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The Economics of Race

A visit with Robert Weems, Professor, History Department

By LuAnne Roth
Published: - Topics: history race Nixon economics African American

For two decades Robert E. Weems, Jr. has been studying interrelated aspects of African-American business and economic history at levels both local and national. The MU professor of History observes that the history of black economic development in Columbia, Missouri, with its once-thriving black business district, stands as a microcosm of national trends. “For a variety of social and economic reasons,” he notes, “we literally see black businesses disappearing from the landscape of America.” Weems’ first book, Black Business in Black Metropolis: The Chicago Metropolitan Assurance Company, 1925-1985 (1996), based on his dissertation research, explored the factors underlying this change. The history of this now-defunct black insurance company in Chicago has implications for the economics of race in America in general.

“The black insurance industry arose out of . . . Jim Crow,” explains Weems. Following America’s Civil War, Prudential and Metropolitan Life were relatively small start-up companies that insured the ex-slave population “on an equal basis with white workers.” In the 1880s, however, when America began to re-segregate based upon Jim Crow laws, these same two companies, among others, began charging blacks higher premiums than whites for the same amount of coverage, and Prudential eventually cut all ties with the black community. “So it was in this setting,” Weems observes, “that we see [black-owned] companies like Chicago Metropolitan enter to fill this niche.” However, in the 1950s the economic status of African Americans in the U.S. was improving, a development that prompted the larger companies “to take another look . . . at the black consumer market” and to begin aggressively pursuing it. Companies like Prudential raided the black insurance firms of their best black agents to sell policies in the black community. Unable to compete with larger white companies because of economies of scale, black firms began to disappear. Here’s how Weems describes the process: “On one level, we see white companies making great inroads among the African-American consumers. But we don’t see black companies being able to make similar inroads in the mainstream community. In economic terms, [this] one-way situation…is not true desegregation.” Thus, he concludes, “the black insurance industry today is literally struggling to survive.”

After examining this phenomenon of so-called “desegregation,” Weems began to notice how corporate America profited from the Civil Rights Movement. The result was his second book, Desegregating the Dollar: African American Consumerism in the Twentieth Century (1998)—a comprehensive look at the African-American community as a consumer base in the U.S. Finance and general economics played a greater role than had heretofore been realized: “When we look at the Civil Rights bill of 1964 or the 1960s in general, there’s this notion of it being an era of liberalism, that America was morally transformed during the ‘60s and that’s why you had the Civil Rights legislation. The evidence is very clear that growing African-American economic power contributed significantly to the civil rights legislation.”

Consider, for instance, the economic impact of “The Great Migration,” the mass movement of African Americans from the rural south to urban areas in the north. “Before the Great Migration, blacks were not considered to be a significant consumer market worth appealing to,” explains Weems. In fact, companies could afford to use racist images and perhaps, by insulting blacks, they sold even more successfully to white people. But “as African Americans began to proliferate in larger cities, companies had to take a second look at this market.” This reassessment of African Americans as a consumer base is apparent in changing techniques of advertising, which gradually improved its depiction of African Americans. In the end, it remains a bitter irony that the Civil Rights Act of 1964 ultimately helped white businesses more than it helped black consumers; in fact, one ramification of the Act, as described above, was the disappearance of black businesses.

On a related note, Weems’ current research project, in collaboration with Lewis Randolph of Ohio University, looks at the history of U.S. government interest in black business development, with a special focus on Richard Nixon’s famous “Black Capitalism” initiative. During the late 1960s and 1970s, he notes, “there was unprecedented national discussion” about how to better bring African Americans into the American mainstream. Among the many proposals being put forth, many argued that “if we’re talking about a truly desegregated society, we not only need to see more African Americans having more access to the workplace, but also having access to being entrepreneurs.”

While examining Nixon’s “Black Capitalism,” Weems and Randolph have noted interesting nuances behind the administration’s not-quite-altruistic motivations. “Political initiatives . . .just don’t fall out of the sky,” Weems reminds us. “[Policy makers] don’t just wake up one day and decide that black people need more economic development in their community.” Rather, due to increased urban disorder, race riots, and rebellions during this period, the government “was justifiably concerned” about how to stem urban unrest. One proposed idea was that stimulating black economic development might likewise stimulate people to take more ownership of their community. Hence, “we see Black Capitalism as a domestic version of the Nixon administration’s policy of détente in foreign affairs, a very shrewd way of making certain concessions to diffuse some of the black urban unrest.” In addition to quelling unrest, Nixon’s interest in Black Capitalism was also “a pragmatic anti-communism impulse,” since he believed that racial discrimination hurt the U.S. not because it was morally wrong, but because it “gave the Society Union propaganda that it could use against this country.”

Today, the veneer of black success, as reflected by prominent black entertainers and athletes, belies the ongoing economic deprivation that characterizes many sectors of the black community. “If you didn’t know better,” argues Weems, “you would think that black folks are doing great in this country,” yet the same dramatic disparity pervades the country. Weems doesn’t believe black scholars “can afford to be doing research just for the sake of doing research. It really has to have some type of ‘real world’ implications, or it’s a waste of time to me.” Along those same lines, a project about which Weems speaks passionately falls into this realm of applied history. “One of the scariest things I found in researching Desegregating the Dollar,” he recalls, “was that as early as the 1930s, corporate marketers figured out that black people had an especially acute case of status anxiety” because of their particular history of slavery, from which they were “subconsciously trying to distance themselves.” In that vein, Weems engages students regularly, castigating the conspicuous consumption celebrated in the realm of hip-hop as “bling-bling.” “The real players,” he tells these youth, “are the folks on Madison Avenue who are manipulating them.”

“This isn’t just a harmless enterprise,” Weems warns. The average child today is exposed to 50% more marketing than previous generations. Programs such as the Cartoon Network, geared specifically for children, condition young people to participate heavily in consumer culture. “The best way to empower yourself against being totally manipulated,” he cautions, “is to turn off the television . . . or watch it on a limited basis, because every time you turn on the television you’re inviting corporate marketers to manipulate your mind any way they see fit.” Weems tells students that if they want to stop being “played,” they need to look at the dynamics of consumption in this society. Then they can make conscious choices.

The flipside of being a scholar who spends so much time looking at the past is that Weems cares a great deal about the present and the future as well. “I’m not a preacher,” he humbly disclaims; “I’m just a historian who sees it as his job to let young people know this is the reality of the society they live in and that they have a choice of how to respond.”