BLACK CAPITAL

by Larry D. Crawford

One of the most troubling things I encounter among my people is an ignorance of the concept of wealth. We have come to accept the self-defeating falsehood that wealth and income are synonymous. As a result, we come to negotiating tables with pockets empty but big toothy grins. There is an even greater confusion over our relative economic position in this country, especially as it translates into actual individual and group empowerment. Here, a fundamental dilemma remains over whether we should individually or collectively accumulate material things or economic power. Even while mimicking the European we cannot see that an obvious truth of the capitalist system is that if you had real wealth you would not need to negotiate or engage in debates about your (economic) power, relative or otherwise.

We operate in a capitalist system but often fail to realize that it is only one type of economy. It is different from other forms such as socialism or communism in that it places an extremely high value on private property and the invidious distinctions brought on by the hierarchical, value laden, rank ordering of everybody and everything. Think about it. You can tell what is considered the basis of power in any given society by what precedes the "ism." A people name their social order after what it’s about but mold the social system, and whatever economic model they chose, to fit what they’re about. Under individualistic, zero-sum European capitalism, capital, meaning wealth or assets, is by far the primary determinant of ones power, position and life chances.

However, let’s not get too technical here about what we mean by economy. It is simply the method by which a culture organizes the production, distribution and consumption of a society’s goods and services. Every society must have one to survive. The economy, along with religion, education, politics, family and, in most cases, military, is one of the institutions essential to a people’s ability to prepare, maintain and insure their interpretation of reality, their Way.

With that understood, any confusion we have over wealth and income and, therefore, our power in this society as measured by our economic position needs to be thoroughly studied. Undoubtedly, the problem is not one of income because our nearly $480 billion in spending power is regularly broadcast. This is up from $300 billion in 1990. Instead, our condition develops out of the misperception that our income itself is sufficient to ensure our interests. For while we conservatively constitute approximately 15% of the population, the best estimates give us less than ½ of 1% of the nation’s wealth. And while our population was virtually the same, this is down from 1-3% just 7 years ago. And, even more interesting, that is an incredible drop from before the end of slavery when free Blacks equaled 1.6% of the population and but also controlled less than ½ of 1%, a near ideal situation recognizing that the rest of us were subsidizing the income and wealth of whites in America and Europe. Today, in fact, there are individual white males who control more wealth than all African Americans combined and we are the wealthiest group of Africans in any one country on the planet. Globally, wealth translates into real, active power.

But, as a group we do have some wealth, so what’s the big deal? Why is this comparison meaningful? Ideally, whatever proportion a group represents of the general population should similarly be reflected in its share of all the good and bad of society. For example, since Black people are over 12% of all voters, we ought to have 12 times the 1% of all elected officials we now do. And, that 56% of all state and federal male prisoners are Black and 27% are white becomes even more alarming when we see that they respectively represent 6% and 32% of all people in this country. To preempt those insistent on pushing self-serving diversity arguments it should be noted that, even though each group in society has its own historical backgrounds and unique characteristics, differences should not be so great as to negate this proportionate share assumption.

Nonetheless, using this model to look at Black-white income, we definitely should make more than only 7.6% of all income. And neither should whites, who make up nearly 80% of all Americans, pull in 85% of all incomes.

But what exactly is wealth? What is wealth in the general context we are using here? By definition it is simply what you have left over after you subtract what you owe from what you earn and already have. For most of us, the discretionary income we have left over after taxes, bills and deductions leaves little room for paying ourselves first. Statistic in point, Oliver and Shapiro found that "nearly two-thirds (63.2%) of all black households possess no net financial assets..." In fact, the American Bankruptcy Institute reported in 1990 that 83.5% of the average U.S. worker’s monthly income went toward paying bills. It stood at 62.5% in 1983. An important fact to mention here is that the average American is white. The elders used to say that when they catch a cold we catch the flu. Today, with their average family net assets ten to twelve times ours, it might be more appropriate to say that when they catch a cold, we become comatose or die.

In this light one very important assumption that we adopt in our pursuit of affluence and privilege needs to be immediately addressed. Most of us go as far as we can in school not so we can provide the conscious leadership our community so desperately needs from warrior-scholars but to increase our personal earning potential at the expense of the community The problem, as Arrested Development so poignantly phrased in "Mr. Wendell," is that "Blacks spend all that money on big colleges still most of ya’ll come out confused". Even when so-called educated we remain unaware that the association between education and income and wealth obtains for whites to a much greater degree than for us. The truth is that at all educational attainment levels the income of Blacks is lower than that of whites and at no educational attainment level is their average wealth less than 4.4 times that of ours. This least difference is at the bachelor’s degree level. The greatest disparity lies for those of us with only some high school where whites have over 54 times as much wealth on average.

The same discrepancy applies when we look at the relationship between money and age. It is generally accepted that as one grows older his/her income and especially wealth is supposed to naturally increase. Not even restating the enormous differences in wealth, the only age group where individual Blacks’ wealth stands at a higher figure than their income is when they pass 64 years of age. Then it averages near $16,000. For the same age group of whites, net assets hoover around $77,000. However, the important point here is that the wealth of whites falls below their income only under the age of 36, where it averages just above $8,000. Oh, by the way, the average wealth for African Americans in this age group is $500.

Findings like these should lead us to question whether we are on an uneven playing field or a completely different one. Is the key to economic empowerment creating more opportunities, redistributing wealth or moving out of this neoslavery mentality and taking charge of our own economy. The problem, as Wilson well articulated for us, is with the nature of the relationships that exist between us Blacks because the cultural framework for any economy exists long before the economy itself or the currency used to facilitate it. From different perspectives, Akbar, Light and Lynch (see Milligan) correctly speak to the source of this problem in the seasoning of Africans in the Americas.

Many underdeveloped nations have long recognized this "evil genius." They no longer willingly allowing themselves to be put in the position where they are forced to pay off only the interest on their loans from the IMF and other global banks because the required loan payments are too large. Recognizing that the sheer size of their loans makes full payment impossible, they are demanding that their loans, like Great Britain’s, West Germany’s and Japan’s, be forgiven. Isn’t it interesting that the U.S. is now a debtor nation to West Germany (there is still a military and political divide between it and East Germany with a heavily armed border patrol enforcing it) and Japan and it is paying off only the interest on loans that have required payments that are also too large. But that’s another discussion.

In the meantime, let us look at the possibilities of realistically playing catch up while following the rules to someone else’s game by way of this scenario. If I had $1 million and were dumb enough to deposit it in a regular 2.5-7% interest-bearing savings account, recycling the interest but never adding another penny, and you opened a similar account with the minimum requirement and start depositing $1,000 every month, how many generations, if ever, would it take you to catch up? What would the yearly interest at this rate be for $1 million compounded quarterly? We don’t even want to talk about this game at the level of high finance investing where returns are dramatically higher for well equipped investors or the fact that most serious wealth is inherited.

However, moving on to another easier, less depressing method of financial catch up, the widespread use of credit has given many of us the illusion of affluence. It is a serious statement about the state of the economy when individuals stigmatized as bad credit risks are courted by financial institutions to borrow large sums of money. Bad credit, no credit, come on down. We’ll get you a new car, and now a house. It’s an even more serious statement about our understanding of the game when we voluntarily submit to further exploitation.

The bulletin boards of Black colleges and universities in particular are covered with credit card applications. And students are the worst credit risks. They have no job, no money and no guarantee of a job. Yet, as Heady reports, "in 1996, nearly 65 percent of all college students had credit cards...the average credit card balance for undergraduate students was $2,226 with an average credit limit of $6,122...[and] an average finance rate of 17 percent..." Obviously, extending credit to students serves a purpose. Obligatory student participation means being locked into the System before they can realize what has happened to them and get out. Malcolm’s father was wise to say that "credit is the first step into debt and back into slavery."

Unfortunately, as a result of the socialized inability to distinguish between wants and needs as well as the steadily downward spiraling economy, many of us are sinker deeper and deeper into what has come to be called negative wealth. That is, after subtracting what we owe from what we have, more and more of us still owe more and more. Moreover, our level of credit indebtedness becomes greater relative to whites as we move up the income ladder.

Credit card businesses are twice as profitable as any other banking venture. Last year alone, there were 2.7 billion forms sent to consumers for acceptance of pre-approved credit cards. Why? How do they benefit? If you borrow $2,500 and pay only the minimum amount due it would not only take 20 years to pay it off but you would also have paid over $6,000 in interest. Buying a house over a 30 year period means that you pay for it once, twice and again half. Some would call that usury. Let it be no secret that people are not getting on waiting lists to apply for second and third mortgages to finish their basement or add a deck to their home. Their patience is primarily motivated by bills they already have and will have to pay.

Yet, a foreboding sense of decline has neither kept Americans from overspending nor pushed them to question domestic capitalist imperialism. The average per capita credit card indebtedness in this country now sits at $6,000. Agencies profiting by salvaging overextended consumers have become bigger business than locking up Black men, women and children.

Lest we forget as John Henrick Clarke teaches us, for those who don’t know their history everything is new. The bankruptcy laws keeping the average person from behind bars are under systematic and relentless attack. How quickly we forget that a significant number of the indentured servants who were shipped here from traditional European society came from debtor’s prison. Like racism, the new world order is the same old game. And, complementing racism, it has become a more sophisticated instrument of control. In 1996, approximately 1 million people filed for bankruptcy. That comes to approximately 1 in every 100 families who destroyed their financial future in a credit-locked society.

We have yet to realize that living in an expensive home, driving two or more new cars, and having a designer wardrobe mean little to nothing if we do not own them. The forces ruling your destiny and the world are not seen in impotent and hypocritical Easter Sunday adornments. Owership, that is rentalship and leasership, is quite different from ownership. As these trends continue, our generation is finding itself in debt for life. Our children’s generation will be the first to pass on their indebtedness to their children.

It is time for us to actively realize who truly benefits from our conspicuous consumption and act on that understanding. We have to stop believing that the goods and services propagated as symbols of success grant the same power that automatically comes to those rich in capital-creating resources.

But back to the demographics of wealth because the picture is incomplete. Even poor and working, and to some degree middle, class whites recognize that their position relative to the European elite reflects only a relatively small, although prized, advantage over us. A short historical description of the elite can help focus this differential.

In the mid-1960s, the highest 1/5th of all Americans controlled a little over 75% of this nation’s wealth. In the mid-1980s, the top ½ of the top 1% of all U.S. families controlled 35% of all wealth. Combined with the next ½ percent, they controlled nearly 42%. However, in comparison to the early 1960s, the top 10% of all families held 70% of all wealth. The concentration of wealth in the hands of fewer and fewer families and individuals continues unabated.

Looking at the relationship between the state of the economy and the European tradition of bringing itself out of economic hardship by civil or international war, you have to decide what is the necessary and probable outcome of this rapid and significant "sucking-up" of wealth into the hands of the few, the proud, the European elite. Batra, Haga and Tolnay and Beck speak of the regularity and relative predictability of capitalist cycles and the connection of this to violence against scapegoats or military conflict. The West digs its way out of economic decline through war. War is highly profitable and helpful to this economy in many ways, from reducing unemployment rates by getting those without jobs to the sacrificial front lines to providing business for those supplying everything from yellow ribbons to land mines to body bags.

Become knowledgeable. Open a map of Europe, close your eyes and let your finger do the walking to any country it may. The pattern is the same all over. Any nation picked will reveal that preceding each civil war, as well as those between it and other European nations, there was a relative or absolute economic decline. Their wars were not the result of some king retaliating because a neighboring prince violated his son or insulted his daughter’s honor. They happened because many aristocrats were arrogant and stupid enough to in one way or another reply to the impoverishment of their subjects with "let them eat cake." This provided the opportunity for the dispossessed elite to agitate the already impoverished peasantry into bloody revolt, thus enabling them to regain their exploitative privilege. Ask yourself, what was occurring before the first and second wars on the world, the Civil War, the Korean War, the Opium Wars? Is there a connection between the shortness of America’s invasion of Iraq, continued economic decline in this country and Bush’s lost reelection bid?

One of the most important but undiscussed aspects of U.S. wealth is national and international corporate wealth. "You’ve been had, you’ve been took, you’ve been hoodwinked, bamboozled, led astray" into believing that, because you work for some multinational conglomerate like Citibank, Nike or Amway, if it folds its assets will somehow trickle down into your loyal, servile pockets. The trick to any seemingly brilliant analysis of the probable outcome of such a situation is in understanding that corporate wealth is not included in calculations of individual wealth but has been used as such. And, when loosed from its bureaucratic machinery, it has always been divided among those wealthy individuals who already hold the positions where such decisions are made.

And speaking of the power brokers behind this global capitalist system, what’s up with white male anger? I’m trying very hard to grasp the importance or sincerity of their dilemma when they make up 97% of all upper level management positions, 80% of all lawyers, 85% of all tenured professors and 95% of all medical doctors, to name just a few highly lucrative positions they dominate. It’s beyond me.

In the meantime, we must come to realize another flawed assumption we cling so desperately to. Our beliefs about the income range middle class membership falls into is often quite different from the official categories as defined by the federal government in the Tax Reform Act of 1986, its more recent amendments, and presented in various ways through the media. Middle class families are statistically defined as those whose annual income fall within the range of $25-49,999. This means that if each individual in a couple is making $12,500 annually, before taxes, they are considered middle class. For years, the general belief has been that for every 5 days you work one day goes to taxes. However, as with most economic indicators, the situation worsens. According to J. Kenneth Blackwell, Treasurer of the State of Ohio, now, 40% of family income goes to direct taxes and an additional 9% goes to indirect taxes. So, how realistic is this official middle class status when compared to the material possessions we associate with being members of such a privileged club? Without great indebtedness, what are the chances that we will be seen, and apparently we do like to be seen, as members of the middle class? Upper class families are taken from those making $50,000 or more a year. Can this even come close to purchasing the upper class lifestyles we imagine to reflect it?

Assuming for the moment that this system is viable and that wealth is the most plausible answer to Black empowerment, what we have before us now is simply a realistic picture that should serve to assist us in mobilizing our mental and physical energies toward a more solvent definition and acquisition of this form of power. Whether this road to self-determination is realistic or not, we must remind ourselves not to turn these facts into a bleak, paralyzing outlook. Traditionally, Africans have risen to any challenge that interfered with the health and welfare of their community.

Asante.


Larry D. Crawford has been an Assistant Professor of Sociology at Morehouse College since 1991, and has been recognized for his dedication to students and community alike. He serves as the advisor to numerous student organizations at Morehouse College as well as other institutions in the Atlanta University Center.


SOURCES

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