Co-ops Can Help Close the Racial Wealth Gap, But Need a Policy Helping-Hand

November 9, 2018; Yes!

In Detroit, residents of the city’s North End neighborhood are organizing a co-op as part of a larger community development project that will include a health food café, an incubator kitchen, and public event space. The food co-op, expected to open by the end of 2019, will employ more than 20 community members. The project represents a small but important part of a broader strategy to rebuild community wealth in Detroit, a city that remains nearly 80 percent Black.

As Malik Kenyatta Yakini, executive director of the Detroit Black Community Food Security Network, which is spearheading the project, explained to Nonprofit Quarterly this past summer:

One of the things that is so stark about Detroit is the clear racial element of the wealth extraction that is going on…You have a city that is 80 percent African American, yet few Blacks own stores. The average person can see that, and experiences it every day. So that kind of explicitly racialized way in which wealth is being extracted, at least in Detroit, is quite evident. There is a need for us to cooperate for our own collective benefit.

“Black people,” he tells Zenobia Jeffries Warfield of Yes!, “have a long history of using co-ops as a way of navigating through an economic system that has been intentionally aimed to disinvest in our communities and prevent any kind of parity. So, this is us latching onto a historical strategy that Black people have used in this country to try to build collective wealth.”

Yakini has worked with co-ops for over four decades, beginning when he was a college student at Eastern Michigan University in Ypsilanti in the 1970s. As he explained to NPQ:

In college, I was chairman of the Black Student Association at Eastern Michigan University, in Ypsilanti. We ran a free breakfast program at an elementary school, patterned after the Black Panther Party, and we also had a co-op—a buying club—that we called the Ujamaa Co-op Buying Club. We would take orders in our organization and the community, and two of us would make the forty-minute drive to Detroit’s Eastern Market on Saturday, buy things in bulk, and divide it up. At that point, I didn’t know anything about a food movement, but cooperative economics was part of our thinking.

Part of the strategy, Yakini explains to Warfield, involves creating economic micro-systems that enable people to envision larger changes. “When an economy is smaller and more local, people by definition in that locale have more say-so over it, presumably.”

His work also seeks to foster economic self-sufficiency. In the days of legal segregation, economic cooperation within the Black community was not so much a choice as a necessity. “From 1888 to 1934, African Americans owned more than 130 banks in the US, and the number of Black-owned businesses rose from 4,000 to 50,000,” remarked Alden McDonald, CEO of New Orleans-based Liberty Bank and Trust in 2016. But now Liberty is one of only 22 Black-owned banks in the US.

Writing last year in Washington Monthly, Brian Feldman notes that banking is not the only sector that has been hit:

Of the fifty black-owned insurance companies that operated during the 1980s, today just two remain…Over the same period, tens of thousands of black-owned retail establishments and local service companies also have disappeared, having gone out of business or been acquired by larger companies. Reflecting these developments, working-age black Americans have become far less likely to be their own boss than in the 1990s. The per capita number of black employers, for example, declined by some 12 percent just between 1997 and 2014.

For her part, Warfield argues that national policy is critical and that co-ops alone cannot end the racial wealth gap, which seems obvious. On the other hand, statements by Warfield such as “Capital can’t concentrate in areas where capital doesn’t exist” don’t explain why Black banks used to be more prevalent, even though capital was less plentiful then.

Bob Dickerson, CEO of the Birmingham Business Resource Center in Alabama, tells Feldman, “Had our institutions and businesses been maintained, had that money been plowed back into our communities, it could have meant a world of difference.” Feldman, by the way, agrees policy is important—only he emphasizes the importance of anti-trust enforcement to preserve small businesses; the loss of these protections, he contends, helps explain the recent decline of Black business in many sectors.

For Yakini, co-ops are a tool to help reverse this disinvestment. But he agrees that in “trying to create justice in a system where you have hundreds of years of injustice happening on multiple levels in multiple ways, there’s not any one thing that’s going to solve that.”

“We have to fight on all these fronts,” he adds. “The question is how we build the vehicles that are sophisticated enough to function on all of these levels.”—Steve Dubb