BlackEconomics.org®
Analysis Brief
Brooks Robinson, Ph.D.
November 2024
Acknowledgements
This is to acknowledge the importance of the queries and comments about “group economics” that motivated us to extend due consideration to this topic, perform the research, and prepare this analysis brief. We are indebted to all members of the Long-Term Strategic Plan for Black America Implementation Team for their special roles in the production of this analysis brief.
“If race relations are based on power, the more blacks integrate into white society, the less chance they have to acquire power. Blacks’ willingness to dilute their own strength destroys any perception of their having power. The perception of power is the first step toward the reality of power.”
Dr. Claude Anderson (1994), Black Labor, White Wealth: The Search for Power and Economic Justice, p. 41
Table of Contents
Introduction
What is “group economics”?
Benefits of “group economics”
Measuring “group economics”
Why measure “group economics”?
Measurement requirements and methods
Data gaps
Special consideration for Black Americans
Implications for Black Americans
Conclusion
Endnotes
Introduction
The origin of the term “group economics” is uncertain. However, there is no doubt that notable scholar and iconic promoter of Black American (Afrodescendant) upliftment, Dr. Claud Anderson, popularized the idea during the 1990s, and its popularity remains today. On page 184 of Dr. Anderson’s Black Labor, White Wealth: The Search for Power and Economic Justice, he discusses a strategy that Black Americans could adopt to inure wealth and power. His first related recommendation on page 187 is that: “To achieve self-sufficiency, blacks must master principles of capitalism and group economics.”(i)
What is “group economics”? Why should it be a goal or objective for Black Americans? Which benefits are derived from “group economics”? What is the best method for determining whether “group economics” is being practiced; i.e., is the concept measurable? Is a “group economics” measure absolute or relative? This analysis brief offers answers to these questions.
However, with an intent to enable forward progress for Black America in our 400-plus-year war with the United States, we follow up Dr. Anderson’s writing on this topic concerning a required posture for Black Americans. He was adamant and categorical about a requirement for Black Americans to organize, remain unified, and to plan systematically, strategically, and long-term to ensure that we fulfill our objectives and achieve our goals. He made it perfectly clear that Black America’s failure to achieve sufficient power (i.e., a sufficient level of “group economics” practices/behaviors) could very well precipitate our demise.
What is “group economics”?
Black Americans (Afrodescendants) conceptualize “group economics” as “strong” self-support (patronization) of Black-owned businesses. Typically, no attempt is made to parameterize “strong.” However, the thought is that, under a strong “group economics” regime, most Black Americans would make a vigorous effort to shop with Black American firms. It is mainly a demand (not supply) side perspective. Also, little thought is given to the percentage of Black firms’ total receipts that should be accounted for by Black Americans in a “group economics” regime that is “strong.”
To be useful, a plan or strategy for ensuring that Black Americans practice and benefit from “group economics,” should be S-M-A-R-T (Specific, Measurable, Achievable, Relevant, and Timebound). If “group economics” is to be specific (S), then we must specify a definition that is measurable (M, we will come back to this point). The relevance (R) of the concept is not in question because “group economics can inure many favorable benefits, without imposing significant costs. On achievability (A), almost any goal is achievable with a sound strategy and sufficient time. In this case and depending on the definition of “group economics,” it is likely to be an elongated undertaking in a status quo environment. The time horizon for achieving “group economics” could shorten dramatically, however, if Black Americans adopted a more racially segregated vs. integrated approach to socioeconomic development.
Before proposing parameters for defining or assessing “group economics,” consider the following Black Americans business statistics.
Tables 1 and 2 are self-explanatory. For Table 2 specifically, which reflects statistics for 2021, an important takeaway that we mention often when discussing nonemployer Black American businesses by North American Industrial Classification System (NAICS) industries is that all Black American nonemployer firms have average receipts of less than $45K. Also, Black American firms in eight of the 18 two-digit NAICS industries reflect average receipts of less than $25K.
Table 3 enable us to see that, if we assume that all Black Americans (Afrodescendants) patronized employer and nonemployer firms and accounted for all their receipts, then the per capita spending would be about $5,042.07 during 2020 based mainly on Census Bureau statistics. Bringing in Bureau of Labor Statistics data, Table 4 reveals that given the estimated number of households and average persons per household for 2020, then Black Americans are estimated to have expended about $210.1 billion with Black American businesses, which is somewhat short of the similarly green highlighted amount in Table 3 of $226.9 billion. Importantly, under the just-described circumstances (Black Americans accounting for all Black firms’ receipts), Table 4 shows that during the 2020 period, Black Americans would have spent just over 13 percent of our estimated total spending power with Black American businesses.
Benefits of “group economics”
The following seemingly “obvious” benefits come to mind when considering the impact of successful and strong “group economics” practices. For example, “group economics” reinforces solidarity (Umoja) and can yield greater self-reliance and self-determination (Kujichagulia).(ii) Because more of Black American spending power remains with Black Americans, higher levels of individual and group income and wealth are expected to accrue. Greater solidarity and higher levels of income and wealth would serve to amplify Black America’s strength and power. Much can be achieved with power. While such development may reduce intergroup income and wealth inequality within the US, it may exacerbate intragroup inequality.
Measuring “group economics”
This section explores reasons why measurement of “group economics” is a meaningful undertaking; requirements and a method for such measurement; data gaps; a special consideration for Black Americans concerning “group economics;” and a comment on what all of this means for Black Americans (Afrodescendants) today.
Why measure “group economics”?
To ask “why measure ‘group economics’” infers that it is not measured now. Importantly, it stands to reason that the status quo is purposeful. In a nation that went from Jim Crow and segregation to desegregation to integration, anyone apprised of economic conditions prior to desegregation and integration and today is aware that Black Americans were forced by law and convention to practice “group economics” before desegregation/integration. Accordingly, desegregation and integration served to dilute Black American “group economics” practices. If “group economics” produces favorable outcomes for those who practice it, then why would an enemy choose to assist Black Americans in measuring the resulting adverse change to the “group economics” landscape knowing that Black Americans would use such statistics to highlight the injury imposed by desegregation and integration?
Consequently, the onset of “group economics” measurement for all racial/ethnic groups will enable each group to identify how its strength declines or increases and the groups that are leeching from or augmenting its strength. If information is unavailable, then there is no basis for acting. However, when information is available, then not only can one act, but one can act with surgical precision to improve outcomes.
Measurement requirements and methods
The logic of measuring “group economics” is straightforward. For any “area of influence” (community), municipality/county/locale, region, or nation (a place (p)), one can develop a measure of the extent to which a specific racial or ethnic group “j” of all “i” such groups engages in the practice of “group economics” (GEj,p,t) during time t by collecting from each of the “n” establishments in p estimates of: (i) Total receipts (TRn,p,t); and (ii) expenditure shares (xsi) of TRn,p,t that are attributable to patrons from each ith group (Σxsi = 1 or 100, depending whether expenditure shares are expressed as percentages or numerical values). Suffice it to say that with such detailed estimates, one can develop estimates of: (i) TRn,p,t received by all n establishments in p and t; (ii) TRi,p,t received by all n establishments in each p and t that operate as a member of an ith group; and (iii) a measure of “group economics” for the jth group in p and at time t that is measured using the following ratio: [the sum of products of xsj,p,t for jth group patrons * TRj,p,t received by all (jth) establishments in p during t) / (the sum of products of xsj,p,t for jth group patrons * TRi,p,t received by all (ith.) establishments in p during t].
The foregoing description of the “group economics” measure is expressed in Equation 1a mathematically and in 1b in plain English:
For clarity, the denominator of Equation 1a is expressed in two parts: (1) The share of the jth racial/ethnic group’s receipts received by jth group-owned establishments; and (2) the share of the jth group’s receipts received by all other i ≠ j establishments.
Note that expenditure shares (xs) are used to operationalize the estimation of “group” economics” because it is reasonable for establishments to provide “estimates” of the shares of receipts received from all racial/ethnic groups as opposed to the actual value of receipts received from racial/ethnic groups. There is a condition under which the latter may be possible. It will be noted below.
Where all the previous notation applies, and by “R/E” is intended “racial/ethnic.”
This equation should serve as a sound metric for estimating the extent to which “group economics” is practiced if establishments are able to report accurate estimates of the expenditure shares (xs) of their total receipts to assign to each ith racial/ethnic groups, and if estimates of total establishment receipts are also captured accurately.
Given such a measure, which level of GE characterizes favorable GE? This is a question that warrants an “economist’s answer:” It depends! The main “dependent” factors are the volume and scope of industrial coverage provided by ith racial or ethnic group-owned/controlled establishments that are available to ith group consumers in p at t.
However, all else being equal, it may be reasonable to conclude that traditional high (≥80%), moderate (≥50% – ≤79%), and low (>0% – ≤49%) ratios could be accepted as appropriate characterizations of GE—or some variation of this theme.
Data gaps
The fact that statistics are unavailable to estimate or measure the extent of “group economics” for any particular racial or ethnic group is extraordinarily surprising. It is common knowledge that racial and ethnic differences are hallmarks of the US socioeconomic landscape. The existence of racial and ethnic enclaves in all major and many moderate-sized US municipalities is evidence of this fragmentation. This despite the appearance of the nation’s gallant effort to promote (at least though lip service) integration and the related public expenditures that have gone forth. The nation’s near obsession with all efforts designed (but unenforced) to produce a more egalitarian society (i.e., Affirmative Action, Equal Opportunity; Multiculturalism; and Diversity, Equity, and Inclusion) has mandated the collection of an enormous amount of data by public and private institutions alike. Yet, where the rubber meets the road and where economics and business are involved, the data required to perform the calculations specified by Equation 1a and 1b are nowhere to be found.
Given that a new Republican Administration is scheduled to assume control of the nation beginning in 2025 and with prospect for similar administrations in the near term, it will be difficult to motivate the collection of new data due to the cost that would be incurred. However, the other reason why there will be little-to-no-interest in collecting these data is because they will help reveal the extent to which Black Americans (Afrodescendants) have the least capacity to practice “group economics,” while other racial and ethnic groups, especially White Americans, are the beneficiaries of our economic weakness.
Nevertheless, we know that: “If you do not try, then you are certain to fail.” Therefore, this is to urge that all efforts be made to begin collecting data samples that will enable measurement of “group economics.” A sample based on firm types (sole proprietorships, partnerships, sub-chapter S corporations, corporations), industries, and places (area of influence (community), municipality/county/locale, region, or nation). We caution that considerable study should be performed before completing the design of the sample because there has never been such an undertaking and mistakes should be avoided at all costs. For example, certain types of corporations should be excluded from consideration because ownership by race/ethnicity may be difficult to determine or is indeterminant. Also, certain industries should be excluded from consideration because they are not associated with consumer choice (e.g., utilities) and producers in these industries are typically monopoly corporations. In other words, it is important to develop a sampling strategy that focuses on establishments (enterprises) that sell directly to consumers, where there is evidence of intra-industry racial/ethnic ownership diversity, and where consumers can actually practice “group economics.”
Looking to a future where a central bank digital currency is operational, where a full and complete financial technology system is operational that captures “all” transactions digitally, and where such transactions databases can be linked to databases that reflect the race/ethnicity of purchasers and to administrative records databases that reflect establishments’/enterprises’ types, places, and ownership, then preparations of “groups economics” measures becomes a fait accompli. Skilled coders should be able to produce the code required to prepare these measures in short order.
Just because it has not been done before, is no reason to reject-out-of-hand collecting data to estimate the extent of “group economics” practices. Given Black Americans’ position on this issue, our representatives at every level of government should support the idea. The results produced by the data that are collected are likely to be appalling and should serve as further motivation for Black Americans to redouble our efforts to prepare to, and to increase our entrepreneurship where appropriate. The estimates that are produced by data collected to estimate “group economics” measures should also serve as further evidence concerning our purposeful exclusion from certain important life venues, which has served to hamstring Black America’s growth and development. The latter then becomes another sizeable brick in the Black American wall that is filled with reasons (bricks) for our Reparations demand.
Special consideration for Black Americans
An obvious concern with efforts to measure Black American (Afrodesendant) “group economics” is the mix of African American Descendants of Slaves (ADOS) and non-ADOS in the Black American population. Any efforts to separately identify ADOS versus non-ADOS during data collection efforts stands to complicate the effort exceedingly. Therefore, until we exist in a digital world with the type of central bank digital currency and financial technology system that are described in the Data gaps subsection above, it is recommended that no effort be made to identify differences in “group economics” practices by ADOS versus non-ADOS.
Implications for Black Americans
As highlighted in the section “Measuring ‘group economics,’” it is transparent that the extent to which Black Americans (Afrodescendants) practice “group economics” as it is defined herein is low. The estimate that appears in Table 4 indicates that Black Americans are likely to have expended about 13 percent or less of our total 2020 spending power with Black American-owned enterprises during the 2020.
Consequently, and as already stated, such a low-level measure of “group economics” should motivate Black Americans to raise the level of “group economics” practices. Delineating all actions required to increase a Black American “group economics” measure is beyond the scope of this analysis brief. However, it is important to note that the methods used to achieve such an increase is complicated by a shifting future landscape concerning business operations and Black Americans’ income and wealth. Nevertheless, comprehending generally the historical process of business development for Black Americans, our proclivity to become entrepreneurs, our access to financial capital for business development, and the concentration of our enterprises in selected industries, the time horizon for raising Black Americans’ “group economics” measure substantially from its current very low level is likely to be of considerable duration.
Conclusion
Given the importance of the “group economics” concept, Black Americans (Afrodescendants) have been remiss in not exploring the concept thoroughly to date. The obvious low level of our pseudo “group economics” measure opens the door to grave concerns about the economic exploitation of Black Americans by other racial and ethnic groups, and the related historical and current reasons for it. What we have is a concept that is generally “understood,” but about which almost no actions have been taken to measure it formally.
The existence of an “official” measure of Black American “group economics” would shine a bright and hot light on government and other racial/ethnic groups if their “group economics” measures are at a much higher level. Racial/Ethnic differences in “group economics” measures vis-à-vis Black Americans, in addition to differences in income and wealth, constitute an inconvenient truth that should elicit loud calls for reducing the differences.
This analysis brief shows that “group economics” can be defined and measured. Such measures can assist racial/ethnic groups in assessing their absolute and relative standing as a group and in taking appropriate action to improve their economic position and power.
Irrespective of current gaps in data required to prepare sound “group economics” measures, the recognition of the importance of such measures should motivate Black Americans to develop and implement plans for ensuring that we raise our “group economics” practices. It is fortuitous that there is a current upsurge of interest in “Buying Black” has across the nation to raise the level of Black America’s “group economics”—although this interest waxes and wanes. However, efforts that will increase Black America’s “group economics” practices are embodied in a recently developed Long-Term Strategic Plan for Black America (LTSPFBA).(iii) While the LTSPFBA is not a perfect plan, it is more than a viable starting point for improving Black American life over the next 100-years—including providing strategies for increasing our “group economics” practices.
Endnotes
i Claud Anderson (1994). Black Labor, White Wealth: The Search for Power and Economic Justice. Duncan & Duncan, Inc. Edgewood.
ii The words in parenthesis are Kiswahili words that are elements of the Nguzo Saba (Seven Principles) that are associated with the Kwanzaa Tradition. For more on this topic, visit: https://www.officialkwanzaawebsite.org/ (Ret. 112624).
iii Long-Term Strategic Plan Panel (2023). Long-Term Strategic Plan for Black America. Long-Term Strategic Plan Panel. Honolulu. https://www.ltspfba.org/LTSP/fin_ltspfba_071223.pdf (Ret. 112524).