Marxist Theory of Racism and Racial Inequality by Peter Bohmer
December 20, 1998

note: This article will appear in a forthcoming book edited by John Whitehead and Cobie Kwasi Harris, Readings in Black Political Economy (1999, Kendall/Hunt, Dubuque, Iowa). In converting it to a Web document, all footnotes and references were erased. Email me or write me for the references.

Racism directed against African-Americans and other people of color has been a central and continuing feature of U.S. society. Its forms have changed but we need to look no further than infant mortality rates and life expectancies, unemployment and poverty rates and incomes, and stereotypes in the mass media to understand that racism and racial inequality remain. The value of the theory examined in this chapter is that racism is analyzed historically and as a central aspect of the economic system. In this chapter, I examine the Marxist theory that racism serves the interests of the capitalist or employer class by dividing black and white workers, reducing their potential unity and thus their bargaining power. I also examine a closely related theory, that of segmented labor markets. In the next chapter, I look at the theory of internal colonialism, a framework used by many groups who challenged racial injustice in the late 1960’s and 1970’s. Although these theories need to be modified, they have continued relevance for examining racism and U.S. society.

Orthodox Marxist: Racism Divides the Working Class

Much of the social analysis that focuses on the injustices and inequalities in U.S. society has been influenced by the ideas of Karl Marx and the Marxist tradition. Central to Marxism is the understanding that capitalism is an economic system with two major classes. The capitalist class owns and controls the means of production, capital, and continually tries to increase its profits. The working class, which is the large majority of the population, sell their labor power, their capacity to work, in return for a wage. Profits come largely from paying employees less than the value they add to production. Marx called this exploitation.

Conflict between capitalists and workers is inherent in a capitalist system. Workers try to raise their wages and improve their working conditions. Employers try to limit wages and increase the amount of work done per hour. The employer has the upper hand because workers fear losing their job and the unemployment that awaits them.

Exploitation, in the Marxist sense, can only be ended by the working class overthrowing capitalism. Workers can, however, improve their economic situation by forming unions and other organizations. The more disunity among workers, the weaker their ability to effectively challenge the employer. This insight is central to the Marxist analysis of racism, which focuses on attempts by capitalists to divide black and white workers. If white workers identify primarily as whites, rather than as workers, they will not act in their common class interests with black workers. The way to end racial oppression and class exploitation is an interracial and united working class.

Racism in the United States is defined as the systematic oppression of African-Americans and other people of color and the related ideology of white supremacy and black inferiority. These two aspects of racism have shaped U.S. society from the early 1600’s until the present.

The origins of racism in the United States are directly traced to the European conquest of the Americas, to a rapidly expanding capitalism in Western Europe and the British colonies that were to become the United States seeking cheap and growing supplies of food, beverages, tobacco, and increasingly, cotton. These needs were met by a system of production in the Americas based on land seized from its inhabitants, American Indians, and the kidnapping, transporting and selling into slavery of millions of Africans. The slave trade created much of the wealth subsequently invested in textile, shipbuilding and other emerging capitalist enterprises in the Northeast United States and Europe. Marxists call this the "primitive accumulation of capital".

By the late 17th century, slavery became the established labor system for the production of these agricultural commodities. African people became enslaved, not because of European aversion to blackness, but because more labor could be coerced from Africans than from either Native Americans (Indians) or Europeans indentured servants. African societies did not have the political and military strength to resist the seizure of its people. The ideology of black inferiority developed as a rationalization or justification for slavery; it was not the cause of slavery. This racist ideology spread throughout the United States.

The following periods are pivotal for the changes in and reproduction of post-slavery racism:

(1) The defeat of Reconstruction in 1876 by the Southern planter class and their ability to regain

control of the labor of blacks led to a new system of racial oppression. Southern planters defeated the alliance of blacks and some poor whites as the North withdrew their support for Reconstruction. Jim Crow was the social and political system established by the 1890’s that consolidated white planter hegemony in all spheres. It was the segregationist system that dominated the South and influenced most of the country until the 1960’s. The 1896 Supreme Court decision, Plessy vs. Ferguson, which ruled that segregation was constitutional, was its legal foundation. The purpose of Jim Crow was the domination and coercive control over black agricultural labor. Sharecropping and tenant farming were the most common forms for the organization and exploitation of black labor. They produced much of the profits and wealth of the Southern upper class.

(2) The growing concentration of capital (corporate or monopoly capitalism) led to increased competition among the European powers for new sources of profits. They colonized most of Africa and increased the colonization of Asia in the late 19th and early 20th century. This led to an elaborate ideology of western cultural, if not biological superiority over non-white people -- the white man's burden.

Racist ideology, United States imperialist expansion and ambitions, and efforts by an increasingly powerful monopoly capitalist class to divide workers by race and ethnicity led to greater oppression of black people and a virulent racist ideology. Segregation and lynching increased in the early 1900’s. Most unions excluded blacks. Black employment grew in industries such as steel and meatpacking, but declined in the skilled trades.

(3) After World War II, as a result of the vast reduction in labor required by a far more mechanized Southern agriculture, the economic necessity of Jim Crow to the Southern elite declined. By the mid 1960’s, this made it easier for the interracial civil rights movement to force an openly segregationist system out of existence. However, the racial divisions between blacks and whites and the greater exploitation of blacks served capitalist interests and continue to be reproduced.

The direction of causality from profit seeking and the accumulation of capital; to the oppression of black people; to a racist ideology to justify racial oppression -- has continued up to and including the present period. Within this framework, racism supports capitalism in several ways:

(1) It permits employers to pay lower wages to black than to white employees. The difference between the wages of blacks and whites measures the superexploitation of black workers and the super profits of capital. For example, if the average wage of white workers is $13 an hour and of black workers is $9 an hour, $4 an hour measures the extra exploitation of black workers and the super profits of the employer. Different pay for similar work within a firm is often disguised by slightly different job titles or by making some departments of a firm primarily white and others primarily black.

(2) Racist ideology, promoted by the elites, is accepted in varying degrees by most white workers. This ‘false consciousness’ of white workers decreases the ability of workers to unite across racial lines and struggle as a unified group for better wages, benefits and conditions. Racism makes it easier for employers to play off one group against the other, reduce the average wage, and maximizes employer control and profits. Paying lower wages to black workers exacerbates racial divisions.

(3) Blacks are disproportionately unemployed. Racist ideology makes black unemployment more acceptable than white unemployment to white society. It is therefore easier to maintain higher unemployment (in Marxist terms, a larger reserve army of labor) than if whites and blacks shared unemployment equally. By reducing worker bargaining power, higher unemployment lowers the average wage and thus, increases the profit rate.

In recessions, employers can provide a cushion to white employees by disproportionately laying off blacks. In a boom, unemployed blacks are available to meet the expanded demand for labor.

In the Marxist or class-based analysis of racism in the U.S., the tendency for the working class to be fragmented and divided racially, both in material conditions and ideologically, is dominant. An opposite effect of capitalist accumulation – the erosion of racial, ethnic, gender and other differences – also exists but is much weaker.

A weakness of this perspective was its focus on the class interests of employers as a whole in perpetuating racism. It did not demonstrate either, that it was also in the interests of individual employers to discriminate, or that there were plausible mechanisms that employers used to insure that the behavior of individual employers coincided with the interests of the group as a whole. The analysis often moved from a demonstration that racism was in the interests of employers as a class, to concluding that the necessary outcome must be racist without showing the steps by which employer interests were realized. Several models have been developed to address this particular weakness.

Marxist Models of Racial Inequality in Earnings

Marxist models of racial discrimination have been developed to rectify this shortcoming, and to simultaneously critique the implications derived from Gary Becker and Milton Friedman’s conclusion that capitalism and racism are incompatible. These class-based models show the interests of employers as a class to pay lower wages to blacks than to whites coincide with the interests of the individual employer. They focus on one central aspect of racism, that capitalism uses racism to divide workers.

Based on Marx’s analysis that production is a social as well as a technical process, these models show that an individual employer can make more profit from a racially divided working class than from a united one. In these models, the level of wages and the average production per worker depend on workers’ bargaining power as well as on the technology. More worker bargaining power means higher wages and lower profits, and less bargaining power means lower wages and higher profits. This provides a microeconomic foundation, consistent with profit maximizing behavior, of disparate on the job treatment of equally skilled black and white workers. It also explains why black workers will not replace white workers, even if the latter can be paid lower wages. These ideas are developed most thoroughly in Michael Reich’s, Racial Inequality.

By hiring both white workers and black workers, but paying a lower wage to the black workers,

employers as a class gain by racism and racial inequality, and each individual employer also maximizes profits. Paying unequal wages in a firm based on race divides workers, makes unity weaker than it would be if all workers received the same wage or if the workforce was racially homogeneous. The resulting disunity from racial division lowers average wages and increases profits. At a certain point, however, firms do not hire more lower paid black workers to replace white workers because this would lead to more black worker militancy possibly raising the overall level of wages. Alternatively, though with similar results, the disunity of workers caused by different wages paid to blacks and whites leads to increased profits. The reason in the latter case is the employers are able to get workers to work harder and faster and produce more than they would have otherwise.

Doing careful econometric analysis, Michael Reich shows that the data on racial inequality is consistent with and provides support for this theory. Using data primarily from the 1970 census, he compares urban areas. He demonstrates that greater racial inequality causes lower average earnings of white workers and higher profit rates. He uses the ratio of black to white earnings as a measure of racial inequality and racism. In cities in the U.S. South, where the gaps between the wages of blacks and whites are greatest, wages of whites are lowest, and profit highest. Reich demonstrates empirically that not only do black workers lose from racism but so do all workers as their incomes are reduced. If the wages of blacks equaled whites, not only would the wages of blacks be higher but so would the wages of whites.

When synthesized with the historical analysis of racism, these models provide insight into the reasons for the reproduction of black-white earnings inequality. They demonstrate that capitalists divide the working class, and that the correct strategy for the increase of racial and overall equality (between employees and employers) is an alliance of black and other workers of color with white workers against their common exploiter, capital.

There are a number of problems however. This model downplays the role and importance of black people and black organizations in challenging racial inequality and exploitation.

Also missing is a convincing explanation of why white workers often accept or support racial inequality and a racist ideology. Since in this framework, the incomes of white as well as black workers are lowered, claiming white workers have ‘false-consciousness’ is not a sufficient explanation of their racism.

Although this class-based approach to racism provides insight into the reproduction of racial and overall inequality, it leads to class reductionism and excessive economic determinism. Class reductionism considers central only movements and issues directly related to class struggle between the working and capitalist class. Economic determinism means the economy determines the politics, culture, consciousness and struggles of a society; it minimizes the autonomous role of culture and race.

In the class-based approaches to racism (and in the internal colonialism framework examined in the next chapter), there is little analysis of the role and situation of black and white women and how it has differed from that of black and white men. Gender is almost completely disregarded and there is little investigation of the relation between gender, race and class oppression.

Recent developments in Marxist theory have led to a fuller analysis of racism. These include theorizing the importance of non-class-based groupings such as gender and ethnicity. Culture, ideology, consciousness and the State are examined as more than reflections of the economic base. They are important aspects of society that influence and are influenced by the entire social formation.

Segmented Labor Markets

A second class-based framework for analyzing racial inequality, whose origins are both Marxist and institutionalist, is the theory of dual or segmented labor markets. There are three distinct labor markets.

In the secondary labor market, wages and benefits are low, and job tenure is short with high turnover. There are few job ladders and labor control is simple and direct. Examples include most work in fast-food restaurants and in garment factories.

In the primary subordinate labor market, most employees are members of unions, pay is significantly above the minimum wage and rises with tenure, and benefits include health, pension and paid vacation time. Promotion within clearly defined job ladders usually occurs from within the firm and follows bureaucratically established norms, as do layoffs and promotions. Seniority plays an important role. Turnover is low, although unemployment for the goods producing members of this segment is very sensitive to the business cycle. Examples of jobs in the primary independent segment include blue-collar work in heavy industry and the majority of government employment

In the primary independent segment, the employee internalizes work norms. There is more autonomy than in the other labor segments and less direct supervision. Credentials are often needed for entry into this segment. Evaluation, control and promotion follow bureaucratic norms. Unemployment is low, although there may be considerable movement between different employers. Most professional and managerial work is part of the primary independent segment.

Central to labor market segmentation theory is not just the clustering of jobs into three categories, but also the lack of mobility for employees from one segment to another. Race plays a role only in determining in which labor market segment one is employed. The higher rate of black unemployment and lower earnings than whites are primarily the result of underrepresentation in the primary labor market segment and the high concentration of black women and men in the secondary labor market. Except for this racially biased placement, labor market segmentation, not race, determine employment, earnings, promotion, occupational mobility and job tenure.

The power of labor market segmentation theory lies in its ability to explain the lower earnings and higher unemployment rates of blacks. It also explains the more rapid growth of earnings of blacks compared to whites in the 1960's and early 1970’s by the increased demand for labor in the primary labor market leading to upward mobility for some blacks from the secondary labor market. It aids in understanding the stagnation in black to white earnings since the early 1970's and the more rapid growth of unemployment for blacks than whites. Reasons include the reduced entry into the primary labor market from the secondary labor market and the overall decline of jobs in the primary subordinate labor market, an important site of employment for black men.

Another plus is that this theory is not dependent on assuming – as the neoclassical theory does -- that employers have an unexplained ‘taste for discrimination’ – or as in the class-based models above -- that the bargaining power of employees with their employers is decreased when black and white workers receive different wages.

The principal weakness of labor market segmentation theory -- one admitted by its adherents -- is the absence of an explicit theory of racism. A theory of racism is necessary to explain how and why blacks are concentrated in lower segments, why mobility between labor segments differs in a manner unfavorable to blacks, and what accounts for the changes over time of the distribution of blacks and whites within each segment. If black to white inequality was primarily the result of placement in different labor markets, one would expect small differences in earnings and unemployment rates by race within each segment. This is not the case. As Rumberger and Carnoy conclude: "black workers even in primary sector jobs face labor market conditions characteristic of the secondary labor market."

A theory of segmented or dual labor markets can complement but not supplement a theory of racism. The latter is necessary to explain both the different treatment of blacks and whites within each labor market segment, and the causes of the concentration of blacks in the secondary labor market. Synthesizing labor market segmentation theory with the particular racial dynamics of past and present United States society would be very insightful in explaining racial inequality in income and employment.

The power of the class-based theories of racism reviewed here are their ability to demonstrate that racial discrimination follows from the logic and history of U.S. capitalism, and that its continuation is consistent with the likely behavior of employers. The main weakness of the theory, that racism divides the working class, is its underestimation of the importance of racial and other non-class groupings in both the perpetuation and the possible elimination of racism. Multiracial working class organizations are emphasized as the primary vehicle for ending oppression. Organizations of black people as vehicles to end racism are downplayed; so is the role of white people in perpetuating racism.

In the next chapter, I examine a framework that explicitly focuses on race relations between blacks and whites, the theory of internal colonialism.