Article Summary: “Cotton, Slavery and the New History of Capitalism” by Olmstead and Rhode


Title: Cotton, Slavery and the New History of Capitalism
Author: Alan L. Olmstead and Paul W. Rhode
Scope: 3 stars
Readability: 3 stars
My personal rating: 4 stars
See more on my book rating system.

Topic of Article

Two distinguished historians demolish the currently-popular theory that British and American capitalism depended upon slavery.

My Comments

Rather than admit the tremendous achievements of capitalism in elevating the masses, each generation of leftists invents a new “original sin”. The latest is just an incorrect as all previous attempts.

Key Take-aways

  • Neither slavery nor cotton was essential to American economic growth before the Civil War.
  • Slavery was actually a great hindrance on economic growth.
  • Slavery was expensive, inefficient labor that only enrichened a tiny portion of whites in the Deep South.
  • Cotton exports before the Civil War amounted to less than 5% of GDP.
  • Corn, produced by free labor, was a much bigger portion of the economy. Hay was also more important than cotton.
  • Cotton manufacturers never controlled British foreign policy. Nor did cotton growers control American foreign policy.
  • British cotton manufacturers swiftly responded to the loss of American cotton imports by importing from India (which had no slavery). Later they imported from Egypt (which also had no slavery).
  • After abolition of slavery, cotton production kept growing, showing that slavery was not essential for it.

Important Quotes from Book

A surge of studies on the “New History of Capitalism” [NHC] grounds the rise of industrial capitalism on the production of raw cotton by America slaves. Recent works include Walter Johnson’s (2013) River of Dark Dreams, Edward Baptist’s (2014) The Half Has Never Been Told, and Sven Beckert’s (2014) Empire of Cotton.

Taken collectively these works offer a perspective on nineteenth century world development that redirects attention from the centers of cotton textile industrialization to the agricultural periphery and to the innovations that linked manufacturers with their sources of raw materials.

The NHC relates a barbarous story. The key commodity in this account is raw cotton. It was produced by coerced labor on lands expropriated from indigenous peoples. Workers were kidnapped and transported to new lands, subjected to brutal punishments, and, in some accounts, often existed on the verge of starvation. Cultivation practices caused environmental damages, contributing to demands for ever more land. Moreover, slaves working on southern plantations were the real catalysts of world development.

However, to agree that slavery was important and evil does not mean that it was economically essential for the Industrial Revolution, for American prosperity, or even for the production of cotton in the United States. The new literature makes spectacular but unsupported claims, relies on faulty reasoning, and introduces many factual inaccuracies.

In Empire of Cotton, Sven Beckert argues that raw cotton was the crucial input for the leading sector of the Industrial Revolution, and that increasing production of the fiber depended on expanding global supplies of coerced labor.

The American South was a late-comer to world cotton markets, first entering in the mid-1790s.

U.S. cotton and southern slavery had zero role in kick-starting the Industrial Revolution or in fueling its takeoff during its first decades.

Among the most inexplicable claims in Empire (p. 108) is the assertion that antebellum American cotton planters “enjoyed access to large supplies of cheap labor—what the American Cotton Planter would call ‘the cheapest and most available labor in the world.’”8 Beckert asserts that in India and Asia Minor, labor was scarcer than in the American South. The data suggest otherwise. Sources for northern India indicate that an Indian agricultural day laborer circa 1850 could be hired for the rough equivalent of $15.80 a year (300 work days).9

This is about one-quarter to one-half of the annual cost of food, housing, medical care, and clothing for American slaves. Estimates Recognizing the high cost of slave labor is important for many issues central to the NHC narrative. Most significantly it affects our understanding of the sources of America’s comparative advantage in cotton production: it most certainly was not cheap labor.

The themes that an increase in coercion was a prerequisite for increasing cotton production and that cotton capitalists drove British foreign policy also fails in India during the American Civil War cotton famine of 1861-65.

Throughout his treatment of the pre-Civil War era, Beckert maintains that slavery was essential for American cotton production. This creates a problem because the United States continued to produce cotton, lots of cotton, after the Civil War. Just five years after the War’s end, cotton production approached the peak antebellum levels, and in 1891 U.S. output was twice the highest level ever achieved in the pre-War period.

The demise of slavery vastly expanded the potential cotton labor supply because large number of whites toiled in the South’s postwar cotton fields.

He fails to understand a fundamental fact of American history—labor, be it free white labor or slave labor was typically relatively scarce and expensive. And to justify his claims that slavery was essential to produce cotton he invents a new and misguided history of post-bellum labor relations.

NHC scholars generally have omitted a major caveat dampening southern economic prospects: much of antebellum southern growth came from territorial expansion onto more productive lands and from riding the cotton boom. It could not be sustained over the long run.

Beckert, Johnson, and Baptists all vigorously advance the idea that the antebellum Cotton South drove national expansion. They seem unaware that this hypothesis has been proposed, rigorously tested, and rejected several times.

As the bottom line makes clear, cotton exports were a very small share of national product—less than 5 percent over much of the of the antebellum period (Engerman and Gallman 1983, p. 28).

More than this, cotton was not even the nation’s most important agricultural commodity in terms of value—that distinction always went to corn. The national value of the small grains (taken together) and of hay also were typically higher than that of cotton.

If slavery had been abolished nationally in 1790, we still would have had the Cotton South, and we still would have had an American Industrial Revolution. The British Industrial Revolution was already underway, and it would have continued.

The riches of slave owners were not essential for national development, and the policies that this elite imposed on local, state, and national governments were on balance detrimental to development. The slave system was an effective way to produce cotton, but hardly the only way. Slavery was a national tragedy that inhibited economic growth over the long run.

The three foundational books in the NHC literature examined here all make serious errors of scholarship. Perhaps most significantly, all mistakenly assert an essential role for cotton and slavery in the emergence of modern economic growth. There is little understanding of the fundamental technological and production realities of the plantation cotton economy. On this latter issue, all three books fail to recognize and come to grips with the significance of biological innovations in reshaping the American cotton slave economy and the worldwide implications of these innovations. As the NHC matures, it might embrace the enduring strengths of traditional historical scholarship, including citing sources correctly, conducting close (and accurate) readings, drawing inferences that are actually supported by the evidence, and integrating its findings into the broader historiography. It should also stop making stuff up.

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