Why Rosa Parks Best Displays American Free Market Capitalism
The protest of Rosa Parks has reminded us of her place in history, as the black woman whose refusal to give up her seat on a bus to a white man, in accordance with the Jim Crow laws of Alabama, became the spark that ignited the civil rights movement of the 1950s and 1960s.
Most people do not know the rest of the story, however. Why was there racially segregated seating on public transportation in the first place? “Racism” some will say and there was certainly plenty of racism in the South, going back for centuries. But racially segregated seating on streetcars and buses in the South did not go back for centuries.
Far from existing from time immemorial, as many have assumed, racially segregated seating in public transportation began in the South in the late 19th and early 20th centuries.
Those who see government as the solution to social problems may be surprised to learn that it was government which created this problem. Many, if not most, municipal transit systems were privately owned in the 19th century and the private owners of these systems had no incentive to segregate the races.
These owners may have been racists themselves but they were in business to make a profit and you don’t make a profit by alienating a lot of your customers. There was not enough market demand for Jim Crow seating on municipal transit to bring it about.
It was politics that segregated the races because the incentives of the political process are different from the incentives of the economic process. Both blacks and whites spent money to ride the buses but, after the disenfranchisement of black voters in the late 19th and early 20th century, only whites counted in the political process.
It was not necessary for an overwhelming majority of the white voters to demand racial segregation. If some did and the others didn’t care, that was sufficient politically, because what blacks wanted did not count politically after they lost the vote.
The incentives of the economic system and the incentives of the political system were not only different, they clashed. Private owners of streetcar, bus, and railroad companies in the South lobbied against the Jim Crow laws while these laws were being written, challenged them in the courts after the laws were passed, and then dragged their feet in enforcing those laws after they were upheld by the courts.
These tactics delayed the enforcement of Jim Crow seating laws for years in some places. Then company employees began to be arrested for not enforcing such laws and at least one president of a streetcar company was threatened with jail if he didn’t comply.
None of this resistance was based on a desire for civil rights for blacks. It was based on a fear of losing money if racial segregation caused black customers to use public transportation less often than they would have in the absence of this affront.
Just as it was not necessary for an overwhelming majority of whites to demand racial segregation through the political system to bring it about, so it was not necessary for an overwhelming majority of blacks to stop riding the streetcars, buses, and trains in order to provide incentives for the owners of these transportation systems to feel the loss of money if some blacks used public transportation less than they would have otherwise.
People who decry the fact that businesses are in business “just to make money” seldom understand the implications of what they are saying. You make money by doing what other people want, not what you want.
Black people’s money was just as good as white people’s money, even though that was not the case when it came to votes.
Initially, segregation meant that whites could not sit in the black section of a bus any more than blacks could sit in the white section. But whites who were forced to stand when there were still empty seats in the black section objected. That’s when the rule was imposed that blacks had to give up their seats to whites.
Legal sophistries by judges “interpreted” the 14th Amendment’s requirement of equal treatment out of existence. Judicial activism can go in any direction.
That’s when Rosa Parks came in, after more than half a century of political chicanery and judicial fraud.
Is American Free Market Capitalism Fundamentally Racist?
American capitalism is, at its core, anti-racist.
A good example of this was the Jim Crow era, with bus and street car segregation in the south. This was not the work of capitalism. It was the work of government, of the state intruding into the economy and dictating what private streetcar companies could do.
What is not so much known is that the private streetcar companies actively protested against the Jim Crow segregation laws. They tried their hardest to get get these laws overturned. The laws were nothing but trouble for the owners, since they faced boycotts and ended up running with half-empty streetcars, reducing their profit.
The basic math is this: In a democracy politicians have an incentive to scapegoat minorities, whether it be base on race, ethnicity, religion, class, sexual orientation or whatever. You can win an election with 51% of the vote. So ganging up on minorities is a winning strategy. History abounds with examples of this. A politician has little incentive to reach out and make a play for the support of 100% of the people. Instead he looks for the easiest way to get a solid 51%.
A capitalist, on the other hand, has no reason to be satisfied with pleasing 51% of the population. He wants more profit. He wants to sell to everyone. To a capitalist, a racist policy is like shutting down a full store at noon. It is a money-losing idea. It doesn’t make sense. Where you see real widespread racism, it is something propped up by government.
Another Example is the Atlanta Race Riot of 1906. African-Americans were massacred by whites who were incited to a racist rage by the two extremely racist gubernatorial candidates and racist local newspapers. Why? Because too many of the local African-Americans were becoming entirely too prosperous. Their wealth was growing rapidly and their rights were expanding, and Atlanta was looking to become the kind of city that the local white racists just couldn’t tolerate. That happens under capitalism all the time, which is why the government has to pass laws (or worse, incite riots) in order to prop up the racist system. The same thing can be seen if you study the establishment of the apartheid system in South Africa. Yet some kids are, amazingly, taught that capitalism somehow undergirds racism.
In capitalism, when a landlord acts that way it creates an opportunity for additional profits for someone else to go in and cater to the under-served buyers. The only way you can get really lock out a segment of the population based on race, or any other factor, is to forbid capitalists from seeking greater profits offering their goods and services broadly. And only the state has the ability to prevent competition like that.
Break it down:
In a society where less than 50% of people are racist, then government that intrudes upon the market will force everyone to act like a racist. The capitalists are thwarted in their attempt to offer goods and services to the minority detested by those in power.
In a society where more than 50% of the people are racist, then government can just let the capitalists do their natural thing, and drive the less profitable racists out of business. Or government can intrude in the market and try to accomplish the same thing, at greater overhead and expense. But if we encourage a state with such powers over the market we just set it up for state, gripped by the whims and passions of the day, to repress some other minority down the road. You reap the whirlwind.
If setting up a competing hotel was freed from government regulations, was as easy as putting a listing on AirBnB, then Heart of Atlanta would have been bankrupt before the case even got to court. It is government interference in the market that slows the kind of salubrious competition that drives racist actors to the margins.
Where most people are racist they will use their democratic majority to drive out of business those who are not racist. Compelling segregation is one way. But any regulations that benefit existing interests at the expense of new competition has the same effect.
I’m not claiming all capitalists are idealists. I’m not claiming that racism does not exist under capitalism. I am claiming that capitalism is anti-racist, in that it brings about disincentives to be racist, as well as incentives to oppose racism.
If someone is racist and denies services this creates an opportunity for another capitalist to fill the void, and gain greater profits by serving that market. Absent government regulations that prevent competition, this problem naturally solves itself.
This, of course, does not mean that racists cease to exist. Certainly nothing the government has done yet has made racists disappear. But what the free market does is push racists to the margins.
Even look at the present day, in the private sector, where a business leader can easily lose their job if they say something racist, where endorsement opportunities are lost, where sporting leagues can strip owners of team ownership, where stores and brands can be boycotted.
These influences all operate in the free market, not by government.