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Debt and the Underdevelopment of Black America

How municipal debt contributed to the development of white America and underdevelopment of Black America.

In his 1983 classic, How Capitalism Underdeveloped Black America, Manning Marable asked, “What is development, and what is its structural relationship to underdevelopment?” Marable rejected liberal replies as well as the ontological approach to seeing development as a condition of the West, and underdevelopment as that of the non-West. For Marable, underdevelopment was “not the absence of development; it is the inevitable product of an oppressed population’s integration” into what we might call racial capitalism.[i]

But what was it about capitalism that, in actual terms, underdeveloped Black America? Marable identified four vectors. For starters, the “repressive and bestial force” of slaveholders, judges, juries, prison wardens and police preserved and reproduced “fraud and force,” the essential dynamics of American capitalism. Second, capitalism was the culprit because it generated structural exclusion and discrimination, at one level, and the select integration of the “Black petty bourgeoisie” into the system, at another level. Third, and relatedly, capitalism was to blame because of its ideological tentacles. Black elites theorized that the problem of underdevelopment was not capitalism per se, but that white capitalists hoarded all the wealth. Finally, Marable argued that the very foundations of capitalism—patriarchy and racism—led to the under-compensation of black women in ways that generated “higher profits for white capitalists.”[ii]

I want to add to Marable’s thesis. But rather than focus on violence, intra-racial class relations, the theory of black capitalism, or capitalism’s patriarchal and racist foundations as the agentic force, I want to emphasize the role of municipal debt in the underdevelopment of Black America. Marable is surprisingly quiet on the matter of finance in general, and credit-debt in particular. He did not think beyond consumer debt and interpersonal lending arrangements.[iii] Because Marable did not consider credit-debt as central to capitalism, it had no bearing on his tragic story of underdevelopment.

Across distinct traditions, it is well established that credit and debt, as much as investment capital and profitability over time, are key dynamics of capitalism. Influenced by Joseph Schumpeter, German historian Jürgen Kocka has recently commented that, “the entrepreneur carrying out innovations requires capital in advance, which he contracts as debt in order to pay it back with interest later if the project is successful.”[iv] Whereas Schumpeter emphasized the relationship between credit and innovation, Karl Marx considered how lending to state governments allowed a “class of state creditors” to rechannel their claims on future public revenues into other profitable investments.[v] Clearly, then, credit-debt is key to capitalism’s dynamism. And, from the seventeenth century onward, this crucial dyad has been articulated through race.[vi]