For some years now, we have been told that “systemic racism” in American society, culture, enterprise and politics has uniquely, painfully and invidiously prevented African Americans from fully obtaining the advantages of American economic growth.
The premise of the Caux Round Table’s Principles for Business is that enterprise is a force for social progress, as it creates jobs, products, services and wealth for enjoyment on a scale never before possible in all of human history. The value premise behind enterprise is that self-interest can be reconciled with the public good.
In his two notable studies, The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith came to a similar conclusion. In The Theory of Moral Sentiments, he proposed that “The rich, …though they mean only their own conveniency , though the sole end which they propose from the labors of all the thousands they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessities of life, which would have been made, had the earth been divided into equal portions among all its inhabitants and thus without intending it, without knowing it advance the interests of the society and afford the means to the multiplication of the species.”
And more well-known was his affirmation in Wealth of Nations that an entrepreneur “intends only his own gain and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.”
In my classes, I have used the slides below to provide some data by which to evaluate what Smith proposed – has capitalism contributed to better lives for humanity?
These graphs do not discuss the net impacts of economic growth or the distribution of its advantages and disadvantages across social classes or the impacts of industrialization and post-industrialization on culture and politics.
Recently, I looked for and found graphs with data on the intersection of American capitalism and African Americans since the victory of the Civil Rights Movement in 1965.
As many know, the system of chattel slavery in the southern English colonies in what would become the United States and in the southern states under our federal union was institutionalized in the 18th century to be terminated after the Civil War. Then, after attempts by the federal government, initially with strong support from northern voters to legalize opportunity for former slaves in the southern states were abandoned, a system of segregation was imposed on African American citizens living in those states. The Civil Rights Movement successfully abolished Jim Crow segregation.
Thus, how African Americans did nor did not benefit from American capitalism over the last 55 years is important to determine.
This graph provides data on the earnings of different quintiles among African Americans in the years since the end of the Civil Rights Movement.
This graph provides data on the earnings by quintile of African Americans in 2017 compared to average earnings for all Americans.
While the percentage of African Americans in the top three quintiles is smaller than the average percentage of all Americans, African American households did include a substantial percentage of middle, upper-middle and upper-class households.
Not receiving the advantages of American capitalism over these years were 46% of African American households.