“The Myth of Black Capitalism” by Earl Ofari Hutchinson, 1970, republished 2023
Hutchinson wrote this book as a Marxist in the aftermath of
the 1960s class and color struggles against aspects of capitalism. It is a careful and factual description of failed
efforts by a ‘black elite’ as he calls it, to promote capitalism within the
African-American community since the late 1850s. Hutchinson’s new 2023 introduction says that
while there is now a larger strata of black millionaires and
multi-millionaires, mostly from sports and entertainment, his thesis has not
changed.*
The black ‘masses’ will never be able to raise
themselves up through capitalist methods. While a bit dated in its figures,
they still show the trend.
Hutchinson centers his book on class in the black
community, noting how the black elite – businessmen, middle-class
professionals, ministers, social reformers, non-profit leaders – have different
goals than dark-skinned working class people.
This split was occurring prior to the Civil War among free
African-Americans. Their real interest was
in exploitation and gaining wealth. Hutchinson’s
view of class is anathema to liberals, nationalists and profiteers, along with ruling
white corporatists. It is also fatal to pure identity politics. The main figures carrying the banner for
black capital, ‘self-help,’ entrepreneurship, independent business and even a national
territory were figures like Martin Delaney, Booker T. Washington, Marcus Garvey,
the Nation of Islam, Roy Innis and leaders in Liberia. He also addresses the temporary 3rd
Period (1928) embrace of the ‘Black Belt’ by the Communist Party as a reformist
impossibility.
Just The
Facts, Ma’am
Hutchinson’s main angle is that black financial ‘independence’
is a will-o-wisp in a capitalist society dominated by big capital and
imperialism, with its added layer of racism.
He proves it by looking at the various attempts to build a black
business infrastructure or a “separate
Negro economy” from the 1840s up to 1970.* He notes in his modern intro that Nixon and
Agnew both supported ‘black capitalism’ and enlisted millionaires like singer
James Brown to the cause. Yet in 2010 .8% of Fortune 500 CEO’s were black,
while blacks owned 3% of all businesses in 2020.
Dubois pointed out that original African societies were
highly communal – sharing food, shelter, clothing, land and property, along
with equal distribution. This was
transmitted to the U.S. in the early pooling of meager financial resources by
African-Americans who were not enslaved.
However these efforts were always overseen by a ‘black elite.’ In
Philadelphia in 1856 this group held $1M in real estate property. In 1830 there were 3,777 dark-skinned
slave-masters in the U.S., mostly centered in Louisiana. Black resettlement in Africa started in 1815,
which made a Paul Cuffe wealthy and later benefitted Marcus Garvey. Martin
Delaney followed Cuffe and attempted a re-colonialization of African land and
minerals in the Niger River valley with explicit help from French and English
colonialists. Hutchinson calls Delaney ‘a pioneer black separatist’ and “black cultural nationalist." His
example prompted black businessmen in 1853 to promote ‘buy black’ campaigns,
which returned in the 1920s-30s and are still around today. In 1858 another campaign for ‘self-help’ was
launched, a campaign that differed from those advocating armed resistance to
slavery.
Capital and credit are essential to business development
and this was in short supply for African-Americans. The post-war 1865 ‘Freedman’s Bank’ failed,
even after Frederick Douglass was stuck with it. In 1898 1,906 black businesses
had an average capital of $4,600 – very small.
In the 1880s the black elite formed 36 banks, mostly from the deposits
of fraternal orders, with the longest lasting 22 years. Together they held $13M in deposits. The Depression of the 1930s wiped out many
enterprises. Today there are 22
black-owned banks of various sizes, less than in the past.
Booker
T. and the Benjamins
In 1900 Booker T. Washington started a National Negro
Business League (NNBL), with help from Andrew Carnegie. This is a familiar theme as nearly every
effort appeals to wealthy “white” capitalists to help. This give the lie to the idea that any segment
of business can be independent. Rockefeller,
Mellon and others backed Washington’s program of black entrepreneurship which
de-emphasized suffrage. This pattern of
big capital’s patronage continues today.
Black ministers were a big part of the NNBL, encouraging their ‘flocks’
to patronize NNBL members. However members
of the NNBL had little capital, few employees and small earnings. Only 10% even made $10K gross. These businesses – a pattern true today – were
cafes, groceries, barbershops, hair-salons, tailors, cleaners and
mortuaries. The other pattern is that the
NNBL advised against political activism, unionism or civil rights.
Here are other business examples: Marcus Garvey set up the Black Star Line of 4 run-down ships in the 1920s and achieved a capital of $610K. But it collapsed and Garvey was jailed, losing more than a million in believer’s subscriptions. In 1938 Chicago there were some 2,600 black businesses – yet they only gathered 10% of sales in the ‘ghetto,’ with groceries earning 5% of sales. 85% of these ‘businesses’ were sole-proprietorships and could not hire many workers. The famous millionairess Madame CJ Walker had an Indianapolis business making toxic skin and hair cosmetics that whitened skin and straightened hair – a dubious product. Another profitable Chicago financial idea was ‘the policy’ or ‘the numbers game,’ as many black businesses were owned by a secret syndicate which made the real money. Cheap fast-food chains also undermined local black businesses in the 1960s.
Exploitation of labor, rents, nature and interest are the
main profit avenues for capitalism and ‘black’ ownership doesn’t change this.
Hutchinson points out that black preachers were enthusiastic supporters of this
right-wing tendency. To quote him: “The organized church could provide … the
means for retaining long-term control over the financial resources of the black
masses…” This eventually led to a
profusion of store-front churches and people like Father Divine, Daddy Grace,
Prophet Jones, Noble Drew Ali and the Nation of Islam (NOI). The NOI is the
main propagator of black separatism and black capitalism in the U.S. with ‘self-help
and ‘non-participation’ as their watchwords.
The NOI owns restaurants, groceries, barber shops and farms, paying
their members almost nothing (paid in ‘charity’
according to the NOI) to work these enterprises, similar to many cults. While ‘collectively’ owned by the NOI, the
actual monies go to the leadership to decide.
In 1970 or so the NOI grossed $500+K annually and the NOI's 1980s estimated worth was $80M.
Farming is an area in which black farmers have slowly been
whittled away. In 1970 the annual income
of black Southern farmers was $3,970, a 90% majority. In 1967 the number of black farmers and farm
workers decreased by half to 423K from 876K in 1960. This pattern of the decimation of small farms
applies across the board. By the way Hutchinson
never in the book baits white workers as the enemy, seeing them as
potential allies who share some of the burdens of the class.
Solutions?
Hutchinson identifies the rise of massive U.S. corporate
oligopolies in the 1920s as mitigating against the success of any small
business. Large corporations directly
employ a plurality of workers, while feeder businesses that depend on them
increase those numbers. Even in 1970
1.6% of the upper class owned 32% of all U.S. wealth, with significant holdings
in cash, bonds, stocks, mortgages, debts, real estate and the like. These inequality numbers have only gotten
higher. All small business, but especially black business people, are
victimized by these forces. Hutchinson
goes on to point out the corporate-sponsored public/private ‘redevelopment’ partnerships
in black communities in the U.S. aided the local black bourgeois. He especially notes the role of the ‘black
nationalist’ CORE and Roy Innis, along with Jesse Jackson’s Operation
Breadbasket.
Hutchinson addresses 3 prominent solutions presented by neo-black
elite reformists. They are: 1) rebates;
2) cooperatives; 3) reparations. He
rejects all three in turn. Rebates are monies given back to the ‘community’ for
every purchase at a ‘buy black’ business.
He points out this justifies exploitation and also raises questions
about how the funds are reinvested … and by whom. He is positive about
cooperatives, but realizes they cannot dominate a capitalist economy. Cooperatives face price competition, capital
acquisition, credit maintenance and labor costs too. Dubois did support a ‘cooperative
commonwealth,’ as he recognized that black capitalists can exploit. Cooperatives were envisioned as a
self-sufficient ‘socialism in one community’ and Hutchinson realizes this is
liberal utopianism. Hutchinson believes reparations are a legitimate demand,
having been used in West Germany, Finland and for Japanese-Americans. Yet he sees most of the monies being directed
towards the operations of the neo-black elite. He highlights a proposal of the
National Black Economic Development Conference in 1970 which details how
reparations would be handled. He doesn’t
address its political ramifications in the general class struggle.
Hutchinson tackles the demand for a separate black nation
in the ‘black belt’ made by certain black nationalist groups in the U.S. He says there is no way that a ‘black’ nation
could be independent in almost any way, nor the fact that there are millions of
white people living in this ‘belt.’ He
considers these demands benefitting the neo-black elite the most. Lastly he details the sad colonization of
Liberia by U.S. African-Americans, and how that country became a wholly-owned
subsidiary of Firestone Rubber Company and a colony of the U.S. He follows that with the experience of many
countries in Africa whose elites collaborate with imperialist and
sub-imperialist firms and nations, especially Jomo Kenyatta of Kenya. Of the exceptions he lists – Guinea,
Tanzania, Algeria, Mali and the UAR – none really stand out today except Mali,
and that is still outstanding.
The book is a good analysis of the class structure in African-American ‘communities’ and a precise rundown of the program of black capitalism, which has failed for years to alleviate oppression for the majority of working-class folks. It only needs someone else to take up the analysis and bring it up to date.
* In 2020 Forbes said there were 7 African-American billionaires in the U.S. “from finance to technology to entertainment.” In 2021, Nubia listed the top 10 ‘black’ wealthy: Vista Equity Partners owner Robert Smith; businessman David Steward; Oprah Winfrey, Michael Jordan, Jay-Z, P-Diddy; business owner Sheila Johnson; Dr. Dre, Rihanna, and Tyler Perry. This small group of super-wealthy reflects a growing wealth gap in the black community. It underlines the notion of class in the ‘black’ community and doesn’t promote capitalism, only aspirations! The ‘black’ upper class is estimated to be 1% of the overall population now. Making over $200K a year qualifies a person’s role in the upper middle class (UMC) according to estimates. In 2016 Brookings reported that 7% of the UMC was African American, 9% Hispanic-American, 11% Asian-American, 73% European-American.
Prior blogspot reviews on this topic, use blog search box, upper left, to investigate our 17 year archive, using these terms: “The Wire,” “Souls of Black Folk” (Dubois); “Elite Capture,” “The Panthers Can’t Save Us Now,” “Toward Freedom – the Case Against Race Reductionism” (T. Reed); “The New Jim Crow” (Alexander).
And I bought it at May Day Books! - Red Frog / December 19, 2024