One of the best economic articles I’ve read in the New York Times is now on line. They have a series called the 1619 Project, noting the 400th anniversary of the importation of the first African slaves to Virginia. But it goes way beyond that. Slavery, it points out in this story, In order to understand the brutality of American capitalism, you have to start on the plantation, is not just part of our history. Rather, our American form of capitalism, and its accounting tools and financial instruments, were developed for the slave system, long before the industrial age.
The story is framed by a very useful term that it credits to University of Wisconsin-Madison sociologist Joel Rogers: Low-road capitalism.
In a capitalist society that goes low, wages are depressed as businesses compete over the price, not the quality, of goods; so-called unskilled workers are typically incentivized through punishments, not promotions; inequality reigns and poverty spreads. In the United States, the richest 1 percent of Americans own 40 percent of the country’s wealth, while a larger share of working-age people (18-65) live in poverty than in any other nation belonging to the Organization for Economic Cooperation and Development (O.E.C.D.).
And not all capitalist societies work that way. It is a uniquely American model, and it began with slavery.
Let me point out that while the Times has had some issues with its political reporting lately, this article was written by a Princeton sociology professor, Matthew Desmond. It never uses the term slave; rather, it refers to enslaved workers. And the brutality of their treatment was a tool for keeping the non-enslaved workers in line too. At a time when land values were low, mortgages were written against the value of enslaved workers. Financial products like mortgage-backed securities were written against the indirect value of enslaved workers. The southern banking industry was backed by their value, and the banks in the north and especially Europe made a lot of money off of the system too. Accounting concepts like depreciation and hierarchical corporate management structures were developed for the plantation, not the railroads and industry that came later.
And lest I ruin your enjoyment by this potential spoiler, a fitting connection to today’s financialized economy is Wall Street itself. New York had plenty of slaves in the 1700s, doing construction and other heavy labor. The wall that the street was named for was built by slaves, and was the site of New York’s slave auctions. The more things change...