The police killing of George Floyd has brought new awareness of systemic racism. Business leaders serious about ending racism need to look beyond forming a diversity, equity and inclusion committee or adding black faces to the C-suite. They must dive into the heart of racial capitalism and shake up the ownership structure of their business.
Anti-racist business leaders must expand the number of people who own productive assets, affording for the first time black and working-class people true access to the wealth their labor creates. An earlier generation of racial justice advocates in Cleveland reached a similar conclusion following the Hough Uprising of 1966.
After a boycott forced McDonald’s to allow sales to black franchisees, the black-led Hough Area Development Corporation (HADC) purchased several McDonald’s franchises in 1971 and held them through 1976. HADC aimed to sell shares of its holding company, Ghetto East, to local residents.
Unfortunately, before Hough residents were able to buy into the future prosperity of the city, an alternative version of this strategy, backed by the Cleveland corporate community, moved HADC in a different direction. Instead of prioritizing collective ownership, this competing vision prioritized ownership by a few wealthy black individuals. While ‘black capitalism’ enriched some black families, it left many others without assets as deindustrialization, white flight and other deliberate disinvestment hit Black Cleveland hard.
Nevertheless, HADC’s original strategy of “community capitalism…served a larger social movement, and challenged the binary relationship of owner exploitation and low-income wage earner,” wrote Dr. Nishani Frazier, professor of history at Miami University of Ohio, in “The Business of Black Power.” Dr. Frazier also authored a book on the topic, “Harambee City.” One reason HADC needed to promote community and worker ownership was because the stock market, ostensibly a vehicle for public ownership, has failed to create viable pathways for access to wealth creation.
Half of American families own no stocks, even including retirement portfolios. Of all stocks owned by Americans, 84% are held by 10% of U.S. families. Of those households, 96 of 100 are not black. Given this maldistribution of wealth by race, it’s little wonder many protesters today view central business districts as symbols not of shared prosperity, but of exclusion.
Community and worker ownership has seen national support as well. In 1984, social justice warrior Ronald Reagan promoted democratic ownership when he signed a law incentivizing Employee Stock Ownership Plans (ESOPs).
Today through ESOPs, 14 million workers own a piece of their workplace. Worker cooperatives, another form of democratic ownership, go further and extend democratic principles into day-to-day workplace operations.
Community and worker ownership strengthen the connections between businesses and the communities in which they occupy space. Where democratic ownership doesn’t seem possible, business leaders can commit to a personal journey of moral transformation.
Business leaders committed to fighting racism must invert the pyramid of traditional business structures. They must recognize this moment for what it is: a call to deeply question the fundamental structures of our economy, and an opportunity to create a more equitable and just future.
Read more from Mordecai Cargill, Indigo Bishop, Adam King and Jonathan Welle here at The Business Journals