Black Spending Power Is Overrated - The Dynamic Between Black Labor and White Wealth

For several years now I've listened to the ongoing discussion in the Black community around black wealth, specifically about black spending power which is projected to reach $1.4 trillion by 2020, this is up from $320 billion in 1990. While this is an extremely large number and can be a source of pride, it's also very misleading. What black spending power is really talking about is the ability for consumers in the black community to purchase available goods and services. 

Now sure, an increase in the ability to consume can be a good thing because it is reflective of increasing education standards (for instance more Blacks enrolling in college), increasing job opportunities and a growing population. However black spending power has no bearing whatsoever on black wealth. Way back in the 17th century, Jean-Baptiste Colbert said simply that wealth was money. Adam Smith, author of The Wealth of Nations  wrote years later in 1776 that one of the conditions for creating wealth was to divide labor among a group of people. One person (say a Manager) would be at the top directing laborers at the bottom and would generate a product/service that would in turn generate more and more money. This can be scaled up and expanded to generate more and more wealth. In this sense, many economists have also stated that wealth is also tied to assets and an asset can be a person (workers) or a thing (real estate, stocks, bonds, etc) as long as it generates value. 

Often when people in the black community, who I believe are well-meaning, speak about black spending power...they are confusing this with black wealth when the two are related, but very different. While the rise of the black consumer is a good thing and shows the ability for the black community to set trends...what we should really be focused on is...

  1. The creation of more Black producers, not consumers.
  2. The creation of not just any Black business, but as Marxian economist Richard Wolff explains it, worker self-directed enterprises (WSDE's). Which is different from cooperative (co-op) businesses, but it shares some traits.
  3. As Claud Anderson writes in Black Labor, White Wealth the development of Black empowerment strategies which include, but are not limited to wealth and capitol formation and group economics.
  4. Tied to #3, I wrote an article on this website back in October about a strategy that I'd like the see implemented that would directly address group economics and that is mass black crowdfunding. 

In the article I wrote linked above, I touched on the issue of the black/white wealth gap. Something that one can overlook if one looks only at black spending power. This is why I believe black spending power to be an overrated barometer of black success. Is it a positive sign? Perhaps yes if you can capitalize off of it, but there's no proof that black buying power will ever directly lead to black empowerment unless you think that as black people, we can consume our way to freedom and justice. Reality doesn't work like that sadly.

The Dynamic Between Black Labor and White Wealth

There are many reasons why Whites have been able to amass as much wealth as they have over the generations. Authors and scholars have written entire books on the topic. One of those authors is Claud Anderson who explains his book that black labor has been the greatest source of white wealth due to the slave economy that fueled the rise of the colonial empires. In that system, Whites were able to amass billions in yearly revenue due to free labor. Now because of the new economy that this system generated, many were able to profit and white spending power went through the roof! See though that white spending power went up because of the exploitative nature of the slave economy.

Now the slave economy no longer exists and spending power is generated by different means today than it was back then. But a few centuries of an economic head start has given Whites an advantage that Blacks simply may not be able to ever surpass...without a massive transference of wealth which is unlikely to happen. So the fact remains that we are in a situation as black people where we have to start re-thinking the very notion of black wealth and wealth itself. Capitalism by its very nature exploits labor and there is no way around that. So while investing in Black banks is cool and I'm an advocate of having all options on the table, I'd say Black credit unions might be better. Black co-opts are better than Black corporations...but Black worker self-directed enterprises might be the most beneficial for black people as a whole. What is clear is as a people, we have to become more well-versed in economics and economic systems.

So how does capitalism exploit labor - the worker? Simple, the means of production in any business is dominated BY labor! Machines don't run, services aren't provides, goods aren't made, etc without the labor of workers. This labor in turn generates a profit and once the costs of production (running the business) are subtracted out - what's left has been called by many 'surplus value.' Meaning the capitol left over that has been generated by workers, but doesn't go to workers. This surplus, especially for big business, is often in the tens of millions (if not hundreds of millions) of dollars. This was a major problem that Karl Marx had with capitalism and why he considered it an exploitative and undemocratic system. It means you work for a company to generate profit from your hard labor...that you don't see. You are given a wage, and hopefully that wage will be a living wage and enough to survive off of. As we see historically in capitalistic systems, that often isn't the case.

Worker Self-Directed Enterprises (WSDE's)

What is a WSDE?

According to economist Richard Wolff, in a WSDE workers collectively determine what the enterprise produces, the location of production, the appropriate technology to use, etc. When it comes to the Board of Director's, no individual who does not participate in the productive work of the enterprise, can be on the Board.

The enterprise also works in conjunction with local, state and federal entities in a shared democratic process. Contrary to private and state capitalistic systems, in WSDE's, the workers solely determine how to distribute the surplus that they worked to generate for the enterprise.

How Do WSDE's Work?

Periodically (let's just say twice a year), the workers in an enterprise will gather together to democratically distribute the surplus, it is never distributed by anyone else who isn't a worker. This is a non-exploitative economic system unlike the capitalist, feudal and slave systems of production. 

A worker's job description wouldn't just involve his/her day-to-day duties, but would also involve voting democratically when the Board of Director's meet to determine what to do with the surplus...

  1. They could use a portion of the surplus to expand production (invest and grow)
  2. They could use a portion of the surplus to lobby local, state and federal officials
  3. They could use a portion of the surplus to pay dividends to owners of the enterprise (which would essentially function as a bonus check to all workers in the enterprise).
  4. They could use a portion of the surplus to pay taxes
  5. They could use a portion of the surplus to invest in local communities and build schools, libraries, buy land, etc.

The Two Kinds of Workers in a WSDE

  1. The Surplus-Producers: the workers who directly contribute to the output of the WSDE. They build and work the machines, they craft the items for sale, they develop the software programs. They are the revenue-generating workers of the WSDE.
  2. The Enablers: the workers who provide the ancillary services and conditions that enable the surplus-producers to function. These are your secretaries, clerks, janitors, security guards, managers, lawyers, architects, counselors, etc who work "behind the scenes" and allow the surplus-producers to function better on the job.

In traditional capitalistic systems, the janitor, manager and machine-worker wouldn't be on the same level and wouldn't have the same power in the company. This is the source of power dynamics in all capitalistic enterprises and the source of inequality and exploitation. In WSDE's, all workers would democratically determine how best to distribute the surplus they all collectively help to generate. No one employee would have more power than another.

Moving Beyond Black Spending Power

In this article, I have laid out a few suggestions about how the black community can move forward beyond the appeal of being a better consumer. Consuming more and more goods is something that has been taught to Americans. We are bombarded daily with television ads that want you to buy a product that may be identical to a product you already have, but because it has a different name and smells different...we think it's different when it may not truly be. We should strive for universal democracy - true democracy. Not just politically, but in the workplace too. 

As capitalism has become dominated by crony systems of gross exploitation, we have to be honest about the fact that as a system...it just isn't the best (despite what you have been taught to believe). We should be less concerned about how well we can consume via our black spending power and be more concerned about how well we can produce and build systems that don't exploit the very people we claim to be trying to help.

If we're going to redefine black wealth, we have to come to grips with the reality that building our foundations in a fundamentally exploitative system will create an upper class, or bourgeoisie, of Blacks who will ultimately show the same disdain for the lower and middle class Blacks that bourgeoisie Whites have historically shown. We can see this in real time today. How many rich and wealthy Blacks have you seen who get their capitol and run away from the community as quickly as they possibly can? Yea you have some athletes and entertainers who ride for the people, but most don't. Capitalism creates class struggle and Black people aren't an exception to the rule by any means.