How America’s Economy Runs on Racism
Institute for New Economic Thinking, 2020
In this article, economist Darrick Hamilton explains how it is the pursuit of profit that is the true force behind discrimination, as opposed to hatred against black people: The problem is that racism is profitable! He then points out that the system of profit-making and the system of discrimination end up reinforcing each other. Hamilton argues that economics lacks the political economy context in order to understand racism, and demonstrates how racism is embedded in the political economy of America.
Comment from our editors:
Modern economic theory provides little help in understanding the systematic structure of racism embedded in our economy. This is where learning from other fields (eg. sociology and anthropology) and subfields of economics such as political economy can provide valuable insight. This is because they have the ability to analyse racism within the system, as opposed to an exogenous variable. By treating as such, the issue of racism calls for more pluralist and interdisciplinary approaches to economics.
Although this article focuses on how America's economy runs on racism, we can expand this analysis towards the Global South and Global North perspective. The Global North depends on cheap labour and raw material extracted from the Global South. In other words, the North profits on the South remaining poor, or at least substantially poorer than them. The global economy is rigged in such a way where the wealthy parts of it can enjoy cheaper goods because of the division of labour amongst nations.