Racism and Profit Rates: An Empirical Exploration

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  In Refereed Roundtable (90 minute): Marxist Sociology Section Roundtable 4

Abstract

This paper begins with an intriguing piece of correlational evidence: racial inequality is associated with profitability across countries over the past 75 years. One explanation, proposed in Calnitsky and Billeaux-Martinez (2023), is that racial inequality divides workers, thereby increasing the rate of profit. The concept of “racial capitalism” has gained traction as a way to describe situations in which racism is causally connected to profits. Some have asserted that all capitalism is racial capitalism, yet this has rarely been empirically tested. This paper asks whether the racism–profitability correlation reflects a general law of capitalism or a historically specific configuration. Is racial capitalism a general or special case?

Using data from the Penn World Tables and the Varieties of Democracy project, we pair measures of racial inequality with standardized indicators of profitability across countries and time. Rather than estimating a single global association, we decompose the relationship across five historical eras and three levels of economic development, creating a 3×5 grid of contexts. Within each cell, we examine scatterplots of racial inequality and profitability to identify when and where the association is strong, weak, or absent.

We also test leading mechanisms and confounders, including poverty, income inequality, worker organization, democratic institutions, and GDP per capita, by stratifying the sample and assessing whether the racial inequality–profit relationship persists within each stratum.

Our findings indicate that the relationship is neither universal nor reducible to development, poverty, or labor strength. Instead, the positive association is concentrated in particular historical periods and development contexts, especially where labor movements were fragmented and states institutionalized racial categories into economic life. In many contexts—especially among rich countries in the postwar and contemporary eras—the association weakens or disappears.

Racial capitalism is therefore a contingent configuration that emerges under specific political-economic conditions rather than a universal law.

Authors

• Michael Billeaux-Martinez, Madison Area Technical College

• David Calnitsky, Western University