December 13, 2011


Marcellus Andrews, The Political Economy of Hope and Fear: Capitalism and The Black Condition in America (New York: NYU Press, 1999) ("This book uses economic analysis as an intellectual scalpel to conduct an economic audit of the Civil Rights movement which shows that the movement toward racial justice in America was assassinated by free markets and the technological whirlwind driving capitalism worldwide rather than by organized racism per se. Racism is still an important and destructive influence on the economic fortunes of black people in America, but it is no longer the primary reason why black people are poorer than white people. Put bluntly, black Americans are generally poorer than white Americans because capitalism and racism combine to limit their access to education and knowledge, which in turn blocks their access to good jobs, decent health care, safe neighborhoods, and good lives. However, racism only abets the more basic problem: black people are poor now because they were so badly discriminated against by historic American racism that they were unprepared for the sea change in American and world economy that has utterly transformed our lives over the past three decades. Black people were completely unprepared for, and unable to take advantage of, the shift in the structure of the American economy toward knowledge- and technology-driven system that offers huge rewards to brains over brawn, because they remained in an industrial labor force in a post-industrial country. Even if every racist white person in this country had a change of heart or moved abroad, most poor black people would be exactly where they are right now in the absence of major changes in government policy to address issues of poverty and economic inequality across color lines." Id. at 2-3. "Of course, market economies rarely function as smoothly as the rhetoric of free market advocates implies. One of the most basic propositions in economics is that a free market economy, left to its own devises, will tend to undersupply education to its citizens. The reason for this type of market failure is known to every competent undergraduate economics major: the wage differences between skilled and unskilled workers only partially reflect the value of greater levels of schooling to society. Increasing the number of skilled workers raises the overall productive capacity of the economy, reduces the social costs of low wages, unemployment, and inequality--including poor support, the direct and indirect costs of crime to private citizens and criminal justice expenditures--and increases the ability of the work fore to adapt to changes in new technologies and to absorb new scientific and technical information, among other things. The typical student/worker will only consider the direct increase in his or her long-term income associated with schooling, just as the typical private school will only consider the contributions that potential new students bring to the institution (principally the increased value of the endowment and the improved academic reputation of the institution). In turn, banks and other sources of educational loans will only consider their own narrow interests in granting or refusing to lend money to finance education Since private schools and commercial banks pay scant attention to the broader, social benefits of schooling to society as a whole, they will generally fund too small a number of students' education choices, thereby leading to a shortage of students and schooling relative to the socially optimal level. Banks will withhold loans from bright but financially strapped students because these borrowers are high-risk investment opportunities compared to wealthier students with more modest intellectual abilities. These basic considerations are the primary justification for public schools, and even in this conservative era, for the public funding of primary, secondary, and college education." Id. at 36-37.).