In her report on the U.S. financial system and racial slavery for the New York Times 1619 Project, international finance expert Mehrsa Baradaran hints at the relationship between racial slavery and the development of finance capitalism in the U.S.
The 1619 Project is “a major initiative of the New York Times,” launched last summer to mark the 400th year of the opening of slavery in the territory that would become the United States. Dutch slave traders brought the first slaves to British colonies in 1619. By the end of that century, racist slavery had subjected African people to legal bondage as labor and human capital and privileged whites as free citizens. According to the general arguments presented by the authors of the 1619 Project, racist slavery became the basis for “nearly everything that has truly made America exceptional.”
Coordinating with the National Education Association, the New York Times distributed to educators across the country thousands of copies of the issue of the New York Times Magazine in which the project appeared. The express purpose is to help reshape how slavery, racism, and white supremacy are taught in the country’s schools. According to the Teaching Tolerance project at the Southern Poverty Law Center, about 9 out of 10 school-age children do not understand that slavery was the central cause of the Civil War.
Baradaran writes that Southern slaveholders feared the consolidation of finance capital into a central bank, as it might “favor the Northern trade-based economy over the plantation economy.” Slaveholding presidents like Thomas Jefferson and Andrew Jackson, who perpetrated atrocities on Native peoples to control their land, fought the national banking system for this very reason.
Historian Tiya Miles, also writing for the 1619 Project, notes that the preeminent symbol of finance capital in the U.S., Wall Street, was built with slave labor. Miles is the author of an essential book on racist slavery titled The Dawn of Detroit: A Chronicle of Slavery and Freedom in the City of the Straits. She has also written compelling books on the relationships of Native and African peoples in the era of racial slavery.
Further, journalist Nikole Hannah-Jones writes even more compellingly of the role of racist slavery in the development of U.S. capitalism: “Profits from black people’s stolen labor helped the young nation pay off its war debts and financed some of our most prestigious universities. It was the relentless buying, selling, insuring, and financing of their bodies and the products of their labor that made Wall Street a thriving banking, insurance, and trading sector and New York City the financial capital of the world.” Not only did enslaved Africans make the things that are upheld as exemplars of U.S. civilization, but their bodies also formed the material of finance capitalism itself.
Thomas Jefferson and other slaveholders relied on the labor of enslaved Africans to build their world and to provide them the creature comforts within it. Further, they also depended on the legal right to mortgage the bodies of enslaved people to pay their bills, acquire more investment capital, and buy new land. Washington, Jefferson, and Jackson were investors in various land speculation schemes that bought expropriated Native lands for resale to white people for higher prices and exorbitant profit.
Cornerstones of capitalist globalization
One piece of the puzzle not emphasized in the 1619 Project is the expropriation of Native land and the process of white settler colonialism. Land accumulation and financial speculation on its value depended on its forced acquisition from the people who had lived there. White settlers who came to North America did not regard the people they met and depended on for survival as worthy of sharing the bounty they could glean from it. Land provided one of the two capital bases for surplus-value creation through commodity production. Racial slavery provided the other. Racist settler colonialism and enslaved labor were the cornerstones of the first stage of capitalist globalization.
Native lands, made available through genocide, war, disease, and other anti-Native racist policies, and enslaved African labor, expropriated through property laws and white supremacy, served as the basis for all U.S. capitalist development. Without white racism as a social force, social development in the territory that would become the U.S. would have occurred in a different, quite possibly non-capitalist manner.
The speculative flurry of financial activity in the late 18th and early 19th centuries based on credit, speculation, and mortgages of land and enslaved African people led to frequent financial crashes. It is a precursor to the types of capitalistic activities that prompted the financial crash in 2007.
But this U.S.-specific story about the relationship between capitalist development, white supremacy, Native land expropriation, and racist slavery tells only one small part of the global story of capitalism.
The current ongoing division of the world into “metropolitan capital” and the “colonial and semi-colonial” marked by massive, unjust inequality of resources, wealth, and power resulted from a two-stage process of capitalist development on a global scale. In concise language that mirrors and updates Marx’s, economist Prabhat Patnaik, in the book Red October, describes massive swathes of this history of capitalist globalization.
Marx had written in Capital, Vol. 1, that global capitalist development, with its core in England and northwestern Europe, had been made possible through “the extirpation, enslavement, and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins.”
Patnaik argues that in this first stage of globalizing capitalism, European colonizers in North America had destroyed “the basis of local petty production” and “ousted the local inhabitants from their lands.” During this period, tens of millions of people moved to new parts of the world. He emphasizes two separate migration streams in the long 19th century: 1) 50 million European people moving to the Americas and Australia, and 2) 50 million South Asian and Chinese people moving to other parts of the Global South.
In addition to these two streams, a third, forced migration stream was vital to the development of industrial and finance capital, as economic historian Joseph Inikori shows in his indispensable book, Africans and the Industrial Revolution in England. Indeed, racial slavery would serve the vital function of making capitalism possible and establishing white supremacy as an essential feature of liberal economic and political philosophy and Western civilization generally, and the dominant features of U.S. society specifically.
Patnaik emphasizes how these two streams of migration were almost exclusively separated movements of people. Scrutiny of the data would reveal that just a few hundred thousand Chinese and South Asian migrants made their way to North America, for example. There, racist immigration and citizenship laws along with frequent violent pogroms combined to discourage further migration for much of that long 19th century.
Patnaik underlines the two trends that shaped the second, more recently incarnated process of globalizing capital. First, European capital refused to export financial or production processes to the Global South, instead, giving preferential treatment to North America. This decision blocked capitalist diffusion in the Global South but ensured it in North America. The availability of land capital and European bodies provided a high wage and income in those places.
Second, and in contrast, British (and other European) colonizers who had destroyed local productive processes in South and Eastern Asian colonial centers refused to import much modern technology, finance capital, or capitalist productive processes and relations. This fact ensured low income and little or no accumulative abilities in the Global South. Indeed, European capital exported to North America as manufactured goods and finance capital depended on the reduction of colonial and semi-colonial regions to centers of raw materials extraction.
Marx had noted that this diffusion of capitalist development in the European and North American contexts was dependent on the non-capitalist organization of colonized regions in his journalism on India and China in the 1850s. The maintenance of the underemployed and semi-proletarian workforce in the Global South underlay the ability of capitalists in Europe and North America to continue to accumulate capital while guaranteeing underdevelopment in the Global South.
By the time the world entered the protracted crisis of capitalism and imperialism that resulted in two world wars, “the old colonial process” had reached its limits. That period witnessed the global decolonization of Asia, Africa, and South America. The ruling class response to the general crisis is also generally referred to as Keynesian economics. That policy formation established a global system of negotiated governance over a framework in which finance capital remained a national entity, controlled by nation-states.
This new regulatory process was accompanied by a significant working-class insurgency that sought capitalism’s destruction and had succeeded in gaining hegemony in one-fifth of the world. This placed capitalism’s most egregious features and accomplishments in competition with an ideology and material philosophy that called for equality, the national liberation of colonized peoples, and working-class democracy. Undoubtedly, capitalist rulers and state managers needed to modify their approaches to economic development to avert further losses. National forms of “demand management” included higher wages (a social safety net) matching labor productivity, recognition of organized labor, limits on massive wealth accumulations, and controls on the export of capital.
By the 1970s, the Keynesian regulatory system too reached its limits. Higher wages for the working class that had ensured a larger share of surplus had also initiated what Patnaik calls “the Golden Age of capitalism.” This new balance of class forces prompted ruling-class fears about working-class power, limits on accumulation, and declining rates of profit that threatened the viability of capital accumulation.
The Keynesian model was superseded by a new ruling-class strategy led by finance capital’s specific methods of capital accumulation that transcended nation-state forms of regulation, undermining national sovereignties, regaining control over liberated states, eroding state-regulated “demand management,” and thus eliminating the power and gains made by workers in the “golden age.”
This strategy is referred to by many scholars and activists as neoliberalism. If not placed in a broader global and historical context described by Patnaik, neoliberalism and its critique become ideological displacements of an anti-capitalist analysis. As scholar Grace Kyungwon Hong argues in a 2015 issue of Critical Ethnic Studies, neoliberalism functions as “global racial capital[’s]” response to “worldwide movements for decolonization, desegregation, and self-determination.” Without linking capitalist development to the material force of white supremacy and imperialism, much of the historical development and contemporary process slips into an ideological and nationalist discourse.
Racism made capitalism possible
What needs more exploration is the relationship between racial ideologies and their material projection as culture, law, and economic relations and the development of specifically capitalist and imperialist relations. There can be no doubt that racism made capitalism possible. But if racial slavery and imperialism, both dependent on white supremacy for their existence and sustenance as systems and processes, ended, shouldn’t we be able to take color-blind approaches to critiques of capitalism and neo-imperialism in the present?
The answer is a resounding no. Two prominent examples help explain the problem: 1) the anti-racist consent decree in the U.S. steel industry in the 1970s, and 2) the production of surplus-value in Apple products in the present.
The film Struggles in Steel: A Story of African-American Steelworkers tells the story of African-American steelworkers who fought racism in their union and the steel industry. Pay discrimination, hiring discrimination, and race-based promotions thwarted their social mobility and their fullest development as workers. The struggle against racism saw them build unity and power that radically altered how the steel industry worked.
Within a decade of their victory, most of the U.S. steel industry shut down, citing lower rates of profit. As economist Victor Perlo had shown in Economics of Racism, racist discrimination provided a source of extra surplus-value for owners of capital that amounted to hundreds of billions of dollars annually. Not only would Keynesian policies of “managed demand” reduce profit rates, but also anti-racist victories like those made by the steelworkers would push capitalists to invest in productive forces and relations in places where the lowest wages could be found.
Unfortunately, Americans generally had accepted the legitimacy of capitalist accumulation, and a publicly owned steel industry rarely entered the discourse of solutions to the problem.
The anti-racist struggle in steel wasn’t an isolated one. It accompanied a national fight against racism led by African-American people, Latinx people, and other racially minoritized people. It was a radical, working-class struggle for Black and Brown freedom that met with massive political and state repression. This repression resulted in the militarization of local police forces that resembled the militarization of slave patrols in the 19th-century South.
Racial power and capitalist profit from this new wave of militarization helped install systemic, racist mass incarceration of more than two million Americans, mostly working-class people of color. Mass incarceration accompanied a resurgent racist backlash against the Civil Rights gains of the 1950s and 1960s that sought to restore white supremacy under cover of “colorblindness” and claims about a “post-racial” society.
Capitalist needs racism
Capitalist processes needed a racist context in which to operate correctly, to provide sources of new accumulation. White supremacy needed the capitalist-class process of surplus-value extraction to survive revolutionary struggles by working-class social movements.
A Tricontinental: Institute for Social Research report reveals how the second stage of capitalist globalization continues to function to divide the world into capitalist centers and colonial and semi-colonial peripheries to produce surplus-value. The report, titled The Rate of Exploitation (The Case of the iPhone), traces the commodity chains that comprise the production of Apple’s iPhones and iPads. In so doing, it explores the wage differentials that are the residue of the colonial system described by Patnaik.
The wages and working conditions for workers in global commodity chains outside the capitalist centers ensure surplus-value extraction at levels high enough to sustain capitalist profits. But these differential wage systems are based historically in a white supremacist–coded colonial system. In the present, white supremacists openly express hatred of the Global South, its cultures, and people. They, including white supremacist policymakers in the Trump White House, openly repeat claims that most of the world’s peoples do not deserve to control their fortunes and destinies in the same way that white, Northern, and European-originated people do.
The Tricontinental report further argues that if Apple products were built in the capitalist centers at the same rate of surplus-value extraction as is the case now, each would cost about $30,000. If capitalism, in general, operated without racist wage differentials, it would not be mathematically sustainable.
While the accumulation of capital may have served as a primary motive force for the diffusion of capitalist relations of production and accumulation in European contexts, its movement beyond those continental borders relied on the accumulation of racial power in the form of a diffusion of white supremacy. Two determinations operate in the present: 1) white supremacy as a material system of relations, production, ideologies, cultures, and social policies, which works to create and safeguard 2) capitalist-class processes that produce viable rates of surplus-value extraction. Capitalist-class processes ensure the accumulation of power for white supremacy.
That the colorblindness of neoliberalism has begun to disappear under the authoritarian white nationalism of the Donald Trump administration in the U.S. suggests something disturbingly significant about the limits of neoliberalism and capitalism’s crisis in the present.
This article originally appeared at CPUSA.org.
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