Capitalism, Slavery, and Matthew Desmond’s Low-Road Contribution to The 1619 Project

By Peter A. Coclanis. He is Professor of History at University of North Carolina at Chapel Hill. Excerpts:

"Many challenge the basic historical facts arrayed by NHAC (New History of American Capitalism) scholars, particularly when the facts in question involve numbers or even rudimentary quantitative manipulation. Economists have been especially critical of NHACers’ use of numbers, which is understandable in light of the fact that with a few notable exceptions—Rosenthal and Louis Hyman, the latter of whom doesn’t study slavery, come to mind—NHACers are, in a scholarly sense, essentially innumerate.

Other critics zero in on interpretive matters. Exhibit A: The NHAC scholars elevate the importance of slavery in explaining not only early American economic development but also, as in The 1619 Project, the main contours of American history. In some cases, this critical path aligns closely with the path discussed in the previous paragraph. The basic numbers on slavery and on cotton, the South’s most important staple in the nineteenth century, just don’t support the interpretive weight NHACers bestow on the same. And Exhibit B: For all their concern about capitalism, few NHAC scholars have attempted to define it, which renders their work squishy and suspect, not to mention makes many of their assertions about capitalism unfalsifiable.

Still other critics focus on the ungracious and ungenerous tendency of NHAC scholars to pronounce that they “rediscovered” slavery as a topic of inquiry, recovering it from the dustbin of history, as it were; to proceed as though they were among the first to study the relationship between capitalism and slavery, a relationship with which both mainstream and Marxist/Marxisant scholars have been wrestling for generations; and in many cases to decline to engage with, to stonewall, or to even attempt to cancel their critics (Coclanis 2018). These critical foci are not necessarily exclusive, with some scholars reproving NHAC work on more than one of these grounds—or other grounds."

"Desmond’s melodramatic narrative, like that of The 1619 Project generally, is as tendentious as it is thinly sourced. Except for a one-off nod in the direction of the distinguished economic historian of slavery Stanley Engerman, virtually every authority invoked and assertion made in Desmond’s piece is associated with the NHAC movement and its take on slavery and capitalism (Engerman 2000, 480). Indeed, although the piece is not footnoted, most of it seems to have been drawn from a single text—Slavery’s Capitalism, edited by Beckert and Rockman—supplemented by a sideways glance at Johnson’s River of Dark Dreams. To be sure, an author has the right to his or her own path, but in a publication intended for a broad, nonspecialist audience, doesn’t every author also have an obligation to point out that there are other paths and that the path depicted has its critics and detractors? Had Desmond opted for complete transparency, he might even have pointed out that almost every serious economic historian of slavery has rejected—in most instances to devastating effect—the basic NHAC positions he lays out in his essay.

Numerous critics of the NHAC narrative have written convincing rebuttals to various parts of their narrative. But two highly respected economic historians of agriculture, Alan Olmstead of the University of California, Davis, and Paul Rhode of the University of Michigan, should be singled out for the breadth, analytical rigor, and degree of empirical support behind their dismantlement—some would say evisceration—of the NHAC line on the Cotton South. It would be in fact difficult to overstate how convincingly Olmstead and Rhode made the economic case against NHAC assertions in their widely read 2018 essay in Explorations in Economic History. Aiming their critical fire at the primi inter pares behind (or at least associated with) the movement—Beckert, Johnson, and especially Baptist—Olmstead and Rhode methodically destroy the principal economic contentions of each (Olmstead and Rhode 2018).

Concerning the NHAC talking points integral to Desmond’s The 1619 Project piece, Olmstead and Rhode, backed by other economic historians, counter with a much less extreme and much more balanced picture. The South, relatively speaking, was a wealthy region in the antebellum period, and its economy was both dynamic and growing at the time of the Civil War. Slave plantations were central to the region’s economy and important to the U.S. economy as a whole. Large plantations, which constituted a small share of the region’s total stock of agricultural units, grew a number of staples for export, the most important of which was cotton. The importance of export staples notwithstanding, most parts of the region were self-sufficient in the production of foodstuffs, and corn, not cotton, was the most valuable crop grown in the region. Although cotton was the leading U.S. export throughout the antebellum period, it was nowhere near as important to the U.S. economy as NHACers, basing their position on Baptist, assert, actually constituting “less than 5 percent” of GDP over most of the antebellum period, and never more than 7 percent (Hansen 2014; Olmstead and Rhode 2018, 12; Magness 2020a, 7–14, 31–36, 55–67; Wright 2020, 373–78).

Slave-based agriculture was profitable and viable for most slave owners, but did not necessarily benefit nonslaveholders living in the region or promote the long-term development of the region as a whole. Whether slavery did or did not reflect a “low-road” form of capitalism, it is clear that slave labor was not cheap, but expensive, much more so than labor in other cotton-producing areas in the nineteenth century, such as India. Slavery was a moral enormity and was based on unconscionable exploitation, but there is little evidence for what Baptist refers to as the “pushing system” in cotton picking. Although daily picking rates, generally speaking, rose dramatically over the course of the antebellum period, the principal reason was not due to the systematic “ratcheting up” of labor requirements, much less to the creation of a labor regime “whose bottom gear was torture,” but to westward movement onto better cotton lands and to a series of mechanical, organizational, and, most important, biological innovations in cotton cultivation that together over time increased the total cotton in each boll and on each plant, the total cotton output, and the output per worker (Olmstead and Rhode 2008; Hansen 2014; Olmstead and Rhode 2018; Magness 2020a; Wright 2020).

However important cotton was to the South and to the United States in the antebellum period—and it was important—it was neither indispensable to American economic development nor served as the model or prototype for American capitalism as it developed after slavery’s demise. Indeed, the type of agricultural regime that came to characterize the South in the post-slavery era—low-wage, low-skill, and labor-intensive—differed significantly from both the much more capital-intensive, scientific agricultural system emerging in other parts of the country and, obviously, from the nation’s growing industrial economy, particularly in the manufacturing belt (Coclanis 2000; Coclanis 2020). One additional reason for the NHAC mischaracterization: Its proponents make the mistake, as Gavin Wright has recently noted, of equating the role, nature, and economic importance of cotton in the United States in the antebellum period with that of sugar in the small islands in the British Caribbean in the eighteenth century, a monumental interpretive error (Wright 2020, 367–73)."

"Desmond argues that utilizing slaves—a legal class of assets constituting almost half of Southern wealth and 19 percent of U.S. wealth in 1860—as collateral for securing debt is somehow prima facie evidence that the financialization of the U.S. economy began neither in the “reckless speculation of the 1920s,” nor with Bretton Woods, nor even with the gutting of the Glass-Steagall Act late in the twentieth century, but in the antebellum South. To Desmond, “the story begins with slavery” (Wright 2006, 60; Desmond 2019, 37; Williamson and Cain 2020).

Had Desmond bothered to explore more carefully the history of mortgages (including chattel mortgages), the use of collateral, hypothecation, and so on, over time and across space, he would soon have found that mortgages have been around since classical times and there was nothing new or particularly innovative about the use of the same in the antebellum South. Throughout American history, items of value—particularly items that retained value, were easy to liquidate, and were fungible—were used as collateral to secure loans and debts. Among the items employed in the United States in the antebellum period were land (especially when cleared), crops, livestock, trade merchandise, tools and fixed capital, urban real estate, household goods, stock certificates, life-insurance policies, and slaves (Murphy 2005, 619–20; Kilbourne 2006; Murphy 2017, 6).

The last category of assets was used with great frequency in the South, as one would expect of an asset constituting so large a portion of regional wealth, but slave collateral did have certain disadvantages from the creditor’s point of view: the value of slaves fluctuated; slaves did not retain value over time; and their fungibility was not unlimited. At one point in his piece Desmond deigns to admit that “[e]nslavers were not the first ones to securitize assets and debts in America,” but he nonetheless tries to tether slaveholders to collateralized debt obligations, financial engineering, and financial chicanery on Wall Street today. Post hoc ergo propter hoc, anyone? (Desmond 2019, 37)."

"Closely related to the argument regarding the purported importance of slavery in creating U.S. mortgage markets is Desmond’s contention, based in large part on Schermerhorn’s work, that slavery was central to the development of debt instruments of various kinds (including bills of exchange), international credit chains, and banking in the United States. The problem with this line of reasoning is that slavery or, more precisely, financing and investing in slaves and the slave trade were subsets of much broader sets: financing and investing in production, infrastructure (particularly transportation infrastructure), and trade in British North America and later the United States. Merchants and the investment community—supported by evolving law, legal protocols, and practices—developed a wide variety of tools, instruments, and institutions over time that rendered short-term lending and long-term investment more efficient, and often, but not always, safer. These tools, instruments, and institutions ranged from promissory notes to bills of exchange, from bills of credit to paper currency and stocks and bonds, and from private commercial banks to state banks to U.S. banks (Lamoreaux 1991; Bodenhorn 2000; Wright 2001; Wright 2002; Sylla 2002; Kilbourne 2006).

To be sure, the South was involved in international trade, especially in cotton, and thus was deeply enmeshed in this financial and credit system as it evolved. But few of the practices and institutions regarding debt targeted by Schermerhorn and thus Desmond were particular to the South, much less originated there, a notable exception being the introduction of short-lived plantation banks in the Lower South in the late 1820s and 1830s (Schermerhorn 2015, 95–123; Murphy 2017). Generally speaking, much of the same debt and credit practices and institutions employed in cotton characterized the trade of flaxseed from colonial New York to England, of Pennsylvania wheat destined for Southern Europe, and of U.S. imports of delftware, Chinese goods, and chinoiserie. Similarly, long-term international investment in U.S. infrastructure, canals and railroads especially, in the antebellum period looked much the same whether in the North or the South. And crucially, bills of credit, paper money, the discounting of bills of exchange, commercial banks, life insurance, credit reporting, and so on, were all developed earlier and in more sophisticated ways in the North than in the South (Doerflinger 1986; Wright 2001; Wright 2002; Sylla 2002; Murphy 2010; Olegario 2006). Indeed, financial innovations such as these—and others—help to explain how and why the economy of the North came to surpass that of the South in the antebellum period."

"Neither Rothman nor Desmond, it is clear, much like capitalism or at least the culture thereof. They go out of their way to try to meld together capitalism, speculation, gambling, and even criminality into one combustible mix. In order to make their position seem plausible, they focus on one economic phenomenon—the Panic of 1837—and imply that it was standard or normative of slavery, the South, and capitalism. The problem is that it wasn’t.

To be sure, capitalism, including Southern capitalism, historically has been subject to periodic bouts of instability—shocks, recessions, panics, and, less frequently, depressions—but over time has always bounced back and generally facilitated sustained economic growth wherever it has been planted and nurtured, including in the antebellum American South. The Southern economy, as suggested earlier, was one of the most dynamic economies in the world in the period between 1800 and 1860, enjoying a growth rate that few other societies at the time experienced. The standard of living of the free population on balance was also very high, and improving pretty much across the board, as Robert A. Margo’s work has demonstrated. According to Margo, between 1820 and 1860 the annual growth rate of real wages of common laborers was 0.97 percent in the South Atlantic census region and 0.85 percent in the South Central census region. The rates for artisans were somewhat lower and for white-collar workers somewhat higher, but annual growth of 0.90 percent, when compounded over forty years, results in an increase of 43 percent, extremely rapid for the time (Margo 2000, 51, table 3.3). This, despite the rough patch during part of the 1830s—and a few other rough patches as well. To focus solely on and then extrapolate from one atypical subperiod—the Panic of 1837—to the history of the South between 1800 and 1860 is shoddy methodologically, an instance at the very least of confirmation bias writ large.

One more point: Desmond’s loose and inaccurate use of the concept of speculation. Desmond (and his scholarly alter ego, Rothman) both misuse the term and demonstrate little sense that they understand it in economic terms. Contrary to the insinuations in Desmond’s essay, speculation and speculators are neither good nor bad, but efficient or inefficient, for both the practice and the practitioners play necessary roles in markets of all types—including financial markets and markets for art, wine, land, slaves, and so on.

Briefly, speculators buy or sell assets, hoping to gain from changes in their prices. Speculators often have short-term time horizons, but some prefer holding assets for medium- and long-term periods. In efficient financial markets, their role is to at once absorb excess risk and to provide liquidity when necessary, while other participants—hedgers, arbitrageurs, and normal investors—perform other functions. In a sense, speculators, if effective, help to render more efficient the intertemporal distribution of resources under conditions of uncertainty, as no one knows what the future will hold. They can err, and when they do, both individual speculators and, in some cases, society as a whole can pay the price. But, like scholars and journalists, they perform certain necessary social functions. In America, and not just the South, some individuals have stepped up to perform such speculatory functions from the get-go (Coclanis 2015). And I for one am glad that many were successful in doing so.

The fourth part of Desmond’s argument regarding slavery and financialization rests almost entirely on the work of Caitlin Rosenthal, one NHACer who is in fact comfortable with numbers and familiar with the tools, methods, and practices of economics (Rosenthal 2016; Rosenthal 2018). Rosenthal is particularly interested in the management practices of large cotton planters in the antebellum period, offering the provocative argument that the practices of such planters were marked, even characterized, by a striking concern for systematic measurement and surveillance. In her view, their business practices were extremely advanced for the time, rivaling those of the railroads, and certainly far more sophisticated than their agricultural peers in the North.

Rosenthal’s single most talked-about finding relates to planters’ bookkeeping practices. Basing her argument largely on cotton planters’ use of the blank plantation record and account books prepared, published, and distributed by Thomas Affleck of Mississippi during the antebellum period, Rosenthal contends that cotton planters were avid measurers, whose “scientific” managerial and bookkeeping practices incorporated the concept of depreciation and approached modern cost accounting. In so doing, they were quite innovative, anticipating much later developments normally associated in America with scientific management, F. W. Taylor, and so on. Rosenthal’s principal evidence, again, is the Affleck blank accounts, which commonly included fifteen blank forms for cotton planters (forms A through O), some of which, if filled out completely and properly, would allow for calculation of income and expenses, and the calculation of capital appreciation and depreciation regarding slaves, livestock, tools, and the like. To Rosenthal, the availability and use of Affleck’s record and account books demonstrate, among other things, planters’ interest in agricultural improvement and business innovation, as well as their capitalist mentalité. Desmond, as is his wont, goes much further, employing Rosenthal’s findings to link slavery’s capitalism to the financialization of the U.S. economy in recent decades and to various and sundry forms of worker exploitation, surveillance tools, and financial chicanery said to embody capitalism today (Rosenthal 2016; Rosenthal 2018).

Although in general I am a fan of Rosenthal’s and appreciate her overall body of work, her use of Affleck is questionable, and Desmond’s is completely off the mark. Rosenthal herself in fact offers sotto voce some cautionary notes regarding both Affleck and his record and account books. Affleck was not a native Southerner but a Scot. He was in fact a bookkeeper for the Bank of Scotland before immigrating to the United States in 1832. During his first decade in the United States he worked as a clerk, a merchant, and an agricultural editor in New York City, Pennsylvania, Ohio, and Indiana, before showing up in Mississippi in 1842. Regarding his record and account books, Rosenthal points out that only a tiny minority of Southern cotton farmers possessed Affleck’s books and, when used, the books were used “unevenly” and only “partially completed” (Rosenthal 2018, 91–92, 94, 101). Olmstead and Rhode made the same points earlier in an excellent 2015 essay, wherein they punctured the notion that Southern plantations were “factories in the fields.” Furthermore, in her well-regarded book Every Farm a Factory: The Industrial Ideal in American Agriculture, Deborah Fitzgerald pointed out in 2003 that, as late as World War I, few farmers anywhere in the United States kept systematic accounts, much less practiced cost accounting (Fitzgerald 2003, 33–57; Olmstead and Rhode 2015, 269–72).

A recent study by a young scholar teaching at the University of Louisiana at Lafayette, Ian Beamish, qualifies the use of the Affleck books even more. In an impressive paper in the journal Agricultural History, Beamish subjected to close textual analysis all sixty-five of the filled-in Affleck account books known to exist for cotton plantations. The principal takeaway from Beamish’s study is that the filled-in Affleck books were used almost exclusively as conventional agricultural record books, in a manner similar to records kept in the eighteenth-century South. Virtually no user (whether an owner or overseer) filled in forms M and N—those needed for cost accounting—and few were interested systematically in appreciation or depreciation. Rather, the books, which were often filled in incompletely, haphazardly, or incorrectly, were generally concerned with recording daily numbers and events—cotton picked by day and by slave, other labor performed, slave births and deaths, and so on. In his view, the books in and of themselves tell us little about the relationship between slavery and capitalism (Beamish 2021). Or, I might add, slavery in the antebellum South and “financialization” in the United States today.

Moreover, it is unfortunate that Desmond, in his haste to look forward, didn’t spend at least a bit of time looking back, not merely or even necessarily on agriculture in the eighteenth-century South, but on the genealogy of capitalism itself. Instead of pressing to link slavery with present-day financialization, he would have been better served by telling us what he means by capitalism and why he places the antebellum South in the context of the evolution of this economic system in the West.

Desmond’s reluctance to do so is not altogether surprising. As stated previously, scholars working under the NHAC umbrella are loathe to get into specifics about capitalism, old or new. For example, in their introduction to the important NHAC collection Slavery’s Capitalism, Beckert and Rockman manage to resist the temptation to define precisely what they mean by capitalism—a point mentioned by many critics—and Desmond follows suit. In this, the NHACers may be following the example set by Louis Armstrong, who, when asked about the definition of jazz, famously retorted, “If you gotta ask, you’ll never know.”

To be fair, NHACers, however reluctant to define capitalism, have suggested that the system or concept needs to be approached more broadly than “it” (whatever “it” is) has been until now. Thus they have tended to emphasize topics sometimes given relatively short shrift by earlier scholars—war, violence, race, the law, and so on—in their analyses. Note that I say sometimes, because it is in fact possible (if one at all tries) to find plenty of earlier scholars of capitalism who have looked at each of these topics in detail. Be that as it may, we have recently seen the publication by an NHAC-related scholar, the aforementioned Caitlin Rosenthal, which includes a real definition of capitalism, or at least an explanation of how the author is using the term. In this piece, Rosenthal offers a succinct definition of capitalism, based, as she puts it, on “(1) the commodification of labor, as it results from, (2) the accumulation of capital” (Rosenthal 2020, 301). She doesn’t historicize the development of said features, or go into the motive forces behind their development, but it’s a start."

"The NHAC view, which assumes cotton totally dominated the U.S. economy in the antebellum period, composing as much as 40 percent or even more of U.S. GDP, is grossly exaggerated, based largely on NHAC compatriot Edward Baptist’s unfamiliarity with standard national-income-accounting methods, particularly regarding the manner in which estimates of GDP are constructed. Such unfamiliarity led Baptist to double and sometimes triple count in estimating the size of the cotton economy by adding to the value of cotton production the value of all inputs used in its production, when, according to national-income-accounting protocols, these inputs are already subsumed into the sale price of cotton. This grievous measurement error would earn an undergraduate economics student a failing grade. This error, however, has not been admitted by Baptist and has gone unremarked upon by NHACers, who continue to use Baptist’s figures, despite their repudiation by measurement experts (Olmstead and Rhode 2018)."

"the South was clearly not urbanizing or industrializing nearly as rapidly as the North, preferring to pursue policies predicated on the continued push westward of its staple export economy, in so doing, expanding, as Drew McCoy put it long ago, across space rather than through time (McCoy 1980). The planters, merchants, bankers, and politicians who led the push westward were more or less forward-looking and “modern” in their thinking, but they hardly represented the capitalist vanguard in the Western world at the time."

"although the Southern economy was growing in the antebellum period, the growth path taken was not necessarily conducive to long-term economic development. Like other plantation economies around the world, that of the South was unbalanced and overly specialized, marked by relatively low levels of urbanization (especially in the interior), a rudimentary “conveyor-belt” transportation system designed to facilitate exporting and importing rather than knitting together the region as a whole, and low levels of investment in human capital. Few plantation economies anywhere in the world have ever developed into modern high-performance economies—none based primarily upon slave labor have—and numerous studies have demonstrated the long-term negative effects of plantation-based slavery on those parts of the South where it took firm hold. So slavery or slavery’s capitalism almost certainly did not promote the economic well-being of the region over the long run"

"Consumers of agricultural products produced by Southern slaves likely paid a bit less—whether in the South, the North, or Europe—than they would have had said products been produced by free labor. But because cotton composed only about 5 percent of U.S. output, this gain would have been fairly small, especially because free labor was able to produce it at a low cost, as shown after emancipation. Similarly, residents of nonslave states probably paid a little less in taxes than they would have because a good part of the U.S. government’s revenue came from duties on imported goods, financed directly or indirectly by exports of slave-produced cotton, rice, and so on. Again, though, the gain would be small because taxes were only about 2 percent of GDP."

"The U.S. economy—unlike the Southern economy—was not based on slavery in the nineteenth century. Although cotton produced in the South was important early on to the textile industry in the Northeast, in the larger scheme of things, the most important economic developments of the century—urbanization and industrialization in the northeastern quadrant of the United States (the area north of the Ohio River and east of the Mississippi) and the creation of the dynamic agro-industrial complex in the Middle West—owed relatively little (if anything) to slavery (Page and Walker 1991). Cotton, one recalls, became much more important in the South after the Civil War, emancipation, and the demise of slavery than it ever was before the war—cotton production in the region did not peak until the late 1920s—and cotton’s importance to the American textiles industry followed the same pattern.

Indeed, it is more accurate to say that slavery distorted rather than directed capitalist development in America. Slavery constituted an illiberal expression of early capitalism in certain contexts in labor-scarce, land-abundant areas during the so-called primitive accumulation. The principal thrust, the major theme, as it were, of capitalism was liberal and progressive, resulting in greater economic freedom. The forces unleashed by capitalism that brought slavery to British America and sustained slavery for a period thereafter later led to the rise among some, then among many, of what Thomas Haskell has famously called a “humanitarian sensibility” that led Great Britain and the United States to abolish slavery relatively early in the modern period, far earlier than in many other parts of the world, particularly in Africa and the Middle East.

Slavery in the American South was an abomination, but Matthew Desmond, taking his cues from the NHAC, grossly misrepresents it in order to render financialization its lineal descendent."