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T//ť Ethnic Economy since Weber
Wfaal Is an Ethnic Economy?	•1
Middleman Minorities	(»
Booker T. Washington	K
The Ethnic Economy	9
The Ethnic Enclave Economy	li
Interactionism	u.
The Ethnic-Controlled Economy	IS
Summary and Conclusion	24
African 'American entrepreneurs had been unusually successful in ruka. Oklahoma, converting the city's black community, Greenwood, into a showpíace of enterprise and pride.' When a blat k man was accused of raping a white woman, whites formed a lynch mob outside the jail on May 30, 1921. After exchanging shots with defenders, the white mob invaded Greenwood, burning and looting black-owned homes and businesses. |J\ the rune the National Guard broke up the not. 18,000 homes and businesses had binned.and 304 people were dc.K\. Newspapers blamed the African Americans for the noi.
During the night of November '). 1938, Adolf Hitlers followers smashed Jew ish storefronts m . ities all over Germany. The Nazis also looted the stores, torched
many, and shot and beat the hapless proprietors .ind their families. According to Hitler's propaganda minister, Josef Goebbels, "orelmary German citizens" had spontaneously arisen to punish the Jews for economic crimes. The police did not
I he bl.uk-Korean conflict in los Angeles came to the world's attention on April 2'). [992, when noting and looting broke out in South Central Los Angeles, the heart of the city's black community. In 3 night-- oľ noting, the worst in American history   since   1863, mobs damaged J!<>73 stores, nearly two-thirds of win. h
.>>
4     Chapter i    rhc Btthnifi Econortij sinceWeber.
were Korean-owned.3 Of looted stores, 38% were also deliberately burned Police protection was ineffectual.
When in the spring of 1998 banks closed and the national currency collapsed <>n foreign markets, irate Indonesians tinned againsi Chinese storekeepers, whom they blamed for die currency's devaluation. Rioters "searching for scapegoats" attacked die Chinese minority.'1 During 3 weeks of rioting, mobs looted Chinese
owned stores and murdered Chinese store owners. Police watched, and some participated in the looting.5
In all tluso eases, angry mobs targeted ethnic businesses. Scholarly interest in the ethnic economy owes mm h to these horrifying incidents and to others, too numerous to enumerate, that are ven similar. On the other hand, the ethnic
economy also draws scholarly interest, especially m the United States, fioin the
Horatio Alger tradition. Whatever Alger ma\  really have meant, m American
culture the "Horatio Alget tradition" stands Tor self-help thai eventuates in rags ii    lies lite stones." When despised and disadvantaged minorities start then own businesses, they  progress &öm employee to business owner, a  progression   that Abraham Lincoln admiringly called "the tine condition of the laborer."
Moreover, when ethnic and racial minorities open business firms, they create
new jobs for themselves and others lather than taking jobs from the general labor market. I'hese new   ethuu   enterprises expand the job stippK öl the host society,
benefiting the ethnoracial majority as well as the minority, One might suppose that, even if prompted by self-interest, others would encourage and support ethnic
business. Why should anyone hate those who increase the job supply? However, the historical record indicates that batted and violence are frequent responses. Ethnic economies ha\e been and still remain controversial. Three generations o! social science inquiry have helped to clarity the reasons.
WHAT IS AN ETHNIC ECONOMY?
An ethttk economy consists of coethnic self-employed .md employers and the» coethnic employees."Whatever IS not part of the ethnic economy belongs to the general labor market. Simple to define, and useful in studies o\ immigrant and
etlinu   minorities, the concept of ethnic economy derives trom three feeder
traditions. I he tust originates with the l.uropean founders of historical sociology;
econd with the literature of middleman minorities that descended trom the fust, and the third autonomously from African American economic thinkers. notably Bookci T, Washington. Although classical economists had no interest in
ethnicity, classical sociologists did. Marx, Weber, and Sombart all thought that
modern capitalism emerged from and superseded a primitive, ethnic predecessor. Therefore, all three distinguished traditional capitalism .\nd modern capitalism. Sombart declared that a modern capitalist enterprise operates impersonally. I hat is, decision  makers place profit  considerations ahead of all purely personal  rcla-
Wlut Is an filiiin Economy"       5
tionships. including relationships of coethnicity. In contrast. "'Iiaternal and coin mun.il sentiments" elccisivelv shaped the decision  making of traditional firms.7 The symptoms were favoritism, nepotism, coinmunalisin. .uid cxieptionalisin m
every phase of the traditional firm's operations.
Weber, too, maintained that everywhere in the world precapitalist firms operated a dual price ethn that reflected underlying loyalties to ethuoreligious groups rather than a determination to maximize profit whatever the social consequences. Weber thought that profit maximization at the expense of all purely social ties
was a feature of modem capitalism, Indeed, Weber" exculpated the Jews from the
charge of inventing capitalism, raised against them by romantic nationalists such as Richard Wagner, the composer, on the grounds that Jews were too traditional m their business outlook to have accomplished the task."' Therefore, late-medieval Jews still permitted ethnoreligious relationships to COloY their business practice. For instance, during the transition from feudalism to capitalism, Jews would soil charge a coethnic less than a non-Jew  or do business favors for a Jew lh.it they
would not do loi a non-Jew. Cmng these backward practices,Weber pleaded the
lews guilty to minor ethnochauvinism while exonerating them ot the disgrace of having invented capitalism.'" Here Weber's widely shared view converged with the Marxist tradition that distinguished precapitalist business enterprise from capitalist business, reserving to the latter a dynamic role in social change.1'
Modern capitalism required a decisive break with traditionalism, said Weber.
and the Jews could not break out. Weber claimed instead that Protestant sectarians, especially those influenced by Puritanism, bad first stripped business enterprise of the Iiaternal and communal sentiments that had everywhere else m the world prevented the emergence of rational bourgeois capitalism from its ethnic predecessor. Weber believed that its universalism rendered rational bourgeois capitalism superior to traditional capitalism. First, universalism permitted legal regulation of contracts and relationships instead of reliance upon soeial trust
and shared cultural understandings. Second, universalism permitted bureaucracy,
itself a key technical innovation. Bureaucracy permitted unlimited expansion of
organization size with access to economies of scale, inentociam appointment to office, official careers, rational cost accounting, and continuous technical innovation. Both Weber ,i\)d Mux relegated ethnic capitalism to a back burner of Sociological  interest  where, until quite recently, it stayed. After all. ethnie capitalism
could not leach vast size, employ bureaucratic methods of organization, appoint
Workers on the basis of technical qualifications, replace strikers with noncoethnic strikebreakers, accept the judgments of 3 balance sheet, or promote research and development. Modem capitalism could accomplish all these feats. Because (^\~ diese advantages, modern capitalism drove out and replaced traditional capitalism. Although traditional capitalism remained significant m underdeveloped countries.
SVen there its days were numbered and its influence continually diminished. following   Weber,   mainstream   social   science   endorsed   all    these   conchr
romoting them virtually to canonical status.
6      Chaptei 1    The Echni< Economy since 'Weber
MIDDLEMAN  MINORITIES
Tlie literature of middleman minorities developed in tins intellectual climate.' (iddly, Weber's13 own concept ofpariah capitalism" had called attention to ethnic minorities that specialized m market trading in precapitalist societies. Unlike proletarian minorities, whom Blauner14 theorized m terms of internal colonialism and Boliacich15 m terms oť spln labor markets, middleman minorities were
marginal trading peoples, residing in diasporas, who continued this commercial livelihood into the modern .t^e despite the  presumably adverse competitive
climate created by modem capitalism." 'True. Jews were the star illustration ot a middleman minority, a centrality that linked middlemen with Weber's concept of pariah capitalism." However, following Howard Paul Becker,18 who first
defined this concept, middleman minority theorists expanded the repertoire to   include   trading  peoples  .ill   over  rhe   world.'"  Armenians, overseas  Chinese.
Gypsies, Sikhs of East Africa, the Parsees and Marwarts of India. Ismaili Muslims.
the H.ms.i of Nigeria, and others also represented nailing naiioiis that so-journed abroad, performing mercantile roles in a context oř old-fashioned ethnic capitalism.
Although old-fashioned ethnic capitalism still worked m backward. Third
World regions, survival OH the margin did not challenge the mainstream's confidence m the ultimate superiority of modern capitalism. After all. so it was argued, middleman minorities inhabited backward regions still impenetrated by modern capitalism. As capitalism expanded, big, rationally organized corporations would displace small and medium businesses thai operated Willi traditional rules. Some ot these were ethnic businesses, others belonged to the petit bourgeoisie.'1 Both were doomed. A line example of the mainstream's cschatology is Clifford Geertz's22 depiction of rotating credit associations as "a middle-rung in development." As Third World countries developed and modernized, Geertz claimed, they would replace the old-fashioned nioucs pools with banks and insurance coinpa nies, the progressive financial institutions oľ modern capitalism. Decades later. CO rating credit associations are more powerful and extensive than ever in many puis of the Thud World, so the claim that modernization dooms them to oblivion is unpcrsuasivc m
Actually, a generation ago. when Clifford Geertz was still preaching the
Conventional view, research had already challenged the supposition that traditional ethnic business conferred only liabilities and no advantages.'' On the contrary, middleman minorities had developed particularistic resources that supported mk\ enhanced then- business success. These resources included entrepreneurial
Values, beliefs, institutions, and social networks through which the children ot middleman merchants easily moved mto mercantile roles, continuing the tradition of their family and people. Moreover, as Bonacich '"' argued, the uneasy practice ot sojourning abroad inclined middleman traders to intensify their social solidarity, arid social Solidarity encouraged their business enterprises.

Middleman Minorities        7
Nonetheless, instructive as it remains, the sociology of middleman minorities perpetuated  certain  conceptual   blind  spots.''   First, middleman   theory stressed
Third World contexts, implying that advanced market societies no longer had
traditional  capitalism    This  implication  mirrored  the  mtelleciu.il  context  m  the
shadow (<i which the theorv of middleman minorities had initially developed.
That context fashioned a sharp distinction between traditional and modern capitalism, relegating ethnic capitalism to the doomed periphery of the world ftCOnomy.   Representing  the   cutting  edge   ot" capitalist   development,  the   ore
could dien be treated as free of the residues of traditional capitalism.27 Even if
tins judgment was m a broad sense coned, it was certainly oversimplified, hi actuality, pluralistic societies of North America always contained marginal sectors within which ethnic capitalism continued to flourish, often more luxuriantly than the modern alternative.1" A simple core-periphery contrast overlooked these ethnic   sectors, tcrnhh   important though  they were to  the communities
involved,
Second, middleman minority theory could treat only trading peoples with a history ot traditional capitalism. Groups such as the' Chinese. Jews, India's Mar-waris. and Armenians mel this qualification. But middleman minority theory could not address the situation ot wage-earner groups among whom private business was a peripheral pursuit or who had onh recently turned to entre-preneuiship ' This limitation rendered middleman theory ot limited use m the analysis of the economic integration and social mobility of ethnic minorities and immigrants generally.3' If one wished to discuss the business enterprise of Cubans m Puerto Rud1 or of Koreans in California,33 the middleman minority concept
Was unsuitable because neither of these immigrant nationalities were historic trading peoples.  I'he  need  to discuss these  precise cases and  others like  them
emerged empirically in the developed societies when many immigrant minorities
turned impressively to business without a convincing middleman history and tradition. Business oriented they certainly were, but they had not previously been historic middleman minorities.
Finally, middleman theorv had lived comfortably with its own margmality. Middleman theory could explain old-fashioned ethnic capitalism m a Third World still unpenetraied by modern capitalism. I low ever, when entrepreneurial minou-
t'es turned up m advanced industrial societies, not just in the periphery, thev
Challenged the accommodation that middleman theorists had worked out within mainstream social theory. After all. the prosperity ot middleman minorities m advanced countries implied that the ethnic business formula still worked even in the heartland of progressive capitalism. If so. tin- vaunted advantages of l-ordisi
capitalism might not be s>, overwhelming as previously imagined. At a minimum,
old-fashioned ethnic business had demonstrated more endurance than an earliei generation of theorists had imagined possible. At a maximum, old fashioned ethnic business worked better than Fordisr capitalism m selected contexts, and could ewn ivuiech  economic problems (such as disintegrating central cities) that
70
8      Chapter l     ľ ho lihnu Ke (»notný since Weber
modern capitalism could not. No ono suggested then, as they do now.' tint ethnic capitalism could sometimes outperform mnltin.ition.il corporations in
nuiny conu
BOOKER T. WASHINGTON
Booker T. Washington35 was die leading spokesman of black America m the last decade of die 19th century. Unlike his arch-rival for African American leadership, William F. B. IHiHois."' who stressed political action and education,Washington stressed business ownership and homo ownership -is strategies for black advancement.3 To this end, he founded the National Negro Business League m 1900. Conceiving of the league as a federation of local black chambers of commerce, Washington hoped the business leagues would improve the economic condition of black America, substituting homo ownership for tenancy and business ownership for unemployment. Washington's book the Negro in Business laid out his
economic program, but it also described in empirical detail  the advantages "ť
networking in business, a wisdom that American business schools did not receive ti>i another eight dorados.
Within the African American community, Washington's political opponents criticized his willingness to compromise with racial segregation, h is true that
Washington   rocommended  toleration   of legal  racial  Segregation  in   the  South.
where most blacks then lived. In actuality, however.Washington did not accept the
Souths racial status quo as Ins opponents Minplistioally alleged. He onh believed
that the development of black economic power should haw priorit) over black
political power and black higher education. A dollar, he once remarked, was worth more to blacks ar that moment than was the franchise. Given economic
power, he thought, black people would have much less trouble claiming social and
Political equality than they would without it.Therefore,forced to select a priority,
he stressed getting money over getting the vote. I his judgment was not complete madness. Reviewing the historical record. Robert Weenis now declares that the ideas of Washington "merit serious reconsideration."311
Washington's supporters lost a decisive political battle CO DuBois, his opponent, at the Niagara Conference <.i\ 1905.-W Alter tins defeat, Washington never recovered Ins leadership, which was assumed by DuBois's organization, the National Association for the Advancement of Colored People. This organization's programmatic focus was on ballot access and education, not cnirepreneurship. Although   banished   from   the   leadership   of the  African American   movement,
Washington's economic philosophy remained influential among many black intellectuals, including Malcolm X.and among African Auieiuan business faculty, who
kept alive and improved his ideas m a series of research monographs."1 During the 1940s, African American intellectuals were maintaining the only active debate
about and research into minority entrepreneurship in the academy.4' When, years
The Ethnic Economy      9
later, interest in ethnic economies reemerged in North America, thou writings
and those of Booker T. Washington informed and animated the scholarly literature on the topic then available.42 Still later, as academic interest m immigrant and ethnic minority business spread to Europe, Australia, and Asia from the United States. Washington's legacy became global.
THE ETHNIC ECONOMY
( ontemporary ethnic economy literature derives from all these feeder traditions.
but owes most to (he theory nl' middleman minorities. Without denying the achievements ot middleman theory, which remains a valid case, ethnic economy theory is more general l'\oi\ middleman minority has an ethnic economy, but every ethnic economy docs not  betoken a  middleman  minority. An ethnic
economy or, as we shall later call it. an ethnic oufuership economy exists whenever any immigrant or ethnic group maintains a pnv.no economic sector in which it has a
controlling ownership stake. The size of the ethnic economy affects its significance. A big ethnic economy is of more consequence than a small one. However, si/o is not a defining feature ofajn ethnic economy. A small ethnic economy is still an ethnic economy. ,\nd even ethnic group has an ethnic economy, including white ethnic group
Social science interest in ethnic economies began in 1972 with the publication of Ethnic Enterprise m America by Ivan Light." This book compared Chinese. Japanese, and African American self-employment between 1880 and 1940, concluding that social trust supported entreprenourslnp. Ethnic Enterprise in .1' anticipated the major theoretical ideas that came later, including social and cultural capital. Additionally it stressed the contributions of rotating credit associations to minority commerce, Rotating credit associations, discussed in chapter 4, still provide the strongest oxidom e o! soi ial capital effects on business." I lowever, Bthnic Enterprise in America did not introduce the concept <.<( ethnic economy. i   Honácích and John   Modell  were the fust operationally to dolino ethnic
economy.* By ethnic economy, Bonacich and Modell meant any ethnic or immigrant group's self-employed, its employers, then COethrÚC employees, and then-unpaid family workers, thus defined,an ethnic economy demarcated the employ
ment immigrant and ethnic minorities had created On then own account from jobs provided them by the general labor market .Thanks u> the hard vd^-: definition, one could measure the size of any ethnic economy in a single percentage, it of all workers (including sell-employed mu\ employers! work in an ethnic economy, then 84% of the group works in the general labor niaikel. In this sense.
the Cuban ethnic economy of Miami comprises self employed Cubans, Cuban
employers, and their Cuban employees m Miami I ho Cuban ethnic economy does not include Cubans who work for wages in the general economy. | (.| example, the Cuban ethnic economy does not include Cubans who work for agencies
1
10      Chapter 1     I Ik- i-.ilinn Economy since Webo
«it government, for multinational corporations, or for private businesses owned bj non-Cubans. All of those Cuban employees work in die general labor market.
A puzzling issue is how to define an ethnic group. In principle, everyone is ethnic, including assimilated whites, and Collins' rightly complains that the etlink business literature includes too few whites. As matters stand, whites are the least understood ethnic entrepreneur«. However, .is .1 matter ol practice, which is iu> guide to desirability, ethnic economy researchers have routinely defined ethnic groups in terms of their foreign national origins. Thus defined, the Irish originated in Ireland, a nation; And the Chinese originated in China, another nation. However, ethnic groups need not be defined by national origin, The Irish can be Protestant or Catholic and each subset further differentiates
into county affiliations  that  have ethnic quality  within   Ireland. Similarly, the
Chinese can be trom the mainland, from ľ.uw.in. from Singapore,or from Hong
■; they can speak \anous dialects; .nul ilie\ i an come Iroin one 01 another
region, all of which have internal ethnic characteristics. Nationality is not a perfect indicator of ethnicity.
Like other indicators ot" national origin, the terms Irish, Mexican, Chinese, and so forth .iif approximations t<< real ethnic identities. Ethnic economies depend
upon ethnicity not national origins tor their boundaries, and national origin is
just a convenient indicator of ethnicity, not the real dung For example, although Chinese-speaking,Shanghainese entrepreneurs played the role ot'ethnit minority
iň Hong Kong, a Cantonese čaty,48 where their firms composed a Shanghainese ethnic- economy Similarly. Iranians of four different ethnorchgunis backgrounds
cooperated mainly with coreligionists m I.os Angeles, a circumstance that created lour thinly linked banian ethnic economies, not just a uiut.in Iranian ethnic economy.1 Similarly, Guarnizo50 observes that 70% of" Mexican American entrepreneurs m bos Angeles actually hailed from only four districts in Mexico, a provenance that is lost unless we examine internal ethnicity among Mexicans
An ethnic economy is ethnic because the personnel are COethnics. Intended only to distinguish the internal 01 externa) auspu es 0j work cication. the concept of ethnic economy makes no claims about the Ideational clustering or density of firms,  which   might, indeed,  be   evenly   distributed   among   neighborhoods
and industries. The concept ot ethnic economy is agnostic about clustering.As a matter of definition, the concept .ilso makes \u^ claims about the level or quality
of ethnicity within the ethnic econonn or between buyers And sellers. Buyers and sellers need not be COethnk in the ethnic economy, nor need they conduct then-business m a foreign language. This definition does not locus attention Upon trade conducted bv owners for the benefit of coethnic buyers, whether at the retail oi the wholesale level. Owners ne m t In ir own group's ethnic economv ivgard-'I whcthei then customers are or are not coethnics. 1 he concept ot ethnic economy neither requires nor assumes an ethnic cultural ambíciu c within the firm or among sellers and buyers. Bonacich and Modell V2 research found that those  in  the Japanese American ethnic econonn   were  more ethnically Japanese
I he I thine I nclavc E< ononis         11
than Japanese Americans of the same generation who worked m the general labor market, a finding that O'Brien and lugita' have confirmed. This empirical result was not a matter of definition. The Japanese American ethnic economy would
have remained an ethnic economy even had the workers in this economy retained
no higher Japanese etlinicitv than Japanese Americans m the general labor market In the pluralistic societies of North America, immigrant and ethnic- minorities have  always competed  tor income, mobility, political  power, and   prestige. Assimilation   theory  always  assumed  that  insertion   is  wage  earners  into  the
economic mainstream improved immigrants' earnings chances, and that insertion required and accelerated .u culturation/' In this view," still the dominant one. ethnic entiepreneurship would not enhance ethnic economic welfare so much .is would economic incorporation into the wage-earning mainstream.""'Wage jobs m
the mainstream are deemed likely to pay more than the ownership of small businesses, and jobs outside the ethnic community are deemed better than jobs within it Keitx And Sklar's comprehensive survey ' found that the assimilation models economic issumptions did fit the economic experience ot European ethnic and immigrant groups m Canada. Men of European origin paid a penalty of about 10% if they retained ethnic language use. a sign ol uonacculturation. However, the assimilation model dul not rit the economic experience olnonw hues in Canada, who paid no financial penalty at .ill when they continued to speak h languages m Canada.5g Acculturatcd or not. nonwlutes experienced economic disadvantage.
Tinning to the ethnic economy, we find that some ethnoracial groups have (uriied heavil)   to entiepreneurship. others have made average use ol it. and still others have made below-average use.'" In the United States, high-eiitrepieneui ship groups include Arabs. Armenians. Chinese, Gypsies, Greeks, Italians. Japanese.
Jews. Indians and Pakistanis, I ebauese. Koreans. n\d Persians. Immigrants ot western and central European provenance have generally displayed only average entiepreneurship m North America, as have Cubans and Latin Americans. Blacks, Mexicans. Vietnamese, and Puerto R leans have had be low-ave rage rates ol entrepreneurship in North American towns and cities."'
THE  ETHNIC ENCLAVE ECONOMY
The concept of an ethnic enclave economy resembles the concept of ethnic economy and was often identified with it m the ll>S'»s."s However, these are different concepts with different intellectual lineages. Unlike the concept of ethnic economv. which derived from the earlier literature of middleman minorities, the concept of ethnic enclave economy derived from dual labor market theory, itself a product of institutional economics,6"1 Dual labor market theory developed m the late 1960s as an effort to explain persistent inequality in employment. Seeking  to  explain   the   reduced   Income  And   status  attainineni   ol   women   And
12      Chapter I     I he Ethnic Economy since Wobei
minorities, dual labor market theon claimed that disadvantaged groups were locked into an inferior, secondary labor market that did not offer egress into more desirable jobs m the primary sector of the labor market.' ' "1 abor market
segmentation" meant the long-term coexistence of noncommunicating labor markets m which vastly different standards oi remuneration and work satisfaction prevailed. Since neoclassical economics declared such a situation impossible, labor
segmentation theorists had to concentrate on proof, nor theory.'''Valid as far as it went, dual labor market theory took wage labor as its reality, entirely overlooking self-employment on the grounds, then widely shared, that sell-employment was a
dwindling phenomenon of negligible importance. In practice, dais simplification
led to a world View in which self-employment vanished from the consciousness
of social scientist
Sullivan''1 was the fust to note that labor market studies could no longer treat
self-employment as an anomaly that could be ignored, Somewhat later, fortes
and Manning1'' made the case more forcefully, and their view has subsequently prevailed, Although some segmentation theorists still ignore self-employment, " informed opinion no longer mistakes such treatment for a comprehensive analyse 1 nst. self-employment is no longer declining in North America, Australia or m
western Europe, Second, its prevalent c was long underestimated m official documents, a practice that, it is now realized, unwisely encouraged social scientists to ignore the phenomenon. ' Finally, the effects o\ self-employment are usually
stronger in immigrant and ethnic minority communities than they are in the general economy. 2 Therefore, if self-employment is ignored.no treatment of employment cm be comprehensive.
I his influence OJ dual labor market theory is clear in the work of Wilson and Portes, * the earliest formulation of the ethnic enclave economy. After a review oi
the dual labor markets literature, to which they believed themselves contributors,
Wilson and Portes"' introduced the Concept of "immigrant enclave," a conceptual ancestor of the ethnic enclave economy. H\   immigrant enclave, however. Wilson
and Portes still meant only the employment of immigrant workers m "the enclave
labor market." Workers were m the enclave labor market il then employers were COethnics. ' Wilson and Pones did not include the self-employed in their study because only employees were öf interest to students of labor market segmentation— and the self-employed were not employees.
Wilson and Portes's concept of ethnic enclave economy built upon dual labor market theory's distinction between the competitive and monopoly sect Wilson .\nd Portes and his associates argued that ethnic enclave economies obtained some of the economic  advantages of the  monopoly sector even  though.
strictly speaking, the} belonged in the competitive sector. Ethnic enclave economies obtained these advantages thanks to superior recapture of coethnii
spending.This recapture was caused ultimately by vertical and horizontal integration along ethnic lines such that coethnic funis could suck \alue out oi each Stage o\'  a    product's    movement    toward   the   market,   losing   little   or   no    value   lo
The I thin. I ni law I - onomy.       13
nonCQCthni« firms. Using the Cubans of Miami as then example. Wilson and Portes showed that t tiban firms bought from and sold to one another to an extent fir beyond chance levels. Along Calk Ocho, the Cuban economy's mam street. Cuban-owned firms bought the semifinished products of other Cuban funis, worked on
the products themselves, ami then passed the improved products on to other Cuban firms, which finally sold it at retail I hesc ethnic linkages permitted Cuban linns to extract maximum value trom every dollar of final product ultimately sold to non-( uhans. As befits an important idea, analogous enclave situations are easily spotted once someone points out the basics Fuuisi-, i an see an analogous process Operating on San ľrancisco's Fisherman's Wharf, where Italian fishermen sell their catch to Italian restaurants that sell seafood meals to visitors. In this manner. San Francisco's Italian ethnic- economy monopolizes the whole value of the restaurant business even
though the tourist industry has a competitive,small business structure.
The vertical and horizontal linkages that gave the enclave economy its quasi-monopolistic advantage derived ultimately from what social Scientists now call social capital, a concept we define and use in chapters 4 and 5. Although Wilson and Portes did not utilize that terminology, which had not vet been invented, they did report that Cuban merchants built upon ethnic networks, ethnic trust, and common language for reasons of expediency. That is. (uban business owners dealt With Othci Cuban business owners because they already knew and trusted them and could speak CO them in their native language. I hese Straightforward and practical business advantages were easv to understand without requiring observers to postulate a Cuban economic conspiracy to bilk or defraud consumers. At this point. Wilson and Portes intersected with the core argument of the ethnic economy according to which ethnic economies evolve naturally because of then operating advantages. True. Wilson and Portes's arguments about the quasi-monopolistic advantages of ethnic- economics would have been familiar to African Americans, whose popular economic thought had long stressed like arguments, but their income recapture arguments had never before been empirically traced in
formal input -output analysis as Wilson and Portes did.
Portes " later expanded the enclave labor market to include the self-employed,
the first time dual labor market theorists had done so. According to Portes, immigrant enclaves had two characteristics: Spatial clustering, and numerous immigrant-owned business funis that employed many coethnic workers.    I ven
though Ins new conceptualization included the sell employed, then a conceptual innovation, Portes's emphasis was still upon the numerous workers thev employed, not upon the self-employed themselves.s" Fins emphasis upon numerous workers was a  product of the labor market segmentation  tradition. It   ignored
the question of what was to be done with the self-employed who employed ii" workers.
Pones and Bach8' returned to Portes's"'-' earlier definition of an enclave economy. However, they83 operationalized the Cuban enclave economy as "all men indicating employment in firms owned by Cubans." ,i definition that excluded
U      ( li.ipiri i     i he Bchntt Economy since 0
the self-employed. Later» aggregating self-employed and theii eoetlinic employees, who were not further distinguished, thou final operationalization actuall) followed Bonacich and Modell's earlier definition of the ethnic economy even though it contradicted the definition ol enclave economy they offered. In this book, the ethim: enclave economy empirically consisted of the self-employed plus their coethnic employees in Miami. They compared Cubans in the enclave
economy with Cubans Ul the primary and secondary sectors of the labor market
in respect to nione\ returns on human capital, ľhey found that after 6 years ol'resilience in the United States, the Cuban immigrants' money returns on occupational prestige and knowledge of English were more favorable in the enclave than m the primary labor market.
Turning to Mexican immigrant men. whom they also followed longitudinally lioni their arrival, Portes and Bach84 found no enclave economy at all. a telling result. Cubans bad an ethnic enclave economy, and Mexicans did not Ol Course,
Portes and Bach found self-employment among Mexican immigrants in then-sample. In (979, 5.5 percent of Mexican immigrant men in their sample were self-employed compared with 21.2 percent of Cuban men. However, Mexican
Self-employment did 1101 create a small immigrant enclave economy to contrast
with the Cubans'big one. Such a position would have coincided with the treat
ment one would haw expected Trom the perspective of Honácích and Modell's
concept of ethnic economy."5 Instead, they declared that Cubans had an enclave
economy and Mexicans did not. As a result. Mexican immigrants had to take then-chances as "low wage labor in the open economy," whereas Cubans operated in
a "setting dominated by immigrant business networks."'"   The non-CXÍstence <>t'a
Mexican enclave economy is clear evidence that Portes and Bach's concepts were
not the same as those introduced earlier by Bonacich and Modell.
Although   Portes  and   Bach"'    cited   Bonacich   and   Modell, thus  indicating familiarity with this earlier work, then treatment of Mexicans diverged from the
concept of ethnic economy because they wanted co propose something different. As Portes and Bach conceived it. the ethnic enclave economy was not just the co-ethnic self-employed and their coethnic employees, It also consisted of a Ideational cluster ol business linns whose owners and employees wen: coethnics and whose
firms employed a "significant nuinbei"ol coetlmu workers. Irom this definition, three corollaries followed that excluded the Mexicans from an ethnic enclave economy even though Mexicans clcarlv had an ethnic economy. Fust, unlike Cubans m their sample. 90 percent of whom resided m Miami. Mexicans m their sample were more evenly dispersed across the Southwest. Therefore, their ethnic
economies were sin.ill m scale mu\ could not derive the same benefits from loca-tional aggregation. Second, the scattered Mexican ethnit economies tacked a huge
locations] duster like Miamis Little Havana. Thud, the Mexican sell-employed did not employ a significant number of coethnics in then firms, most ol which had nn employees at all. Tor these reasons. Mexicans had .\n ethnic economy as Boiiaci.h  and  Modell  had  defined  it. but  they  (fid  not   have an  ethnic en
■ •■ .»ms as Portes and Bach defined it.*6
Ihe Ethnic Enclave Economy      15
When attempting to define the ethnic enclave economy. Portes and Bach had in mind the Cuban economy of Miami. One-halt the population of Miami is of Cuban origin. Miami's Litde Havana contained (still contains) a conspicuous
concentration of Cuban-owned linns m which many Cuban employees work.
The concentration of the funis m a I 'ub.in business district was conceptually important because Ol the threshold benefits supposedly derived therefrom .Chat is, Wilson and ľortes"'' and Wilson and Martin'"1 had argued that the Cuban ethnic
enclave economy was hyperefficient because of vertical and horizontal integration, ethnically sympathetic suppliers and consumers, pooled savings, and rigged markets. Not sharing in this agglomeration benefit. Cuban-owned linns outside the Cuban enclave presumably did not derive any spin-off benefit from their location, so the enclave concept appropriately excluded such linns and their Cuban employees. Indeed, the alleged agglomeration effects of the Cuban ethnic enclave in Miami explained whv neither Miami's blacks nor immigrant Mexicans could obtain equivalents high rates of self-employment as did immigrant Cub
After much initial confusion during which the concepts were vv rough equated, the literature now distinguishes an ethnic economy from an ethnic enclave economy 'These are different concepts. As the concept of ethnic enclave economy matured, the term came to stand lor the economic advantages of loci tional clustering. Economic advantage means the ability of the enclave economy iierate more money foi participants than the participants would have been able to obtain without that enclave structure to support them. At this point, the ethnic enclave economy turned into a special case of the ethnic economy, the Current view. It is a special case because evciv immigrant group or ethnic minority has an ethnic economy, but only some ethnic economies are territoriall) dus
tered and confei quasi-monopolistic economic advantage. In other words, an ethnic em law economv requires loeational clustering of firms, economic mterde-
pendency, and employees, whereas an ethnic economy requires none of these. V. a
result, researchers conclude that ethnic enclave economies are fewer than ethnic economies.1'
When ethnic firms are not clustered conspicuously in a neighborhood like Miami's Little Havana, or when firm owners have no employees, or when vertical and horizontal integration do not obtain, then an etlmu economv exists that does noi lit the concept of an ethnic enclave economy. Since all three conditions are r.uelv obtained, the concept ot ethnic enclave economy tits far lewer cases than does the Concept of ethnic economy. The case of Iranians m Los Angeles illustrates the distinction 1 Ik- li inians' ctlinu ecmouiv is verv large. It occupies 6L3 percent of Iranian heads of households m the labor force. However, the Iranian ethnic economv is not an ethnic enclave economy loi two principal reasons I ma. the Iranian linns are virtually unclusiered in Space just as Iranian residences aie Unclustered. Ihe Iranian eilinu e< oiiomv lacks a business core analogous to Chinatown Or Little Havana."' Second, the Iranian funis are heavy on owners, but
light on coethnic employees.Therefore, the ethnic enclave economyls emphasis
upon relative wages misses the main economic  effect of the ethnic economv.
16      Chapter 1     I In- Ethnic Economy since Weber
INTERACTIONISM
I Ik- textbook explanation ofentrepteneurship has long maintained chat entrepre-ncurship lias a demand side .is well .is .1 suppV) side.   That is. the number of entrepreneurs anywhere and their characteristics depend simultaneously upon what customers want and what provider groups will supply. Here what the customers want to buy stands tor the demand side or" the explanation, and what the
provider groups offer stands for the supply side." Both sides belong to a lull explanation. However, as the ethnic economy literature developed, emphasis had
lallen heavily Upon the supply side to the neglect of the demand side. I his emphasis made sense in terms of the new subject's need to prove the existence oi m-tergroup variation On the supply side in order to legitimate the whole discussion. Additionally, the practice of holding some factors constant in order to ascertain the effects of others is both essential and legitimate 111 social science. Nonetheless.
some researchers complained that the ethnic economy literature neglected the
demand side. I hey asked fot balanced explanations that included both the demand side and the supply side.
In a pioneering statement of this complaint. Waldinger. Ward, and Aldnch'1'' Observed that .1 "common objection u< cultural analysis" was us lack Ol attention to "the economic environment m which immigrant entrepreneurs function" They «commended "an interactive approach" that examined the "congruence between the demands of the economic environment and the informal resources of the  ethnic  population," Since   the  time   thev   wrote   this,  that   reaction   has
achieved the strength  of a movement of thought  in  the ethnic economy
literature, Within  which  it  is now   axiomatic  that  ethnic entrepreneurs emerge from the interaction of supply and demand. At first, this conclusion sounds like the prewar textbook  orthodoxy  rewarmed. However, the  interaction approach does not represent a return to the older textbook generalization that supplv and demand coprodtice entiepreiieiirs. I hat older view  makes no relerence to the articulation of supply and demand, only insisting that both participate in a complete explanation. In contrast the interaction hypothesis specifies how supply and de mand codeteruune entrepreneurslup — not just that they do SO, Specifically, mter-actioiiisin claims that the entrepreneurial performance of groups depends upon the fit between what thev have to "Her and what a market  requires.'" I he better the lit, the more entrepreneurs; and the same group can experience  1 good fit m some places and a poor fit in others. Thus, the Chinese operate proportionally more restaurants in New York City where numerous Jews like Chinese food than they do in cities whose predominantly non-Jewish consumers do not share the enthusiasm.'"" I his example suggests that the number oľ Chinese restaurants m am place is a joint product of the number of Chinese in the place and the local public's appetite for Chinese  food. In  fact, interactionism  maintains that every groups entrepreneurslup depends upon the tit between what it can do and what the local market demands.
Interactionism       17
I
Interai tionisin imposed a new and stringent methodological constraint upon
ethnic economy research. In order to expose supply ami demand factors, inter
actiomst research designs must permit simultaneous variation in supplier groups
and in demand environments. Some preinteractionist research met this design requirement; most did not.1'" For example, m their research on Asian entrepreneurs in three British cities. Aldnch, Jones, and McEvoy" compared the Asians with a sample of white entrepreneurs in respect to directly measured practices
thought to reflect ethnic business style. They \\n\i)i\ few differences between
Asians and whites in respect to resource endowment but important differences in business environment among the three cities, with all groups demonstrating higher rates in some than m others. Reviewing the evidence, they concluded that "immigrant business activity" was more shaped by internal than by external forces. "The opportunity Structure of the receiving society outweighs any cub tUral predisposition towards entrepreneurslup." |03 Absent simultaneous variation in both supplv and demand conditions, this judgment would not have been permissible.""
However, most early, interaction-seeking research stumbled over this methodological requirement. For example, in his study of New York City's garment industry, Waldingei stressed the advantages of a balanced treatment that ,u -knowledges "opportunity structures" as well as cultural influences. In this regard,
Waldinger1""' mentioned the economic advantages that lured immigrant Dominican and Chinese entrepreneurs into this industry. These economic advantages included low returns on economies of scale, instability and uncertainty of product demand, small and differentiated product markets, agglomeration advantages. access to cheap labor, and vacant niches caused bv exodus of ethnic white predecessors. These demand-side attractions did not negate what Waldinger called the "predispositions toward entrepreneurslup"' of the immigrants, and Waldinger acknowledged the predispositions as well as the economic incentives. Waldinger regarded this conclusion as a balanced one that did justice to supply as well as demand influences.
However. Waldmger's research varied only groups. It did not simultaneously ry demand  environments.1'"'  His multiple  groups-one  industry design  only
emitted inductive generalizations about the influence of supply-side resources
on entrepreneurslup. It did not permit generalizations about the influence demand environment, a constant. I roin a formal point of view, therefore, aldinger's balanced conclusions were of unequal value. On the one hand, the omparison of Chinese and Dominicans permitted conclusions about the inriu-nce of different supplv profiles on the groups' cntreprciicurship. On the other and.Waldinger's design vlid not authorize Ins conclusions about demand.'"
I" (olve the methodological problem, balance seeking research tinned to ■iltigroup, inultilocahty research designs. In these designs, a plurality öl ethno-Cial groups represented the supply side, and a plurality otTocalities the demand V. In the first of these interactiomsi designs. Light and R-OSenstein'^ examined
MASARYKOVA!                 TIA
Fakule sociálních studil
JOStU
too nn n d tun
18      Chaptei I    'l'lu- l.iliiih Economy since Weber
tlie self-employment rates of five ethnoracial categories in 226 metropolitan regions of the United States. The categories were native white, foreign-born white, Asian, black, and Hispanic. This research did turn up sume interactionist results. Metropolitan areas showed considerable variation in respect to the rank order of ethnoracial categories within them. For example, Chico, California, ranked 1st in self-employment rate for Asians and native whites, 3rd for Hispanics, but only 13th for blacks and 35th tor foreign-born whites. If local demand just determined entrepreneurship, one would have expected all ethnoracial categories to respond identically to Chico, But, taking interactionisra into account, one expects metropolitan areas to produce unequal rates of self-employment among resident ethnoracial categories,
Light and Kosenstein were able to examine the main effects of demand and
supply variables net of the supply—demand interaction required by interactionist theory, [f interactions were die only influences upon the selívemployment oí
ethnoracial groups, then  neither supply  variables  nor demand variables should
exert any direct and unmediated main effects.The results were only partially confirmatory of uueraetionism. Although  interaction strengthened the explanatory
power of demand-side variables, when supply variables were omitted, supply-demand Interactions only slighdy reduced the main eflieci of supply-side variables
such as age, gender, human capital, and ethnoracial category.This result is compatible with the presumption that capacities leap across occupational and industrial bound,ines.
Kazm and Light11" compared the Self-employmeni rates ot 77 national origin groups m 16 metropolitan regions. I Ins study used national origin groups as the supply-side unit, not ethnoracial categories. Greeks and Koreans were the most consistently entrepreneurial groups m the 17 metropolitan areas. Ra/in and Light found that mainstream groups'self-employment rates varied closely with the Overall sell-employment rale of the metropolitan areas, rising where that overall rate was strong and falling where u was weak. Hut nonniainstream groups had a dilierent pattern. By noninanistrcam groups, they meant national origin groups that arc noi predominantly white, or not predominantly Christian, or not from Europe, or all of these. Nonniainstream immigrants had a much greater propensity to form strong nu lies m a few low-income retail or service specialties, ka/m and Light called these "entrepreneurial niches." I he existence of these entrepreneurial niches shows that immigrants of the same nationality were clustering in the same occupations and industries rather than tanning out individually in search of the best opportunities.
THE ETHNIC-CONTROLLED ECONOMY
Honácích and Modell's concept of ethnic economy frustrates those who wish to build ethnicity or niches mro their analytical tools. Therefore, some researchers have redefined the term ethnh   noiKMiiv to suit broader needs, even at the risk ot
I he I rliuu -t oiiuollc.l I conoiTty       19

producing terminological t onfusíon. I he firsl was probably Keitz '' who defined die ethnic economy as any work context in which coethnics utilized a foreign
language- Others have wanted to equate the ethnti economy to business firms
m which buyers and sellers are coethnics."J When ethnics sell to or buy from noncocthiiics. the transaction takes place outside the ethnic economy. I he ethnic economy would then exist only when ethnics buy from and sell to coethnics.
Jiobu' defined "ethnic hegemoni/ation" as a combination of" industrial clustering and industrial power. Lie illustrated his conception by reference Co Japanese Americans m California agriculture. Because the) were not only numerous in this
industry, bin heavily clustered within it, especially in strawberries, the Japanese Americans could raise the price of their farm commodities by withholding crops
from the market.Therefore.Japanese farmers e\en ised economic power, and were no! jusl the price takers of economic theorv. Successful minorities. Jiobu general
jsed,"have to hegemonize an entire economic area, both horizontally .md verti-
cally." What is noteworthy is that Jiobu referred to .^^ industrial context in which Japanese Americans had ownership authority, but his concept of hegemonizaiion stressed their power, based on their numbers and clustering, not their ownership
authority
About the same time. Light and Monacích" found that Koreans m I 0S Aug«! les were heavily clustered both as employees Mn\ as self-employed. I he heaviest cluster was in voli drinks, m which Korean owners represented more than one-third of all dealers even though Koreans were only 3 percent of all business owners m Los Angeles County, More generally, the clustering of Koreans in self-employment was greater than the clustering ^\' Koreans in wage employment (Table 1.1). Korean employees worked in just 64.7 percent of industries because 35.3 percent of industries had no Korean employees at all. On the other hand. li"1 percent of sell-employed Koreans worked in just 28.5 percent of industries A full 71.5 percent ofl OS Angeles industries contained no self-employed Koreans
at all! To equalize the distribution of Koreans  tmong Los Angeles industries.
TABLE  I.I    Korean Representation in Employment and Self-Emp incut, 232 Industries of Los Angeles County, 1980 (in Percent i;
I in.pl                                     miployed
No Koreans in m.liiNiiv                                                                             71.6
Up to                                                              1.3
Mon than   I
K.i.il                                                            {(JO                                         Kin
\                                                               (233                                       (232)
Source: Ivan Light and Edna Bonnckh, Immigrant Entrvpreneurs (Berkeley •""•' [*» \tigeles: University of California Press, 1988), p. \85L Reproduced by pen
SI. H!
20      c: li,i put I    The ľihiiu Economy sinceWeber
35.3 percent i>l" Korean employees would have \\.w\ to move into industries in which no Koreans were actual!) employed. Conversely, to equalize the distribution of Koreans among the self-employed, 71.5 percent would have had to move into industries that actually contained no Korean linns,'The industrial clustering oí Koreans, the authors noted,"conferred a potential foi moderating competition, exchanging information, and mutual aid."
Zhou and Logan1   approached the ethnic economy of the Chinese through
Census data. They first identified industries m Which Chinese were ovei represented, and defined the ethnic enclave economy as the sum of these Industrie's. Model'"' used a similar approach to compare Chinese and Cub,m et huk economies. Somewhat later. Logan. Alba, and McNulty" redefined an ethnic economy   .is ".my situation   where  common   ethnicity provides an   economic
advantage."11' Possible situations included relations among coethnic owners, relations between owners and coethnic employees, and relations among coethnic
employees in the mainstream economy. Since this definition of ethnic economy
included wage earners m the mainstream, u was broader than what Hon.u u h and Modell had proposed. In practice, however. Logan. Alba, find McNulty crafted census-based measurements that mimicked the Bonacich and Modell concept of ethnic economy. Studying 1° ethnic groups m 17 metropolitan areas of the United States, they declared that joint overrepreseiitation of coethnic workers and coethnic employers m am uidiistrv would be interpreted as an ethnic-controlled   industry  and   the   stun   of the   ethnic-controlled   industries
would represent the ethnic economy. Since the U.S. (ensus docs not provide
data on the cihiucitv of business owners and of their employees, the authors had to examine clustering rather than ownership. Thus, finding Chinese heavily overrepresentcd as restaurant owners and restaurant employees. Logan. Alba, and McNulty concluded that the restaurant industry fell within the Chinese ethnic
economy, Theirs is a legitimate Innovation because issues ofd.ua availability and quality impinge very strongly nn all social science debates. Lheir compromise
made it possible to count the number of ethnic economies in major cities from existing census data.
[b redefine the ethnic economy as ethnic economic advantage invites dialogue with anyone who asserts that ethnicity never confers economic aď ,m
:      timothy Hates'1" makes this claim, alleging that ethnicity is economically neutral, nevei advantageous. Other economists now dispute this view.1'" I low
ever, on Bates's ultraconsei vativc view, the "bedrock" economic resources are Only wealth mk\ human capital.,:i People who enjoy wealth, education, and occupational skills prosper thanks to these resources alone. F.thnieity never contributes anything additional, from our perspective. (Ins view is wrong, and rejecting it is a major purpose of this entire hook. Jusi lor starters, ethin. trepreneurs usually cluster m the same occupations and industries. Clustering confers market power above and beyond individual wealth and human capital.   For   example,   Komm:   business   owners   monopolized   die   wig   business
ľhe Ethnic- (lontrollcd Econorrq       21
before federal prosecutors brought sun under the Sherman Aim-Trust Act. While they enjoyed their monopoly, Korean business owners excluded non-k(weans from the wig industry, and raised prices of wigs to consumer.. Again. Japanese farmers were able to raise puces for strawberries thanks to then clustering. Cases like these are v cr\ common, and all illustrate ail ethnic economi« resource, market power, that does riot depend upon the business owners' human capital or wealth.
Secondly, the redefined concept of ethnic economy (as ethnic advantage) opens discussion of how ethnic employees mosj advantageously operate outside
the ethnic economy, an issue chat Bonacich and Modells concept cannot raise, much less address. I ..; example, what if" government employees control hiring for government jobs, but hire only then friends and relatives? These cases have happened with considerable regularity m American history. - In a pluralistic socí-Lich as the United States, orduiarv nepotism protlučeš ethnoracial clustering. When, thanks to nepotism, coethmcs get the jobs, iioncoethnics are excluded. True, the intent is to advantage friends, relatives, and cocthuics rather than maliciously to injure outsiders — even if the effect is the same.'"''' In such a case. too. contrary to Bates, workers obtain economic benefit trom their ethuicnv above and beyond whatever then individual wealth and human capital confer.
following Kessiier and Modell, ' who reached similai conclusions. Waldm reminds us ihn exactly this arrangement has long prevailed in the municipal government of New York City.1"' Waldinger studied the history of municipal employment in New York Cuv in the twentieth century lie found that Italian. Irish, .nul Jewish immigrants obtained municipal employmenl through coethnic hiring networks. lust, the immigrants established ethnic inches within government workplaces, occupations, and industries, lor example, construction became an Irish niche, sanitation an Italian niche, and school teaching a Jewish niche. Ethnic hiches are just ethnic concentrations at high density. The economic success of white immigrants and their native born descendants involved "finding a good
niche and dominating it."1,1 To dominate a niche meant to assure coethnic applicants ol preferred access to jobs.
Very informal methods can obtain this end. An Irish contractor in Boston explained'32 his hiring procedure in this manner: "A good number of building contractors drinks m the pub. and the lads comes m and they gives them work," Sim e the Irish contractors drink in Irish-owned pubs, the lads are reliably Irish. Research recurrently reports that informal social contacts are the most frequent way m which people of all ethnoracial backgrounds find Work. ■ Social networks also produce the best jobs. Moreover. omc established m tins way ethnic nu lies ,ue persistent.''' I icberson and Waters' ,a found that white ethnics' occupational clusters had pcisisted for So years and were still going strong. White ethnics did not own the municipal government of New York City, which employed them, but they managed to control employment m it.
22      Chapter 1    Hie Ethnic Eeöiiojn) since Weber
After 1970, African Americans began to enter employment niches that upwardly mobile whites had exited, and they also began to compete with whites for access to government jobs  ih.it   had once been  the exclusive preserve
Of the whites, and to develop niches of their own.1"' Indeed. Boyd'' proposes that Opportunities tor blacks m the public sector siphoned ,iu,i\ entrepreneur!,illy
endowed workers who would otherwise have st.uted businesses. Although this claim has not been prown beyond the shadow of a doubt, the preponderance of government employment among African Americans is sufficiently strong to create at least a suspicion.Table 1.2 compares the sectoral employment (private,govern*-ment, sell employment) of Afričan Americans, non Hispanic whites, anil sell-, ted others in Los Angeles, Heavily immigrant, noncitizens, and lacking poliaca) influence, the Asian and Hispanic groups have a much smaller share of government employment than do non i Uspanie whites, who. in turn, obtain only half as much uncut employment ,is do blacks. When eoethnic workers control hiring, pay mk\ working conditions on the
job. whether through numbers, trade unions, social networks, legal priorities, or any Other advantage, they usurp the legal owners' titular authority ro control those decisions. The employees thus obtain de facto control of someone else's property.,3ň it does not matter whether the usurpation affects a private coi ;
non. such as the Bank of America, or a government agency, such as the city of
New York. Wherever they arise, ethnic niches confer some rights of ownership, but they do not require coethmes to own the premises, industries, or occupations whose hiring, wages, and working conditions they control. Lewin-I psteiu and ScinvoiHA•"'' even raise the possibility of ,m ethnic community "'gaining hegemony" over portions ot (he public sector. At this point, business ownership and job control become equivalent m respect to the hiring advantage they convey. An
IABI i   i  !    Sectoral Distribution of Ethnoracial Groups in Los Angeles, ľ'*"1 (in Percentages)
				SbIP-	
Group»		Private	(iovernment	empiayment	[bul
Mori 1 lispanic		71.7	12.2		lllll
Bl.uk			23.7	7.1	.....
i aSincse		73;0	".;s	17,2	100
		60.1	4,6	35 3	KM)
		86.3	2	6.5	mo
		•)n •/	VII	C.I	KM.
Source r James ľ Allen and Eugen.« Turner. '""' Ethnii Quill, Population Diueisii) in Southern Los               '        ! foi I n ographii.;: So»        .     Jifornia v.u.-
I he I chili« ■< controlled Economy      23
ethnic-OWned ßrm that employs 99 coethniCS provides the same employment to coethnics as a state agency that employs 100 coethmes even though the employees do not own the state agency. Small <uu\ medium businesses are rarely
unionized and they overwhelmingly hue coethmes through word ot mouth recruitment. Worker control is uncommon m the ethnic-owned economy.1 '
Giant corporations ami public bureaucracies are the principal sites in which coethmes usurp de facto hiring authority from owners or managers who are not eoethnic.
It is important  to note that  not ail ethnic niches yield an ethnic-controlled
economy. If coethmes cluster m a linn or government agency but do not. as
ethnics, influence wages, hiring, working conditions, and the like, then an ethnic
niche exists, but membership yields no control.
As we wash to address the broader advantages of ethnicity m the economy m
this book, not just the advantages oJ ethnic ownership, important .is those are, wc require the conceptual means to do it. I he Bonacich—Model! concept ot the ethnic economy does not provide sufficient means, ľherefbre, we propose to rename what Jiobu called "ethnii hegemomzation." what Logan, Alba, and iMcNulty called the ethnic economy, am/ wh.it Waldniger"1 and others have called ethnic niches. Instead, we propose  the  term  ciliiiic-eoiitrollftl economy to  encompass all
ihc.e concepts,and,indeed,all situations A\)d sectors m winch eoethnic employees
(not owners) exert significant and enduring market power in the general economy, usually because of numbers, clustering, and organization, but also, when applicable, because of external political or economic power. In contrast to the ethnic-controlled economy, denned previously, we wish now to rechristen what Bonacich and Modell called the ethnic economy as the ethnii ownership economy.
These terminological redefinitions permit us to contrast an ethnic economy with its basis m property right, the ethnic ownership economy, with an ethnic economy whose basis is de ťacto control based on numbers, clustering, and Organization, the ethnic controlled economy (fable l.3)."ľ
IAISI !   1.3    I tbuu Economies
I ■>:>                                                                               Definition
Ethnic economy                                           Self-employed, employe«, unpaid family
work                   thine craplo)
Ethnic enclave economy                               An ethnic economy ih.u t- clustered around ,\
tci inoii.il core
lomy                                 thnh '••■ om i
l.lhnu-. oMimlled eroiiom\                                                                                         ■•■a
thnk employees in the mainstream ccon<
24      Chaptei I    The Ethnic Economy since Webei
Our masons for renaming are several First, our terminology reduces intellec-tu.il clutter without losing content. The ethnic-controlled economy includes all manifestation of economi< power based on number, organization, and clustering regardless ofexacdy what control employees exert. Poi example, employees may control hiring, wages, working conditions, training, or all of these. Second, different concepts should have different names; otherwise, one sows confusion.143 Third. Bonacich and ModeU's definition of ethnic economy has a valid and legitimate purchase that we retain. Although we change the concept's name to ethnic ownership economy, we leave the content unchanged. Fourth, new terminologies
clarity and highlight the latent distinction between ownership and control thai
has thus t.ii eluded precise identification in the ethnic economy literature. Finally, we believe that the new terminologies invite and open up research questions that will profitably occupy research for some time.
SUMMARY AND CONCLUSION
We have identified three related concepts that derive from the Core literature, but
that reflect different aspects of the ethnic economy Of these,the oldest is what we
have reehristeued the ethnic ownership economy.The ethnic ownership economy consists ot business owners and their loethmc helpers and WOľfcerS.l he businesses owned are small .md medium in size. This concept permits comparison of rile
economic integration of ethnic groups now and in the past, in the United States
and abroad.The ethnic ownership economy's boundaries distinguish where auó
how much a group has penetrated a host economy, taking the jobs it made available, .md where, how, .md how much each group has grafted new linns and jobs onto a host economy. A key feature of any group's economic stratégy, this balance between self-employment and wage employment affects the abilit\  of groups to
accelerate economic mobility or to cv.uk- unemployment. Here the process of
ethni< succession in the general labor market creates a baseline of economic mobility against which it IS possible CO explain why some groups have gone up faster than expected and others slower.'44
The second concept is the ethnic enclave economy. An ethnic enclave economy is an ethnic  ownership economy that is clustered around a territorial core.
This concept invites inquiries about the consequences of territorial clustering.
1 xisting literature proposes that territorial clustering permits ethnic communities to capture a higher proportion of sales than would be possible from miclus-tered firms. In effect, the ethnic enclave economy obtains economic strength that small business linns normally lack, but that monopolies enjoy, ľhe added
economic Strength  accrues to  the  advantage  of the  ethnic community, whose workers obtain extra jobs and profit as a consequence. This bonus .iccď \ their economic mobility above and beyond what unclustered ethnic economies provide.
Summ.m and ( <>iicltisi<m        25
Finally, we have identified a third sector, the ethnic-controlled economy. Tbc ellmu-controlled economy refers to industries, occupations, and organizations of the general  labor market   in which coethmc employees exert  appreciable and
persistent economic power This power usually results from then numerical clustering, then numerical preponderance, then organization, government mandates,
or all tour. The ethnic-controlled economy is completely independent ^i the ethnic ownership economy,and its participants exert de facto control, not ownership authority. Control permits coethnics to secure more and better jobs in the mainstream than they otherwise would, to reduce unemployment, and to improve working conditions. In this way, the ethnic-controlled economy accelerates the economic niobilitv o\~ participants as well as the ethnic group tO which they belong.
II we call these three together the etlinu  economies, to emphasize then
relatedncss. their contrast ÍS with the mainstream labor market in which isolated
ethnic employees have- jobs outside ethnic economies. In these mainstream job-.
coethnics are unclustered. and thev exercise no influence as coethnics. Mainstream employment results when immigrants and ethnics fan out in pursuit o( individual economic opportunity. Fanning out is exactly what assimilation theorists expected.'Atl In the mainstream labor market, immigrants and ethnics get the deal American society oilers individuals,and this deal may include discrimination from other pcoph '< ethmc-controlled economies. For this reason, the general labor market is a more treacherous environment than its enthusiasts acknowledge. Mainstream employment is obviously very important in fact as well as in theory, and we <}>.) not ignore it. I lowever. the inaiiisiieani labor market has tor ton long been interpreted as the only way in which ethnics and immigrants can obtain income.
Peter Li1"1   asks whether self-employment offers better earning opportunities
than wage work, and concludes that it depends on what type of self-employment one specifies.True enough, but the answer also depends, we suggest, on whether
employees are in an ethnic-controlled economy or in the general labor marl.
assume, as have assimilation theorists, that everyone works in the general labor market is to oversimplify. The- prevailing simplification ignores all three ethnic economies in the interest nf a homogeneous cconospace within which uniform assimilation occurs at a constant speed, a I ordisl image that has outlived its usefulness. jNo wonder that assimilation thcoiv cannot explain why some ethnu and immigrant groups make faster economic progress ih.m others, and why, very generally, intergroup economic outcomes are as divergent as they are.14" On the whole, sociology's pedestrian answer has been intergroup inequalities of human capital, no doubt a nientocraetie aspect of the problem Still, n is clear that the three ethnic economies powerfully affeCI economic attainment mi of individual Wealth and human capital endow -incuts. Progress in understanding Unequal nomic outcomes requires acknowledgment of the diversity in economic situs that actually exists,
80
226      Chapter 9   Credit Issues in the Ethnic Ownership Economy
of the poor. We disagree; a worse poverty exists* When the poor lack social capital and even tack the capacity to tonn social capital, their situation is worse than when they only lack social capital Such people are truly the poorest of the pooi     \ cultural import from Bangladesh, Gramcen-style microcredii cannot as
sist these poor people, so ttlOSl American inu roeredit agencies have shifted then priority Írom creation of social capital to training trainable individuals. When training individuals becomes the goal, then agencies acquire an incentive to select from the pool of impoverished loan applicants those who require the least trail
ing,Training them is easier and cheaper than attempting to build social capital
among those who cannot build it. However, this new strategy encounters the objection that the agency is selecting the least impoverished of the poor. Moreover,
the training of individuals costs inonev. so the microcredit agencies require SU dies x^ öfter it.
Contrasting banks >.n) the one hand .\\n\. on the other, informal credit mk\
microcredit, we h ml th.it each institution's orient.ition to social capital explains success or failure m the problem markets, ' I \cept lor in-titution.il credit checks, a conimodihed social capital, banks ignore borrowers" uncommoditied social capital. However, ROS< As and Grameen-Style microcredit lenders orient their entire strategy around social capital. Compared with this reorientation, the soeia! crimination of the bankers is of modest importance.This institutional difference in orientation explains why banks cannot service the problem markets wh microcredit and intormal credit can.Therefore, the chronic failure of the American financial system to deliver services to the problem  markets arises from an excessive reliance upon banks, h is as though American societ)  asked 1 fly as  well as to build dams, then critici/ed eager heavers  for mcoiiqn reach the problem markets, die American financial system needs to diversity institutional forms, expanding the role and scope of informal credit and microcredit without eliminating the vital role banks plav m the mainstream, I he trotll : microcredit and informal credit are. relative to banks, still few m number, shoo Ol assets, and subject to obsolete laws that curtail their growth.     1 heietoie. th \elopment of a balanced financial system, whuh better serves the needs ol the poor, of women, and of small business, requires structural reform ofbankmg.
Endnotes
Chapter 1
1.   John Siblcv Butler, SrlJ-Help and Eni                     mnoifg BlackAmtrtctim (Albany: Si u
v.   Yelk,    ľ'''
2.    Iv.iii light, tl.iii.is ll.ii-t :hvi.and Kennet}) Kan,"Black ;                 ullut in 1 <                      h 6 in
nius I »unii, >•<! . Managing Divided Cities (Newbury Park, < <v s.^y. 199 I hi, I -l.ir < ill vi, and Kan. Managing Divided Cities, 75. 4.  "Indonesians Riot over Prices, Unemployment,*' Las Angeles Times, February It, I
'Once Again. Indonesia Starts living Dangerously," "flu Economist, February 21. 1998, p   J7; "Taking the Blame,"' The Economist, Februar) :>*  1*598, p 46. See also Keith B. Ruhbn, nese Hear Drum ol Indonesia'« llb,"AíiMi      i    I    \tdian Weekly, Januar) 17. 1999, j ().   Ivan  Lighi  and Carolyn  R-osenstein, Race,  Ethnicity, and Etfttepnmeurship in  Urban America
l ľ. ■ .-!   : nc, N.Y.: Aldine de Gruytet, 1995), 205. 7    Werner Sombart. 'Iliejews and Madvni Capitalism (< Hem oi ,11   Fn i Pre». 195 I H   VlaxWebei   I    i   '      epn in Sociology (New York. Greenwood Press. 1  i                         >2;and
II. II   Cicrcli   ind C Wright Mills, From  \/.r, Weber. / .-..,,■   in  Sociology (New York: Oxford Universit) í'                 . IS'', 215.
11 For contemporary discussion of the economii role ofjews in Europe, ice HillelJ. Kieval,"Mid dlcman Minorities and Blood: h I her« i Natura] Economy of the Ritual Murdci Accusation in Europe?". Ch 8. and Victor Karady. "Jewish Entrepreneurship .md Identit) lindci Capitalism and Socialism in i entral Europe," in Daniel Chirol and Anthony R,eid,cd*.. Essential Outsiders (Seattle: University of'Washiňgton. 1997), 125 |M <'n,' inighi suppose that Jews would welcome the honor ol having invented capitalism. I lowever, in Wilhclmian Germany, capitalism was luted on the feudal -landed right wing as well
ii the «ocialirt lefi wing, rherefbre, capitalism's inventors would haw been obti many Germans To blanu the Jew* foi inventing capitalism was, in thai political climate, to la) Opprobrium ai then door, thus bolstering old-fpshioned religious miü-Semmtrn with economii arguments. In point "i fart, a generation later, 1 litlcrs lefi -wing supporters did lay this historical opprobrium at the doorsti p ol the Jew». In recognition of Thi Jews and \Mern Capital)
ronteinporar) and intellectual rival, Wemei Sombart, received an honorary membership in Hitler's party. See Vnthotrj I) Reid "Entrepreneurial Minorities, Nationalism, and the State," in Panici < ihirot and Anthons Reid, eds, Essential < husjdpts, i h. 2 tin the whole controversy, sec Karl
227
Endnot« Siegbett Reherg»"! >as Bild des Judentums m de* Fruchcn I tauschen Soziologie," in Erhard VC rehn cds„Judcii in éet Soziologie (Konstanz I larcung Gams; 1989). 127-73. Edna Hun,uuh und John Modell, The Uconomit Basis of Etlmit Solidarity (Los Angeles: Universit)
ol California, 1981), i 5
Indeed, as Jan« Wmn observe»; this intellectual clhnatt -till persist* ni development studi
Culture,and Development: Relational Contract and the Informal Sector "f Taiwan," in Social Relations, mid ' Udiural Pntttices: Studies .>/ file Chinese Societies (Taipei:
Academics Sluka, i'
Gerth and Mills. (mih Max Hí/ti Essays in Sociology, 189 Sec also Ma* \\ bert General Etonomň
//ľ/.»)'(New Brunswick,NJ Transaction, 1981),ch G
Robert Blauner. Rfln'dl I '/•;>!, -.-i '.'i n-, ImrftVa (New, York I larper .'ň Row. 1972     í
Bdna Bonaclcb.,''A Fheori "t Middleman Minorities,"   lnum.,jm iwehlogkal Win.,.
Robin ( ioheo. Global Diaspotas (Scuttle: University ofMfeshington, 1997), l"l -4, Rehberg/'Oas UiKl des Judentums m der l ruelien Deutschen Soziologie," 127- 73; and St Model    ľh   Ecouomi I      i     of European and East Asian Americans," In Norman R.Yetman, ed., Majority ,iml Minority, 5th ed (Boston: Allvn St Baron, 1991 . 292   93
Howard Paul Becker,AJ,..mh U                   slewYorfcPnn
LVeicL **1               n urial Minorities, Nationalism, and the State," 39,58; and. Walter Zen.net
n the Middh (Albau) Statt Universit) ofNcwYork, I99t),7
Ahm                 ustoni ,111í/ Polities in Urban Afrit« (Berkeley   ind Los Angeles; Univei
California I'r.-ss. I969).8  ". I I
ľ. Bechofet and B, Elliott,"The Petite Bourgeoisie in I ate * apitalism," 1n««iil Nm--.
Clifford ' • '        The Rotating Credit Association: A'Middle Rung' in Development."' í-
■m,řfr and Cttlttttal Clutter in (I962),24l- 63 J.ii Dei Luo,"The Significant                  irks m the (nidation of Small Businesses m ľah
•<wi/ Pun«« n 'i''1'        i     I ' ill   -\   yams «id M I . ( »naves! dc Sahoncro. "Rotating Savings and Credit Associations in Bi                          f Development 13
Leon Mayhe                   tion in Mód*                        " 'Socictlogical Inquiry 38
Benedict. "Family Firms tod Economic Development                    .tern Journal of Anthmpoloji
(1968), 1-29: Wayi                                                    ol the Nigerian Extended Famil) on Entrepre-
\. civity" ' momit Development and Cultural <                                           ■ •. Brigitte B
Mi   i ultun ol Modern Entrepreneurship." in Brigitte Bei (San Francisco: ICS, 1991
Hun.ui, li."A rheor) ol Middleman Mino                       94
Jose Cobas,"Puerto Rican Reactions to Cuban Imnngran»: Insights from Trading Minority Inter piTi.itiuiis," Ethnii and Racial Su                Mí),535:lvan Light and Edna Bonacich, Iwudgitttn Ettuť
preneuts (Berkeley and Los Ang                rercy of California Pi
and Roger walding               it) ind Entyeprcneurship," Annual Rev\
Suzanne  Berget   defined me "traditional sector" ol   Franc«    md  Ital)   ■■■■• diow   groups "activities involve the production ol goods with technologies,. osts, i apital-labor ratios, and p of ownership and management th.it are tignifkantly different from those used m the produce ihe same goods by other, modem firms,     . , We »re shove .ill describing Ute class ol sntill, pendent property ownei   I                              rtisam,andc«mmsmaBandniediumbtlsinc«
i h« ii.ulni.in.il Sector in France and Italy;** ch. 4 in Suzanne Bergei and Michael
Dualism and Di.....umuityifl bidustrtal $oa |ej(< im ridg   I itnbridgi I m             I                     91.
Ivan l ighi and Stavros Karagts                                  i eonomy," in Neil Smclser and Richard
•                                                       sJcwYork Russell Sage Foundation. 1994
Cobai, "Puerto Rácan Reactions to Cub.m Immigrants; Insights from reading Minorit) Iní
i.ition-."   I ' ,-. id I  ( i Tmi • ľ .iii-.l StC) 'hi :i -•  I Ugil I. Japanese . Im,M.,in Ethnicity, i/':.•
iimiiii                       nivcrsit) ofWashtngton Press                         md ZLenner, Minorities i» du
ices       22')
Martin Marger, "East Indians m Small Business: Middleman Minorit) w Ethnii Enclave
Comttumity 16 (1990): 551 -SO.
Cobas, ''Puerto   Ku .m   Rr.i.iion>  to  Cuban   Immigrants:  Insights  from   Trading  Minority
Interpret itions."
Light and Bon i< i< b, Immigrant Entrcpn'ncurs, I
i: i, '.   David Ip, and Nod Tracy; "i.  Chinese Diaspora ••mi Mainland China (New York: St. Martin's, 1996),ch. 14.
An intriguing parallel exists between this situation and the emergence <>ľ alternative medical therapies that challenge the medical mainstream, N.. one suggest« that the alternative tbo many derived from traditional remedies, can replace allopath« medicine, the "scientific" dluh stream. On the otlio hand, acupuncture, transcendental meditation, yoga, tai Chi chuan, bomeopa thy. herbalism, and other alternative meilual systems curt                     lilmencs invulnerable (o
.illop.ithk intervention while • >                   :-. preventing the appearance of disease in other cases
These achievements have brought alternative medicine back into the armamentarium of pragmatic thcrapisc
i Washington, Thi Negro in Business (New Vbrk:Johnson Reprint Co., 1907).
Burghardl DuBois, Tin Philadelphia Negro (Philadelphia; University of Pcnnsylvanin I'n-ss,
Shelley Green and Paul Pryde, HLnL- tziitrcprcticurship In America (New  Brunswick, N|:'li
non, ľ'"7,. 2n; .nu! Kelleyc Jones, "Johnson Publishing, lh< ,A Case of Strategic Development,"
journal t»/ Developmental Entrrpmnimhip 2 (IW7). I I.V  1-1.
Roben l..Weeins."Oni oi the Shade                is I ntcrprisc and African Ameirican I hstoriogra-
|ihy," Business and Economk History 2d
Harold Cruse,                                 IntellMual (New York: WiDiaiu Morrow i"
See, for example, Robert I.. Woodson. "A                 i ntrcprcneurship," »' Robert I  Wo
pd-, On the Road to Economic r%r^m(Washiiigton,D.C^ Regnery I                        h.l.
Ivan I ight, Ethnii Enterprise It» America (Berkele) and Los Angeles: Universit) of California Press.
1972), i h 6; and John Sibley, Entrepreneurship and Stlf-Hclp among Black Americans (Albany, NY.
Stati. I                     it New Yoik. 1991),du  1.2.
Light. Etlmii Enterprise m America, ch, 5.
(roups support .u least some entrepreneurship: hence, the presence of self-employ tnent does not meaningfully distinguish among them." Suzanne Model. "Ethnic Economy and Industry in Mid Twentieth Centur) Gotham."                  m* 44 (1997), 459.
RogerWaldtnger, s/i// the Promised I 'it,yi (( ambridgr: Harvard Universit) Pro , 1996)   *55;and Pitej s l i    Nil1 Employment and lis Economic Return foi Visible Minorities in *■ w
: VI. Saunders, ed„ VavApproaclii ■ to Employee Mamigeiiient, «ol- J, Discrimination m Employ-ment (Greenwich, CT:JAI Press fnc, 1994), 182
Steven J. Gold, Rjefngei Ommumtrie, (Newbur) ftwk,< A: Sage, 1992), 180   81, 194 Bonacich and Modell   ;           ttomh Basis of Ethnic Solidarity, 45
Jock t oilins   t oMiiopolit.in Capitalism! Ethnicity, Gender.and Australian I nti                        Ph.D,
diss., University ol Wollongong, 1998), I. 4,72.
Sic i mi Wong. Emigrant Entrepreneurs: Sltanghai htdustrialisii in Hang Kong (New York: ' Universit) Press, l
Iv.in Light Georges Sabagh. Mehdi Bozorgmehr, and Claudia Der-Mattirosian. "Les quart« economies ethnique« 'las iraniens a Los Angeles                                                    Hons intenutthiudes 8
I ms (in.n ni/o. / /;,• .\/,m,. m iiiiin, /:.,.//.»!<()' ii, ;      ;             i (uitotlist Accumulation, Cla:   d
iHjf, and ill, Trauinationatizatiort t»/ Migration (l>a\is. <_ A California Commtinitles Program ol the
Universit) of California, 1998). 10
Light and K                 'The Ethnii Economy," 647-71,
Q       : hand Modeil, 7)u Emtomii Basis of EdmkSolidarity, chs.12   14.
O'Brien and Fugita fapanesi   ImtrieanEtlmicity lite Pcrsisteua of Community, ch
C1C
7
70
��6D
78
230      Endnotes
54.  Charies Hirschinart, "America's Melting Pot Reconsidered," Annual fcetn                             11983
Barbaru  Lál distinguishes ethnit   entrepreneurs, who own  businesses   from "ethnic  id 1 entrepreneurs,'' who promoce csscntializcd version« ol ethnic identit) out of occupations
"Ethnii Identit; I ntrepreneurs: I lun Role in rŕänsracial and Intcicountry Adoptions." \;.m and Pcidfi MigrationJatnnat6 (1997).3S5    11 I
lefřřey G. Reitz, "Ethnic Concentrations in Labour Markets and rheii Implications foi Ethtti« In equality;" in Raymond Aron d a/., edx.. Ei/i/iic Crrwpj mm| Sona/ tor/usrán   I < Wpdraííif Sn/íty (if' .     und Conjtrwi/iB  m ,111  Urban  Setting (Toronto; University  of Toronto  Pi
Ncolibcrals claim ih.it an immigrant economy constrains immigrants' potential for upward mo biliirv by restricting worl                  «hnii business sector.Guarnizo, 'Hie Mexican Ethnh Economy
in   /_,-                                       \taitnnlatioit,   Ctei   Restructuring,   una   the   'ImtuuadonalUathn   ol
Migral
i i. Rou/ and slu-iiiKn Sklar, "Culture. Race, irtd (he l. onomu Assimilation of Immi-
gl ml.     S«) tofcjßiftll PWlllH I2{1
59   in fairness to the assimilation model, its predictions are a mattet of speed as well as of dire Conceivably; the assimilation model's predictions will ultimately prove as nonwhitcs as they altvad                  ang whites. However, it w ill have taken longer to teach this
point  Sec Ivan Light, "Ethnic Succession," in Chad                  .. ed.. Ethnic C/tm
m Pre«, 1981), 68 D.u.i from the 1991 Australian census shows thai many [non English-speaking background! immigrant groups continue to have .» higher relative presence .is employers and self-employed than do the Au-.tr.ili.ui hum in the 1990s." High entrepreneurship groups in Australia ii those from Korea, Greece, Italy, Germany, Holland, the Czech Republic, Slovakia, 1 Hungary. I ow cntrepreneurship groups in Australia include those from Japan, India, Sri I anka, Vietnam. Indonesia, and Turkey. Avei                  ireneurship groups include those from <
Singapore, Malaysia I           I    lanan, Poland, Ukrainc.Yti               '   inada, and the Unii
Collins. "Cosmopolitan Capitalism; Ethnicity. Gender, ai>d Australian Eno                    I 239.
<p|    Stephen Castles el «I  identit) similar bin not identical patterns in Australia, another pluralistic market •                           ú Milkbai and ill« Loruf Sweatshop; Utlmi, Small Business and tlte Bcotiamii
; Sydiie) (Wollongong, Australia: Office ol Multicultural Affairs. Dept,o1 the Prim* i\   the Centre fbi  Multicultural Studies, University ol   V\
(991) ul.  Prank Fratoc and R  I   Meek«. "Business Participation Rates .>t the 50 Largest U.S \v Croups: Preliminary Report." Research Division, Minority Business Development the U.S Department ol '       rncrce, 1995; Frank Prati       \ So iological Analysu of Mil
Business," K,:'iiii 0/ Black ft>/ti                     15 (1986),                         '  Sullivan and Stepfi
Met ii                                       lis Patterns and Rates of Return to Self-Employment," \
Journal c                  !   1988   167   85 «nd< (instance A Hoffman and MartinHMarget."Pa
of Immtgraul                      in Six Metropolitan Areas." Sadakgy and Serial Ktteaah 75
Ml
63   Mortcza 11  rVrdebiU, "The Economic Adaptation of Iranian Imraignttits m the Kansas Cit; Metropolitan Area," (Pb I >. diss . University ol Kansas, 1986). 116} M. I». R   Evans, "I an Skill. 1 angua;                  ltd Opportunity: Immigrants in the Australian 1 about Market," Sonw<sgy
.1 Moni, 1 Bcjyd. "Family and Personal Networks in International Migi u Developments and New Agendas," International Migration Reww23(ľS 64.  Robert r.Averltt, T7« Dual Economy:Th« DynamUi ofAmpriuth Industry Stnieture (New York:\W W. u, 196&); and Robert M.JiobU."Ethmc Hegemony and thejapaaiesti of California." Ameri'
n. Patrick Moi.iu. md l.  M   B           Pfctej Structure of Economic Segregaci
DualAppi   ■               rltm foumal 0} Sociology 85                           i 16.
Endnotes      231
66   Impossible because, where noncommimicating labor markets exist, employers will hire cheap
lethnk  labor in preference to expensive  cocthnie  labor  As this practice spreads, the
formerly noncommunicating labor markets merge Into .1 »mgle labor market
'•7.   Pierre Boufdi                  mis the practice of simplifying eeonomli  reality t<> make it agree with
theory ("L'essence du neoliberalismc," Li Monde Diplomatique March 1998; l Avail-
il-.lt-hup     www.mondediplomarique.fi md 1998/03 BOURDfEU I9167.htmlj
68      Fferesa A Sullivan,"Sociological Views of I abot Markets: Some Missed Opportunities and Nc-glecred I Hmensions." ch 12 in Ivai Berg, ed., Sociological Perspectim oh Ltd»! Mnrkfts (NewYork:
lemu  Press, I981J.342
69     Alejandro Pones and Robert I >. Manning,''The Lnimigrani 1 1            ' hcory and Empirical 1 .-. iinpk-s." m |oane Nagel and Susan Olzak, eds., Conrpetitiw 1.tlmi. Relations (Orlando: Academii Pros . 1986),61
7i).  Arthur Sakamoto and Meli hu I' Chert,"Further Evidence on Returns to Schooling In Establishment Si/;-," . bucnViwi Sociological Revietv 56                       ~ I; and Don Mar,"Another I 00k ,11 tli.                                   sis,"  liuemsia 17 (1991), 13. 7|    Light and Bonacich, Imnngnjiil Entrepreneurs,ch. I. "2   Ivan Light, "Immigrant and Ethnit  Enterprise in North America." Eiluiii mid Raritd Sti
216 73.  Kenneth L. Wilson and Alejandro l'orres, "Inunignúit J                                     f the Labor M
t of Cubans in Miami," American Jtmmal 0) ■                    I980),297
\ lismi and Portes, "fmmigram                   An Analysis ol the Uboi Markei Expcrirtii
Cubans hi Mii»nL".291 75   Wilson and Portes, "Immigrant                                                                                                es of
1 Cubans in Miami,   tOfj 7i.    I his was also the palm d'appui ofThomas Bailey and Rogei Waldinger/'Prim; 1                  ! f, and
tve I aboi Markets: A Trainit .                  approach.*' American Sociological Utriete 56 (1991),
♦32
ui.l I lon.r R ( ,m,„,./;',:,.'                    NwYoriĽHarjrerAÄow, 19<
7s. Alojandix) Portes,"Mo les ol Incorporation and Theories of Laboi Immigration," in Mary Kritt, Charles Kcely, and Silvai  i I »m    . eds., GlabalTrtndi in Migration (Nou York: Center fbi lion Studit». 1981).
'Enclaves consist ol immigrant groups which concentrate in .1 distinct spatial location and m/;- .1 variety ol enterprises serving their own ethnic market and 01 the general population. Ilu-u batit chars                    lut 1 tignif» m< proportion of the immigrant labor force
prises owned by othei imntigraiJts," Portes, "Modes of Incorporation and                 ol Laboi
Immigration." 290-91.
Wilson and Martin redefined I'ortes's concept of endav«  economy, In order to permit intei group comparisons, thi                   d an input—output model that permitted estimation of the
erticaJ integrntion i>t firms permitted an enclave economy to capture rcspcnď
n;     ütho        '     me lias s ibscquently followed up this lini.....esearch, thejf emphasu upon
ici Intcrd pendence did become .< permanem fearure Of the enclave literature- Sec Kenneth Wilson and W Allen Martin. "Ethnii Enclaves \ < cunpai'ison of the Cuban and lJl.uk Economics in Mia                   m Journal of Sociology 88(1982), 135 '60.
SI    Mejandro Portes and Robert I.. Bach, LatinJoumit] (Berkeley and Los Angeles; University of forma Press, I
Modes ol Incorporation .null henries of 1 abot immigration S3   Portes and Bach, Latiu Journey, lil SM    Portes and Bach. Latiu Journey, ch.7. ^S   Portes and Bach, Latin Journey, Is7. [93( B6.    Porte-', and Bach, Latin journey, 268, Š7.   Portesand Bach,Ijttiujou HH.  Niles H. ll.iiiM-n iihit.i!!                                                                      Ethnic Enterprises in
35
47
02
80
232      Endnotes
i.m fanerican Neighborhoods: Differing Perceptions of Monk.m Immigrant Workers," bttenui-
liowil Migration ktľieu                  !26~42.
Wilson and Pottes, "Immigrant Encla\      v.   \nalysis of die Labor Marke) Experiences of
t iih.ins m Miami," in|    2« 90   Wilson and Martin, "Ethnii Enclaves: A i comparison of the- ( uban and Black Economies in Mi
.inn." I An
91.   Wilson and Martin,"Edvnii Enclaves \ < omparison ol the Cuban and BUck I conomies in Miami." 154; Porte» and Bach, Latin Journey, 267   68,
92.   Ivan Ughi «I «/., "Beyond the ethnic enclave economy'' Social Prútíen    I!      »94). 601—16; Suzanne Model, "The Ethnii Economy Cuban    nd                                                   I Qua*
i ''i:, 63-82; Mar."Anotnei I ook a< (he i m lavs I cononv. Thesis"; Rol "\i, --.i, .m EnitP preucurs and Market in die City of i os \ngel< ■. \ Gase of an immigrant Enclave," I frfom ^ndirppafiyy 19 (199(1), 99- 123:1 wa Morawska/T he Sociology and 1 listori-ography of Immigration," in Virginia Yans McLaughlin, ed., tmniigmtiott Recottsidered: History, s, oology, mid Politics (New York Oxford Uni                                  1; Coba$, Puerto Rican Rvaaionf
iban tmmignntsi (mights fiamtkiding Minority InWijpurMfitfNnJohn R I ogan, Richard h All•■., and Thomas L. McNulty ''Ethnii   Economics in Metropolitan Region!  Miami md Be ''V  Gerard < elas, "L'enCrepreiTeurshtp et les hardens de Montreal'' (master's tin ■    I    ivewitc de
Montreal, 1991), 122 94.  Logan, Alba, and McNtill                   onorrae» in Metropolit;                  Miami and Bcyon I
95    Rus is also true of Iranians in Kansas < it) Morteza H Ardebili.Tht Economii \daptation ol Iranian Immigrants in tl                 iry Metropolitan V   i." 190.
-, L'.l 1 Smcber writes that "like .ill market», the market fot entrepreneurial services has a ď and a supply                                                                           vood C1HB, NJ: Prentice-Hall.
i                   i    '.    •   .                  '.tail in Ivan Light and Carolyn Rosenstcin, Rate, Ethnldiy,
urship m I than Atactica (New York: Aldine de Gruyter, 1995), 73  81
98    Rogei Waldinger, Rohm Ward, and I lov..ml Aldrii h, ' trend Report: I tboii Business and Occupational Mobility in Advanced 5oi ieties,'1 Sociology 19 (1985),
99    P    ■ i Waldinger, Rohm Ward and Howard Aldricli,'Trend Report: Ethnii Business and (
pattonal Mobility in Advaro                   "32
I(XI   "Wi emphasize the in between immigrant m up. md thi eovjronrnents in which they fun
including noi onu e« onomu' and social conditions but also the unique historii il conditions encountered ,u the rime ol immigration." Waldinger, Ward, and Aldrich. "Trend Report  I Business and Occupational Mobility in Advanced Societies,' I'M   Gave tuchman and Hairy Gene Levine,"NewYork Jews and Chinese Food: rhc So
struction of an Ethnii Pattern," Journal ol Conmmponay Ethnography 22 (1993), 102   See Inn Razin "Immigrant Entrepreneurs in Israel.t anada,and Calitbrnia,"ch.5 in Ivan and Parmindct Bhacher, eds.. Immigration and Entrepreneurdiip (Nev. Brum 1993). lni. I.im Razin, "l-ntK-piYiu.-uv.hip among Foreign Immigrants in th< LosAugeli S.m Francisco Metropolitan Regions," Urban Ethnic Trade; Chinese   Laundries in  Early California,*' Journal oj litinu,   Studiti
95   l IV
103.   Howard Aldrich,Irevoi P. Jones; and David Mel -. iy "I ilmu Advantage and Minority Busli Development," in Rohm Ward and Richard Jenkins, eds., Btlmir, Goimmmirit
York: i ainhiidu> University Ptess. 1984),ch. 11
104.   Aldrich, Jones, md McEvoy,"Ethnic Advantage and Minority Businesses I Icvclopmi i
105.   Ol course, one might dispute the sweeping conclusion on other grounds, First, it is incon
ill the textbook claim thai suppVj and demand resources always interact to produce '■""" neurship Second, the Tcscarchera did noi examine demography •               loutce» on fl**"
supply                                  k iqto mtermetropolitan continuities ol rank. in..      .
233
might have required a modification ol then lopsided conclusion, .i contradiction to die text« hook  model, th.it only denwnd-^ide  Influences affected emwprermirship in  che  British
[). Waldinger, flirouglt tin Eyeofth Vcwfir (New York; New York University, 1986), ch* I, 4.
I nomas R. Baileys study of New York ( ity*s restaurant industry encountered the same problem, bmmgnmt and Native Workers (Bouldei Westvievi Press, I987),22.
his design.Waldinger could not explain why, on the supply side, i.......grant groups other
than Dominicans and Chinese were not drawn into the garment indiistrt           n dae demand
side, whether other New York City industries did not offer more or equally favorable demand
opportunities to I lominii ans and Chinese.
I ight and Rosenstcin, Race, Ethnicity, and Entrrpreneurship in ' 'rban America
Light .md Rosenstcin, Race, Ethnicity, and Entttprtneurship in ('man, Uncrica. 93,
Iran Razin .mA l\.m Light,"Ethnil  Entrepreneurs in America's Largest Metropolitan Areas."
Urban Affairs Review 32 (1998):332   60
|-itii.-\ G, Rut.-, tu, Survivaloj Etlmd Groiipi • toronto McGraw-Hill, 1980) Robin 'á ü l ' I tímu   Entrepreneurs in Britain and I              i   Robert Goffee -nn\ Richard
Scase, eds.. Entrvprvneutship in Europe (I
Robert M.Jiobu. Ethnicity and Assimilation (Albany: State University ol New York. 1988), 223. I ight .md Bonacich, Immigrant Entitjnrneuts, 193. Mm Zhou and John R. 1 ogan,"Rcturn on Human Capital in Ethnic Enclaves; Now Vbch
Chinatown."   \mn,„m Sociokff<alRtvleH'S4 (1989        '■     »I
Suzanne ModeL'The Ethnii Economy: t nbans ,un\ Chin                 idcred," Sociologii il Quar-
terly 33 (1992 Logan, Alba, and McNulty, "Ethnii Economies in Metropolitan 1             Miami and B
thnic economy could be defined .is any situation where common ethnicity provides an economic advantage: in relations among owners m Chi                omplementary business •
'                          nd workers, or even among workers m the same firm or industry regardless of
the owner's ethnicity." I ogan, Alba, and Mi Nulty,''Ethnii Economies in Metropolitan Regions: Miami nul Beyond
L, Bates, "Why Art Firms Owned In Asian Immigrants Lagging Behind Black-Owned Busines                »at Journal of Sociohg) 10             18; and Timothy Bates; Rue«, Seff-Einpioynient,
md Upward Mobility (Baltimore: Johns Hopki     I        rsitj Press, 1997)., > "I have argued chat ethnicity haj an external effeci on the human-capital accumulation is."Ethnii us. Neighborhoods, and I lumnn-< tpn.il i xternalities,
See also Phoniai Sowell, Ran and Culture (New York: Bask, S Becker, faauntittg.fi>               antbridge: Harvard Universit) Press,
,16. The data Bal                         ľ. however,support his theoretical generalization, "Blacks and I Its-
panics arc sii'.iuiii antly less likely than whites to enter selt^cuiployment. controlling loi other factors. Ilu ochei ractors   .   are educational background, household wealth, work experience, age. gender, and marital statu-.." Raň . Self-1 mph-yuiuii. md ' 'pw.n.l Mobilit)    I! iVtc-i S. Li, "Self-Employmcni and let Economii  Retnrn foi Visible Minorities in t .ma.la." in David M. Saunders, ed., Neu-Approaches to Employee Management, Volume 2 Discrimination In l-m-phymeni (Greenwich,C ľ: [Al Press lne . 1994), I*'1 I ight and Bonacich, limnigraiu BiKtvpnncurs, 197 Jiohu. Bmnirity and Assimilation, 2   I
Dennis R < lark "The I «cpansion oi the Publii Sector and lush l . momii Devclopnn Si.ott ( uiniiiing--. ed . Self-Htlp ill I -il;iu .-\in,it,,i (Washington, NY: Keunikat Pi On  nepotism  at  work, see  Margaret  GricCO, **Family  Networks  and  the  Closure  of Employ-rnent." in Gloria Lee and Ray l-overidge, eds., The  \A                < Disadvantage (Milton Keyne-:
Open I
39
C1B
23-1       Endnotes
128,   Ihnin.i- Kessner, The Ckdden Poart Italian ami Jewish Mobility in NewYorh City, tSSO- 1915 (New York: Oxford University Pre                 n d Sussann« Model, Tilmu  Bonds in the Workplace:
Black», kalians, and |cwsin New York City' (Ph D diss .University öf Michigan, i
12». Waldmger, Sri// //»' Promised City?, 302. ■ ' I'M.! i< . m finds the same process m work in the private economy ol New York City, I960, where white ethnic* consciously built upon social networks to "find job», toaj to control access to those jobs, to sei up privileged relationships with suppliers and clients ol business firms, u. pool capital, and i<> do .ill the other tilings that affcci success of failure in the economy." "White Ethnics m the New York Economy 1920 I960." Itönittui} Paper 112 (New York: Russell Sage Foundation, 199
131.   Alejandro Porte», "Social Capital: Its > »n^im and Applications m Modern Sociology," Annual Review oj Sociology 24 (1998)! I J
132.   Waldmger, Still ih- Ptoinwa' Gil
133.   Judy Siully. "'A Static Irish Identity—an Example el Symbolic Power," Vir Otmmui
i lu- results show that, tot both white and hl." k youths, the most frequendy used methods ol 'ľ with friends and relatives, and direci application without referrals."!! also the two most produi                          Harry J. Holaer, "Inform                  eh and Black Youth
Unemployment,"Aintriatn Bamomii ReviewTÍ (1987), l"> 135, I ogan/'Whitc EtHnies m du- New Yoik Economy, 1920-1960;' 43, 13'.. Stanley 1 ieberson and Mary <■   Waters, From Many Stra                  and Racial Groupi m Com
wry America (New York. Russell                                      ilso Nathan Glazei .nul Daniel ľ M<
han, Beyond the Melting Pot., 2d                   ridgeiMľl Pi
137     Roberl I   Boyd "Difli rences m tin- I anting* of Black Workers m 'In- Private .mil Pubtii tow/1 tin Si                  r»nnw/30 ■                   I . *09~429,
138    Roben I   Boyd."A Contextual analysis oi Hl.uk Self-Employment m Large Metropolitan a
I     1          I991),413
139. in man) cases,owners prefer t« abdicate responsibilit) for hiring to employees, who perfom
rvice the employers would otherwi                                      ; then own cost, I in Hunk ol
America's check cashing racilitj on Pigueroa Street m Los Angeles once hired onrj Cubam tm md floor I Ik- reason: the Cubans were good workers, .»nil they assumed the response placement when .my coethnk retired or quit, Uii   Noah Lewin-Epstein md Moshe Semyonov,"Sheltered Labor Markets, Public Se< mi Em| tcioeconomii Returns to £ducation Cif Arabs in Israel," \merUati Journal
1994   .                 51.
i-li. Edna Boracích,'"Making m m \merica," Sociologl
142.   Roger Waldingcr,>% Ethnicity .md Opportunity m tin- Plural Cnv," m Rogci Waldmgej Mehdi Boxorgmehr, eds.. EfAni   '                    Jew York: Rus  ill Sage, 1996), 449^-51.
143.   Oni distinction recreates the same ownership vs, control terminolog) dint Berk utilized to disi us? Hi.- modern corporation, 1 lowevei tli« overlap i- ihm foroui
not discussing ownership vs. control <>i corporations, bin the mannet m which ethnií 1 extend (hen influence oyer whole economies, See Maurice Zoitlin, ľ                  wporatíon im
»temporary Classes [New Brunswick, NJ: Rutgers University, I989),chs, 1.2 14-1. Patricia G.Greene,"A Call fer Conceptual Clarity."Nationaljaum                                        50.
141.. Waldmger uses the term usurpationary closure to d                 Winnies' ability to cxclud
li.iin Im ing, I he u-i m 1 f/n/i: -controlled economy in« lodes this function, but ilso include oi coethnu employees to featha ôs                    i m othei ways S     R.o              !
( apltál «T Social Closure?; Immigrant Network» m thé Labm Markct,"Working ľ.■;■■■ 26 of the Lewis                      u,-uu>n.il and Polic) Studies, School of Publii Policy and
Research, Universit)'of California, I
Endnotes      235
147. "The modal labor market experience of immigrants is noi in the ethnic economy nor die ethnic enclave economy, but in the open mainstream economy," Richard Albu andVictoi Nee."Thc
Assimilation of Immigrant Groups: < ......spi ("heory, and Evidence," Papci                 I it the I on1
fcrcnee on Becoming American/America Becoming: lnii-in.itnni.il Migration to the United
. red by die Social Si ience R.esea« h < lounciLJami iry 18   21, 1996,71, 1 1   Sell Employment and Its Economit Return for Visible Minorities in Canada," 194-93.
149   Light, "Ethrti« Succession," 79,
Chapter 2
I. U" 2 ľibetans live in \V.m-..m. and one works in the others business, then the Tibetan ethnic ownership economy would occupy one hundred perceni ol the nberans. This uniformir m,1 .nive ii 11 n 1.1«n 1 Tibetans lived inWausau. I        Bonacich and John Modeli, Tlie BtonomU Basis fEdtnk Solidarity (Los Angeles: Uni
t)Í I ■.diloini.i PfCSS, 1980), l.ihk-   VI
J,   "Sixty perceni of tl« male NUei in the nud-1960s «                          01 these 10 perceni
working in firms that they identified its Japanese American." Bonacich and M.>dell. Tin Economic Bash of Ethnic Solidarity, III.
4   Steven j Gold, "Patterns of Economic Cooperation Among Israeli Immigrants In L01 International Migration Review 1.05 11994): 114   135.
3.  Pyong Gap Min, "Some Positive Functions ol 1 thni« Business for an Immigrant Community: Vngeles." Final Rařpori Submitted to the National Science Foundation; Sociology I ^vision, 1996,66.
n    Mejandro Portes. Juan M. Clark, and Manuel M Lopez. "Six Years Later: The Process of Incor-BOi mou ofCuban Exiles in the United Stattet. 1973- l979"Oi*wi Studio II    \2 (1982), 18, On Koreans, see: Pyong Gap Min, Caught in tht Middl                    minunilia in NeutYark and Lo*
Angel                              niversit) ol (California Pi
K.  Ivan Light, l ihm, Enterprise in interim (Berkeley: Universit)       -        rnia Press, 1972); Pyong Gap Min,"Filipino .md Koumu Immigrants in Small Busůiess:A Comparative Analysis,''  Intemsia 13 (1986   1987): 53 -71; and James T, Fawccn and Robert W, Gardner. "Asian Immigrant l.ntn--m T.nnepieneiirs: A Comparative Study of Recent Korean and Filipino Immigrants," PůprilatioH 'iiiil Environment', A Jotttnal <>/ hiteté                'studies 15 (1994), 211 -238,
/en-Fen Tseng, "Chinese Edmit I.....mm  Sart Gabriel Valley, Li                                    |   trnulo)
l Hum j        í            ■    |69   189
I".   Frank A. Fratoc md Ronald L   Meeks, "Business Participation Rates of the 50 Largest LIS Ancestry Groups: Preliminary Report," (Washington, I).(.'.   Minority Business Developmcm p irmwni of< lommen e I II,  * iomparin j fables 2.3 and 2.4, we see thai K                  employment rues rose drastii all) between
1980 and I99p. In poinl ol fact, the Koreans were establishing themselves in business m ih so die big Increase 1- probably attributable t<> ■> rapid!) rising rate radier than to enumeration erttit, 12   In JinYoon, Own My Oiwi (Chicago University ol Chicago. 1997),20-21, 1-3. Jock C                  miopolitan Capitalism Ethpicity, Gender and Australiai                  reurs,MVoi 1.
(Plil>diss.. Universit)                     ong, l998)tRobert Kloosfermanjoanne van dci Leun.andjan
Raih,"Across the Border: Immigrants' '•                  Opportuntti                     apital and Informal
Bu'                    i.-s." journal a) I.ihm, and Migration Studit* 24 11998). 258.
l-l    Ivan   üghi   md Carolyn   lipsenstein. Race,  Ethnicity, •»'•' Entrepreneurs/rip "'   Urban America
(I lav, thorn« New Vbrki Aldine de Gruytcr, 1995). 1 h. 2 15.  Maria De I.ourdes Villar, "Hindrances to the Development ol an Ethnic 1                  Imong
xican Migrants," Mumm Organisation 53 (1994),
25
5
115