Archive for March, 2013

slave mart

In Capitalism and Slavery, Eric Williams argued that the British abolition of their Atlantic slave trade in 1807 was motivated primarily by profit—rather than, as previous historians had suggested, by altruism or humanitarianism.

But, Walter Johnson reminds us, the history of the relationship between capitalism and slavery is even more complex.

What was the role of slavery in American economic development?

The most familiar answer to that question is: not much. By most accounts, the triumph of freedom and the birth of capitalism are seen as the same thing. The victory of the North over the South in the Civil War represents the victory of capitalism over slavery, of the future over the past, of the factory over the plantation. In actual fact, however, in the years before the Civil War, there was no capitalism without slavery. The two were, in many ways, one and the same. . .

Between 1820 and 1860 more than a million enslaved people were transported from the upper to the lower South, the vast majority by the venture-capitalist slave traders the slaves called “soul drivers.” The first wave cleared the region for cultivation. “Forests were literally dragged out by the roots,” the former slave John Parker remembered in “His Promised Land.” Those who followed planted the fields in cotton, which they then protected, picked, packed and shipped — from “sunup to sundown” every day for the rest of their lives.

Eighty-five percent of the cotton Southern slaves picked was shipped to Britain. The mills that have come to symbolize the Industrial Revolution and the slave-tilled fields of the South were mutually dependent. Every year, British merchant banks advanced millions of pounds to American planters in anticipation of the sale of the cotton crop. Planters then traded credit in pounds for the goods they needed to get through the year, many of them produced in the North. “From the rattle with which the nurse tickles the ear of the child born in the South, to the shroud that covers the cold form of the dead, everything comes to us from the North,” said one Southerner.

As slaveholders supplied themselves (and, much more meanly, their slaves) with Northern goods, the credit originally advanced against cotton made its way north, into the hands of New York and New England merchants who used it to purchase British goods. Thus were Indian land, African-American labor, Atlantic finance and British industry synthesized into racial domination, profit and economic development on a national and a global scale.

When the cotton crop came in short and sales failed to meet advanced payments, planters found themselves indebted to merchants and bankers. Slaves were sold to make up the difference. The mobility and salability of slaves meant they functioned as the primary form of collateral in the credit-and-cotton economy of the 19th century.

It is not simply that the labor of enslaved people underwrote 19th-century capitalism. Enslaved people were the capital: four million people worth at least $3 billion in 1860, which was more than all the capital invested in railroads and factories in the United States combined. Seen in this light, the conventional distinction between slavery and capitalism fades into meaninglessness.

Note: The photo above is from the Old Slave Mart Museum, located at 6 Chalmers Street, Charleston, South Carolina. The 1808 ban on the United States’ participation in the international slave trade led to a renewed demand for slave labor, which was satisfied, in part, by the creation of a domestic slave-trading system in which Charleston functioned as a major slave collecting and reselling center.

snapshot-corporate-profit

According to Larry Mishell,

the share of capital income (such as profits and interest, which are hereafter referred to as ‘profits’) in the corporate sector increased to 25.6 percent in 2012, the highest in any year since 1950-1951 and far higher than the 19.9 percent share prevailing over 1969-2007, the five business cycles preceding the financial crisis. . .

We now have an economy built to assure high corporate profitability even when it’s operating far below capacity and when most families and workers are faring poorly. This is further evidence that there is a remarkable disconnect between the fortunes of business and those best-off (high-income households) and the vast majority.

 

Special mention

128913_600 mike2april1

129468_600

Special mention

129448_600 129308_600

coops10

The next time someone suggests that workers shouldn’t run their own enterprises, you can give them ten reasons why worker-owned cooperatives rock.

Or you can simply suggest it would be hard for workers to do a worse a job than the boards of directors of capitalist enterprises—like the board of computer giant Hewlett-Packard.

¶ After ousting Mark Hurd as chief executive in 2010 amid messy allegations of sexual harassment, the board hired Léo Apotheker to replace him, even though Mr. Apotheker had been fired as chief executive of the European software giant SAP after just seven rocky months. Most of the board didn’t bother to meet Mr. Apotheker, let alone ask him any probing questions about his tenure at SAP, before rubber-stamping the choice of the board’s four-member search committee.

¶ In 2011, H.P.’s directors unanimously approved the acquisition of the British software maker Autonomy for $11.1 billion, a deal that was considered wildly overpriced even at the time. Less than a year later, H.P. wrote off $8.8 billion of that and claimed it had been defrauded. (Autonomy officials have denied the allegations, which are being investigated by authorities in both the United States and Britain.) Some consider Autonomy to be the worst corporate acquisition in business history. In fiscal year 2012, H.P. wrote off a total of $18 billion related to failed acquisitions and other missteps.

¶ With Mr. Apotheker at the helm and the board backing his strategic initiatives, H.P. announced that it was considering abandoning its giant personal computer business, then changed its mind. After Mr. Apotheker had been on the job a disastrous 11 months, the board demanded his resignation, and then paid him more than $13 million in termination benefits.

Shareholders might have forgiven what Fortune magazine called a “tawdry reality show” if the stock had performed well. But from the time Mr. Apotheker was hired in September 2010 until he left in 2011, the stock went from more than $45 a share to a little more than $22. Despite a recent rally, shares are still below $24, even as the Dow Jones and Standard & Poor’s 500-stock indexes are hitting new highs.

“You really couldn’t have a stronger case for removing directors,” Michael Garland, executive director for corporate governance in the New York City comptroller’s office, told me this week. “There’s been a long series of boardroom failures that have harmed the reputation of the company and repeatedly destroyed shareholder value over an extended period of time.”

GD2

my conclusion is that I should stop calling the current episode the Lesser Depression. Yes, its shape is different from that of the Great Depression; but, so far at least, there is no reason to rank it any lower in the hierarchy of macroeconomic disasters.

J. Bradford DeLong, “Let It Bleed?”

median income

In the United States, median annual household income in February 2013 was $51,404, about 1.1 percent (or $590) lower than the January 2013 level of $51,994.

As Catherine Rampell explains,

February’s median annual household income was 5.6 percent lower than it was in June 2009, the month the recovery technically began; 7.3 percent lower than in December 2007, when the most recent recession officially started; and 8.4 percent lower than in January 2000, the earliest date that this statistical series became available.

And we call this a recovery and not the Second Great Depression why?