The Illusory Promise of Free Enterprise: A Primer for Promoting Racially Diverse Entrepreneurship

Abstract

The U.S. Census reports that minority business ownership exceeds the corresponding racial makeup of U.S. demographics. Based on these figures, the principle of free enterprise seems to be acting on equal grounds. Could entrepreneurship be the social panacea for abolishing racial biases and the inequality gap? This Essay argues that this parity of minority entrepreneurship is misleading. The Kaufman Foundation and Small Business Administration most recently reported that Black-owned firms represent only 7% of all U.S. businesses, Asian-owned firms represent only 4.3%, and Hispanic-owned firms represent only 10.6%. These businesses typically do not grow or expand, leaving the number of people employed by them relatively constant. Overall, minority-owned firms experience more business failure, turnover, and job loss than traditional businesses. This disparity in American free enterprise is, in and of itself, a source of systemic racism and social injustice. Seemingly, American minority entrepreneurs are given a false hope of economic independence. In fact, This Essay illustrates that current legal programs destine many of them for insolvency, bad credit, debt accumulation, or, at best, being rendered small and meaningless in the marketplace without the proper tools and opportunities to increase equity and wealth. The Essay concludes by proposing new legal methods to increase dedicated access to capital, networking, guidance, and education for racially diverse entrepreneurs. Specifically, it proposes relaxing bureaucracy, fixing biases in lending, forming racially inclusive networks, and cultivating the role of lawyers as social agents who can inform minorities about impediments and opportunities to accumulate wealth and economic growth. Such methods may, in turn, reduce systemic inequities caused by racism.