Actually this particualr claim goes to the core of understanding economic theory at all. The antique economy made do without any significant form of available cfredit and all economic activity needed to be settled in goods including minted coinmage. For most, that meant in labour.
The only available credit asset was an individual's future labour and from that we naturally derived slavery as such a tool. So far so good until increased trade and real colonies got involved. Indenture contracts for irish serfs soon turned into contracts for captured slaves and then all this became an independent source of wealth. Thus our antique economy operated around workable land, slave contfracts and a doubtful pool of currency to facilitate.
This changed completely with the invention of fiat currency and reserve lending by commercial banks. This tool allowed for what we identify as capitalism to fully arise. Its expansion through the post revolutionary war period through the Civil war had the effect of allowing free workers to gain significant wealth and then to expand their enterprise.
Way more important it began to fully monetize the real cost of a slave contract. Thus the carrying cost of a slave began to rise in real terms and owners soon found that they needed to actually rent out their labour to cover those costs. This opened the door to more emancipation pressure.
King Cotton likely only postponed the collapse of slavery within the expanding British currency pool. In the evdent the british got rid of it first, not least because it has ceased to be useful at all. After all, the labour was available for harvest as usual and they were then on their own without cost.
I assert that Capitalization made slavery completely uneconomic and drove it out of the market place.
Why They Keep Trying to Blame Capitalists for Slavery
Tags U.S. History
https://mises.org/wire/why-they-keep-trying-blame-capitalists-slavery?
In recent months, several national media outlets and public figures have begun pushing the idea that modern capitalism is built on the foundation of slavery. Last week, while linking to a New Your Times article on the topic, Bernie Sanders claimed "America’s rise relied on treating Black people as literal property. "Meanwhile, a recent Vox headline proclaims "How slavery became the building block of the American economy."
Conveniently, this narrative is perfect for doing two things at once. It sets up capitalism as the moral heir of slavery. And at the same time, it pushes the idea that those who lead a relatively comfortable life under the capitalist system are benefiting from the toil of slaves from long ago. By this thinking, if every modern day business owner, entrepreneur, and middle-class property owner has benefited from capitalism, then that person — whether or not his ancestors were in any way connected to the slave economy — has also benefited from slavery. If the strategy succeeds, then modern day capitalists can be shown to be, in a sense, on the same moral plane as the slave masters of old. And, of course, capitalism is also shown to be morally repugnant.
Fortunately, the evidence doesn't support the theory.The slave economy was never the engine of American economic growth, and capitalist systems never needed slavery to succeed.1
Reviving the Arguments of Slave Owners
Modern-day anti-capitalists aren't the first to use this tactic. This version of history claiming everyone gets rich off slavery has a lot in common with the propaganda spun by slave owners in the antebellum South. The goal was to attack the idea that non-slaveholding northerners were morally superior to slave-owning southerners. The message was "we are all equally responsible for slavery."2
One part of the strategy consisted of claiming that some northern abolitionists were hypocrites for participating in the slave trade as owners of shipping firms that served the slave economy.
As recounted by Matthew Karp in This Vast Southern Empire, pro-slavery politician — and US diplomat in Brazil — Henry A. Wise chronicled the hypocrisy of northern merchants who claimed to oppose slavery while making money off the slave trade in Brazil:
The Americans involved in the trade, Wise reported, "are all from North of Balt[imore ]," and northern abolitionists were deeply complicit in the cruel traffic. One notorious ship, which landed about six hundred slaves in Brazil, "was owned by a Quaker of Delaware who would not even eat slave sugar." Another American vessel, Wise declared, "which has made several trips to the coast under the charter party of notorious slave traders here, is also the owner of an abolition newspaper in Bangor, Maine.
While this no doubt made some northern merchants look bad, these claims nonetheless failed to make the case that northerners in general were getting rich from slavery.
Far more useful in spreading the blame about slavery was the "King Cotton" argument which pushed the notion that most of the industrialized world depended on the cotton economy. Karp continues:
Slaveholders in the 1850s seldom passed up an opportunity to sketch the inexorable syllogism of King Cotton: the American South produced nearly all the world's usable raw cotton; this cotton fueled the industrial development of the North Atlantic; therefore, the advanced economies of France, the northern United States, and Great Britain were ruled, in effect, by southern planters.
The conclusions southerners drew from this King Cotton model were no less grandiose than their premises. De Bow's encyclopedia declared that cotton was "the most beneficent product that commerce has ever transported for the comfort of the human family."
Without southern cotton, it was claimed, northern industry — assumed to be dependent on cotton for textiles — would suffer a crippling blow. Thus, the northern and European capitalists were thought to be at the mercy of the cotton producers, and to owe their success to the slave economy.
So widespread was this belief that southern political theorists believed the South ought to forget about diversifying its economy. George Fitzhugh, for example, insisted the South should focus on putting all its eggs in the cotton basket:
It matters little who makes our shoes. Indeed, the South will commit a fatal blunder if, in its haste to become nominally independent, it loses its present engines of power, and thereby ceases to be really independent. Cotton is king; and rice, sugar, Indian corn, what, and tobacco, are his chief ministers. ... We should not jeopard this great lever of power in the haste to become, like Englishmen, shop-keepers, cobblers, and common carriers for the universe.3
Ultimately, so confident were many southerners that they could use the cotton economy to control the world, Sen. James Hammond of South Carolina concluded: "[Y]ou dare not make war on cotton. No power on earth dares to make war upon it."
Needless to say, Hammond and the purveyors of the King Cotton theory were wrong about the extent of global political power generated by cotton.
It turned out that the world could survive without southern cotton, and — more importantly — the world did not need cotton produced specifically by slaves. Nor was it true that the world needed the "cheap labor" of slavery to produce goods and services economically. Northern immigrants disproved this even before the war.
The pretensions about the "necessity" of slave cotton became more abundantly clear after the war. Even in the wake of the Union army's scorched earth campaign against the South, cotton production began to recover within only a few years of the war's end. Cotton production, now using non-slave labor, had returned to peak levels by the 1870s. By the end of the nineteenth century, cotton production was more than double what it had been during the antebellum years.
Moreover, even during the slave-labor era, the northern economy was hardly doomed to failure without southern cotton. Textiles were not the only thing people needed to meet their basic needs. And slaves were not the only thing merchants could make money shipping. Northern states produced immense amounts of food stuffs. Northern merchants shipped growing amounts of crops, building materials, and other resources unconnected to the cotton economy.
Rather than be an engine of the world's economy, it is more likely the slave economy held the southern economy back. According to Karl Smith at Bloomberg this week:
Just before independence, the per capita gross domestic product of the South, adjusted for inflation, was $3,100 per year — compared with just $1,832 in New England. Over the next 60 years Southern per capita GDP actually declined, to $2,521. British demand for cotton helped it to recover to $4,000 per person in 1860, but by then the comparable figure for New England was $5,337.
Slave labor was no match for canals, railroads, steel mills and shipyards. Slavery — and the parochial rent-seeking culture it promoted — inhibited the growth of capitalism in the South.
The fact that many industries in the US North and in Western Europe benefited from slave-produced southern cotton does not prove that these economies needed slave cotton to thrive or survive. The world's industrial economies have gotten along just fine without it.
Nonetheless, certain leftists are now trying to revive the old antebellum theory that the capitalist economy is built on the backs of slaves. The slave drivers of old would no doubt agree. But the theory is just as wrong now as it was then.
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