"The glittering coin of so-called black capitalism, on closer scrutiny, turns out to have a dimmer side," said Barron's in its October 7th editorial, and then proceeded to turn over one such coin: PRIDE, a federally funded anti-poverty group that Life magazine said, "exemplifies the way that, in Washington and a score of other cities, youth gangs are turning from crime to capitalism."
"If so," answered Barron's "then capitalism, as its radical critics have argued all along, assuredly covers a multitude of sins." About the same time Life's reporters were doing verbal somersaults in praise of PRIDE's "capitalism," the federal government's General Accounting Office was investigating the OEO-sponsored organization. After only brief auditing, G.A.O. uncovered definite traces of widespread fraud. "Through Sept. 3, 1968 [reported G.A.O. to a Senate committee], we had completed interviews with 80 enrollees, or in a few instances their parents, of whom 70, or 87.5% made one or more allegations of irregularities in activities carried out by PRIDE." These irregularities included payroll padding, kickbacks of wages, and fraudulent check endorsements. Life reporters, however, managed, to overlook any evidence of such practices, or perhaps having swallowed the dogma of Marx and Marcuse whole, thought that fraud is a natural appendix to capitalism and thus not worthy of mention in their glowing article on PRIDE.
But whatever Life's motives, its most dramatic oversight was not PRIDE's fraud. Addressing the House, Representative Joel P. Broyhill (R. Va.) alleged: "When the Washington riots occurred in April, as many as 52 PRIDE employees were involved, with Winston Station, the new chairman of the board, standing in one police precinct posting bond for them as they were brought in. When the riots ended, the harassment of merchants began…"PRIDE's aspiring little "capitalists" went right to work—peddling picture posters of Dr. Martin Luther King. "The fee for purchasing the posters ranged from $1 up to $25 or more, but the penalty for not buying them was made quite clear—buy or you are next." "In early May, a PRIDE supervisor took his crew along to the liquor store of Ben Brown and shot Mr. Brown fatally when he protested.…"
Many may wonder at the sudden loving acceptance of "black capitalism" by the "liberal" press in general, after its years of deprecations against capitalism. There is no enigma here, really. The press has merely selected a new word (however ill-fitting) to cloak, continuing support of the welfare state.
In ascribing to "black capitalism," ills and evils of the mixed economy, LIFE and similar magazines have unwittingly perpetrated a new smear against the free economy.
This new smear differs from its predecessors in several ways. First it was never consciously meant as a smear. Second, the perpetrators seem quite enamored with the new variety of "capitalism."
And no wonder: their new version of "capitalism" is so opposite in nature from the real thing as to rest happily with many staunch anti-capitalists (which is what it was designed for). Gone are old (very old) notions of the equivalency of freedom and capitalism; government subsidy and intervention are proffered instead. Gone are notions of profit as the motive power of capitalism and of the entrepreneur as a "cold, cunning, greedy robber baron"; the new "capitalist" is pictured as either a altruistic scoundrel or an impotent bumbler—the first, unwilling to earn a profit, the second, unable.
But crime, corruption, coercion, and charity are not a part of capitalism. The fourth estate's insistence otherwise reveals its knowledge as being shallow.
Reader's Digest, for example, graphically demonstrated hazy understanding in its February "Black Capitalism on the Move." Among its illustrations were the Black Economic Union of Cleveland, the Community Conservation Corps of Watts, and the Harlem Co-op supermarket. Of the three, only one is even remotely capitalistic.
The Black Economic Union, founded three years ago by football hero Jim Brown, and operating in Cleveland and five other cities, has provided capital for personal and business self-help. "Brown," the Digest explained, "wanted black people to become producers, not just consumers, to develop habits of helping each other in practical ways."
The Community Conservation Corps of Watts, however, is merely another government-sponsored (Dept, of Labor) boot-polishing project. "Capitalism" to the CCC means "to plant vegetable gardens and flowers in lots where buildings were burned down, to care for the new parks and playgrounds that black people have built…"
But the Digest's coup de grace was the Harlem Co-op supermarket. Thorough knowledge of left-wing dogma could never have prepared us for this next version of "capitalism."
Vital to the success of the Harlem Co-op was the expert advice and supervision of a competing chain of stores. What did the competitor stand to gain from, offering such aid? The article never said.
Do the players in this new plan believe that this kind of selfless assistance is really "capitalism?" Apparently so. Quentin Reynolds, President of Safeway, which recently saved a similar neighborhood co-op in San Francisco said: "we want to see this co-op succeed because it symbolizes the free enterprise system." The co-op, it should be noted, is only ten blocks away from one of Safeway's supermarkets.
The most potential dangerous aspect of this new smear is perhaps not that it offers altruism and government subsidy as valid appendages to something called "capitalism," but that it pictures America as a land of free enterprise ("The purpose of black capitalism is to bring blacks into the mainstream of American free enterprise.").
This image is only half true.
At the turn of the century, the political atmosphere of the U.S. was conducive to rapid growth of new black businesses. In 1915 the African Union Co. grossed more than $250,000. In 1919 Kaffen Chemical Laboratories was capitalized at $500,000. America's largest Negro enterprise, North Carolina Mutual Life Insurance Co., which today has assets of over $94,000,000, was founded in 1898.
Since that era, however, federal and local authorities have expanded government power far beyond laissez-faire levels, resulting in a rapid drain on economic health. Fifty percent of all small businesses today do not survive to see their first anniversary. Commercial listings cannot keep up with mergers as droves of toddling young companies sell out to established rivals.
New black establishments will not fare much better—probably much worse. The incredible quantity and variety of taxes, extra bookkeeping, regulations, restrictions, permits, codes, licenses, inspections, laws, and programs that officials demand adherence to/or compliance with, insure new entrepreneurs an almost impossible task. Also, politically sanctioned racism—in unions, in publicly assisted organizations, in the South—will continue to plague black businessmen.
Advocates of "black capitalism" who evade this are headed for disaster. Dr. Israel Unterman, an expert in Negro business, believes that "every business failure by a black will create frustration and anger not only against 'whitey' but also against the black leader who preached black capitalism as the only answer to the black economic problem." (Newsday, Jan. 25, 1969) It is imperative, then, that this latest attack on capitalism—"black capitalism"—be properly identified as the doomed half-measure that it is.
So-called black capitalists have ignored the chains that government is increasingly burdening the citizenry with, insisting instead that blacks earn a living even while half-enslaved, insisting that they continue to produce even while being systematically robbed. Such encouragement will not be enough to sweep away poverty and misery.
True capitalists must reveal the token nature of "black capitalism". They must point out that politician, press, and public alike, embrace capitalism only in word, not in deed.
True capitalists must do no less than cast off the chains. Less will never solve the problems. And less could never be capitalism.
This article originally appeared in print under the headline "The New Smear Against Capitalism: "Black Capitalism" ".