In his fable “The Racial Preference Licensing Act,” the late Harvard law professor Derrick Bell (1992) imagines a license which authorizes businesses to exclude people on the basis of their race . Similar to pollution permits giving firms the legal right to pollute, this license legalizes racial discrimination for a fee (“expensive though not prohibitively so,” p. 48). Once obtained, a business must display their license prominently within their premises and operate their activity in accordance with their official racial preference. Only licensed facilities are allowed to discriminate. Others, if found guilty, are fined. The Act also stipulates that license holders must regularly pay a tax to an “equality fund” that supports discriminated communities through investments in business development, home ownership, and education. Accordingly, the fictional president of Bell’s fable presents The Racial Preference Licensing Act as a way of maximizing freedom of racial choice while guaranteeing racial equality, either directly from equal access or indirectly from the “fruits of the license taxes” (p. 52). Drawing on the idea that the purpose of integration laws is “not to punish lawbreakers but to diminish their numbers,” the president further claims that the license and associated taxes are the best ways to de-incentivize racist behaviors (p. 51). Rather than policing morality, he calls for a paradigm shift which realistically uses the “working of a marketplace” to achieve racial justice:
Racial realism is the key to understanding this new law. It does not assume a nonexistent racial tolerance, but boldly proclaims its commitment to racial justice through the working of a marketplace […]. (p. 47)
Subtitled “a fable about the politics of hate,” Bell’s essay highlights some of the key questions that inform Race in the Marketplace (RIM) as an emerging field of interdisciplinary scholarship. Namely what is the relationship between markets and racial justice? Is racial injustice an indelible feature of a market society? Or can market practices, incentives, and/or policies be liberatory, enabling all individuals to experience just treatment, access, and opportunity?
Market(ization): The Road to Racial Justice?
Historically, scholars have considered the State as the key site of racial oppression (Omi and Winant 2015). Racist systems like Jim Crow, Nuremberg, and apartheid laws which directly impacted markets were all put in place by national governments. The marketplace, on the other hand, has been conceived as a potential space for the liberatory emancipation of dominated classes. Because the possibilities for commerce offered by markets extended beyond the scope of localized power structures (for instance trading with outside partners or in new unregulated commodities), subordinated groups could engage the market as a means to advancing their marginalized and/or ascribed status (Hann and Hart 2009). The power of Jewish merchants in medieval Europe (430 AD–1453 AD), for example, often challenged the racist arrangement of local authorities, which excluded Jews from many occupations and places of residence, and forced them to wear distinctive, identifying clothing (Friedman 1962; see also Levy 2005). Similarly, the disproportionate contribution of “immigrants” to entrepreneurship and national growth contradicts racist anti-immigration rhetoric and policies that view them as social burdens (Kerr and Kerr 2016). Thus, prominent scholars across disciplines have theorized that a market unfettered by the political grip of government would eventually correct racial injustice and make it obsolete (Becker 1957; Friedman 1962; Posner 1987). In the words of US economist Milton Friedman in his seminal Capitalism and Freedom (1962, p. 109):
[a] free market separates economic efficiency from irrelevant characteristics. […], the purchaser of bread does not know whether it was made from wheat grown by a white man or a Negro, by a Christian or a Jew. In consequence, the producer of wheat is in a position to use resources as effectively as he can, regardless of what the attitudes of the community may be toward the color, the religion, or other characteristics of the people he hires.
Such theorizing relies on the idea that marketplace participants are free, independent, and self-interested individuals who cooperate through various economic mechanisms to exchange goods and services. The argument continues: If a business uses racial preference in its activities, the self-imposed burden of excluding potential customers, clients, and/or partners on the basis of race would place it at a disadvantage relative to its non-discriminating competitors (Friedman 1962). The costs associated with such an obligation would act as a tax on the discriminating company and inevitably, so the logic goes, drive it out of business.
Supporters of this view agree nonetheless that a store may still discriminate within a free-market framework. Yet they contend that, if it does so, it is as a response to the racial preferences of its community of customers or employees. According to this third-party argument, racist patrons and staff can introduce “competitive pressures” forcing businesses to behave in discriminatory ways (Sunstein 1991, p. 25). Legally enforcing non-discrimination policies would then be counterproductive as they would not directly impact the real racists (that is the community) but rather the store, which is only trying to satisfy the preferences of its (racist) clientele and staff (Friedman 1962). In this view, also espoused by Derrick Bell ’s fictitious president, governments should not coerce firms to practice racial equity but should instead prevent coercion by ensuring freedom of choice. In other words, individual freedom should prevail over other values as it will guarantee mutual benefit, global stability, and put an end to discrimination .
History, however, has refuted this assumption time and again. First, local authorities have consistently controlled the potential racial subversiveness of markets by restricting the mercantile activities of racialized groups. An infamous example of this was the pariah status of Jews in medieval Europe, which controlled how they could run their business and public life; ensuring that they had limited access to money and almost no political power (Hann and Hart 2009). During the twentieth century, race riots against “Black Wall Street” in Tulsa, Oklahoma (USA) and against thousands of Jewish-owned businesses during the Kristallnacht (“Crystal Night”) in Nazi Germany confirmed the ineffectiveness of market-logic in thwarting racial violence. More recently, beliefs that “neutral” market-driven technological advances will eliminate racial injustice were further challenged when the United Nations and several NGOs accused Facebook and its supposedly dispassionate algorithms of stoking the flames of racial hatred against minority-status Muslim group...