In a New York Times Magazine article this month, Matthew Desmond provided an overview of recent work by historians of capitalism who argue that slavery was foundational to American growth and economic development in the nineteenth century. In Desmond’s words, slavery “helped turn a poor fledgling nation into a financial colossus.”The article provoked predictable wails of disapproval among conservatives seeking to defend the moral integrity of capitalism, and the Times should be commended for exposing its readers to the brutal history of slavery, which is indeed central to the story of American capitalism. But the vision that Desmond presents is wrong on the details, and obscures the way in which slavery actually shaped the wealth and power of American capitalists.
Desmond begins his article by drawing on the Harvard historian Sven Beckert who argues that “it was on the back of cotton, and thus on the backs of slaves, that the U.S. economy ascended in the world.” Yet Desmond neglects to mention that this claim has been widely rejected by specialists in the economic history of slavery.
It’s true that cotton was among the world’s most widely traded commodities, and that it was America’s principal antebellum export. But it’s also true that exports constituted a small share of American GDP (typically less than 10 percent) and that the total value of cotton was therefore small by comparison with the overall American economy (less than 5 percent, lower than the value of corn).
Historians like Beckert and Seth Rockman get around this fact by pointing to forward and backward linkages that connected slave-produced cotton to Northern industries. But this claim (known as “the cotton staple hypothesis”) has also been widely rejected by economic historians. Slave plantations provided raw cotton to Northern mills and offered some markets to Northern producers, but Southern demand was limited by the production of food and other inputs on plantations themselves (Desmond approvingly cites Walter Johnson’s claims that the South was a net importer of food, but it was not). It’s true that slavery made many fortunes, in both cotton and sugar, such that there were more millionaires per capita in the Mississippi Valley than anywhere else in the country. But it’s also true that most of that wealth stayed in the South, where it was tied up in land and slaves, such that the net effect on real accumulation was probably negative.
Desmond also draws on the work of Edward Baptist and Caitlin Rosenthal to suggest that the Southern slave-based economy was a hotbed of dynamic innovation in finance and accounting. It is true that the Southwest was a center of credit expansion in the 1830s (though this was driven by an increased demand for cotton, not by speculation in slaves). It is also true, as Rosenthal demonstrates, that large planters often adopted the latest methods of accountancy, partly in the service of labor management. But there is little evidence that slave-owners themselves invented new financial instruments or new methods of accountancy, or that the adaptation of these things to the plantation led them to be widely adopted elsewhere in the American economy. Rosenthal is careful to note that her book “is not an origin story,” but that is how Desmond reads it.