The last couple of my blogs have dealt with a very important topic; one that has had a huge impact on my life. A week ago we had a very tough discussion in one of my classes, but I will tell you it has changed the way I look at things. In today’s blog I want to discuss the market and how privilege can be used in positive ways to lead to a better standard of living for all. To accomplish this huge task I want to discuss what the market is, and its centrality to our society, and how its elements function. I will then discuss actions that can be taken to create equal opportunity, while not focusing on equal results.
Zulema Valdez, in her book “The New Entrepreneurs: How Race, Class, and Gender Shape American Enterprise,” eloquently describes the nuances of America’s market economy. She begins by describing it as “embedded and enmeshed in institutions.” I think what she is describing is the market system. In describing the Market,Valdez fisr identifies the element of market exchange. In my classes I describe this by using an experience I had in Kenya, Africa. While we were vacationing there we hired a cook named Jerome. We told Jerome we wanted to have fish for dinner with fresh fruit. Jerome and I then traveled to a palm tree where the sellers were located. The sellers were selling fruit and fish for a certain price, and I as the buyer went there to buy the product I wanted. The seller had set a high price, and I as the buyer did not want to pay the high price, so we negotiated an agreed too price. I gave the seller money, and the seller gave me a fish and fruit. Through this process both of us were better off. The seller made a profit and I purchased the product I wanted. This is what the market exchange is all about.
The second element of this embedded and enmeshed process involves reciprocity. Valdez describes this as “long-term symmetrical social relationships that elicit trust and obligation.” When I teach financial classes I will always discuss the fiduciary responsibility of businesses. Fiduciary is a world that means trust. The agents of the company, managers, have a fiduciary responsibility to the principles, owners, to properly use the owner’s property to produce a maximize return on their investment. However, I also discuss how important all stakeholder relationships are, and the importance of trust between leaders and followers. Reciprocity is critical to the evolution of the market.
The third element involves the concept of redistribution. Or as Valdez states, “asymmetrical collection, allocation and distribution of commodities by a central actor (that is the state).” She later describes this as an avenue of economic integration involving the collection of taxes that are subsequently redistributed to the “members of the polity.” This “government capital” will benefit people via “government lending programs to targeted individuals.”
When I teach economics, I always state that the market system is amoral. It is neither good nor bad, it just is. However, I also tell my students that what makes the market system good or bad is how the process is administered, or what is allowed to occur. Valdez states, “The American market economy is embedded within the larger social structure, made up of three interlocking systems of oppression and privilege, capitalism, patriarchy, and White supremacy.” I know some of my readers will bristle at this quote, but let me explain what is meant here.
Think back to how our country started. George Washington, Thomas Jefferson, and others were all male and all white. Our country was started by individuals who understood the “white-Euro-centric system,” which they brought to this country adjusting the system for more of a democratic emphasis, but it was still a white male dominated process. Then via policy, the Monroe Doctrine and Manifest Destiny, these leaders marched across this continent to create the great country we are today dealing with indigenous people in ways that we look at today as tragic. This history that I am describing, is, and there is nothing we can do about changing what has happened. This is not a value statement of right or wrong, it is just recognizes that our current social systems are still heavily guided by our Euro-centric beginnings.
I want to focus this discussion on the most embedded and central activity within our social interchange, the market, which is where we continue to see the influences of our cultural beginnings. Social stratifications based on wealth are a reality. There are still some folks that have an advantage over others when it comes to economic opportunity. Maybe some of us would be more open to this discussion if we remove “white” from the phrase and just say privilege?
Those that own more property and wealth have more privilege. These individuals are usually more middle to upper-class folks. It does not mean that people cannot pull themselves up from lower classes, but it has become less likely that this will happen. Those that don’t have access to better education and financial resources are less likely to be able to start businesses. Valdez states that those that have more capital “the stronger and more profitable the business and the more powerful and privileged the would-be entrepreneur.” I do think this is a pretty big assumption and too generalized for my liking.
The fact is our economic system is changing, but maybe not quick enough. The levels of women in leadership have changed, as has levels of Latino and black leadership, within large organizations. However, it may not be fast enough; because the world is changing, and America’s dominance within the world economy is being challenged by China and others., therefore, how we look at diversity needs to change.
Where we see the greatest disconnect between those who are privileged and those who are not is in the area of small business. This is where the greatest need for change has been identified. This is where I strongly agree with Valdez. By using group-based social capital and redistribution processes we can create stronger and more equal opportunities for all entrepreneurs, not just those who were lucky enough to have been born in the suburbs instead of the inner city. This will not produce an equal outcome, but equal opportunity.
Because “entrepreneurial outcomes are positively influenced by who you know,” finding successful entrepreneurs, no matter what race or ethnicity, who are willing to mentor your future economic and social entrepreneurs is critical. I also think the academic process is critical. By training future entrepreneurs, and connecting them with mentors, we can positively influence the current system in a positive direction. And lastly, I think businesses and the government should provided low interest loans to all future entrepreneurs as a way to continue to provide fair and equitable opportunities in the future.
I will end this blog with words from Valdez. “Market capacity is the sum total of market capital, social capital, and government capital.” By combining these three elements, “market capital, which includes skills, education, and work experience as well as tangible material goods related to class background; social capital, a more intangible resource that fosters group-based solidarity, trust, and reciprocal obligations; and finally, government capital, or access to resources based on polity membership, such as a government loan or subsidy,” we can mitigate the systemic stratification deeply entrenched.
I think the biggest issue facing our country today is not Democrats versus Republicans, although I hate the incompetency of our current government at all levels, but the issue of the growing disparity between the wealthy and the poor. Where this can be, must be, addressed is in the market. I tend to think that large companies, like Walmart, should pay a livable wage. I also tend to think that if we help entrepreneurs have access to needed resources they will more likely succeed (this is a huge generalization, I know). And I also think, like Valdez, “Under conditions of market disadvantage, reciprocal or redistributive relationships may act as compensatory mechanisms that serve to augment entrepreneurial outcomes through the use of social and governmental capital.” Phew, I think I am done.
And that is my thought for the day!