Exploitation Through Racialization*.

The article develops a formal economic model explaining the social construction of race as a strategy used by elites to divide laborers and extract surplus by linking unequal rights to observable, heritable, and relatively immutable traits—specifically skin color. It distinguishes between ancestry-based racial systems, where mixed-race individuals are categorized with the oppressed group (as in the United States), and color-based systems, where mixed-race individuals may attain higher status through "whitening" (as in Brazil and the Caribbean), depending on demographic conditions such as population composition and gender ratios. The model accounts for historical variations in racial boundaries, assortative mating by skin color, and persistent skin-tone inequality (colorism), supported by empirical evidence from census and survey data across the Americas. It further explains phenomena such as legal restrictions on manumission, the psychological wage of racial hierarchy, and the emergence of buffer classes, emphasizing that racial categories are not intrinsic but are politically and economically constructed by elites to maintain control.