For whiteness is the mortar holding together the fortress of white supremacy, and if it crumbles, those walls will inevitably collapse. Because of its binding importance, the idea of whiteness has been, and remains today, vigilantly defended. In fact, virtually nothing has proven too costly a sacrifice on the altar of its defense: the bloodbath of the Civil War, the construction of a segregated education system, the creation of an apartheid Jim Crow system of laws enforcing segregation across all aspects of society, redlining real estate practices that divided virtually all of our major cities along racial lines, the development of a criminal justice system that disproportionately incarcerates millions of black men, and even the distortion of Christian theology. If one stops long enough to reflect on it, the ransom this fiction has demanded to sustain itself is staggering: the number of lives both white and black, the amount of money and cultural energy, and the disfigurement of some of our most precious ideals.

Source: Jones, Robert P.. White Too Long: The Legacy of White Supremacy in American Christianity (p. 19). Simon & Schuster. Kindle Edition.

What bearing does this have on institutional racism and its causes? The neo-colonial economic model is about coercing labor apart from whatever racial and / or national animosity might exist. American industries could have offered market wages to the Mexican peasants that NAFTA targeted until they agreed to work for them- this is the way that labor ‘markets’ work. But instead they chose to ‘free’ several million people from subsistence economies to compete with previously displaced Mexican labor and American industrial workers with the result that wages were lowered all around.

As uncompensated labor, slavery reduces employment and wages for the non-chattel working class. Without slavery, plantations and factories hire labor and pay it the prevailing wage. But doing so reduces profits. Then consider: this dynamic places the working class in direct competition with more deeply exploited classes, be they slaves, descendants of slaves or displaced peasants. This economic relationship of competition is (1) imposed from above and (2) socially divisive by being economically divisive.

From slavery through convict leasing, Jim Crow and the New Jim Crow, the economic lots of American blacks were never left to market forces. Each of these institutions were used to expropriate the product of black labor outside of market forces. And this racialized economic ‘management’ impacted labor markets more broadly through controlling the supply of labor. What this means is that ‘management’ of black labor was to manage the supply, and with it the price, of the entire working class, not just blacks.

In human terms, unless the source of this systematic exploitation is made visible, the class dynamic that it establishes is to make the most deeply exploited the most blameworthy. Slaves, descendants of slaves and displaced immigrants were never the creators of the circumstances of their exploitation. The fallacy of ‘takers’ that unites white racist chatter confuses state strategies to maintain relative class positions for employers with the power to expropriate social resources. The class that largely controls economic outcomes remains well-hidden in this ruse.

Source: Why Capitalism Creates Racism | naked capitalism