would be invested in U.S. securities.” The bank opened in New York city and there were branches in Nashville, New Orleans, Vicksburg, Louisville and Memphis. The bank failed! This was an experiment that need not be repeated today. The lasting path and key to the creation of major black businesses in the end will be no different from that of other races. Business creation requires access to an uncontrolled and unfettered stream of venture capital.
Now sir, you tell me how is the federal government through subsidization going to do that given the political climate we are currently experiencing? Speak sir, put your plan before us. I for one will read it! (http://www.Jobcreationnow.com)
I’ve been in the ghetto my entire life and fail to see how any government program will help to advance us economically. This is a misconception by many that the ghetto lacks capital when it is every where. Getting people to value delayed gratification is a key to economic empowerment.