We live in an urgent time: duopolies and monopolies greatly suffocate the growth of small, local businesses; tax policy overwhelmingly favors the wealthy; corporate subsidies remain a lynchpin in economic development efforts; and the racial wealth gap continues to grow exponentially. Systems changing ideas and beliefs are needed to confront today’s economic challenges.
A hundred years ago, Greenwood, a 35-square-block section of Tulsa, Oklahoma, was home to one of the largest concentrations of African American-owned businesses and wealth in America. Booker T. Washington referred to Greenwood as “Negro Wall Street.” Black Wall Street, as it’s called today, had more than 300 African American-owned businesses serving roughly 11,000 residents.
It all came to a violent end in 1921, when a teenage African American boy was accused of assaulting a white female elevator operator. Followers of American history will know what came next: On May 31, 1921, white residents marched into Greenwood and burned it to the ground. Hundreds of black residents died and thousands more were left homeless. City and state officials were complicit in the violence: Instead of curtailing the riots, the National Guard was sent to detain African American residents into detention centers.
I first learned of Greenwood at the knee of my grandfather, a black man from the South who fought in the Korean War and received a Purple Heart for his troubles. Like millions of African Americans who served in the military during Jim Crow, my grandfather was denied the privileges owed to him from the G.I. Bill of Rights, which provided financial support in the form of cash stipends for schooling, low-interest mortgages, job skills training, low-interest loans, and unemployment benefits.
“The past is never dead. It’s not even past.” — William Faulkner, Requiem for a Nun
Most of us know nothing of Greenwood, or how G.I. benefits that helped to build the American white middle-class systematically excluded African American servicemen and their families, denying and suppressing wealth creation in black households for generations. Few of us know anything about redlining and blockbusting, and even fewer are aware that in 2018, financial institutions like Bank of America and Wells Fargo are being sued and fined for discriminatory lending practices in African American and Latinx communities. Indeed, the past isn’t past — it lives with us today.
“If you stick a knife in my back nine inches and pull it out six inches, there’s no progress. If you pull it all the way out that’s not progress. Progress is healing the wound that the blow made.” — Malcolm X
In 2016, a United Nations panel declared that the United States owed reparations to African Americans, as compensation for “the legacy of colonial history, enslavement, racial subordination and segregation, racial terrorism and racial inequality.” Thomas Craemer, an associate professor of public policy at University of Connecticut, concluded that U.S. slave labor in the 89 years between our country’s founding until the end of the Civil War would be worth approximately $5.9 trillion today.
Chattel slavery. Jim Crow. Redlining. Mass incarceration. Predatory lending. It’s a minor miracle that the racial wealth chasm between white and African American households isn’t significantly larger than it is today.
For over 40 years, the U.S. political economy has been shaped by ideas conceived by Milton Friedman’s “Chicago School” of free market orthodoxy. These ideas have defined much of American social, economic, and political life. In 2017, these ideas enabled bipartisan support (Tim Scott on the “Right,” Cory Booker on the “Left”) for the Investing in Opportunity Act (Opportunity Zones), developed by billionaire venture capitalist Sean Parker, who proudly pronounced:
“Instead of having government hand out pools of taxpayer dollars, you have savvy investors directing money into projects they think will succeed.”
In this narrative, government is bad and market investors are the heroes of American ingenuity. Forbes’ commentary on Opportunity Zones says it all:
“If everything goes right, a big slice of the estimated $6.1 trillion of paper profits currently resting on American balance sheets is about to go to work to revitalize America’s depressed communities. If all goes wrong, however, it will prove to be one of the biggest tax giveaways in American history, all in service of gentrifying neighborhoods and expelling local residents.”
Opportunity Zones are just the latest invention of neoliberal free market orthodoxy. However, the ideology has seeded countless prominent institutions and networks. And as Anand Giridharadas illustrates in “Winners Take All,” its influence is pervasive in left-leaning institutions as well.
Today, with wealth inequality exploding and economic anxiety and political tensions rising, unlikely voices clamor for new ideas and paradigmatic shifts. Hewlett Foundation is investing $10MM over the next two years to support research on new ideas and intellectual frameworks to address problems like wealth inequality, wage stagnation, economic dislocation due to globalization, and loss of jobs and economic security due to technology and automation. In its most recent call for Fellows, Open Society Foundationsinvites applicants to respond to the following provocation:
New and radical forms of ownership, governance, entrepreneurship, and financialization are needed to fight pervasive economic inequality.
Even billionaire financiers Ray Dalio and Paul Tudor Jones acknowledge that free market capitalism no longer works for most Americans. However, they are bereft of ideas on what can be done, turning to platitudes like improving schools, increasing access to higher education, public-private partnerships, microfinance, and creating stronger job training programs. In other words, more of the same. 10 years after the collapse of Lehman Brothers, NY Timescolumnist and “Too Big To Fail” author Andrew Ross Sorkin admits that, “capitalism, the way we’re operating it today, is not working.”
Alan Greenspan’s 2008 testimony before the U.S. House Committee on Oversight and Government Reform served as a succinct indictment of the ideology behind neoliberal free market orthodoxy. This exchange between Greenspan and then Committee Chairman Henry Waxman sums it up:
Greenspan: I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms…
Waxman: In other words, you found that your view of the world, your ideology, was not right, it was not working.
Greenspan: Absolutely, precisely. You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.
Of course, one can credibly debate whether or not things had been “working exceptionally well” over the 40 years that preceded Lehman’s collapse, with income stagnation, radical wealth inequality, and costs for healthcare and higher education increasingly out of reach for ordinary Americans. Greenspan would note that the “whole intellectual edifice” behind his faith in Wall Street and free markets collapsed in the summer of 2007.
And yet, today in 2018, the free market status quo is tightening its grip. We can recite such frightening statistics as:
- 82 percent of all wealth created in 2017 went to the richest 1%
- The world’s billionaires saw their wealth increase by $762 billion
- The poorest 50 percent saw no increase in wealth at all
- Median wealth of African Americans could be zero by 2053
We live in an urgent time: duopolies and monopolies greatly suffocate the growth of small, local business; tax policy overwhelmingly favors the wealthy; corporate subsidies remain a lynchpin in local economic development efforts; and the racial wealth gap continues to grow exponentially.
And while governments, philanthropists, investors, and civic leaders seek answers to today’s economic challenges, they lack truly systems changing ideas and beliefs. Opportunity Zones, impact investing, “doing well by doing good” — these ideas spring from the same intellectual edifice as trickle-down economics. It’s a tough fact to swallow, yet the truth of it is no less potent.
What is needed is an entirely different intellectual edifice.
“People should think things out fresh and not just accept conventional terms and the conventional way of doing things.” — Buckminster Fuller
The mainstream ideas that drive our political economy concentrate authority, power, and wealth into the hands of the few, while actively marginalizing, exploiting, and extracting from the rest of us.
Where there was once slavery, indentured servitude, and sharecropping, there is now prison labor, wage theft, and the gig economy. In California, prisoners make up nearly 40 percent of firefighters — saving the state $100MM annually — and earn just $1.45 a day to fight deadly fires. Capital continues to find new ways to, in the words of Ta-Nehisi Coates, plunder. This is fundamental to how our economy works. But it need not be.
In our pursuit of new ideas and innovation, we’ve dismissed history and the collective capacity, genius, and tireless work of communities of color. As Jessica Gordon Nembhard and Edgar Villanueva make clear in Collective Courage and Decolonizing Wealth, African Americans and Native people have a long history of cooperative ownership and democratic economic participation, two intertwined beliefs that are antithetical to the economics of plunder, wealth hoarding, and “market power.”
In fact, the very answers sought-out by Giridharadas, Dalio, Jones, Hewlett, and Open Society can be found in marginalized communities of color that have historically built and operated economic alternatives to colonization, oppression, and exploitation.
Restorative investing is one such alternative. Pioneered by brilliant black women like Nwamaka Agbo and Alfa Demmellash, restorative investing acknowledges the urgent moral, economic, and ecological imperative to share and redirect power and promote collective well-being and social equity. It is an attempt to subvert the systemic injustices that plunder from rural, Native, and majority communities of color, and repair the harm unjustly inflicted upon economically exploited communities.
There is no shortage of leaders and communities who put restorative investing into practice. Inspired by Latin American indigenous movements, Thousand Currents’ Buen Vivir Fund demonstrates what is possible when investors democratize capital, enable community wealth and power building, and promote well-being above the preservation and accumulation of capital. Tiffany Brown and Kate Poole, principals at Chordata Capital, challenge, guide, and support their clients — largely, young inheritors of generational wealth — to invest with a laser focus on racial and economic justice.
In Boston, a network of frontline leaders — including BALLE leaders Aaron Tanaka and Deborah Frieze, alongside Nia Evans, Lucas Turner-Owens, and Mark Watson — work incessantly to build a community-controlled economy that redresses the city’s astronomical racial wealth divide through transformative efforts like Ujima Project and Boston Impact Initiative. And through the Runway Project, a powerful group of women of color — BALLE Fellow Jessica Norwood, Nina Robinson, Konda Mason, and Rani Langer-Croager — audaciously tackle the racial wealth gap and its adverse impact on African American entrepreneurs.
The major criticism levied against Giridharadas’ Winners Take All is that it lacks solutions. This criticism is intellectually dishonest at best — a complex system predicated on unequal power dynamics in which one party controls the purse strings and systemically sets the terms cannot be “solved.” In fact, what Giridharadas painstakingly sets out to prove is that financial elites are winning by the rules of a rigged game. What is required is a paradigmatic shift in the rules — moving from systemic power imbalance and wealth accumulation to distributing wealth and power equitably.
Foundations might prioritize investing in structures that resulted in perpetual community wealth building above their own institutional perpetuity.
Donor-advised funds (DAFs) — which surpassed $110 billion in total assets under management in 2017 — would serve as risk capital largely inaccessible to communities of color due to systemic racism and economic exploitation.
And instead of spending $90 billion every year in tax breaks and cash awards to companies like Amazon to move across states, U.S. municipal and state governments would invest in cooperative ownership, minority-businesses, community-empowered development, and other authentic alternatives for advancing community wealth and economic equity.
There are clear alternatives to the status quo. In order to build a just and equitable economy, we must reckon with our compounding moral debts and heal the wounds caused by generations of economic plunder and exploitation. And for those of us with power and wealth engendered by the status quo, it means giving some of it up — rather than doing well by doing good, it means doing good by giving up more; less privilege, less wealth, and less power.
Philanthropy and investment — indeed the act of giving itself — is in need of reframing. I’ll leave you with a simple question: What are you willing to give up in order to make lasting systemic change?
Original posting of this article can be found on Medium.com
Rodney Foxworth is Executive Director of BALLE, a network of local economy leaders from across the US and Canada. This year, we’re calling for a #ShiftCapitalTuesday to refocus our efforts on communities that have been historically marginalized and economically exploited. To support this work, and the collective efforts of the BALLE network, consider a commitment of action by tagging #ShiftCapitalTuesday on Twitter or by making a contribution here.