Melvin L. Oliver and Thomas Shapiro. 1995. Black Wealth/White Wealth: A New Perspective on Racial Inequality. New York: Routledge.

I. Introduction

Black Wealth/White Wealth (Oliver and Shapiro 1995) is a contribution, based on empirical research, to the study of the causes of U.S. blacks' disproportionately high poverty. The authors' New Perspective on Racial Inequality is grounded on an analysis of racial differences in wealth ownership. A focus on wealth, they argue, will disclose qualitatively different dimensions of inequality that research based on indicators of socioeconomic status such as education, occupation, and especially income, is unable to reveal. The authors' goals are to deepen the understanding of the causes of racial inequality, to establish a new approach to policy making designed to lessen inequality in wealth ownership, and to write a text that is simultaneously scholarly and accessible to the public.

II. Overview

Oliver and Shapiro argue that wealth is a better indicator than income for establishing the depth of the socio-economic gap between whites and blacks. For example, in 1984 dual-income black households earned 77 percent of the income of similar white families, while the black families possessed only 19 percent of the white families' net worth (Oliver and Shapiro 1995:25). Further, most black families' equity is in housing and automobiles. The authors point out that the lack of wealth in general, and liquid assets in particular, indicates blacks' inability to weather temporary periods of financial duress. Whites on the average can maintain their social positions because they have the assets to survive short term hard times while, typically, blacks are unable to do the same. Income is only one source of whites' well being, whereas among most blacks income is the main or only basis of economic status.

Arguing against explanations of racial inequality on the basis of either class or race, they view the study of racial differences in wealth ownership as "an important way of combining race and class arguments about racial inequality" (Oliver and Shapiro 1995:35). This, they argue, necessitates a a "theoretical discussion" of wealth and race designed to identify the historical processes conducive to the development of unequal opportunities for wealth accumulation (Oliver and Shapiro 1995:35-6). These, the authors argue, have substantial ramifications for present and future generations. They develop and use three concepts to analyze the systematic impediments to wealth accumulation among blacks. "Racialization of the State," the first concept, describes policies that made it difficult for post-Civil War blacks to acquire wealth and subsequently to benefit from tax policies designed to foster the accumulation and intergenerational transmission of wealth. The Federal Housing Authority (FHA), for instance, redlined blacks from receiving loans, and later wrote policies whose implementation prevented widespread home ownership. Their second concept, "Economic Detour," refers to federal, state, and local policies that created barriers to black's ability to use self-employment as a means of livelihood and asset accumulation. "Sedimentation of Racial Inequality," the third concept, captures the legacy of discrimination that continues today to exclude a large proportion of blacks from employment and from opportunities opened under Civil Rights laws.

According to Oliver and Shapiro, the institutions and processes captured in their three concepts explain not only the disproportionate poverty of the black population, but also the precarious situation of blacks who attain middle class status. Hence the often-documented difference in black and white social mobility patterns, which shows that black sons of upper white collar fathers are less likely than their white counterparts to attain their fathers' occupational status. Their work ends with a presentation of policies, which were influenced by Michael Sherraden's (1991) Assets and the Poor, for improving on the unequal distribution of wealth. Oliver and Shapiro recommend that future policies deal with the historical injustices experienced by minorities, advocate education and accumulation of wealth among those in the lower economic strata, and redistribute wealth to the disadvantaged.

III. Findings and Praise

Black Wealth/White Wealth should be acknowledged for several strengths. First, it is extremely valuable because of its focus on wealth and the thorough empirical examination of wealth inequality. The detailed research findings about differences in wealth ownership in general, as well as between whites and blacks, are a very useful contribution to the literature. They convincingly and thoroughly illustrate their main point: that there is a consistent and vast difference between black and white asset ownership. From our theoretical standpoint, they starkly document the "living on the edge" effect of being a member of the propertyless class; i.e., the class compelled to rely on employment for economic survival, where asset ownership even among the better off pales in comparison to the top wealth holders. As the authors indicate, "one in three American families possesses no assets whatsoever, and only 45 percent possess enough to live above the poverty line for three months in times of no income" (Oliver and Shapiro 1995:179).

Second, the historical focus in Black Wealth/White Wealth is particularly important as it identifies earlier conditions that have substantial ramifications for present and future generations. Oliver and Shapiro skillfully place the empirical analysis of differences in asset ownership by race in the historical context of state and local policies, laws and other institutionalized forms of political and financial discrimination. Because of discrimination, black social stratification differs, in its relative proportions of skilled blue collar, white collar, technical and professional workers, and small and large business owners, from white social stratification. This situation is the source of another important factor affecting current wealth distribution among U.S. blacks: the lack of substantial and widespread intergenerational transfers of wealth. Unlike most blacks, whites are more likely to inherit at least some assets from their parents, primarily as home equity. The authors point out that today, while the white baby boom generation will soon benefit from the largest wealth transfer the nation has ever seen, a similar phenomenon will not happen among blacks. For most whites, the main source of this wealth is the result of increases in real estate values. Consequently, exclusion from home ownership, barriers to self-employment, and other forms of institutionalized racism, account for blacks' comparative lack of wealth accumulation.

IV. Problems

Historical and empirical research are the strength of this book, turning it into a valuable source of information about some causes and effects of racial inequality in this country. Yet, Oliver and Shapiro's work also warrants some criticisms. It is disconcerting to read in this book about the greater importance of wealth relative to income, about the concentration of wealth ownership in the hands of a tiny minority of the population, about the importance of inheritance, and about the precarious nature of middle class status for most people (regardless of race) as if they were new sociological insights.

A couple of examples from the book will illustrate this point. In the preface, the authors state that " . . . [our] diverse experience in the real world moved us to boldly argue that income, while crucial, is less important than the popular discourse acknowledges. It is wealth that matters" (Oliver and Shapiro 1995:ix-x, [our emphasis]). In the introduction to a general discussion of wealth and inequality in America, they state:

. . . we contend that the buried fault line of the American social system is who owns financial wealth -- and who does not . . . [I]n this chapter we provide evidence that what for Tocqueville and others is 'most important for democracy' is in peril. Instead of great fortunes being built by each generation by dint of hard work and pluck, a small class of rich men is perched atop America's social system. For some this is a polemical claim, for others it is common sense wisdom. We assemble evidence to support this proposition (Oliver and Shapiro 1995:67 [our emphasis]).

Perhaps this is new information for the very uninformed; given their stated goal of reaching a broader audience, this way of presenting well-known data and information is possibly a way of calling attention to the depth of U.S. inequality. Yet, this is a book intended also to be scholarly, and sociologists familiar with class and social stratification theory and research -- especially, but not exclusively, those working within the Marxist and neo-Marxist traditions -- have always known that wealth is more important than income in determining individuals' class locations and life chances. Marxists, neo-Marxist and critical sociologists in general have also been aware of the extent to which other social scientists have down-played wealth differences in their research, but this does not mean that all social scientists routinely ignore wealth, as a quick perusal of the literature would show. Furthermore, reports about wealth inequality and about the increasing concentration of wealth ownership and corresponding increases in economic inequality in the U.S. regularly appear in the Wall Street Journal, the New York Times and other newspapers with national readership. The media widely reviewed a most trenchant analysis of this process: Kevin Phillips's The Politics of Rich and Poor (cited by the authors). And few social scientists knowledgeable about class and stratification are likely to be unfamiliar with the widely cited statement from Ferdinand Lundberg's comprehensive study, The Rich and the Super-Rich:

...[A]nyone who does not own a fairly substantial amount of income producing property or does not receive an earned income sufficiently large to make substantial regular savings or does not hold a well paid securely tenured job is poor. He may be healthy, handsome and a delight to his friends - but he is poor. By this standard at least 70 percent of Americans are certainly poor, although not all of these by any means are destitute or poverty stricken. But as it was shown in the 1930's, Americans can become destitute overnight if deprived of their jobs... many persons in rather well paid jobs, even executives, from time to time find themselves jobless. . . . Unable to get new jobs, they suddenly discover, to their amazement, that they are really poor . . . And even many of those who never lose their jobs often discover in medical and similar emergencies that they are as helpless as wandering beggars. They are, in fact, poor. In such eventualities the man of property is evidently in a different position. He is definitely not poor (Lundberg 1969:23).

Oliver and Shapiro's research extensively documents the truth of Lundberg's statement; Black Wealth/White Wealth is not only about black disadvantages but also about white poverty and widespread economic insecurity. However, the precarious nature of middle class status is not a new finding (e.g., Frank Parkin's [1971] The Myth of the Middle Class). Wide disparities in wealth ownership and the uncertain economic conditions in which most Americans (regardless of race) live are common themes in stratification textbooks. Since the mid-1970s, there has been the consistent publication of the very thorough and useful booklet and poster, Social Stratification in the United States: The American Profile Poster Revised and Expanded (Rose 1992), widely used in the teaching of social stratification.

However, the misrepresentation of the relative novelty of the significance of wealth is not as problematic as the authors' atheoretical stance. While Oliver and Shapiro posit the importance of theory mentioned earlier in this essay, there is no theoretical analysis of wealth in their book. They define wealth in descriptive, not analytical terms. Wealth is simply " ... what people own ... command over financial resources that a family has accumulated over its life time along with resources that have been inherited across generations" (Oliver and Shapiro 1995:2). Thus defined, wealth is only a set of things and assets individuals and families own in different quantities. We argue, and the authors say they do, too, that it is important to differentiate between capital (i.e., income-producing property), and other assets (e.g., homes, automobiles, other consumer durables, etc.) which, while important for the quality of life of individuals and families, cannot become -- except under exceptional circumstances -- the basis for the acquisition of capital. However, this important difference between two qualitatively different kinds of assets is often blurred in the text through use of the term wealth to encompass both. Furthermore, wealth is often used to refer to very small net financial assets such as a few thousand, a few hundred dollars or even less. In our view, this usage is confusing because it can exaggerate white wealth while downplaying the common fate of propertyless Americans, regardless of race.

It is true that the racial gap in asset ownership is startling: 63.2 percent of black households (BH) have negative net financial assets compared to 28 percent of white households (WH); only 3.3 percent of BH but 23.7 percent of WH have a net worth of $50,000 or more (Oliver and Shapiro 1995:102). It is, therefore, true that, compared to whites', black's share is exceedingly meager. These statistics appear to need no commentary to convey their meaning. But, is it then appropriate to conclude that whites are "in total command of the nations' NFA (net financial assets); 95 percent of the net financial assets pie rests on their plate" (Oliver and Shapiro 1995:103)? We find this assertion misleading because it obscures inequality within the white population. Besides the 28 percent of WH with negative net worth, 8.5 percent have net financial assets between $0 and $1,000 and 39.8 percent between $1,000 and $50,000; thus, 48.3 of WH have assets between $0 and $50,000 (Oliver and Shapiro 1995:102). Most WH, 76.3 percent, have very little in the way of net worth, even though having a little is better than having nothing. While they are better off than most BH, it is also true that in most whites' plates the share of the wealth pie is so meager that to call it "wealth" obscures the realities of wealth ownership within the white population; the top 20 percent of households owns 94 percent of the nation's financial wealth and the top 1 percent owns 48 percent (Wolff cited in Rossides 1996:130). It would have been more appropriate to state that most of the nation's wealth pie rests on the plates of the top white wealth holders. Broadening the discussion of black/white differences in wealth ownership to consider class differences within the white population would have put the information in perspective -- bringing forth not only the grounds for substantiating blacks' claim to a greater share of the pie but also for the potential development of political solidarity between whites and blacks.

A descriptive and quantitative view of wealth is not, however, sufficient to shed light on the complex meanings and causes of current differences in wealth ownership. The authors correctly observe that the notion of barriers to equal opportunity, useful to account for income inequality among individuals, might not be adequate to explain wealth inequality (Oliver and Shapiro 1995:28-9). However, instead of identifying the structural sources of the limitations inherent in policies intended to foster equal opportunities, they argue for the need to rethink and broaden the scope of equal opportunity to "encompass asset formation as well as income enhancement and maintenance" (Oliver and Shapiro 1995:29). Consequently and for all practical purposes, the authors treat wealth almost like income, as something all individuals could strive for. It follows that it would be possible to shed light on wealth inequality, especially on racial differences in wealth ownership, by investigating "inequities in access to wealth" (Oliver and Shapiro 1995:29). This is an important research question that requires a theoretical investigation of the structural conditions within which "real wealth" (i.e. capital) is produced and appropriated, beyond the more concrete historical and sociological research on the various individual and institutional factors that affect individuals' access to other kinds of assets.

A theoretical view of wealth entails more than a cursory acknowledgment that "[S]ocial theorists from Karl Marx to Max Weber to Georg Simmel have stressed [its] bedrock significance" (Oliver and Shapiro 1995:32). The distinction between capital and other assets, a distinction crucial in both Marx's and Weber's analysis of class, has important theoretical and political implications for it signals the division of modern societies into two major social classes: the owning class (families, individuals, corporations and other institutions) and the propertyless class, the vast majority of the population that does not own capital, though it might own a variety of assets in quantities that vary with location in the social and technical division of labor. These two classes are engaged in cooperative, antagonistic and, for Marx, contradictory relationships that ultimately affect, depending on their relative power, the degree of capital centralization and concentration, the levels of wages and salaries and, consequently, workers standard of living and possibilities for acquiring assets other than income.

The stratification approach to the study of inequality this book represents, on the other hand, excludes research on class relations; within this framework, class is simply a ranking or ordering category used to sort individuals into as many "classes" as a researcher might find suitable for his or her research. In other words, class is whatever the researcher decides it will be within broad limits set by the standard SES indicators (i.e., income, occupation, education, place of residence, and other individual characteristics researchers might choose to include) and the available data. The authors of Black Wealth/White Wealth are no exception. Their approach is thoroughly pragmatic and they tell us so in defining the middle class:

"[W]e do not intend here to engage in a discourse about class in modern American life; the concept is important but not entirely germane to our purposes. Rather, as an exercise, we present several conceptions of the middle class, so that the subsequent analysis is not dependent on any one way of thinking about class" (Oliver and Shapiro 1995:70 [our emphasis]).

It is remarkable that in a work focused on wealth and its distribution, the authors do not consider it pertinent or appropriate to devote some effort to the investigation of the concept of class and of the different theoretical and political implications of the theory of class chosen to illuminate past and current patterns of wealth distribution. After all, crucially important to the study of wealth distribution is the question of the theoretical meaning of wealth and the conditions within which wealth is produced and appropriated and, consequently, the relationship between class and wealth. If wealth is simply as a set of things individuals can acquire in varying quantities depending on inheritance, education, income, age, occupation and other "factors," then it is true that the concept of class is not important; it becomes a device to classify clusters of individuals who share similar life chances. If wealth, meaning capital, is understood not as a set of things but as a set of relationships between the owners of capital and the direct producers, as the surplus produced by the propertyless and appropriated by the owners of capital, then analysis of class relations is exceedingly important to understand the patterns of wealth distribution within the population as a whole and within each racial/ethnic population.

Lack of theoretical allegiance to any given theory is not equivalent, however, to the total absence of a framework helping social scientists make sense of their object of research. There is, in our view, a "way of thinking" that appears to underlay this work: the common sense understanding of U.S. stratification in terms of descriptive categories that classify the population into the rich, the middle class, and the poor; the authors hardly mention the working class in the text. This is surprising, considering that the U. S., like all advanced industrial societies, is a "nation of employees" (Lundberg 1968:2-3) where the overwhelming majority of the population is compelled to work for a wage or a salary to survive economically, so much so that, as the authors' data shows, even the so-called middle class (white and black) is only a few months away from poverty if sudden unemployment, lay offs, illnesses, or other crises result in loss of income or in higher than usual expenditures. For example, their college-educated defined middle class had a net worth of $68,000 and net financial assets of $17,344, enough to survive 6.3 months at middle class standards and 17.9 months at poverty standard (Oliver and Shapiro 1995:71). Their interpretation of these findings is that the middle class, despite its apparently comfortable economic situation, is more "precarious and fragile" than most people think.

Leaving aside the question whether it is appropriate to describe such modest sums as "wealth," does not this fragile economic situation challenge the adequacy of referring to these strata as middle class? What kind of middle class is this if its resources can keep it away from poverty only a few months? Isn't this, instead, the upper level of the heterogeneous American working class? Doesn't this illustrate the increasing proletarianization of the so-called middle class (which they define in three ways: college educated, white collar and self- employed, and with incomes between $25,000 and $49,999)? Theoretically, what do we learn from these and other similar findings? Their SIPP data show that in 1988 nearly one in three households had zero or negative financial assets, and that the average American family had only $3,700 in net financial assets. What does this information convey about the balance of power between the two main social classes, the workers and the owners of capital, and how it influences wealth distribution?

In our view, some of their research findings describe the real conditions of existence of the entire U.S. propertyless class, usually hidden under the veil of status pretensions that are effective as long as the economy is stable. The distribution of wealth, such that capital is unavailable for the vast majority of the population, is not primarily the result of barriers to the distribution of capital, a state of affairs that more "equal opportunity" policies could, hypothetically, substantially change. This dispossession of the population is a "societal prerequisite" in a system where the organization of production and the appropriation of the surplus rests on the private ownership of capital. The current economic order would cease to be if the vast majority of the population could eventually own enough capital to lead economically secure lives or become economically self-sufficient and, consequently, able to withhold its labor power. However, these are only logical, not historical, possibilities.

Their statistical analysis of the correlates of wealth inequality, which mirrors the standard analysis of income inequality both in the techniques used and in the findings, is informative, but also disappointing. The general thrust of their findings support previous studies and theoretical analyses regarding the existence of extreme income and wealth inequality in the U.S., and the lack of economic security affecting the lives of most Americans. Their findings also support generalizations such as these: males are better off than females; being white, married, in the prime of life, with steady employment, with a good education and of middle class background is correlated with higher levels of income, net worth and net financial assets; and the higher the income, the higher the amount of assets. These findings are not new ones, aside from the additional information on the ownership of assets. This indeed offers a detailed picture of the staggering levels of inequality in asset ownership. Putting their findings together, they portray indeed a dismal situation for most people in the U.S., especially for blacks. What is missing from their discussion is the connection between these important research findings and their conditions of possibility; i.e., the common class location of these individuals classified as middle class. We argue that these findings actually reveal the life of the propertyless class, which relies primarily on the labor of its members for survival. The various factors that correlate with levels of income and asset ownership do so because of the effects of the real (i.e., propertyless) rather than imaginary (i.e., "middle class") class situation of most Americans, a situation whose effects on life chances are tempered by "factors" associated with individual workers' location in the technical and social division of labor. Among members of the privileged top 10 percent of wealth holders, for instance, the "life cycle model of wealth accumulation" is unlikely to apply, not in the class where parents can establish millionaire trust funds for their children at the time they are born, and where aging brings greater, not lesser capital accumulation.

Further, while in quantitative terms unmarried upper class women might have less wealth than married upper class women, it is unlikely that being single, divorced, becoming a single mother or getting old would throw them into poverty or near poverty. These are not facetious examples; they are designed to underscore the extent to which the correlation of a variety of demographic, social, and economic "factors" with given levels of income and asset ownership rests upon very specific material foundations: individuals' location in the propertyless class, whatever illusions they might consciously harbor about their class or status position and despite the descriptive class labels social scientists might assign to them.

V. Conclusion

We commend the authors for their detailed data analysis, as well as for their nesting contemporary inequality within its historical framework. They have produced a "thick description" of U.S. racial inequality, documenting the vast racial inequality in asset ownership. Although the portrait of inequality Oliver and Shapiro paint is vivid, their view of class is purely descriptive, non-relational and, consequently, irrelevant to the understanding of patterns of wealth distribution. In the end, the authors' analysis and policy recommendations reinforce the conclusion that racism is ultimately the main cause of the racial gap in asset and wealth ownership. However, we also need to understand the past and current political, economic, and social practices that produce and reproduce racial inequality in asset ownership, as integral aspects of the dynamics of capital accumulation, and the unending political and economic conflicts and divisions they create within the propertyless population. We are not arguing for "class reductionism," but for future research examining the connections between the processes characterizing the "normal" functioning of the economy (which constantly opens doors for some while closing them for many), and the racialized state policies and other mechanisms identified by Oliver and Shapiro as contributing to the racial asset gap. The authors are correct when they state that "... a focus on job opportunity is not sufficient to the task of eradicating racial disadvantage in America. Equal opportunity... does not lead to equality" (Oliver and Shapiro 1995:177), but they identify racial inequality in asset ownership as the main reason: as long as the wealth gap remains, black gains will be fragile and racial socioeconomic inequality will continue. The solution, then, is in "policies that promote asset formation and begin to close the wealth gap." (Oliver and Shapiro 1995:177). However, the "normal" operation of the economy is itself a limit to eradicating racial disadvantage; equal opportunity for employment means little given structural unemployment, a substantial demand for both very skilled labor (out of reach for most working class people, especially members of racial and ethnic minorities) and for unskilled low paid labor, declining real wages, growth in contingent and temporary employment, capital flight, etc. Furthermore, the economy rests precisely on the wealth gap between the owners of capital and the rest of the population. This is why the redistribution of wealth from the top wealth holders is an unattainable policy objective, while narrowing the racial asset gap among the propertyless, on the other hand, seems less controversial because it leaves the economic order unchallenged. It is in this terrain where politicians might be willing to tinker with the status quo, especially in election years.

The authors' ideal of racial equality seems to be the attainment, within the black population, of a stratification profile (in terms of income and assets) that mirrors white stratification so that, in the end, both whites and blacks will have the same probability of being poor or, to make the point differently, blacks will be proportionately asset poor. It is an important goal, for its attainment would improve the quality of life for millions of blacks, but it would also entail a transfer of resources from the propertyless better off (regardless of race) to the worse off (regardless of race). This would make it as controversial as policies aiming to redistribute wealth from the top wealth holders. In times of economic growth and rising standards of living such policy objectives, if articulated as common goals for all members of the working class regardless of race, could help forge bonds of political solidarity between blacks and whites. However, the current economic situation, which has brought great affluence for the few, while increasing economic uncertainty for a growing proportion of the work force, is extremely unfavorable to such policies.

Nevertheless, we believe that political struggles designed to broaden the content of the notion of equality of opportunity are important, regardless of the structural limits to their chances for ultimate success. We believe that people of all races, organizing together to improve their lot are more likely to learn, through their experiences of struggle, far more about the way capitalism works and its structural limits to change than through the pronouncements of intellectuals like ourselves. So, despite our criticisms, we welcome Oliver and Shapiro's contribution to increasing our knowledge of the causes of racial inequality and broadening the concept of equality of opportunity in a way potentially useful not only to bridge the racial asset gap but also the racial political gap. References

Lundberg, Ferdinand. 1968. The Rich and Super-Rich: A Study in the Power of Money Today. New York: L. Stuart.

Oliver, Melvin L. and Thomas M. Shapiro. 1995. Black Wealth/White Wealth: A New Perspective on Racial Inequality. New York: Routledge.

Rose, Stephen J. 1992. Social Stratification in the United States: The American Profile Poster Revised and Expanded. New York: New Press.

Rossides, Daniel.W. 1996. Social Stratification: The Interplay of Class, Race, and Gender (2nd. edition). NJ: Prentice-Hall.

Sherraden, Michael. 1991. Assets and the Poor: A New American Welfare Policy. New York: Sharpe.