The Economic Origins of Racism

“Racism, in and of itself, was not motivated by the hate of another race. Instead, it was the by-product of an economic phenomenon.”

The concept of race has not always existed and is indeed relatively new, estimated to have emerged in the 18th century amidst the transatlantic slave trade (Smedley, 2007). Thus, if we are to understand racism in its entirety as well as its mechanisms, it is best done so through the long–run historical perspective, allowing us to understand its inner-workings by exploring the context within which it was born; the transatlantic slave trade.

Historically, slavery has supplemented the prosperity of numerous economic systems, for example the ancient Greek, Egyptian and Roman economies (Williams, 1944). Thus, it is unsurprising to find that slavery was important in creating the foundations for modern-day capitalism.

After the British discovered the New World Colonies, the large amounts of arable land combined with good weather meant that if cultivated productively, these colonies could be immensely profitable.

Yet, Solow’s neo-classical growth model shows that, a country’s income is a function of two things, Capital and Labour (and also Technology), with capital containing things like land and physical capital containing things like machinery and tools (Solow, 1956). However, the British only had one ingredient; plenty of great land but lacked the labour to be able to profitably cultivate the land.

Due to the limited population of Europe in the 16th century, the amount of free and willing labour required to be able to cultivate the staple cash-crops of sugar, tobacco and cotton could not be supplied in satisfactory amounts. Consequently, after several methods had failed, the British found themselves reverting to slavery, once again, to facilitate the scaling of production in the new world.

To fulfil their demand for indentured labour, initially, the British turned to the indigenous Indians, which quickly proved to be unsatisfactory, then to the poor white people in the Old World, such as convicts and Irish people; which was made easier by the harsh feudal laws in Europe which saw people being persecuted and banished to the colonies to provide labour for minimal transgressions.

Yet, white indentured labour proved less than desirable as it was expensive and the British worried that the increasing migration rates from the old to the new world would weaken the metropole. Since the basics of capitalism dictate that to maximise profit, one must minimise costs as Profit = Revenue – Costs and the biggest costs capitalists face are labour costs, the expensive nature of white indentured servants thus proved to be undesirable.

“The African was not just enslaved because of the colour of his skin but rather enslaved because his labour was abundant, cheap and lasted a life time”

This is where the African’s role in the transatlantic slave trade begins; in a bid to decrease wages, new world capitalists turned towards the African to fulfil their requirements for cheap and abundant labour, a phenomenon we have seen in recent times as corporations flocked to China and the East in the pursuit of cheap labour and production costs.

The significance of this is that it challenges the view of racism just being an ethical lapse on the part of the Europeans, which of course it was partially, however, the African was not just enslaved because of the colour of his skin but rather enslaved because his labour was abundant, cheap and lasted a life time. The negro slave was therefore, incorporated into a system of production that had already existed in the colonies, initially based upon the indentured servitude of poor white people.

Therefore, although the enslavement of the African was not entirely motivated by the colour of his skin or racism, due to the barbaric nature of slavery, to justify their inhumane actions and ease their own cognitive dissonance, Europeans employed pseudo-science to justify the enslavement of the African by concluding that the African was inherently inferior and closer to animals  than humans. Thus, they did not see it as a transgression of any divine laws of morality by treating them in such a vile manner (DeGruy, 2005).

Such pseudo-scientific ideology created the foundations of racism. Racism was thus a by-product of slavery; a means used justify a system where people measured prosperity and success in monetary terms whilst readily sacrificing human life in the pursuit of increased production and monetary gain.

Of course, racism has persisted and evolved since, but something to remember is that it is an economic phenomenon. Indeed, it is essentially a race of races trying to take over spaces and resources. Therefore, to me, racism is not name calling or racial slurs per se.

Instead, I argue it is the systematic and economic discrimination (and perhaps exploitation) that someone might face because of their race. Nowadays, we are too quick to pull the race card even when it does not apply. Too busy treading on egg-shells trying to be politically correct instead of investigating the true nature and source of things.

Our understanding of the roots of racism is important because it can enable us to effectively alleviate it. Because racism is underpinned by economic forces, perhaps the most effective way to fight it is through equal economic force. I firmly believe that those that do not have an economic foothold will be the ones completely exposed to the adverse effects of racism.

Consider the cooperative group economics practised by the Chinese, in most large cities in the UK, if there is a sizeable Chinese community within that city, it is very likely that you will be able to find a China Town to go with it. Similarly, they will also have flourishing communities where they have their own supermarkets, restaurants and banks within their communities.

This is an effective model for these groups who have migrated away from their home to a foreign land where they could potentially face racism. The development then of their own economic base and community enables them to survive and flourish without being dependent on another group for their sustenance.

Consequently, those groups that practise group economics are able to insulate themselves from racism by having the means to live a fulfilling life with everything they require being available to them within their own communities and most importantly being able to find employment. As a result, they are able to alleviate the effects of racism through such economic empowerment as they live and work cooperatively with others from their group; all for one and one for all.

To conclude, racism started as a by-product of an economic phenomenon as capitalists tried to justify vile actions in the pursuit of profit. Although the nature of racism may have changed throughout the ages as the socio-economic landscape changed, one thing is for sure, for those groups that suffer from discrimination, perhaps the best way that they can combat and alleviate the effects of racism is through the effective use of group economics which would allow them to insulate themselves and other members of their groups through the effective establishment of an economic base from which they can acquire work, resources and capital, allowing them to live unencumbered. Cooperative economics amongst the discriminated would allow these groups to be better prepared in the face of racism because no matter what we may think, those who are dependent upon another for their own sustenance and well-being will be at the mercy of those people and that is an uncertain and volatile place to be.



Smedley, A. (2007), Real black: adventures in racial sincerity – By John L., Jr. Jackson. Journal of the Royal Anthropological Institute, 13: 493–494. doi:10.1111/j.1467-9655.2007.00439_16.x

Robert M. Solow; A Contribution to the Theory of Economic Growth. Q J Econ 1956; 70 (1): 65-94. doi: 10.2307/1884513

WILLIAMS, E. E. (1944). Capitalism & slavery. Chapel Hill, Univ. of North Carolina Press.

Leary, Joy DeGruy. (2005). Post traumatic slave syndrome : America’s legacy of enduring injury and healing. Milwaukie, Oregon :Uptone Press,




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