Race, Entrepreneurship, and the Inner City
Butler, John Sibley, USA TODAY
THROUGHOUT the U.S., on talk shows and in newspapers, discussions are on-going concerning the condition of blacks within inner-city America. These people represent less than one-third of the black population, yet get nearly 100% of the publicity about blacks in America. Every four years, presidential candidates promise to change their conditions. This theme resounds in political races on the local and state level as well. The questions always are: How can this population establish a degree of economic security or how can the central cities be rebuilt? How can hope be created in a sea of seeming hopelessness?
Research in the area of race, ethnicity, and mobility is providing a revised picture of what it takes to be successful in American society. For decades, academics, as well as the general public, viewed the picture of success by race and ethnic groups as going through a process that began with them starting on the bottom of the economic ladder in bad jobs, then working up to better ones. The emphasis on the relationship between job type and time in the country has documented the treatment of race and ethnic mobility in textbooks of different disciplines.
This model of mobility has produced excellent results in academic journals and textbooks and has come to dominate the thinking about what it takes to be successful in America. Usually, it is called the Anglo conformity or assimilation model.
Basically, the model notes that there is a core culture in the U.S. that historically controls the best jobs. As immigrants arrived, they gravitated toward this dominant culture, based on the need for work. They gave up their old ways, became assimilated into American society, and thus were able to obtain better jobs in future generations.
This model worked well for European groups and produced a nation that could be known simply as "white America." Although there are rumblings about the importance of different cultural traditions among ethnic groups, or multiculturalism (the importance of being of Irish, Italian, German, English, etc. descent), the basic distinctions still revolve around race. The categories continue to be white and non-white (or black), and these racial groupings have driven the politics of race. During the days of segregation, only "white" and "colored" signs were prevalent in public places. Research on the health of the population by the National Science Foundation divides the categories into "white" and "African-Americans" for comparative purposes. National issues of crime do the same. No one ever labels a German-American or other hyphenated ethnic for creating racial tensions in an American city. The point is that the assimilation model has worked well for people who have white or Caucasian biological characteristics.
While this model has been dominant, research is starting to show some interesting results that relate to other models of incorporation into society. The new model is not new at all, but takes its inspiration from research in the late 1800s and early 1900s on self-help among ethnic groups. In The Protestant Ethic and the Spirit of Capitalism, sociologist Max Weber noted that national or religious minorities who are in a position of subordination to a group of rulers are likely--because they are excluded from opportunities in the larger society--to be driven with peculiar force into economic activity. Their best members seek to satisfy the desire for recognition in this field since there is no opportunity in the service of the state. Weber pointed out that this has been true of the Poles in Russia and Eastern Prussia, the Huguenots in France under Louis XIV, the Nonconformists and Quakers in England, and the Jews for 2,000 years. Thus, he recognized the importance of economic activity, or small-scale entrepreneurship, for groups that have experienced discrimination based on race or ethnicity.
Weber's ideas serve as the intellectual springboard for scholars who study groups that incorporate into countries through the use of self-help activities. Included are the importance of small enterprises, development of community organizations, building and maintaining of private schools, and an emphasis on the higher education of children. In my book, Entrepreneurship and Self-Help Among Black Americans: A Reconsideration of Race and Economics, I note that a self-help analysis moves the emphasis away from such topics as prejudice and discrimination to the process by which groups develop, maintain, and expand business enterprises within the economic structure. Indeed, it is the presence of prejudice and discrimination that drives economic and other self-help activities among groups that have adjusted by concentration on self-help activities.
The research on self-help activities and successful economic adjustment to America is creating a new paradigm, or way of thinking, among researchers. The findings of this research should enhance the understanding of how certain groups and individuals never fall, in the long term, to the bottom of the socioeconomic ladder. More importantly, the prevalent theory coming out of this self-help research is proving to be universal in nature; it appears to work for groups regardless of race or ethnicity. Self-help is defined as an emphasis on business enterprises and the building of other community organizations such as voluntary associations and private educational institutions.
Concentration on small enterprises
The research on ethnic groups can be seen in the work of scholars like Edna Bonacich and John Modell. In a 1980 book, The Economic Basis of Ethnic Solidarity, they show how the Japanese on the West Coast, at the turn of the century, achieved a sense of economic stability by concentrating on small enterprises. Although the group arrived in the U.S. almost penniless between 1889 and 1907, there were over 3,500 Japanese-operated small enterprises in the western states by 1909. Of these, 473 were in Los Angeles, 474 in Seattle, and 545 in San Francisco. In addition to these shops that were in urban areas, the group went heavily into agriculture. Between 1905 and 1925, farm ownership increased from 2,442 to 41,898.
In Latin Journey, Alejandro Portes and Robert Bach analyze the adjustment of Cuban refugees and Mexican immigrants for the same time period. The Cubans were successful in producing, in the authors' terminology, an ethnic enclave that fostered and developed small enterprises. These enclave enterprises provided jobs for many Cuban refugees, and a strong tradition of the higher education of children was started. This emphasis on higher education allowed some second-generation Cuban-Americans to compete for the best jobs in the country. On the other hand, Mexican immigrants followed the pattern of going into the labor market and ending up in jobs on the bottom of the economic ladder. Thus, they followed the pattern of many immigrants who did not concentrate on the importance of developing small-scale enterprises.
In the winter, 1992, issue of the National Journal of Sociology, Min Zhou and Carl L. Bankston III reported data showing variation among Asian immigrants based on whether or not the group concentrated on entrepreneurship. They found that Chinese and Korean immigrants, because they emphasized the importance of establishing small enterprises, were ahead of the Vietnamese in terms of over-all economic stability. When the Vietnamese first arrived, they depended heavily on public assistance and aid from private voluntary organizations, such as those found in churches. More recently, the Vietnamese have started to develop their own emphasis on small-scale entrepreneurship.
Perhaps no other group has adjusted better, through business enterprise, to hostility and discrimination than the Jews, a fact that is well-documented, especially in the European tradition. In the U.S., because of anti-Semitism, the turn-of-the-century Jews developed a strong tradition of enterprise. In Jews, 1870-1914, sociologist Moses Rischin notes that, by 1911, Jews ranked first in 26 out of 47 enterprises listed by the Immigration Commission. By 1914, they were among the top cigar packers, printers, bakers, hatmakers, tailors, and watchmakers. They also were active as jewelers, butchers, photographers, and dressmakers.
As a result of the emphasis on entrepreneurship, self-help groups often outperform members of the "larger society" in educational and income attainment, a fact that was documented as early as 1967. In that year, it was found that Japanese-Americans reported family incomes significantly higher than the average American family's income. Their nearest competitor was Eastern European Jews, a group that also placed an emphasis on entrepreneurship and small enterprise. It is not surprising that many of the most recent entrepreneurial groups in the U.S., such as Asians in general, report a higher average income than most Americans.
An emphasis on the higher education of children and institutional building is a component finding of the research on self-help groups. In response to the religious and ethnic hostility of the larger society, self-help groups have developed private school systems, which sometimes extend from elementary school to college. Thus, when their offspring enter the labor market, they tend to enter as professionals who are entrepreneurial. Although their parents were small shopkeepers in the service sector, an emphasis on the higher education of children almost assures their entrance into professions such as law, medicine, and accounting.
In the mid 1980s, I started to ask questions about the relationship between business enterprises and the state of blacks in America. To see if the self-help model of adjustment might apply to blacks, I began to examine the literature on black enterprise. After reviewing it, I concluded that most, if not all, of the theories that guided the development of the ethnic literature already had been specified in research on early black Americans. If the emphasis on immigration were removed, the theories would be almost identical. It is interesting that from a theory-building point of view, this literature is not utilized by scholars of ethnic enterprise and entrepreneurship. This is like writing about evolution without mentioning Darwin or the development of the airplane without giving consideration to the Wright brothers. Thus, in the quest to test a theory, to see if it applied to blacks, a huge gap in the ethnic enterprise literature was discovered.
The concern with black enterprise in America has its roots in W.E.B. Dubois' Economic Co-Operation Among Negroes (1899), and it continued in Henry Minton's History of Negro Business in Philadelphia (1903). The importance of black enterprise became full blown in Joseph Pierce's Negro Business and Business Education (1947). These works are important because they document the institutional building among black Americans and their great concentration on the importance of education. In fact, the differences in educational attainment and economic stability among black Americans today largely can be determined by their relationship to the builders of the self-help tradition in the U.S.
The first indications among blacks are the scattered documents of enterprise found among the free black population before the Civil War. These blacks, like other excluded people around the world, developed strong entrepreneurial enclaves in developing cities. As with the Jews of Europe, they were forced to engage in enterprises in order to develop an economic anchor in sometimes hostile environments.
Philadelphia was one of the early entrepreneurial enclaves of free blacks. "A Register of Trades of Colored People in the City of Philadelphia" listed 656 persons engaged in 57 different occupations. Included in these trades were about 15 cabinet makers, 15 tailoring shops, 30 tanners, five weavers, and nearly 100 hairdressers. The pride of this early entrepreneurial community was the sail-making factory of James Forten. After serving in the Revolutionary War against the British, he returned to Philadelphia and made millions designing and manufacturing sails for the big ships that sailed on the open sea. Between 1766 and 1841, he employed more than 40 workers, black and white.
Another important figure in this city was Robert Bougle, the creator of the catering business. He was so successful at this new venture that a major "ode" was written about him by Nicholas Biddle, the leading financier of Philadelphia and president of the Bank of the United States.
Free blacks created business communities in other pre-Civil War cities. During a convention of black business organizations in 1853, it was reported that real estate holdings in New York City had increased by 100%. In 13 counties of New York State, black property was worth more than $1,000,000. The investments in business start-ups were reported as New York, $775,000; Brooklyn, $79,000; and Williamsburg, $4,900. In New York, as in many pre-Civil War cities, blacks owned major eating enterprises in the business district. All major restaurants on Wall Street were operated by free blacks.
Farther west, Cincinnati was a center of economic activity for free blacks prior to the Civil War. In 1835, it had a black population of around 2,500. Of these, about 1,195 were ex-slaves. When purchased from slavery, mostly by black entrepreneurs, blacks moved to Cincinnati and utilized their skills (slaves were the most skilled population in the South) to start enterprises. By 1840, the city's free black population controlled more than $200,000 in property. By 1852, that property value had increased to more than $500,000. This type of pattern was realized in Cleveland and Columbus, Ohio, as well.
These free black business communities developed the same attitude toward education and economics as other ethnic groups, whether it was the Jews in Europe or the Asians in America. They were responsible for developing educational institutions and a value for education. In Black Property Owners in the South 1790-1915, sociologist Loren Schweninger expressed surprise to find that free blacks placed a strong value on the education of their children, a value that whites as a whole had not developed. After careful analysis, he concluded that among 200 free black families in one Louisiana parish, only one percent was illiterate. In the same parish, 20-25% of the white families were illiterate. When viewed in the tradition of the relationship between enterprise and education throughout the world, this finding should not have been surprising.
After the Civil War, black freedmen were faced with legal discrimination in the South and discrimination in the North. Between the turn of the century and the 1950s, many blacks migrated to the industrial North. Some, like many Americans, found excellent jobs in the growing industrial complex. Certain blacks who remained in the South, because of strong legal segregation, turned inward and created excellent business communities. In a sea of segregation, they built and supported more than 200 private elementary and high schools. They nurtured private colleges and universities such as Morehouse, Clark, and Spellman in Atlanta, Dillard in New Orleans, and Hampton Institute in Virginia. They created community organizations that started a tradition of emphasis on education and excellence for their children that can be seen today. Blacks in this tradition are likely to be third- and fourth-generation college graduates.
At the turn of the century, there developed in Tulsa, Okla., a business district called Greenwood. In 1921, whites invaded the district and burned down 36 square blocks of that community. Although the incident allegedly was touched off by a black worker stumbling against a white female on an elevator, the historical record shows that certain elements of the white business population coveted the land leases of blacks. Because the latter would not sell, the destruction occurred. This experience is similar to other excluded groups, such as the Jews in Germany and the Ebos in Africa; hostility is generated toward a successful group because of its economic accomplishments. Another example is the experience of Asians in Los Angeles, who suffer destruction of property by some members of the black and Hispanic community.
By 1928, the blacks of Greenwood had rebuilt their community. They continued a strong tradition of building the values of self-reliance. Today, the area contains five blocks of mall-like enterprise, and serves as a reminder to the tradition of self-help and business activity within the history of black America. The Greenwood Chamber of Commerce is working hard to make sure that the historical significance of the black business district is not lost.
The black community of Durham, N.C., developed a strong entrepreneurial community at the turn of the century. In the 1960s, urban renewal destroyed the community by running an expressway through the old business district, called Hayti, a complete community that blacks developed in the face of intense discrimination. Today, however, black Durham has come bouncing back with new shopping malls, development plants, and manufacturing. The people responsible for the economic development of the black community draw their strength from what their parents, grandparents, and great-grandparents accomplished. The generation at the turn of the century created the North Carolina Mutual Life Insurance Company and the Mechanics and Farmer's Bank. These institutions still stand as the cornerstore of the economic strides of the black community. The Durham Business and Professional Chain, that black Chamber of Commerce, is in its fifth decade as an organization. Its purpose is to promote the growth and development of black businesspeople and professionals through cooperative effort and unselfish service.
The historical significance of the old black business districts of the South, some of which are extinct, is that they laid a value foundation for future generations of a segment of black America. Like Eastern European Jews and turn-of-the-century Japanese on the West Coast, these blacks are more likely to be in their third and fourth generations of college graduation. A significant number of black students, in both traditional black schools and those that were integrated two decades ago, are sons and daughters of the people of this tradition. Although they are more likely to be southern in origin (because of the presence of black colleges and universities that were started in the late 1800s), some also are northern. These blacks, the products of generations of success in a racially hostile society, continue to react to racism and discrimination by concentrating on the education of children and business enterprise.
At this point in history, there are many black communities that have fallen into decay. The government has spent billions of dollars in public aid to try to reconstruct them. A welfare establishment has developed that has had the effect of servicing the black poor, rather teaching them the elements of self-help, elements that are so much a part of the black experience. Politicians and ministers also have replaced businesspeople as role models in communities. It is not that these professions are not important, but it is true that they have an emphasis on "fairness," rather than the economic development of black communities. Nevertheless, the success of any group that has experienced oppression must develop communities around the principle of business enterprise, whether small or large. This relationship has been proven empirically for excluded groups around the globe. Thus, black communities must begin to draw on the strong, albeit neglected, tradition of entrepreneurship and institutional building laid by blacks in the 1700s and immediately after the Civil War.
The people who started the civil rights movement came from strong communities. Martin Luther King, Jr., who symbolized the movement, was reared in a strong, safe black neighborhood. He was part of a generation of black college students who owe their educational attainment to their parents. In 1937, sociologist Charles Johnson's The Negro College Graduate revealed that black families who elected to send their children to college were spending 70% of family income on their offspring's higher education. He detailed the sacrifices that families had to endure to make the college experience a reality for their children. These sacrifices cut across families who worked as domestics, laborers, and professionals. Johnson noted that most blacks who were attending college in 1937 represented the second generation of higher education matriculation. Although colleges and universities throughout the North made a contribution to the number of black college graduates in 1937, private and public black schools of the South produced the majority. Schools such as Hampton Institute, Dillard, North Carolina Central, and Shaw are four of the more than 60 universities that produced college graduates.
The key to rebuilding portions of black America, especially the central cities and other places where hope is low, lies in the often-forgotten self-help tradition of black Americans, the group that created this phenomenon in American society. That history is not forgotten by all black, especially those who were reared in the self-help tradition. Research shows that these blacks today--representing about 12% of the black population--are more likely to be third- and fourth-generation college graduates. They are responsible for maintaining the community organizations and values that nurtured their parents and grandparents when segregation was systemic. Like today's Koreans and generations of Jewish-Americans, they understand the importance of business enterprise and education in a society where race can be problematic. Many are second- and third-generation professionals because of the self-help activities of their foreparents, and have lived rather comfortably in a society that is known for discrimination.
In order to rebuild many black communities (not all are in disarray), they have to be grounded in the self-help tradition. This means that, if the public education system has turned into a detention center, rather than a place of learning, private schools should be created. It means that when an individual does not have the credentials to find an excellent job in the competitive market, he or she must concentrate on the establishment of small enterprises. It means that the culture of the inner city will not represent the whole of black America. The black college tradition, the history of black enterprise, and safe communities are just as much a part of black America as the social disorganization that are presented on television and other parts of the media.
New leadership must emerge
The revolution in entrepreneurship must come from blacks in the central cities who have few opportunities. Because the current black "leadership" is concerned, for the most part, with things that do not make a difference, new leaders will have to emerge who understand the relation between small business enterprise, economic stability, and the education of children. These leaders, who can come from the ranks of all economic and professional sectors, must understand that business enterprise is more important than worrying about whether or not the group is called African-American, black, or Negro. (Actually, Negroes have the most distinguished record of all the historical names that have been used. Between 1870 and 1930, they created more than 300 black banks, over 400 private schools, and stable communities. They were part of a black America when 70% of all families were intact, with a wife and husband in the home.) The new black leaders also will have to understand that no one really is interested in strong black communities except blacks themselves.
At one time, people felt that business enterprise could not be done in these areas, but the immigrant groups arrived and recreated the tradition of black enterprise for themselves. Throughout the U.S., Asians, Lebanese, and Africans make small enterprises blossom in previously depressed areas. The lessons that were noticed by ethnic scholars such as Weber once again are being played out in an advanced society. It must be understood that in a society where credentials are important, the trump card for success is community entrepreneurship.
Leaders already are evolving who are creating this new emphasis on self-help. Robert Woodson of the National Center for Neighborhood Enterprise has dedicated his life to the development of businesses and other institutions in places where hope is all but forgotten. He has created a national agenda that focuses on the concept that "poor" people can create small enterprises and community institutions. The Rev. "Buster" Soaries, who ministers to more than 5,000 people in New Jersey, has a church that combines the importance of religion and self-help. In addition to economic development, the church has established an outstanding tutorial service for children and is sending them to college in busloads. Kimi Gray, a former welfare recipient, helped to form the Kennilworth Park Side Resident Management Cooperative in Washington, D.C. This community, once drug-infested and exhibiting all of the signs of urban decay, now is a model of cleanliness and excellence. With an understanding of the relationship between self-help and the future of children, this community has sent more than 800 children to college during the last seven years. Toni McIlwain of the Raven Dale Community Association of Detroit has been successful in reducing crime by more than four percent. The burning of homes during Detroit's feared "Devil's Night" (Halloween) has been reduced under her leadership.
There will be many opponents of the recreation of the self-help tradition among blacks in the central cities. Sometimes, this opposition comes from people who do not understand the importance of enterprise that was established by blacks in an earlier time and do not realize that many successful blacks today are cut from this cloth. Opposition also will come strongly from those who mix the importance of self-help with political issues of conservatism and liberalism, which have nothing in common with these self-help traditions--indeed, most self-help immigrant groups stay out of politics. Recently, a PBS show that concentrated on blacks who were interested in keeping the neighborhoods clean, starting business enterprises and institutions for their children, and saving money to make sure that their offspring went to college was titled "Black Conservatives." This is somewhat ironic, since these things are what Jews in Europe, free blacks of the pre-Revolutionary period, and new freedmen concentrated on in order to live in societies that had provided them opportunities. There is no doubt that, if black Americans concentrate on the importance of self-help activities, their children will be the truly advantaged in the future.…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Race, Entrepreneurship, and the Inner City. Contributors: Butler, John Sibley - Author. Magazine title: USA TODAY. Volume: 123. Issue: 2596 Publication date: January 1995. Page number: 26+. © 2009 Society for the Advancement of Education. COPYRIGHT 1995 Gale Group.