PALMDALE, Calif.—Money is scarce, jobs are rare and business is not booming, so it’s time to get smart. An old practice in the Black community used to be cooperative economics, when everyone supported everyone else’s business and enterprise, and when families only bought from Black stores and ate at Black restaurants.

Calvin Kennedy, founder of Ausar Consulting, began his journey to reestablishing cooperative economics in 2001 when he began to recognize the viability of Black business.

“Cooperative economics is the idea and practice of building up those who are part of your affinity group,” he explained. “This can be achieved through investing in projects, patronizing specific vendors and even creating supporting companies so that the supply chain, is all within the same group. This is not a new concept. It was commonplace in America within the Black community in the early 1900s. We see this in the communities of Black Wall Street (North Tulsa, Okla.) and Rosewood, Fla., among many others. Now, we do not consciously practice cooperative economics and we may be the only group in America and the world, for that matter, that does not.”

Kennedy sees Blacks’ long history of working together and sticking together as having little precedence these days, especially with the more recent phenomenon of multiculturalism. The business consultant says the practice of cooperative economics is a vital vein in the survival of the Black community and economy. Without it there is a chance we can become totally dependent on others.

“It is truly about self-preservation, especially in uncertain economic times; and these times will grow more uncertain as we move forward,” the consultant said. “It is vital because instead of depending on someone else (government or large corporations) to create jobs and work, we create the work. We should be the ones providing the work for our children to step into. Economy transcends currency. So even if a currency is devalued or it becomes useless due to hyperinflation, an economy where we are able to provide the needed goods and services can still thrive. It allows for us to provide for our lives.”

Kennedy remembers the times when African American communities were economically sound, were excluded from patronizing White-owned banks and investing in White-owned companies.

He says when Blacks were allowed to put their money in mainstream banks, a kind of “recession” occurred within the community. Competitive White businesses would lower their rates temporarily on products, goods and services, and their Black competition would eventually fail.

 “Many Black people could not see the long-term cost of saving a few pennies in the short term,” he said.

Both Kennedy and other community business leaders stress the value of investing in the future by investing in and supporting one another’s businesses.

Rich Poston, Ray Webb, and Curtis Woods, leaders in the Antelope Valley Black Chamber of Commerce, recently set out to unite Black businesses and organizations throughout the High Desert in hopes of better sustaining the health and wealth of the Black community.

Inspired by the constant moan among community members that local churches and civil rights organizations were not doing enough, the AVBCC decided to take on the challenge with a more direct approach. Temporarily called the Inner Organization Committee, the group’s purpose is to help businesses and organizations thrive more efficiently with the support of others.

“It’s a collaborations of all the organizations in the Antelope Valley that can really help us push the urban agenda for the Black community, for the African American youth and small businesses,” Poston said.

“In unifying our efforts, we want to be an advisory board, together collectively and collaboratively working to make each organization better and stronger,” added Webb.

In the spirit of cooperative economics, they are visiting Black businesses and organizations to share information and resources. They have come to the conclusion that without the support of one another, each individual establishment runs the risk of struggling more than it has to, shutting down, or competing with a fellow minority-owned business.

Poston also commented on the reality that a large percentage of Black-owned businesses close within a few months of opening. Due to the lack of support, access to resources, and perhaps even an individualistic business module, many do not withstand the trying first years.

According to a 2005 study on “The Role of Families, Inheritances, and Business Human Capital,” conducted by Robert W. Fairle of UC Santa Cruz and Alicia M. Robb of the Foundation for Sustainable Development, in several aspects, including profit margin and survival, Black-owned businesses typically do significantly worse than White businesses.

“The magnitude of (profit) differences in business outcomes is striking,” the study said. “For example, only 13.9 percent of Black-owned firms have annual profits of $10,000 or more, compared to 30.4 percent of White-owned firms…. Surprisingly, nearly 40 percent of all Black-owned firms have negative profits.” The study added that Black-owned businesses have a significantly higher rate of closure than White-owned businesses.

The study suggested that those with a stronger family background in business are more likely to succeed, but the margin of difference of educated professionals and non-educated professionals hardly factors into the profit and survival probability of a small business. It concludes that individuals who have had experience in a family-owned business or are inheriting a family-owned business are more likely to survive, profit more, and grow more. But Black-owned businesses are less likely to have that experience.

“The problem is that we do our own thing on our own,” Woods said, emphasizing the importance of collaborating in the community in order to survive. “The point of what we are trying to do is get these different businesses and organizations together, no matter what they are doing. We want to see how we can support one another and in the same fashion have more conversations.”
By building a “nucleus,” as Woods called it, where African American entrepreneurs can collaborate, connect, support and learn, the community’s economy can slowly rebuild and thrive.
In moving forward, Kennedy explained that the first step to cooperative economics is being intentional.

“We need to also look at what creates economy, what are the skills necessary,” he said. “Everyone is not meant to be a rapper, entertainer, athlete or model. And all of these fall under ‘talent,’ meaning there is someone who is able to write them a check or make their careers possible. We should focus on the skills necessary to be the ones to make careers like these possible.”

 “We are not well represented in the technical fields, such as computer science, engineering and health sciences. These are vital for any society or economy. How many young people are learning skills as an electrician, plumber, carpenter, or auto mechanic; all high-paying skills, yet not highly regarded in the Black community. However, when the going gets tough, these are the important skills that keep a community going. Look to go into business instead of just seeking to get a job.”