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The Low Road to Capitalism

The Low Road to Capitalism

by William H. Benson

August 29, 2019

     “In order to understand the brutality of American capitalism, you have to start on the plantation,” writes Matthew Desmond, in his article “Capitalism,” that appeared in the August 18, 2019 issue of The New York Times Magazine, part of “The 1619 Project.”

     Desmond argues that America’s “low-road to capitalism” of today descends from the techniques that landowners perfected on the cotton plantation in the South prior to the Civil War. To support his argument, he points to two statistics that laborers across the United States understand.

     First, today “only 10 percent of American wage and salaried workers carry union cards,” and call themselves members of a labor union, “authorized to fight for a living wage and for fair working conditions.” This 10 percent ranking places the U.S. second to last among the worlds’ nations.

     “How easy is it to fire workers in the U.S.?” Unlike other countries that have strong rules about severance pay, reasons for dismissal, and safeguards to prevent arbitrary terminations, “they virtually disappear in the U.S., now ranked dead last out of 71 nations.”

     Desmond says, “American slavery is necessarily imprinted on the DNA of American capitalism.” If he is correct, one wonders, “What happened on the plantation?”

     First, President Andrew Jackson stole the land across the Southern states from the people who lived there. Desmond says, “The U.S. solved its land shortage by expropriating millions of acres from Native Americans, often with military force, acquiring Georgia, Alabama, Tennessee, and Florida.”

     Second, landowners exploited the land. “Enslaved workers felled trees by ax, burned the underbrush and leveled the earth for planting. Whole forests were dragged out by the roots.” They planted cotton.

     Third, landowners exploited the laborers. “Planters understood that their profits climbed when they extracted maximum effort out of each worker.” Overseers set a quota for cotton picked per individual, and if a slave failed to meet his or her quota, the overseer would bring out a whip.

     Food, clothing, books, education, recreation, and free time for a slave were negligible.

     Third, landowners played the credit markets. They learned that it was easier to mortgage their laborers than their real estate. For example, Thomas Jefferson mortgaged his slaves to build his mansion at Monticello. To access the credit markets, a series of state banks expanded across the South.

     Fourth, landowners kept meticulous records, an early form of spreadsheets. They used Thomas Affleck’s “Plantation Record and Account Book,” “a one-stop-shop accounting manual, complete with rows and columns that tracked per-worker productivity,” that even allowed for a slave’s depreciation.

     “People reduced to data points,” writes Desmond. 

     Desmond relies on research that Caitlin Rosenthal, a history professor at Berkeley, conducted for her first book, Accounting for Slavery: Masters and Management, published a year ago. Her research into numerous plantations’ business records led her to a surprising conclusion.

     “Slavery in the United States was a business. A morally reprehensible, and very profitable business. Slaveholders in the South were using advanced management and accounting techniques long before their northern counterparts, techniques that are still used by business today.”

     In an interview with the Harvard Business Review, Caitlin Rosenthal said, “all of this should make you cringe. This is not an easy topic to read. The plantation was the brutal extraction of labor from an oppressed people.”

     Desmond adds, “Slavery was a font of phenomenal wealth. By the eve of the Civil War, the Mississippi Valley was home to more millionaires per capita than anywhere else in the U.S. Cotton was the nation’s most valuable export.”

     One can understand why the Southern landowners were aghast when certain Northerners called for the abolition of slavery, because, “The combined value of four million enslaved people exceeded that of all the railroads and factories in the nation.”

     Desmond writes, “We can still feel the looming presence of this institution of slavery, which helped turn a poor, fledgling nation into a financial colossus. Slavery can still be felt in our economic life.”

     Desmond makes a strong argument that a low-road form of capitalism developed on the Southern plantation, but capitalism since then has improved. The 13th amendment abolished slavery, and if management terminates an employee today, he or she is free to find a better-paying job elsewhere.

     Although not perfect, the nation’s workforce of today faces a far more equitable and just business environment, than did the eighteenth-century slaves. Today, you and I reside well above the low road.