Capitalism and Equality
As the civil rights movement expands to include investing and investments, I thought it would be an appropriate time to reflect on Martin Luther King, Jr.’s attitude toward investing. Though it may surprise some, Dr. King was one of capitalism’s staunchest proponents. In this respect, his actions were fully consistent with his faith: as he noted in one of his speeches, “Jesus never made a universal indictment against all wealth.” What’s more, Dr. King’s work made capital markets more efficient, as I discuss below.
A Socially Responsible Investor
Martin Luther King was more concerned with how wealth was obtained and used. To him, the fact that one owned a Cadillac said nothing about one’s faith or about one’s character, for that matter. Worshiping the Cadillac, however, did. This certainly made him a socially responsible investor, specifically a values investor. His emphasis on values rested on a concern he expressed many times, that “material means have outdistanced spiritual ends, (does anyone really need a Gucci handbag?), that mentality has outdistanced morality (Goldman Sachs), and that civilization has outdistanced culture.” ( Trump, some popular music, and most reality TV).
Dr. King believed in both the power of community and in the power of the market. In fact, economic development projects started by Dr. King laid the foundation for future initiatives in socially responsible investing. Operation Breadbasket in Chicago combined ongoing dialog with boycotts and direct action targeting specific corporations. His efforts also strengthened and developed three African American banks, two in Chicago and one in Cleveland.
Finally, Dr. King helped people realize the economic power of their?own spending. Or as he put it, “If you respect my dollar you must respect my person.”
While this tactic still resonates, it’s usefulness has been lessened greatly through tokenism and co option. For example, in response to a lack of recognition, some have called for African Americans to stage an #OscarsBoycott, the idea being that one should not watch or celebrate the film industry ignoring the work of Blacks. But this is a call for tokenism, the result of co option. A far better, and ultimately more effective, tactic would be to boycott the film industry itself by refusing (on some predetermined date for some predetermined time) to go to the movies. African Americans, Asians and Hispanics make up 56% of film revenue. Even a one day boycott by these three group would have significant economic impact.
Martin Luther King’s work also supported domestic economic growth. By my estimate, the elimination of Jim Crow laws and reduced employment discrimination boosted the U.S. economy by $20 trillion dollars over the 20 years after King’s death. (This includes domestic spending and productive capacity between 1970 and 1990.) By contrast, in 2010 the US Treasury estimated that $19.2 trillion in wealth had been lost due to the impact of the financial crisis and corporate fraud.
This certainly puts the bursting of the housing bubble in perspective.
(William Michael Cunningham is a University of Chicago-trained economist. A social investor adviser in Washington, he is the author of “The Jobs Act: Crowdfunding for Small Businesses and Startups.” His website is www. creative invest.com. On Twitter, he is @Creativeinv. This article was reprinted with permission and appeared first on Cunningham’s social media pages.)