Black Capitalism Will Not Save Us, and Baldwin Agrees

[Ellison]

After being asked about optimism within the black community on The Cavett Show on May 16th of 1969, James Baldwin’s response held a statement that instilled me with the fervor that many of his generation must have inhibited as well: “I don’t want to be given anything by you, I just want to be left alone so I can do it myself.” With this in mind, one may develop the belief that only we can free ourselves from this nation’s subjugation. Rather than let others determine what we as a community may need in order to achieve equity and wholly improve race relations, we take it upon ourselves to achieve such goals. There is a miniscule possibility that a community outside of ours can both encapsulate each realm in which we are disparaged and provide us with the resources necessary to ensure said realms are no longer disparaged. Baldwin touches on this as well during his time on The Cavett Show, stating “Perhaps I don’t want what you think I want, and there is nothing you can give me.” Therefore, would it not make sense for us as a people to develop with ourselves and within our own communities, as we know what we need? Well, yes, however, as the quote perfectly illustrates, this can only be done if we are left alone.

One predominant example of black people within our community taking the initiative to “liberate themselves” is through entrepreneurship. Business ownership has the potential to generate economic activity within the community, sparking generational change. Not just this, but different forms of growth capital, such as equity-like investments, will assist owners when it comes to surviving the economic hardships prevalent in Black-owned businesses. 

In theory, this should gradually close the wealth gap between the black and other communities, yet this is not the case. Even with the growth in the number of Black-owned businesses, there has not been a correlation between this and a decrease in the racial wealth gap. The reasoning for this is found in the fact that the average annual revenue for Black-owned businesses is approximately 6.4x less than that of white-owned businesses. Furthermore, less than 5% of Black-owned small businesses have a cash buffer greater than two weeks, meaning 95% of Black-owned businesses are living “paycheck to paycheck.” Additionally, as in the graphs shown we can see how since black entrepreneurs have a higher rate of reliance upon credit cards, which is inherently riskier than a loan or one’s personal savings because if the business fails the owner is still personally liable for that debt for startup capital than other business owners, profits are negatively impacted by access and cost of capital, more so than any other race/ethnic group. More significantly, black entrepreneurs are almost three times more likely than whites to report their business profits have been negatively impacted by access to capital. In terms of the cost of capital, 22.6% of black business owners report their profits are negatively impacted by this cost, which shows that black entrepreneurs are more than twice as likely as white entrepreneurs to be negatively impacted by the cost of capital. The challenges experienced by black entrepreneurs with generating business capital and obtaining business loans illustrate the ways in which we as a community are held back even when attempting to liberate ourselves. 

Further along in the interview, while still being answering the question of the pessimistic state of black Americans, James Baldwin gives a plain reason not just for why we were not satisfied then, but for why we may never be satisfied as long as we live and operate in this nation’s system. Questioning not just the interviewer, but the entirety of the majority of the country as well, Baldwin postulates that America, as great as many perceive it to be, may not be “best” country, institution, system, or what-have-you. A system that has done nothing but force our people into servitude for centuries is, at face value, understandably detestable, but when one has consciousness akin to Baldwin there may come a desire. A desire for a system that allows prosperity and freedom, regardless of race; the unknown becomes much more preferable when the known has been riddled with constant injustice and prejudice. 

Not just this, but the feasibility of assimilating into this system with the hope of eventually becoming accepted by those who designed it such that our very existence would never be equitable has decreased substantially with each subsequent generation. Currently, those within the black community who choose to brave the “business life cycle” are met with many racially initiated obstacles spanning generations: higher insurance prices, uncooperative investors, exclusive supply chains, recessions, exclusionary regulators, an intergenerational wealth gap, and competition with monopolies. This is not a reality that benefits us nor one in which we should seek to benefit from.

I was thinking, in order for this to happen, your entire frame of reference will have to change, and you will be forced to surrender many things that you now scarcely know you have. I didn’t feel that the things I had in mind, such as the pseudo-elegant heap of tin in which we were riding, had any very great value. But life would be very different without them, and I wondered if he had thought of this.

This short excerpt from James Baldwin’s The Fire Next Time directly follows his debate with his chauffeur, a young member of the Nation of Islam who tells Baldwin how the black dollar could support a self-sufficient economy free from the ills of the country’s bigotry. In the debate, James Baldwin made two assertions: 1. additional segregation would shrink black spending power and 2. Inquiries about the political ramifications of a less productive economy. Rather than address systemic issues of racism and contribute towards liberation, black capitalism undermines these goals. In terms of policy, the most recent addressment of the black economy came in the form of “Opportunity Zones” under the Trump administration in 2019. On paper, the program promised to leverage tax breaks and lean on investors, entrepreneurs, and historically black colleges and universities “to revitalize urban and economically distressed communities.” However, instead of mobilizing the large federal government response needed to quell racial inequality through reparations or targeted anti-poverty programs, the president nimbly co-opted the black power movement’s rhetoric of economic self-determination to push a segregated black economy, thereby justifying his neglect of other proposals for meaningful reform. Rather than this, there needs to be conversations and implementation of policy conversations addressing racial economic inequality, such that there is radical redistributive policy for black people of all classes, not just upper-middle-class black entrepreneurs. 

Throughout his appearance on The Cavett Show, James Baldwin brought intellectual thought to many of the issues that are debated on even today. This is represented in the ongoing criticism of the black capitalism movement in favor of true solutions to the deep-rooted issues espoused by the current system. At best, this effort can provide communities with many essential social and political services, but they simply are not capable of generating the resources to address racial economic inequality. While it may be impossible to only use this nation’s system to liberate ourselves, we do have the ability to utilize it along with other methods to gain our liberation. Through this effort, each racial disparity, including the wealth gap, will be closed. The only question that remains is, how can we establish and be free under a system that we have no idea will operate? As we determine the answer to this question, remember that if white capitalism still allows the existence of poor white people, then the same can and will be done under any form of this system.