"Race, Poverty, & Shared Wealth,"by Andrew Lamas September/October 2003 issue of Poverty & Race
What is the central fact of slavery?
Is it the degrading work, the objectification of human life, the denial of basic liberties guaranteed to others, the failure to exchange wages for work, the poverty of living conditions, the destruction of family and culture?
What distinguishes slavery is something else, and it is deeply embedded in our own economy.
The eminent historian Ira Berlin chronicles a meeting in Savannah, Georgia, in January 1865, of former slaves and free blacks queried by none other than General William Tecumseh Sherman and Secretary of War Edwin M. Stanton. In response to the most serious question of the day, George Frazier, an elderly Baptist minister and spokesperson of the group, arose and replied:
Slavery is receiving by the irresistible power the work of another man, and not by his consent, [while freedom] is taking us from the yoke of bondage, and placing us where we could reap the fruits of our own labor, take care of ourselves and assist the Government in maintaining our freedom.
The central fact of slavery—the theft of another’s labor—has long been the basis of production and unjust economic arrangements. This usurpation has long been understood as a threat to democracy. Oppression and inequality are inextricably linked. Modern oppressive systems—such as those historically informed by institutionalized racism and patriarchy—arise amidst and reproduce class hierarchies.
Most popular considerations of inequality, including poverty definitions utilized by the US Census, stress that inequality is all about income, not wealth. Recall the most influential book about poverty in the latter half of the 20th century—Michael Harrington’s The Other America; or turn to today’s bestseller about the working poor—Barbara Ehrenreich’s Nickel and Dimed. The first generated federal support for income security, while the second seeks living wages for the working poor.
Let’s review in more depth two other sources of evidence—from the classroom and the media—regarding the preoccupation with income inequality to the exclusion of wealth distribution.
Students on Inequality
Ask the following questions to your colleagues or students and listen for the responses:
Q: “What comes to mind when you think about inequality?”
A: “Race” . . . “Class” . . . “Education” . . . “Gender”. .
. “Globalization and Comparative Standards of Development.”
Q: “How would you explain this inequality to someone else?”
A: “Blacks labored as slaves for generations, and even today they earn less on the job than whites.” . . . “The rich are high-earners who can afford good neighborhoods and good educations for their children, who prepare for high-paying careers, while the poor—with low-paying jobs and inadequate public support—lack the means to meet basic needs.” … “Women’s work has not been historically valued; in the domestic realm, women have worked without pay; for work outside the home, they are paid less than men even in similar positions.” … “A large percentage of the world’s population labors for less than $2 per day.”
Q: “How will you know if progress is being made?”
A: “Inequality is about the inequality of income from work. Absolute poverty will be addressed, and improvements in relative equality of compensation will be achieved over time through private sector bargaining and governmental redistribution through taxation and transfers.”
Media on Inequality
I recently entered a variety of terms into the Google search engine and into the Lexis-Nexis database of more than 50 newspapers in the U.S. and worldwide. By linking these search terms (e.g., poverty, inequality, ownership, race, property, wealth, assets, capital, income, rich, poor) in all possible combinations, I was able to generate some rough evidence about popular conceptions.
Popular information sources generally frame issues of inequality and poverty by focusing on income rather than on wealth, property, capital, ownership or assets. For example, the overwhelming majority of charts, tables and graphs that depict inequality focus on income and not on wealth distribution. Moreover, analysis of selected text samples — including from the New York Times (during the previous six months, five years, and ten years) — indicates that income, when discussed in connection with inequality or poverty, typically refers to two kinds of income, viz., wages (primarily) and government transfer payments (secondarily). Journalistic accounts of poverty and race are much more often about income than about wealth, property, capital, ownership or assets.
In any given society, income inequality may reach a point where injustice arises and remedies are required. But from Thomas Paine’s Agrarian Justice (1797) to Melvin Oliver and Thomas Shapiro’s Black Wealth/White Wealth, we have been called to task for ignoring ownership and asset development.
At the present moment, opportunities for wealth creation by poor and working people are again endangered, with the rise of predatory lending, weakening enforcement of key federal laws (e.g., Community Reinvestment Act), the defunding of governmental programs (e.g., CDFI Fund for community development financial institutions, affordable housing programs) and waning foundation support for the asset-building initiatives of the past decade.
Strategies for Addressing Inequality
Under the banner of economic democracy, four broad strategies for addressing inequality are suggested by critical historical inquiry and progressive practice.
The first two strategies, noted above, are: Labor-Based Claims for Increases in Employment-Related Compensation and Citizen-Based Claims for Increases in Publicly Funded Transfer Payments. No doubt, labor and community organizing campaigns will continue the important work of asserting these claims.
The two other strategies, reviewed below, significantly focus on reducing wealth inequality: Labor-Based Claims for Shared Ownership of Capital and Citizen-Based Claims for Shared Ownership of Common Wealth.
Share the Wealth: Labor Owning Capital
"Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration."
Abraham Lincoln, “Annual Message of the U.S. President,” 37th Congress, Second Session, December 3, 1861
The cooperative and employee ownership movements are many, varied and global. The longstanding, transformative models in Italy and Spain are particularly noteworthy. In the United States, one of the many current streams of significance was initiated in Depression-era deprivations and the populist tradition of social reform.
Huey Long, the infamous Governor and US Senator from Louisiana, developed a comprehensive reform agenda that combined: (a) substantial government support for public works, education and health; (b) highly progressive taxation on income and inheritance; and (c) egalitarianism regarding income and wealth distribution.
Explaining his “Share the Wealth” platform in a national radio address in April 1935 (and using dollar amounts relevant for the time), Long said:
Here is what we stand for in a nutshell:
Number one, we propose that every family in America should at least own a homestead equal in value to not less than one-third the average family wealth. The average family wealth of America, at normal values, is approximately $16,000. So our first proposition means that every family will have a home and the comforts of a home up to a value of not less than around $5,000 or a little more than that.
Number two, we propose that no family shall own more than three hundred times the average family wealth, which means that no family shall possess more than a wealth of approximately $5 million—none to own less than $5,000, none to own more than $5 million. We think that’s too much to allow them to own, but at least it’s extremely conservative.
Number three, we propose that every family shall have an income equal to at least one third of the average family income in America. If all were allowed to work, there’d be an income of from $5,000 to $10,000 per family. We propose that one third would be the minimum. We propose that no family will have an earning of less than around $2,000 to $2,500 and that none will have more than three hundred times the average, less the ordinary income taxes, which means that a million dollars would be the limit on the highest income.
We also propose to give the old-age pensions to the old people, not by taxing them or their children, but by levying the taxes upon the excess fortunes to whittle them down, and on the excess incomes and excess inheritances, so that the people who reach the age of sixty can be retired from the active labor of life and given an opportunity to have surcease and ease for the balance of the life that they have on earth.
We also propose the care for the veterans, including the cash payment of the soldiers’ bonus. We likewise propose that there should be an education for every youth in this land and that no youth would be dependent upon the financial means of his parents in order to have a college education.
Note two points: (1) While entirely compatible with and fully embracing of an agenda reducing income inequality, Long’s commitments reveal a more fundamental analysis about the source of inequality, hence, the focus on property, ownership and asset development. (2) That he and the New Dealers eventually secured significant, enduring, income-related programs suggests that the focus on wealth inequality created space for addressing income security.
Long’s son, Russell (who became the powerful Chairman of the U.S. Senate Finance Committee), extended aspects of this agenda further into the 20th century, in no small part due to the influence of Louis Kelso and Mortimer Adler’s The Capitalist Manifesto, which promoted broadly held stock ownership. Russell Long’s crowning legislative achievement, in 1978, provided federal tax incentives for the establishment of employee stock ownership plans (ESOPs) in the country’s corporations, more than 10,000 of which have instituted a measure of employee stock ownership, though often as an additional worker benefit and not also as a transformative framework for democratizing corporate governance and broader social reform.
Jeffrey Gates, who for many years served as staff counsel to Long’s Senate Finance Committee, recognizes the broader significance of this legacy and is a leading proponent for addressing inequality and invigorating democracy through ownership plans. His long-time associate, Christopher Mackin, is at the leading edge of this effort as the C.E.O. of a most interesting manufacturing firm, TeamX, which was intentionally designed with employee ownership and union (UNITE!) representation. Marketing “SweatX,” a high-quality clothing line, its products are being purchased nationwide by, among others, university athletic departments under pressure from United Students Against Sweatshops.
Share the Wealth: Iraqi Citizens Owning Oil Resources
The privilege to claim the common wealth of humanity—water, airwaves, oil—issues from the same power and hubris that claims the fruits of others’ labor without consent; however, an extraordinary opportunity has arisen here to promote wealth equality among an impoverished people.
Hold President George Bush to his words: “The oil in Iraq belongs to the Iraqi people.” How? Establish a permanent fund, capitalized by oil revenues and paying annual dividends to each Iraqi citizen.
This plan is practical and immune to red-baiting, as the model has been operating successfully, with Republican and Democrat support, for more than 20 years in the United States, albeit in only one state. It is called the Alaska Permanent Fund (APF). Every autumn since 1982, dividends—derived from trust investments financed by oil revenues—are paid to every Alaskan. In 2002, approximately 600,000 citizens split equally approximately $900 million, yielding $1,540 for each woman, man and child. In recent years, these payments have generated an average of $6,000-$8,000 per Alaskan family. An additional portion of the trust’s proceeds are dedicated for state infrastructure projects.
While wealth accounts also exist in Norway, Chad, Kuwait and Alberta, the unique Alaska-style program was raised by U.S. Senator George Allen (Rep., VA) with U.S. Secretary of State Colin Powell in the U.S. Senate’s Foreign Relations Committee hearings on April 29, 2003.
Senator Allen: I would like to hear any comments or thoughts you may have on the constitution in Iraq of creating something like the Alaska Permanent Fund so that the people of Iraq indeed are the owners of not only their government but also of that key resource [oil].
Secretary Powell: The [Iraqi] people, if they had access to that money directly, as is the case in Alaska, to some of the money that has been generated by Alaskan oil, then they can make choices in their own lives with respect to how to use that money.
Later, according to the Los Angeles Times, Powell said:
[Alaska’s lawmakers have] educated me over the years as to the merit of this approach to the use of oil ... to compensate the people in a way that they can make a choice as to how the wealth of the state is being used. And I think that’s a concept that applies in the case of Iraq as well.
We know two things. First, sooner or later, American advisors will privatize Iraq’s economic institutions; and, as with Russia, the nation’s wealth will become highly concentrated overnight. Secondly, progressive measures aimed at reducing inequality are more likely to endure when they are universal, benefiting people regardless of economic status. The best example, of course, is Social Security, dramatically effective in reducing elderly poverty and defended across class lines.
Privatization need not result in gross inequality; in fact, if implemented pursuant to democratic norms, it can facilitate the egalitarian project. The Permanent Fund is the best, simple measure for leaving Iraq with a progressive legacy. What an irony it would be if an initiative to stem inequality in Iraq reawakened the American consciousness about its own common wealth.
The democratic, egalitarian mission can proceed against the logic of the market and through it as well.
Contemporary discourse about inequality nearly always focuses on income, and we are all the poorer for it. Inequality may be experienced, on a daily basis, as a lack of income. So, understandably, most people conceptualize inequality as income-based. This confusion results, in part, from the consumption-oriented nature of contemporary capitalist economy—where consumption, not production, is what we see when we look around.
Inequality, which most definitely is income-related, is not income-based.
Fundamentally, inequality is wealth-based. An engaged scholarship and a progressive politics must recognize the difference. The way in which wealth is produced, and the claims of ownership that are established at the points of production, are the defining determinants of wealth and income distribution.
With production out of view, and wealth out of mind, we have an impoverished theory and practice regarding inequality.
Wealth has two ultimate sources. The first is human labor, and the second is the environment of natural resources. Wealth can be plundered or wisely, sustainably and justly employed. As Lincoln acknowledged, in an economy like ours, “[c]apital has its rights.” But rights evolve over time on a contested terrain.
The fight about income needs to continue, employing the two strategies for addressing income inequality noted above: Labor-Based Claims for Increases in Employment-Related Compensation and Citizen-Based Claims for Increases in Publicly Funded Transfer Payments.
The fight about wealth needs to be engaged. To repeat: The two strategies for addressing wealth inequality are Labor-Based Claims for Shared Ownership of Capital and Citizen-Based Claims for Shared Ownership of Common Wealth.
What a tragic irony that contemporary racial inequality—whose source is undeniably rooted in an unjust system of wealth accumulation—is largely understood today as a matter of income. Emancipation awaits.
Andrew Lamas is on the faculty of the Urban Studies Program at the University of Pennsylvania, where he teaches courses on community economic development, ownership theory and social welfare policy. He is a founding board member of the Center for Community Self-Help in Durham, NC and of the Reinvestment Fund in Philadelphia, PA. firstname.lastname@example.org
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