It’s About Proximity to Capital
Inheritance and the Nature of Wealth and Power
Perry C. Douglas
As Caribbean people of African descent, we must be under no illusions about the importance of capital, and how the inheritance of wealth builds power and privilege. Many features of inequality have emerged out of the structural socioeconomic wealth systems coming out of European aristocratic societies centuries ago. The impact of having capital, or not having it, is truly something that impacts societies for generations. This is why the socioeconomic impact of intergenerational wealth is so profound. Still, today, the slave-plantation system endures positively for white folks and negatively for Blacks. The capital from that stolen wealth continues to compound and expand through inheritance. It spreads to social and political institutions, making one group powerful and another powerless; bolstering white supremacy and its hierarchical structures and agendas in the universe.
Effectively, the inheritance of capital also includes privilege and opportunity, which create incredible advantages for those doing the inheriting. The lineage of wealth transfers over time has made all the difference in the world. Therefore, inheritance and one’s general proximity to capital puts one at an advantage relative to winning.
Wealth creation at its core is about satisfying the human condition in making us secure. It’s about self-preservation, self-interest, survival, and prosperity. This is fundamental to nature, in our metaphysical world. So, unless Black folk can get with the fundamentals of human nature, stop being distracted by things that don’t exist or work in nature, and get down to the sophistication of self-preservation which is entrepreneurship, our socioeconomic circumstance will deteriorate even further. Our very existence as a people, like all other peoples’ on the planet, depends on securing our future and that requires creating economic value. Wealth creation is at the very centre of it all: wealth = security. Therefore, our future relevance depends directly on the value we create and how effective we can become in influencing the global systemic environment. The world values value and without value, as a currency, we cannot transact and leverage our worth in the universe. You can jump up and down all you like with the standard type of Black Lives Matter (BLM) narratives, you can align your emotions with the likes of nonprofit organizations in fighting for political power and social justice. But in the end, things will just go full circle but everything comes back to wealth and power!
In today’s world, inherited capital remains even more concentrated and in the hands of very few, generally white males in the tech sector, for example. They are now arguably the most powerful and influential class because technology controls our lives whether we know it or not. Rich white nerds like Mark Zuckerberg run our lives, and Facebook’s “Like” algorithms control many of our minds, emotions and behaviour. Much of the capital floating around the tech sector remains staunchly within the white male privileged VC and private equity hands, a closed network. Where capital is only truly accessible to them. Nevertheless, fundamentally, there is nothing new or revealing about this reality. It’s just the sophistication of self-preservation and how nature has always worked, going back thousands of years to our hunter-gather times.
Therefore, proximity to capital is a true force in nature and capital builds confidence in people and underpins wealth expansion — wealth is created through new businesses and general investing, it strengthening families, communities, and whole societies.
So, when the narratives are spun about how brilliant individual white guys are, in starting new ventures and building great businesses, changing the world, etc., just remember that it has nothing to do with brilliance on their part or anything like that. What it has to do with more is proximity to capital! This is why in the tech investing venture space about 95% of startups don’t make it past 3 years. The closed ecosystem network has so much cash and limiting its distribution to the white guys that all they do is throw cash at the idea wall and see what sticks. Yes, that's how things go down. There is no great analysis and modelling, or due diligence happening, it’s just about white guys investing in white guys, like a frat; like attracts like and familiarity drives comfort and trusting relationships.
And if you don’t believe that’s how things go down, then just look at the massive tech investing failures that keep occurring. Of note, the major frauds, recently; Samuel Bankman-Fried, also known by his initials SBF, the entrepreneur, investor, and former billionaire. Bankman-Fried was the founder and CEO of the cryptocurrency exchange FTX and cryptocurrency trading firm Alameda Research. In short, it was all a big fraud! But everyone is blaming SBF, however, the entire white male-dominated tech investing network is to blame, including the noisy financial media, who are nothing more than entertainers reading scripts and creating hype. At the top of who to blame are the big tech investor firms like Sequoia, an 85 billion dollar company that always leads the hype. These guys say they are savvy investors, but obviously, they are not. They just throw money at things they like knowing the rest of the herd will follow; effectively they control the silicon valley investing universe — of what to invest in. And what is really happening is that Sequoia is using its weight and market influence to get into deals early, expecting others to follow, “if Sequoia is in then all must be good,” nobody does any due diligence and the madness of the crowd overruns basic common sense. Nobody understands cryptocurrency or what they are investing in but when the herd moves, it’s a powerful force.
So along comes white boy SBF, from California, who went to MIT, and whose parents are two Stanford University professors, wrap that up with white privilege and proximity to capital; that’s enough to put big capital into. Others in the network join the herd, talking heads and entertainers like Shark Tank Kevin O’Leary, taking 15 million dollars from SBF to further hype the fraud. We can also go back years to convicted fraudster Elizabeth Holmes, the former biotechnology entrepreneur. In 2003, Holmes founded and was the chief executive officer of Theranos, a now-defunct health technology company, which claimed to revolutionize blood testing but was all just a made-up massive lie. And all the usual “smart money” suspects investors took part. But again, Holmes was white and blonde and went to Stanford, so this shallow narrative was more than enough to create another billion-dollar-plus fraudulent valuation, without a single dime of revenue. Can’t make this shit up folks!
There are many more stories like the above out in tech investing land, the landscape has many buried failures and frauds, but you only hear about the very big ones, the ones the media gets a hold of. So, don’t be fooled by the bullshit narratives being swung about brilliance, talent, hard work, etc., it’s just about privilege and proximity to capital.
In another example, there has been a lot made in American history about JP Morgan (John Pierpont Morgan,) he is described as an American financier and industrial organizer, one of the world’s foremost financial figures in the period between the 19th and turn into the 20th century, the Gilded Age as it was known. JP Morgan was famous for helping to create the modern American economy. However, there was no exceptionalism or brilliance to JP Morgan; he was a sickly person throughout his life, lacking self-confidence in his early years, with a grotesque and disfigured nose (Rhinophyma is a skin disorder that causes the nose to enlarge and become red, bumpy, and bulbous,) which he insisted be covered with makeup in all his photos. JP never wanted to be a financier either, he just wanted to “rest and travel,” but his father (Junius Spencer Morgan,) a rich financier in London and New York demanded JP get into the family business. So, Junius funded the “start-up” firm, J.P. Morgan in New York, consolidating his power between the two major cities.
Of course, the money handed down to JP from his father Junius to start the new firm was inherited from Junius’s father, JP’s grandfather. JP’s rise in the period of the Gilded Age, a period in American history marked by rapid industrialization, enormous wealth and privileged families in New York, the centre of the financial world. The Gilded Age was characterized by the extreme wealth of a few individuals and families, while many others lived in poverty. The era was also known for deep political corruption involving wealthy families and politicians, all the way up to the White House.
JP Morgan may be most famously known for “saving” the US banking system at a period when there was a crisis around the US government not having enough gold reserves to back the US currency. Through his political connections, JP Morgan was called in to fix the problem and so he did, earning himself an oversized commission for saving the American Banking System. JP also reorganized several major railroads and became a powerful railroad magnate himself, and during his time about 60% of the publicly traded companies in America were railroad shares. So, J.P. Morgan controlled the clients holding those shares and trading in them. He also financed industrial consolidations that formed General Electric, U.S. Steel, and International Harvester. J.P. Morgan was the most powerful and influential person in American business in his day, with consolidated power through a tight and connected network of investors and political connections.
When Andrew Carnegie wanted to sell his steel business, he called J.P. Morgan, and sold it for $480 million in 1901, making Carnegie the richest man in the world back then. And, the sale was financed through JP’s network of wealthy clients, from New York and London.
So, objectively, all of what JP Morgan achieved or what made him “great” was made possible, not because of his brilliance or special talents, if anything, from the evidence, JP was below average but his proximity to capital made the difference. It was the inheritance lineage that took him from being someone that you might have never heard of, instead, to the great JP Morgan business icon. Nevertheless, even after starting at the very top, and with all his vast privileges and connections, JP still was unable to meaningfully grow his inherited wealth to any great significance. JP Morgan died in 1913 in Rome, Italy on one of his annual two-month or so vacations, and when Andrew Carnegie heard that he died with only a $66 million fortune. Most shocked, Carnegie said, “… and to know now, that he wasn’t even a rich man.”
As time and generations pass, J.P. Morgan Chase has become a global financial powerhouse, which underscores the fact that wealth endures intergenerationally, compounds and expands exponentially, and consolidates in exclusive networks of less-than-spectacular white men.
Today, Jamie Dimon, is the CEO and Chairman of J.P. Morgan Chase, and arguably the most powerful man on Wall Street, in global capital markets, but how does a “banker” who is essentially a manager become a billionaire? He never created anything, he’s not an entrepreneur? Again folks, being a white male in a white male-dominated industry, puts you near the capital and wealth-creating ecosystems. Which oftentimes allows the most untalented among us to achieve great wealth and power. It’s like an aristocracy, where your wealth outcome is dependent on your birth status — white male.
So, don’t get gaslighted and never believe the white supremacy hype, there is no American exceptionalism, just the mighty inheritance variable factor. Like JP Morgan, Jamie Dimon, and others; in the final analysis it all comes down to positioning and advantages, and if your proximity to the goal line is right on the one-yard line, chances are you’re going to score!
Therefore, the long-term impact of inherited wealth, access to capital, and political connections underpinned by exclusive networks of wealth ecosystems can never be underestimated, or improperly weighted. This is where the power is in the world and what drives and dominates political economy everywhere!
It might be helpful if we think about things more mathematically, and if we can fundamentally understand things as being part of nature, we may be better equipped to deal with our challenges less emotionally. See below:
Nevertheless, we can’t ever dwell in the past or make excuses. Black folk need to take responsibility for their own lives and get with the nature of things, reality, and how the world really works.
Achieving real power requires pursuing prosperity and security over the long term. It requires good strategic thinking and decisioning — applied intelligence. It requires the sophistication of self-preservation which is entrepreneurship, and not putting our hands out begging the government for money to change our lives, only we can change ourselves. Black folk need to recognize how other groups like the Jews, have fought discrimination and adversity. This group has been dealing with annihilation and persecution for at least a couple of thousand years now. Black folks need to understand that we exist in nature, so, as the Jews have done, we must muster up some resolve to change our positioning in this economic conflict-driven world. Create value for ourselves and use it in our self-interest. We need to build resilience and become antifragile people with resolve and determination. As the Jews know, security comes through focusing on the sophistication of self-preservation — enterprise development towards wealth creation. It takes money to buy weapons and build a top army to survive in the desert, at the tip of the sea, surrounded by your sworn enemies. So you either survive or die. Up to you.
We have way too many examples of how capital and opportunities are squandered in the Black community, by Black pro athletes for example. If they are not buying gold chains and new cars and supporting an entourage, wanting to be rappers and saying nonsense on Twitter. Then they are now investing in “Pickleball.” The likes of LeBron James, Kevin Durant, and Draymond Green, to name a few, even former tennis star James Blake too. But didn’t that dude go to an Ivy League school? Didn’t he go to Harvard? Just goes to show that when you don’t know how the universe works, regardless of education, you can easily squander capital and miss real opportunities to drive change.
So, because Tom Brady is investing in Pickleball, for the fun of it, the rest of the uninformed Black athletes want to invest in Pickleball too. We need to set priorities and start developing our intergenerational wealth and power base, by applying some intelligence to our decisioning. Investing in Pickleball doesn’t get you into the mighty tech sector. Black tech nerds are not interested in Pickleball for heaven’s sake. Maybe pooling your capital, and creating venture and private equity funds for the capital-starved Black tech entrepreneurs with great ideas, would make more strategic sense. If we continue to make stupid moves with no idea of what we are doing. No long-term power-creating strategy. And if we keep standing for nothing we’ll always be falling for something! These pro athletes’ proximity to capital advantage continues to be wasted. We can’t create Black tech entrepreneurs — millionaires and billionaires if we can’t even think effectively.
Fundamentally, achieving personal security is part of the human condition, so, capitalism is a functional way to secure ourselves through prosperity. Intrinsically, pursuing security is self-preservation at play, which requires putting self-interest first and engaging in capitalist behaviour. Simply stated, building towards individual security requires building wealth. So, to secure our families and communities over the long term, we must build and pass wealth down intergenerational. Capital is the functionally active catalyst for wealth creation, allowing those near it to take advantage of it.
In the post-George Floyd era, we’ve seen where everyone and their grandmother creating a nonprofit to “help the community.” But go back and listen to all the talk and weigh it against the results today, and you’ll find that nothing of any meaningful economic value has been achieved. These top-down organizations are not conducive to producing any real and sustainable growth outcomes, they don’t have the knowledge, experience, capacity or capital to be effective in private equity and venture. So, we must stop this. It doesn’t work. However, these organizations can help set up foundations to provide the capital to every Black youth who wants the opportunity to seek out the best education streams, to prepare for the future of work and entrepreneurship. We need to fund pre-university programs with focuses on math, science, engineering, business and entrepreneurship programs, strategy and political science and history — well-rounded students. So these kids can apply and gain entry at the very top universities in the world. They can compete and win if they are well-prepared and well-funded throughout. Another core area where nonprofits can be helpful is in the area of Black mental health. We are in a real crisis, and if we can’t get mentally healthy we’ll not be able to compete and become high performers.
If we continue to bury our heads in the sand and continue to exist opposite to nature, to how success is achieved in the real world, then we should just stop complaining. It is up to us to change ourselves and bring ourselves up from the bottom, no one is coming to save us, we must think and act for ourselves and rescue ourselves. Thinking long-term, like astute investors, and understanding and adhering to finding ways to improve our overall proximity to capital is vital. The world is unfair, and yes there is massive inequality, and yes we as Black Caribbean people of African descent have endured slavery, colonialism and Neo-colonialism, leaving us significantly behind the wealth curve. All of the above is true! But we can’t change the past, and complaining about it won’t help our circumstances either, thinking strategically and taking real actions will.
