If you Google “capitalism fights racism”, the top search results will show articles like: “Is capitalism racist?”, “Capitalism without racism: science or fantasy” and “The Rise of Capitalism and the Rise of Racism”.
Reading these titles, it seems that the most triumphant economic model the world has ever seen is rooted in a racist and hegemonic structure intended to benefit the lords of society. Good thing we have Google to open our eyes to this inhumane system.
All kidding aside, Western (post)modern society sees capitalism as the very ugly elephant in the room. She doesn’t want to admit that she is a crucial cog that keeps civilization running and prefers to covet impossible dreams, like socialism, seeking to see the world through rose-colored glasses.
We are taken to believe that the free market is the force responsible for much of the injustice, racism, and inequality seen in the modern world. But is this true?
What did capitalism do
The fact is that capitalism as a system has always been a force for good, and that includes America’s tumultuous history. Even during the Reconstruction and Jim Crow eras, periods that saw rampant civil rights abuses perpetrated in black communities, capitalism was the saving grace, helping people overcome their plight, the adversity they faced, and a culture still reeling from the effects. the violence of civil war.
As Milton Friedman stated in his book Capitalism and Liberty: “It is an impressive historical fact that the development of capitalism has been accompanied by a great reduction in the extent to which certain religious, racial or social groups operated under special disadvantages in relation to their economic activities; were, as the saying goes, discriminated against”.
With forces in social media, legacy networks and the government working to undermine the idea that capitalism is a force to promote individual freedom and empowerment of the individual as an agent, it is important to revisit some stories of how the free market lifted people out of poverty and fought racism.
‘The Father of Harlem’
Philip A. Payton (-1917) was a black real estate developer of the 19th century in Harlem, New York City. De facto segregation was still present in American cities at the time. Manhattan was no exception. With the acquisition of brownstone units after several white families moved in, Payton acted to provide more housing for black tenants on the [distrito de] Upper West Side. Considering the racial tension at the time, it’s safe to say that the landlords were not very happy about this.
The Hudson Realty Company intended to re-segregate the area by purchasing the black-owned units and evicting the tenants. Payton returned the favor to white-owned units and offered them to previously evicted black tenants. Payton prevailed in the end when Hudson Reality dropped its goal of resegregation. Later attempts were made by housing associations that used racial qualifications to prevent black families from renting, but they were also soundly defeated by Payton and other black business owners who were inspired by his example.
A Payton’s Afro-American Realty Company grew to $1 million in assets and helped countless black families move to areas where they wanted to live — not just where the city relegated them. He used the free market and demand for better housing to provide a service to his community. Despite the racial obstacles, Payton prevailed because, at the end of the day, he understood that discrimination is no match for the will of the people. As he once announced: “The very prejudice that has so far worked against us can be transformed and used to our advantage”.
The Queen of Cosmetics
Sarah Breedlove was born in Louisiana, just four years after the Emancipation Proclamation was signed by President Abraham Lincoln. Having been orphaned at the age of seven and forced into domestic servitude to survive, Breedlove had a very bleak outlook early in life. She would later recall how “(…) I had little or no opportunity when I started… having been left without a mother or father…”.
Despite this, Breedlove would continue to work hard and eventually develop her own hair care line. As the African-American market was largely overlooked at the time, Breedlove took the opportunity to cater to a growing demographic and began selling her own hair products.
Later, she would be known as ‘Madame CJ Walker’ after marrying Charles Walker, in 1906. Like freshly tapped oil, her business expanded rapidly, finding traction in black communities across the country. A small operation has grown to include a factory, beauty school and hair salon. CJ Walker was known for hiring women into senior management and personnel positions, something unfathomable at the time. In the company’s heyday, it is noted that several thousand women were employed as sales agents and countless others trained in hair care.
Madame Walker’s company would be worth about US$ 10 million in current currency. She is the first recorded female millionaire in American history – an incredible feat in its own right, but even more surprising when you consider that she lived during a time when black people were still viewed as second-class citizens. Walker took the adversity she experienced and built a business literally from scratch. Without the underlying culture of entrepreneurship and the free market system, who’s to say if your company would have been formed?
Mail order fought Jim Crow
The march for freedom that culminated in the Civil Rights Act of 1964 conjures up images of marches, protests and the famous Martin Luther King’s speech on the National Mall. A lesser-known aspect was the emergence of alternative markets that helped combat racist economic policies, which ultimately sought to restrict, not promote, markets. Under Jim Crow, black communities were constrained in their public purchasing decisions. They were barred from certain stores, restaurants and common places. If they managed to buy merchandise from a white-owned store, they were met with racist comments, condescending tones, and even predatory pricing.
Sears revolutionized the shopper experience with the use of catalogs, allowing consumers to mail order goods to their homes. This put the company at a huge advantage in expanding its market, serving many thousands more customers than a typical physical store could. Admitted today, the idea of ordering and receiving your product without leaving home was a new invention – and potentially lifesaving – for families of the century 1876.
This innovation allowed Southern blacks to order items unavailable in their segregated stores. With mail order, black customers also didn’t have to experience the racism and inhumanity they did during some public outings; they could order whatever they wanted whenever they wanted, just like the average white man at the time. Capitalist innovation not only benefited the companies involved, but also served to add value to diverse communities; in this case, it functioned as an escape for so many black consumers embarrassed by Jim Crow.
Something to Remember
These are just a few stories of how free market capitalism helped push people above the racism they often lived under. The legacies of Madam Walker, Philip Payton and many other black businessmen of the century live on today. With multimillionaires and billionaires like Rihanna, Beyonce, Kanye West, Drake, Oprah Winfrey, Tyler Perry, Jay Z, Michael Jordan, it’s clear that capitalism is a socioeconomic force that empowers people to innovate to better themselves and their communities, as opposed to being the purveyor of modern racism and injustice, as Google would lead you to believe.
©2022 Foundation for Economic Education. Published with permission. Original in English.