Racism and Structural Solutions

Michael A. McCarthy

WHEN BARACK OBAMA raised the specter of race in a March 18 speech that went far beyond what one would expect from the Democratic Party, some of us on the left were hopeful. Since the 1970s, race-speech in presidential campaigns has been increasingly buried in coded language like, “welfare moms,” “inner-city,” “street crime,” “states’ rights” and so on. We all welcomed a shift away from such discourse. By dealing a bit more squarely with the issue, the speech had the potential to ignite a national debate that could grapple with the “racial stalemate we’ve been stuck in for years,” as Obama put it.

Yet given the media’s one-sided presentation and lack of serious followup, the debate has gravitated toward the personalistic controversies surrounding Obama’s relationship with his former pastor Rev. Jeremiah Wright. It became more about a presidential horse race than race in America – and, frankly, it’s likely to stay that way.

We all realize that racism manifests itself in many different ways. It ranges from individual bigotry, stereotyping, prejudice, hate-speech, assaults and murder to anti-immigrant actions, labor market segmentation, police brutality, racial profiling, unequal incarceration rates, corporate attacks on the welfare state, gerrymandering and imperialist foreign policies (to name just a few). Regrettably the Obama speech has not led to much discussion of any of these things.

The left needs to make sense of these different relations in a serious and straightforward way — filling the gap in the recent debate. We need to identify how these processes function to reproduce racial inequality, divisions within the working class, and capitalist property relations more broadly. But first, we should demystify some of the rhetoric about race that is circulating in the popular presses.

Avoidance and Colorblind Racism

Some conservatives have tried to avoid the issue altogether. In regards to having a national discussion of race, right-wing pundit William Kristol writes, “my recommendation: Let’s not, and say we did.”

Second, when racial inequality in the United States is acknowledged the proposed causes and solutions are individualistic and market-based. For instance, a recent article in The Economist suggests that the solution is incentive schemes to get Black people to “work harder” and “take education more seriously.” Cash incentives for Black pupils might provide a counterforce to the “cool to be dumb” culture.

The same article claims that “Blacks are hungrily recruited by universities, which often admit them with lower test scores that are required by whites or Asians.” If this is the case, then it must be “their” problem, since the institutional changes have allegedly been made.

This position rests on the idea that the civil rights movement successfully minimized white privilege with the passing of the 1964 Civil Rights Act and the 1965 Voting Rights Act. By ending Jim Crow segregation and overturning racist electoral practices, these laws instituted an “equal playing field” — disparities in life-chance could no longer be made on the basis of race.

Through this logic some feel justified in suggesting that any enduring inequality along racial lines is because non-whites have failed to take advantage of the opportunities available to them. They argue that the United States is fast becoming a meritocratic and color-blind society that increasingly operates upon the principle of fairness. (Michael K. Brown, Martin Carnoy, Elliott Currie, Troy Duster, David B. Oppenheimer, Marjorie M. Schultz, and David Wellman, Whitewashing Race: The Myth of a Color-Blind Society Berkeley: University of California Press) To put it bluntly, people deserve what they get.

This perpetuates the “color-blind racism” that has been the ideological basis for attacks on affirmative action, welfare programs, and even collecting race-based statistics that are used to understand patterns of discrimination and inequality. (David Roediger, “The Retreat from Race and Class,” More Unequal, Ed. Michael D. Yates, MR Press, 2007, 67)

Many free-marketeers even argue that the problem of the Black underclass is an unintended consequence of the welfare policies instituted in the 1960s and expanded in the 1970s. For instance, Charles Murray, in Losing Ground, argues that AFDC programs encouraged non-white recipients to act irresponsibly, living in ways that actually reproduced their poverty and relative powerlessness vis-à-vis whites.

Third, others rightly argue that racism is as present as it ever was. However, their explanation again is wholly individualistic and voluntary. Only here, the problem is individual racists — racism is a racists’ choice, solving racism amounts to getting people to stop being racists. Therefore, racism is something that people are personally guilty of, something that people consciously intend on doing.

In this vein, racism is a result of the moral and cultural failure of racists — they have internalized racist norms and practices and need to be broken of them. The solution here is education — first convince racists that they are racist and second tell them how to stop.

The first position is simply false. Overwhelming evidence shows that racism is alive and real in American society, a slice of which I will present below. The second “free-market” position is equally false, and will be the prime target of my discussion.

The third position, however, is much trickier. While it contains elements of truth — some individuals are really racist — it fails to explain the bulk of the impersonal institutionalized racism that persists today, a factor that Malik Miah, in the previous issue of ATC (May-June 2008), points out was missing in Obama’s recent speech.

Ultimately, while resonating in personal experiences, this position is far too abstract and ahistorical to be the basis for the development of coherent political strategy. Furthermore, as Adolph Reed Jr. notes, “…it doesn’t carry any political warrant beyond exhorting people not to be racist.”  Adolph Reed Jr., “The Real Divide.” The Progressive, Nov. 2005, 27-32)

Ultimately, the recent discussions ignore the central forces behind contemporary racism and instead emphasize individual intent, dispositions and bad choices. Instead, those of us on the left need to intervene in the debate showing just how racial inequalities are reproduced through the legacies of slavery, Jim Crow, housing market discrimination, and the processes of contemporary capital accumulation itself.

We should understand racism and formulate our organizing strategies against it in relation to the features of the historical context in which it emerged and the current forces that reproduce it. Here I want to make a small intervention into just one slice of the debate — racial wealth and income disparities.

Enduring Racial Disparities

Overt and deliberate forms of racial discrimination remain a big part of our contemporary reality. Today, however, the real source of the durable inequality between whites and particularly oppressed non-whites lies in an overlapping combination of the dull compulsions of the market and the racial hierarchies generated through the state and the system of production prior to the civil rights era.

Adolph Reed Jr. suggests, “(C)lose attention to the specific history of the development of American capitalism indicates both that these notions [race] emerged over time and that they have evolved in concert with evolving political and economic forces.”  (Adolph Reed Jr., “Rejoinder,” Political Power and Social Theory, Vol. 15, 304) However, the notion that the free-market activity actually produces racial injustices runs counter to both 19th century Marxism and mainstream economics.

The traditional socialist prediction of the breakdown of racism (and gender discrimination) was based on Marx’s understanding that capitalism was continuously making labor more and more exchangeable. (Erik Olin Wright, Class Counts: Student Edition, Cambridge University Press, 1997, 271) Racism and sexism erect artificial barriers to the free flow of labor, and thus block the full commodification of labor that is required in a functioning free market – i.e. a labor force that is more and more exchangeable.

This basic logic was famously articulated in the Communist Manifesto when Marx claimed that “All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy profaned, and man is at last compelled to face with sober senses his real conditions of life and his relations with his kind.”

Ironically, mainstream economists make very similar claims about the market. Neoclassical economics argues that in a context of competition between firms, a capitalist who refuses to hire qualified non-whites or women will eventually lose out to those firms who do. According to the theory, non-discriminating firms should have access to cheaper labor (because the supply itself will be larger) and a larger market of consumers (because people are more likely to shop at places that don’t discriminate against them in their hiring practices).

These conditions should give these firms a competitive advantage over their racist counterparts. Far from encouraging racism, the market should actually drive racist firms out. Here — echoing the conservative position on racism — redistributive state regulation may actually be the cause of racism, not a solution.

But neither the early Marxist nor the neoclassical predictions bear out in recent history. Since the United States turned sharply toward a more purely market driven economy in the 1970s, inequality along racial lines has tended to persist and at times become exacerbated. For instance, overall, the absolute income gap between Black and Latino families and white families has widened. (The State of Working America 2006/2007, 10th Ed., Cornell University Press, 2007, 51)

During the 1980s, Blacks and Latinos lost ground relative to whites, but this was momentarily reversed during a period of full employment in the 1990s. In 2000, the real median income of Black families in particular rose to only 63.5% of that of whites, the highest level on record. (Ibid, 50) This is an increase of only 10% since 1947. (Whitewashing Race, 13)

By 2005, real median Black income declined to 60% of that of whites, a mere one percentage point higher than the same measure in 1967. (The State of Working America, 51)

Black and Latino families’ income tends to be much more responsive to overall economic trends, both positively and negatively — this is largely because many are in the most precarious positions of the working class. Thus during the period of tight labor markets in the 1990s, the pace of Black and Latino income growth surpassed that of whites. This dynamic bears out in poverty rates as well. Again, non-whites tend to experience much higher rates of poverty. The rate for Blacks was three times the rate of whites through 1989. (Ibid, 284) These rates declined during the period of tight labor markets in the 1990s. However, since the dot-com bubble burst in 2000, the poverty gap between Black and Latinos and whites is again widening. (Ibid.)

These data suggest, first, that while crucial, the civil rights legislation of the 1960s did not go far enough to remedy the problem of racial disparities. Second, the fuller embrace of free market policies beginning in the 1970s has been unsuccessful at dissolving racial inequality. On the contrary, free markets are often a part of the problem rather than the solution — something you won’t here on mainstream media anytime soon. The question I turn to is: In what way?

How the Market Reproduces Racism

First, we must look at labor market competition along racial lines. Instead of assuming that one can change racist attitudes independent of economic practices and policies, the left needs to identify how competition within the working class generates racial antagonisms.

As indicated in Whitewashing Race “Competition between Black and white workers intensifies when Blacks threaten the status of white workers, either because the Blacks have acquired the education and job skills to become competitive or because the job opportunities for whites diminish.” (Ibid, 18) Given this tension, it makes sense that either sluggish or booming economies will lead to growing racial antagonisms.

Second, mainstream debates ignore how racial inequalities accumulate over time. For instance, discrimination that Blacks faced in the housing and credit market (as a result of unjust mortgage lending policies in the 1930s through the 1960s) undercut their ability to amass wealth and reinforced economic disadvantage.

Today’s racial inequalities are in some ways reflections of the legacies of slavery, Jim Crow, and overt racism in the labor market. Thus, in Whitewashing Race the authors rightly assert that, “Whites have gained or accumulated opportunities, while African Americans and other racial groups have lost opportunities — they suffer from disaccumulation of the accoutrements of economic opportunity.” (Ibid, 22)

Third, along the lines above, past discrimination leads to a market perpetuating discrimination. The choices that people make and the goals that they pursue are a product of the existence of discrimination in a labor market. In markets that contain discrimination, non-whites tend to invest less in the skills needed to participate in those markets. Like the disaccumulation of wealth above, once overt discrimination is minimized, the dominated non-white group will have a deficit of skills needed to participate in competition for jobs. (Cass R. Sunstein. Free Markets and Social Justice, Oxford University Press, 1997, 158)

Finally, markets incorporate both the norms and practices of the advantaged groups — i.e. white males. Here, employment settings and requirements are structured around traditional male career patterns. Simply asking the question “Are non-whites treated the same as whites?” already reflects an inequality because it takes the model of whites, and their particular history of advantage and supremacy, as the baseline for judgment. (Ibid, 162)

Far from dissolving racism, these free market processes, alongside others, actually serve to reproduce it. This is done through entirely impersonal means, via the dull compulsion of the market. However, these processes are fully reinforced by past racial stratification and racialist ideologies. The turn toward neoliberalism and widespread deregulation has served to actually deepen the racial divide in the United States — racialist ideologies have been part and parcel of the consolidation and reproduction of capitalist class relations. I will offer two examples of this dynamic.

Inequalities Aren’t Accidential

Like some strange unintended consequence, the market plays off past systems of racial differentiation in a way that racism becomes relatively autonomous to the production relations that helped to spawn it.

First, take the process by which income is determined under capitalism and how the workforce is both divided and further racialized. (The description of wage differentials that I use is taken from, Howard Botwinick. Persistent Inequalities, Princeton University Press, 1993) As the rate of capitalist investment accelerates, aggregate wages increase due to a decreasing supply of labor. However, this increase is limited by its profitability for capital. Rising wages (alongside competition, etc.) provide incentive for capitalists to develop labor saving technologies.

As these new technologies are adopted, larger segments of the working class are forced into unemployment (the so-called reserve army) and wages then decline — due to increasing supply of labor. The least skilled and lowest paid segments are typically the first to go. Non-whites tend to be the last hired and first fired. This is a part of the reason why we see that the non-white working class is disproportionately affected by slumps in the economy.

At the industry or firm level, an increase in wages will affect the rate of profit, and in turn provide incentive for technological innovation. Here, both between and within industries, there will be an uneven development of technologies, which amount to different capital-labor ratios. The technologically innovative industries will displace workers into the reserve army, who in turn decrease the wages in stagnant industries by increasing the supply of labor.

The downward pressure on wages impedes the development of new technologies of sub-competitive firms — as they have access to cheaper labor they are less inclined to innovate in order to displace labor. The idea here is that firms with an above average profit rate will tend toward higher wages than industries with lower than average profit rates.

But the above only describes why wage differentials for labor with similar skill levels persist — it does not answer the question as to why whites tend to be privileged over non-whites in their income distribution and why racism itself is reproduced by this distribution. (This analysis is no longer Botwinick’s.) Both capitalists and more privileged white workers are implicated in this process.

Due to the reasons cited above (non-white deficit in skill generated from lower levels of wealth) capitalists are more likely to hire white workers who are already “one step ahead of the game.” This creates distinctions and tensions in the population.

Furthermore, part of the development of labor saving technologies (i.e. mechanization, automation, etc) is the deskilling of the labor that remains. (Harry Braverman, Labor and Monopoly Capital, MR Press, 1998).

Capital breaks down the labor process so that much of the labor that remains is relegated to unskilled and low-paid workers.

After deskilling makes labor more exchangeable, it puts previously skilled white workers into direct competition with non-white workers seeking to enter the industry. This is the dull compulsion of the market sneaking its ugly head back in.

But capitalists have a real incentive to create and reinforce racial hierarchies. By assigning different non-white groups to lower wage occupations and the reserve army, capital minimizes the potential development of broad based movements that organize around a common working class agenda. It can be seen as a divide and conquer tactic, par excellence.

Second, given that class struggle is the primary means that workers have to block their wage levels from being driven down to subsistence level, historicall, the political practices and policies of white workers’ organizations tend to further block the equalization of wages between different groups of workers (people of color, gender, nationality, etc).

Organized white workers want to defend their relative privilege vis-à-vis their more oppressed counterparts. Exclusive forms of class struggle, the craft union strategies of the American Federation of Labor being the most glaring example, blocked the possibility of the excluded groups wage levels rising at the same rate as those engaged in class struggle in the same firms/industries/aggregate economy.

For instance, during World War II a number of wildcat “hate strikes” were initiated by white workers who opposed the hiring or upgrading of Black workers. Though the CIO unions condemned them, the AFL was silent, indirectly approving a deeply racist form of class struggle that excluded some from the material benefits of it.

Race and the Subprime Debacle

In the early 1990s, subprime lending was a niche market; by 2006 the subprime industry represented 20.1% of all housing loans. (United for a Fair Economy, Foreclosed: State of the Dream 2008, 4) Subprime loans — made to people with little income and few assets — were issued to a disproportionate number of working-class people of color.

According to federal data, people of color are more than three times more likely to have subprime loans: high-coast loans account for 55% of loans to Blacks and only 17% of loans to whites. (Ibid, vi). Since predatory mortgage brokers and lenders make more money when they push people into high-cost subprime loans rather than low-cost prime loans, they have been able to reap huge profits by ignoring a homeowner’s ability to repay. The effect has been devastating for the working class, and even more so, the non-white working class.

The 2008 State of the Dream report estimates that the total loss of wealth for people of color resulting from the crisis will be between $164 billion and $213 billion. They further estimate that if subprime loans had been distributed equally, losses for whites would be 44.5% higher while losses for Blacks would be 24% lower. (Ibid)

This is less the result of individual discriminatory lending policies, and more the result of the fact that some people of color occupy the most precarious positions in the working class. Institutional racism, exemplified in how income and wealth is distributed above, only exacerbates the hazardous effects of those positions.

Getting Race and Class Right

The way we make sense of racial disparities directly informs how we remedy them. Here, the left must clarify our approach, and offer a sounder position in the public debate. Ultimately, it is not an either/or class-not-identities/identities-not-class issue.

Martha Gimenez is correct to emphasize an alternative to both of these approaches. Instead, she argues that “Class and identity [race in this instance], however, are not mutually exclusive but part of a network of relationships that shape people’s experiences. Class struggles and identity-based struggles are intertwined: class relations presuppose cultural understandings, and cultural and political recognitions are a means toward economic and political justice.” (Martha E. Gimenez, “Back to Class: Reflections on the Dialectics of Class and Identity,” More Unequal, 115)

If we think of capitalism as a purely economic system, it is true that class is constitutive in a way that race is not. Capitalism by definition requires class divisions, but in the abstract is conceivable without racial disparities. However, a notion of the real political economy that ignores historical particularities, cultural trends and intra-class dynamics is of very little use.

Racism is not just a legacy of the past, but also something promoted by the market logic — a reality that our strategies should assimilate. Giving relative autonomy to non-class forms of domination (racism, sexism, homophobia, etc.), while framing our strategy and analysis through the lens of class, is a way of avoiding problems of class-reductionism or identity politics and building broad-based movements that organize around particular experiences.

In terms of race, we need to identify and explain the dialectic between the means of production and the process of racism. Histories need to be revisited, with past injustices bearing on our explanations for a contemporary racism that appears autonomous. Race cannot be subsumed into class, but they cannot be divorced either — as recent debates around Rev. Wright suggest.

ATC 135, July-August 2008