The American Political Economy of Credit/Debt and Global Racial Capitalism

• In Event: Inequality, Race, and the Politics of the Fringe Economy

Abstract

This paper brings together three trends within the burgeoning field of American Political Economy: The acknowledgment that American capitalism is racial capitalism, the centrality of credit/debt in the American political economy, and a comparative view of the political economy that puts America in dialogue with the world. Economic crises bring to the surface relationships that, during normal times, may be submerged. The paper uses the case of the Great Recession and its aftermath as a vantage point to explore how the American political economy of credit/debt is part of a global system of racial capitalism.

In The American Political Economy (2021), Hacker, Hertel-Fernandez, Pierson, and Thelen state that “American capitalism is, and has always been, tied up with ‘racial capitalism’” (27). To support this claim, Hacker et al. cite works from political science (Dawson and Francis 2016, Harris and Lieberman 2013), stratification economics (Darity, Hamilton, and Stewart 2015), African American studies (Taylor 2019), and legal studies (Baradaran 2019, Rothstein 2017), but do not provide a definition of racial capitalism or elaborate on how APE scholars might use this theoretical approach. After surveying the literature on racial capitalism, I propose defining it as accumulation through dispossession naturalized by intersectional racial privilege. This definition preserves key features of Cedric Robinson’s canonical formulation and uses the concept of intersectional racial privilege, developed in my own work, to conceptualize racial privilege in the present as proximity to the enduring echo of the global feudal-colonial ancien régime. Driven by the forces of landownership and speculation, financialization and the rise of global credit/debt have been a return to power for these interests. Unlike narrower concepts of race/ism, intersectional racial privilege captures the country-specific and global dimensions of race, facilitating cross-national comparisons.

The paper then surveys the literature on how racial capitalism contributed to the Great Recession in the United States through predatory lending to communities of color and was present in its aftermath through the destruction of Black wealth via the fire sale of “distressed assets.” The paper then considers comparative and global economic perspectives on the Great Recession, noting that racial politics are somewhat missing from these analyses. I apply my conceptualization of intersectional racial privilege to show how patterns of racial capitalism can be recovered in the comparative and global economic literature. The paper concludes by arguing that a racial capitalism lens reveals the importance of the residual feudal-colonial ancien régime in crashing much of the global economy during the Great Recession and, despite this, benefitting in the aftermath to retain privilege. Worldwide, the average share of national income of the top 1% peaked at 20.9% prior to the Recession in 2007, fell to only 19.5% at the Recession’s nadir in 2009, and has not dropped below 19% since. This is an amazing retention of the income gains of the top 1% relative to their low point of 15.6% in 1970 (World Inequality Database). The paper shows that the financialization and speculation that drove this rise in inequality and allowed it to persist through the Great Recession are racialized processes.

Author

• Tess Elizabeth Wise, Wake Forest University