The Census Bureau reports that the number of black-owned businesses jumped 47 percent from 1977 to 1982. The country's first national venture capital fund to aid black businesses and private ventures was just announced by the National Black Leadership Roundtable. A national Buy Freedom campaign is urging blacks to spend more of their dollars in black communities.
The signposts are unmistakable. Blacks are trying to take charge of their own economic destiny and redefine themselves in a new direction: into the entrepreneurial realm.
While business development has been a minor theme among blacks for decades, it became a major one in the hands of the civil rights leadership several years ago. In the '60s, blacks addressed social problems; in the '70s, they addressed political problems. Now in the '80s they are addressing economic problems. Jesse Jackson's Operation PUSH has signed "moral covenants" with a number of corporations. The NAACP has also negotiated fair-share agreements with numerous American businesses, and pushed a new minority business advocacy program that sought federal assistance.
But this new black entrepreneurial thrust, while coming at a time of new anxiety about the state of the economy, does not depend upon legislation or federal assistance to the extent that previous ones did. Government, of course, has played a major role in black business success, from the Nixon administration's black capitalism program to today's programs for minority business development.
At the same time, these government statutes bolstered only private self help; they did not replace it. One of the obstacles has been the dearth of venture capital. But now that doesn't appear to be as much of a hurdle as it once was. According to Rep. Parren J. Mitchell (D-Md.), who announced the formation of the U.S. Investment Company, an investment pool with contributions from blacks and other minorities: "The statistics of late, the visible decline in all areas within black and minority communities over the past few years have brought the need for this minority venture capital fund to the front burner."
It's ironic that blacks are often portrayed as poverty-stricken, particularly since they collectively spend $180 billion a year on goods and services. This is certainly good news.
The bad news, however, is that this buying power has never been organized. Most ethnic groups recycle their buying power among their members from five to 12 times; among black Americans, a dollar turns over less than once before leaving the community. "It is spent in a 180-degree angle directly away from other blacks," says Tony Brown, chairman of the Council for the Economic Development of Black Americans. His organization has designated October as Buy Freedom Month, and is planning to make it an annual event. "This drive is neither a boycott of nonblack firms or a political movement; nor is it antiwhite or anyone else," says Brown.
While some minority entrepreneurs are suffering problems at the managerial level, overall black businesses are doing somewhat better, and we need to applaud that fact. But despite these new thrusts toward economic independence, it remains to be proved whether blacks can organize their buying power for the benefit of their communities. It also remains to be proved whether large numbers of black businesses can make significant inroads into the economic mainstream.
One thing is clear, the two things are related. Until black consumers turn their dollars over more with black businesses, black businesses will not be able to prosper and get the kind of respect they seek from banks and other lending institutions.