The Impact and Malleability of Money Design

Christine Desan –

9780674970953Mehrsa Baradaran’s book teaches us that money has a color, an arresting proposition to fans and foes of capitalism alike.   As she points out, economic orthodoxy posits that the transactional medium is itself a formal instrument:  money expresses but does not affect the value of the substances it measures.  Critics of that orthodoxy agree even as they bemoan the results:  money denies through its very impersonality the social substrate of exchange.  Against that commonsense, Baradaran directs us to consider how the institutions of money creation in the United States – commercial banks – have systemically originated money in white hands over decades.  That is, considering money as a process – asking how value is packaged into the everyday units we call dollars and injected into circulation – reveals that we have designed a market that is racially discriminatory in its very medium.

Baradaran challenges us to recognize how much determinations about money’s design matter.  That proposition is particularly striking because they are also remarkably malleable:  altering the institutions that deliver credit in money can change the way people and groups relate to one another.  I want to underscore Baradaran’s argument about the practice of black banking by exploring an alternative vision.  Only when the monetary project of the agrarian populists failed did Americans settle on the exclusionary system that Baradaran describes.  The contrast suggests that designing money is shaping community; it can bring people together or set them at each other’s throats.

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Black Proprietorship and Crises of Value

Shirley E. Thompson –

9780674970953By shedding historical light on the development and practices of black banking, Mehrsa Baradaran’s excellent and thought-provoking The Color of Money demystifies some fundamental free market myths and strongly cautions against the widespread faith, among policymakers and activists alike, in banking as a means of overcoming long-entrenched and worsening racial disparities in wealth. In this response, I suggest that the history of black banking, even for its many failures, holds a unique perspective on property and its contradictions of value. It also contains a deep lesson about how economic strategies generate and are reinforced by affective practices—and how racist economic laws rested on public feelings of their own. The personal and the structural are closely interlinked.

From the debacle of the Freedmen’s Bank, to the rise of black-owned banks under Jim Crow, to the promotion of “empowerment zones” in more recent times, economically isolated black communities have consistently been urged to engage in “capitalism without capital.” Because black banks were cordoned off from their mainstream peer institutions, Baradaran shows, they could not effectively tap into the money multiplier effect, the means by which a bank stood on the good credit, financial security, and proprietor status of its patrons and generated value by lending its deposits through the system more broadly. Because black people did not own large stores of property, any wealth accumulated by black banks swiftly left black control as it sought greater prospects elsewhere: “once in the banking system,” Baradaran writes, “money flows towards more money.”

It is difficult to overstate the policy implications of Baradaran’s work. The story she tells of the institutional segregation and siphoning off of black wealth disarms the widely held premise that black poverty derives from some sort of cultural deficiency or a lack of personal financial literacy. By exposing the lure of “for-us, by-us” banking and “community empowerment” as “a decoy,” “an empty promise,” and a faulty basis for banking legislation and activism, she paves the way for a bolder vision and more creative experimentation in attempting to remedy a seemingly intractable racial inequality. Indeed, proposals such Darrick Hamilton’s and William A. Darity Jr.’s endorsement of “baby bonds” and Baradaran’s own call for the return of postal banking flow from such an understanding of the structural impact of racism on US political economy.

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Symposium: The Color of Money & Racial Capitalism

Mehrsa Baradaran –

9780674970953When I started research on the project that became The Color of Money, I wanted to write a book about racial disparities in access to credit. When I started digging into the history, I started to realize that there was a much bigger story here, one that undermined one of the most basic neoliberal myths about the free market. This history of black banks and the economy of segregation reveals how inextricably financial markets are tied to racial exploitation, and how the dominant economy can continue to extract from racially subordinated groups through “color-blind” market mechanisms.

I hope that the upcoming symposium on The Color of Money will help connect the historical work to contemporary law, building on LPE’s commitment to understanding and reversing the many structures of racial capitalism.

In particular, I try to debunk three market myths in the book:

  1. That money, markets, and trade exist outside the realm of political power
  2. That inequality is a natural byproduct of market forces rather than being created by the state
  3. And that people left outside of the structures of power can overcome their exclusion through local institutions or self-help

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The New Black Codes: Racialized Wealth Extraction, Economic Justice, and Excessive Fines Schemes in Timbs v. Indiana

Emma Coleman Jordan and Angela P. Harris –

timbs.jpegWhen Tyson Timbs’ father died, he left his son an insurance policy. Timbs used $42,000 of that money to buy a Land Rover SUV, and he was driving that car when he was arrested for selling heroin to an undercover police officer in Indiana. Timbs pleaded guilty in Indiana state court to dealing in a controlled substance and conspiracy to commit theft, and the judge sentenced him to one year of home detention, five years of probation (including a court-supervised addiction treatment program), and $1,203 in fees in costs.

The State of Indiana, however, was not done with Timbs. It hired a private lawyer to bring a civil forfeiture action against Timbs’ Land Rover, on the theory that the vehicle had been used to commit the crime of transporting heroin. The court held that the Land Rover was indeed used in the commission of an offense, but denied the requested forfeiture, observing that its purchase price was more than four times the maximum he might have been fined for his actual conviction. Forfeiture of the Land Rover, the judge determined, would be grossly disproportionate to the gravity of Timbs’s offense, and for that reason it would be unconstitutional under the Excessive Fines Clause of the Eighth Amendment. The Court of Appeals of Indiana affirmed that decision, but the Indiana Supreme Court reversed on a different ground, holding that the Excessive Fines Clause applied to federal but not state governments.

When the United States Supreme Court agreed to hear Timbs v. Indiana, anticipation ran high across the political spectrum, and revealed some strange bedfellows. The Southern Poverty Law Center and the Cato Institute appeared on the same amicus brief. Justices Gorsuch and Sotomayor energetically agreed with one another during oral argument. However, when the Supreme Court issued its unanimous decision on February 20, 2019, the opinion offered less than interested parties might have hoped for. Justice Ginsburg, writing for the Court, affirmed that the Excessive Fines Clause does apply to the states, as “incorporated” into the Due Process Clause of the Fourteenth Amendment, and held that in rem forfeitures fall within the Clause’s protections. The Court, however, did not offer a standard for deciding when a fine is excessive. From our perspective, moreover, Timbs v. Indiana represents a missed opportunity to discuss racialized wealth extraction in its past and present forms, and to situate the Excessive Fines Clause within the constitutional debate about economic rights that arise from predation by the government itself.

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The Constitution and Democratic Insurgency

Aziz Rana—

One of today’s most urgent questions is how to combine an analysis of capitalism with an analysis of democracy.  The rolling socio-economic crises of the last decade, highlighted by the global financial meltdown, have laid bare the extent to which American society is marked by fundamental and irreconcilable conflicts between those enjoying economic power and those subject to the vagaries of the market.  At the same time, the constitutional system, plagued by legislative dysfunction and extreme counter-majoritarianism, is incapable of implementing popular policy—let alone resolving endemic collective problems.  American capitalism generates profound social and material dispossession, yet American democracy either facilitates these developments or seems helpless to address them.  Why is this the case? And to what extent is the existing constitutional order—its basic ideological and institutional terms—at least partly to blame?

Since the forging of Cold War liberalism in the mid-twentieth century, elites have offered the same, familiar account—in both electoral politics and in the study of constitutional law—of the relationship between the constitutional order and the economy. The prevailing theory is that the structures of legal-political decision-making do not favor particular social groups. Instead, through an intricate system of checks and balances—overseen by a Supreme Court enjoying powers of judicial review—the constitutional process produces essentially just outcomes while ensuring that no single political or social actor wields overwhelming authority.  This structure of constraint substantively pushes decisions away from the extremes of fascism and communism and toward a moderate middle ground of ameliorative reform and steady collective improvement.

Although some may be suspicious of the Whiggish story of progress, a bedrock assumption underlying this account has been widely held—even among left-liberal circles.  This is the idea that the constitutional structure and its discursive traditions remain essentially agnostic as to existing distributional battles.  They can be used productively to pursue virtually any end—up to and including socialism.  As the New Deal victories seemed to confirm, constitutional process and language carry no essential theory of political economy.  To the extent that legal-political outcomes have remained in line with a vision of market capitalism and a limited welfare state, this is simply the product of popular will: the complex balance of views expressed across the constitutional system.

But this account ignores a fundamental critique of the constitutional order, one leveled by labor and black radicalism in the first four decades of the twentieth century before Cold War ideas took such an extreme hold. For those activists, the history of sustained racial, indigenous, gender, and class subordination made clear that the country was not then and had never truly been democratic.  Rather, the constitutional order systematically operated to expand the strength of a racial and economic minority.

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The Racial Wealth Gap and the Question of Time Zero

Michelle Wilde Anderson

Each year teaching Property Law, I have taught many of the big cases and topics on race and property law, such as M’Intosh and Dred Scott; segregationist turbulence in rights of reasonable access; public accommodations law; racially restrictive covenants; the Fair Housing Act. I never quite had a cohesive idea about this—they each seemed formative.

Meanwhile, evolving case law and politics have made it clear that we still have a basic disagreement at the heart of American law and politics, and my students carry that question with them into class: On matters of race, did we reset the playing field of property to start a merit system where fair access to markets would govern? Did we create a new Time Zero—for instance, when LBJ signed the Fair Housing Act as a gesture of solace and appeasement seven days after Martin Luther King, Jr.’s assassination?

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Racism is at the Heart of the Platform Economy

Daria Roithmayr –

This post argues that race and racism are segmenting the new “on demand” labor markets, in ways that facilitate the transition to this new sector of the economy.  Scholars of racial capitalism have argued that modern capitalism could never have gotten off the ground without the violence of slave labor in the cotton economy. Violent racism operated to segment plantation workers into free and unfree labor, and unfree labor made cultivating cotton in bulk possible, facilitating the transition to industrialized cotton production and then to industrialization more generally.

Likewise, I argue here that race and racism are segmenting the new labor markets into more free and less free labor, and that this segmentation plays a central role in the transition to the new economy.  Platform-based “on demand” service firms like Amazon and Instacart rely for their flexibility on a core of so-called “motivated” gig workers—workers whose economic survival depend on gig work. As it turns out, these workers are “motivated” because they are workers of color who are less free to turn down unstable work, or to bargain for a wage premium for doing risky, back-breaking or otherwise odious work. As we’ll see, race does very important work in constituting this segment of the workforce, and in keeping this core of workers “motivated.”

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Uniting the Working Class Across Racial Lines

Uniting the Working Class Across Racial Lines

Daria Roithmayr – 

The Democratic Party is once again dividing into a left versus center configuration, just in time for the November Election. The catalyst for this renewed debate appears to be Alexandria Ocasio-Cortez’s massive primary upset in New York’s fourteenth district. Ocasio is a democratic-socialist who has focused on her district’s predominantly Latino and black working class, campaigning on a platform of Medicare for all, a federal job guarantee, and the dismantling of ICE. More than almost any other candidate this season, she has developed an affirmative vision of economic, social and racial dignity for all working-class Americans.

The daughter of Puerto Rican parents, she has argued that the interests of people of color should be represented in the district. Remarkably, some of her strongest support came from predominantly-white Astoria. To those who accused her of playing identity politics, she responded:

“I can’t name a single issue with roots in race that doesn’t have economic implications, and I cannot think of a single economic issue that doesn’t have racial implications. The idea that we have to separate them out and choose one is a con.”

This post serves as a follow-up to an earlier post in which I issued a call to unify the old and new working classes. In this post, I want to accomplish two things. First, I want to further uncover the relationship between race and class. In particular, I want to explore the argument that race segments the working class into less-free workers of color and more-free white labor. Second, I want to strengthen the call to unite the old and new working classes across the race-class divide.

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Police Surveillance Machines: A Short History

Elizabeth Joh –

46038488 - law concept: circuit board with  scales icon, 3d render

The year 2015 witnessed a dramatic rise in demands for police surveillance machines. After a number of widely shared incidents of police violence against often unarmed civilians, public protests and media attention led to calls for the adoption of surveillance machines by the police.  Advocates of surveillance machines, including the family of Michael Brown, argued that these technologies would increase transparency and accountability surrounding police interactions with civilians by collecting and preserving data for public review.  Indeed, the most contentious police-civilian interactions often came down to public disputes as to the alleged threat posed by the civilian, versus the propriety of the police response. Surveillance machines promised a technological layer of accountability by rendering these hidden interactions public. Now that they are being implemented, however, the political economy of police technologies raises new concerns about concentrated private power, consumer platform protection, and adequate regulation of data in the future of policing.

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The Political Economy of Immigration Enforcement: Part II

Sameer Ashar and Amna Akbar— 

In our first post, we made the case for studying immigration enforcement through a political economy lens. Without political economy, we are left with an ahistorical and inadequate understanding of the challenges and realities of immigration enforcement, which implicate both state and market, and not just Donald Trump and Barack Obama, but our colonial past as well. In this second post, we elaborate on three central insights of a political economy and racial capitalism lens: the rise of “guard labor” in the neoliberal, austerity state; lopsided bargaining power between workers and their bosses; and the persistently colonial dynamics of labor extraction.

First, immigration enforcement is a key part of the expansion of guard labor in the United States: the sector of the modern U.S. economy devoted to ensuring conformity to public and private institutional imperatives. This includes everything from police and private security to detention facilities, jails, and prisons to parole, probation, and surveillance. Consider how immigrant detention facilities are marketed as economic development projects, especially in areas without other sources of jobs and income. Private prison companies, especially, have used underdevelopment and deindustrialization in parts of the United States to make the case for new facilities. Those companies have also marketed detention facilities as providing much-needed jobs for veterans returning from years of extended American military engagement in Afghanistan and Iraq. Municipal and county governments have provided carceral capacity for immigrant detention, at a cost. Immigrant detention brought federal dollars to localities starved for funds during the extended austerity regime of the Bush and Obama administrations.

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