Back in the Antebellum South before the American Civil War there was great injustice, Slavery. It was wrong on so many levels, but in addition to being a barbaric, dehumanizing institution it was also bad for the Southern economy on a whole, poor whites in particular.
I am not defending slavery. On the contrary, slavery is indefensible. Slavery is a moral outrage. The economic argument for slavery and all it’s incipient derivatives is bankrupt. It is also the basis for the issues we have still in our “modern” economy.
It’s all about valuation of labor, unfair competition and mobility of the labor force. To start, valuing labor at zero – as in case of the slaves, has a negative effect on the value of labor in general. Even if you were free and white, if you did what Slaves did, your wages were at an unnaturally low level because the work was in general, not valued. As a consequence, even Frederick Douglass, escaped Slave and intellectual giant had to admit on his journey north in his auto-biography that poor Southern whites were far worse off than poor whites from the North. It is notable that Douglass noticed this depravity of the people who kept his people enslaved, oppressed and treated as chattel their entire lives.
Additionally, because Slaves had no money to spend, that unspent money didn’t grow the economy. The obvious happened, the South’s macro-economy was stagnant during the period of slavery. The only people benefiting from the arrangement were rich landowners and northern industrialists. Fewer people spending money, even on a very low level, is a drag on growth in the overall economy.
Imagine if all those Black folks got paid at all? What if instead of having no money to spend on Southern-made goods and services, Free-Blacks earned money and spent it? It could be a huge boon to Southern economies because the South had far more Blacks than the North. According to figures from 1780-1830 Blacks were only 10% of New York’s population whereas they were about 41% of Virginia’s population.
The jump in consumer spending would far outstrip the loss in cheap labor.
Slavery and indentured servitude still exist. They also still aren’t good for their native economies. The institution of slavery had the effect of stifling the natural economic development of the south. Primarily a natural resource exporting economy to the north where the power was in it’s manufacturing, not surprisingly, just like colonies of Africa, Asia and South America, an unfavorable balance of trade between the north and the south enforced economic unfairness nationally. The north was undeniably more economically powerful than the south, largely because it had industrialized. The south couldn’t even hope to keep up when plantation owners were essentially forced to maintain an uneconomic way of life because of their enormous investment in capital assets – human beings.
Humanity. Here again, the South threw away something that could’ve given them a real economic advantage. Had Black folks been free, it is likely, due to prejudice and lack of opportunity, that they, like many oppressed groups, would’ve become entrepreneurs. In 2012 small businesses created between 60-80% of ALL U.S. jobs. Small business, certainly in the past 150 years, has been a major factor in the United States status as a world power. It is our innovation and energy that makes us the most powerful nation on earth.
So, Slavery, in the short run can make greedy, morally bankrupt individuals really rich, really fast. In the end though, it leads to scandals (numerous U.S. corporations in Asia using manufacturers that abuse worker’s rights), civil unrest (labor unions around the turn of the century) and wars (See the Civil War, May 1861).
So really, there was no economic reason for Slavery, in fact it wasn’t even good for the slavers, in the end. These days, it exists as wage bondage in places like India, China and Pakistan. Meanwhile we’re lulled into buying all this crap we don’t need. We’re indebted to ACME Corporation and we end up forced to work just to fill the yawning black hole in our souls. No one forced us to max out our credit cards, but corporations holding populations hostage by through monthly expenses is a great way to control the masses.
Slavery is a mind-set. It’s a winner-take-all system and that system really doesn’t allow for a greater prosperity. It is powered by greed and the greedy will do anything and say anything to keep and horde more. Giving the plantation owners a pass and fighting their dirty battles, while we continue to suffer from privation is lunacy. In this day and age, we need to scrutinize and expose the modern day landowners and industrialists for what they are – greedy and disconnected from humanity.
Here are a few you might want to check out.
In the end, a lack of economic mobility, that is the ability for your kids to do better than you did, is bad for the economy. So relegating any portion of the population to dire poverty or worse is actually toxic for the economy as a whole.