Nikole Hanna-Jones: 1619 Project, “Capitalism” Notes and Summary by Matthew Desmond  

1. Low Road Capitalism: .  The United States is deeply unequal because we squeeze labor with price competition rather than quality competition, and we incentivize work performance through punishments rather than promotions.
   • As a result, the United States is one of the most unequal countries in the world.
   • The important question is why?  Why has America managed to develop a most severe form of capitalism that pushes it to the bottom of all lists for economic well-being among peer nations?
   • The answer lies in our tradition of slavery.
   • Book: Sven Beckert and Seth Rockman, eds., Slavery’s Capitalism: A New History of American Economic Development
2. Colonial America and the Constitutional Era
   • The colonies were relatively prosperous before the War for Independence, which left America cash strapped and vulnerable.  It was important that the new country united and formed a constitution.
   • Northern states not slavery dependent had outlawed slavery before the Constitutional convention.  Virginia and Georgia vehemently defended slavery.
   • What pro-slavery advocates feared most was democracy itself: that Northern majorities would use the power of the federal government to dismantle slavery. This fear shaped our political institutions in ways still felt today.
   • The Great Compromise or 3/5’s rule and an upper legislative chamber (Senate), and the electoral college were 3 devices designed to empower the slave interests in the south.
   • The south didn’t like and kept their enslaved persons from being taxed even by the 3/5’s multiplier.  Taxes were hidden in import taxation.
   • Thus, there was never an income tax in America until the Civil War bills came due.  Later, the Supreme Court ruled this tax unconstitutional.
   • The federal government didn’t acquire the power to “lay and collect taxes on incomes” until 1913, when the Sixteenth Amendment was ratified. (p. 170)
   • Progressive taxation remains among the best ways to limit economic inequality.
3. Private Property
   • Capitalism depends on private property, and private property depends on the law.
   • The owning of human beings raised the protection of private property to a new level of complexity
   • Much of the Constitution is devoted to elaborating and protecting ownership rights over human property, such as Article V, Section 2 prohibited free states from emancipating runaways: human property in the South would remain human property in the North.
   • Likewise, Supreme Court decisions locked slavery into our consciousness.
   • The Dred Scott decision was decided based on property rights, the rights of Scott’s enslaver. 
4. Property After the Civil War
   • The vigorous property rights that governed slavery were extended to other forms of property.
   • Corporations realized that the 14^th (mandating “equal protection of the laws” and prohibiting states from denying people “life, liberty, or property, without due process,)” could be used to protect business property.  This is where we get corporate personhood.
5. Cotton
   • The Cotton Gin was invented by Eli Whitney in 1793 (p. 173)
   • The United States ruthlessly exploited enslaved people and seemingly limitless land to become the world’s largest cotton exporter.
   • Cotton tended to deplete the land and planters were forced to move.
   • Land was seized, often through military force, and sold inexpensively to planters.  This is how the US acquired Georgia, Florida, Tennessee, Alabama.
   • Cotton cultivation established the practice of over-extraction from the land itself. Forests were leveled and burned, soil plowed, and depleted by intensive monoculture.
   • Cotton, like oil after it, supported factories and much trade.
6. Banking and Speculation During the Cotton boom
   • The heart of the 19^th century new economy was slavery.
   • Book: Joshua Rothman, Flush Times and Fever Dreams.
   • The cotton culture and the brand of capitalism it supported was wealth without work, oppression of the powerless, limitless expansion. 
     • And with this capitalism comes periodic market crashes like the great depression and recession.
   • During the Cotton Boom planters got rich along with their cohorts in the North.
   • The value of enslaved workers soared through the 19^th century
   • Enslaved people were used to secure loans and functioned as a walking form of wealth.
   • Banks nationwide loaned money and profited too from the Cotton Boom and the soaring value of enslaved people.
     • Southern planters took on tremendous debt
     • By 1833, Mississippi banks had issued twenty times as much paper money as they had gold in their coffers.  This practice injected vast amounts of wealth into local economies.
   • Banks worldwide became involved in financing America’s 19^th century boom. 
   • Everyone assumed that cotton prices would rise indefinitely.  This in turn gave planters, bankers, investors an invulnerable sense that they could exploit forever.
   • By 1834, cotton prices began to fall and led to the crash in 1837.
   • When the price of cotton tumbled, it pulled down the value of enslaved workers and land along with it. Because enslavers couldn’t repay their loans, the state-chartered banks couldn’t make interest payments on their bonds.
   • The outcome of the crashes was various.  Rich planters rode it out.  Some escaped to Texas, an independent country, with their enslaved and money, enslaved people and local banks suffered terribly.
7. Modern management techniques
   • We’ve long told ourselves that modern capitalism began with the railroad industry. 
   • 19^th century management techniques through many industries looked much like practices used with enslaved people.
     • Planters practiced economies of scale by buying land, using more enslaved people, investing in equipment, and experimenting with different cotton varities.
     • Hierarchical organizational structures developed.
     • Plantation entrepreneurs developed spreadsheets, like Thomas Affleck’s Plantation Record and Account Book, which was first published around 1850
   • The concept of depreciation developed as capitalists attempted to calculate the value the remaining value of an enslaved person.
   • Planters kept logs for tools as a way of anticipating any kind of rebellion.
   • Overseers kept constant surveillance over workers anticipating modern HR methods.
   • The uncompromising pursuit of measurement and scientific accounting displayed in slave-labor camps predates industrialism.  Other industries didn’t adopt these methods until after Emancipation.
   • As the large slave-labor camps grew increasingly efficient, the productivity of enslaved Black workers increased at an astonishing pace.  Baptist accounts for productivity gains using torture which forced faster work.  This author credits the detailed accounting system and surveillance practices.  (p. 179)
   • The entire system was saturated by violence. 
     1. Even the whipping was authorized by supervisors above field overseers. (P. 180)
   • Falling short of a picking goal could get you beaten but overshooting your target could bring misery the next day, because an overseer might raise your picking rate.
8. The American Labor Movement
   • White led unions succumbed to the boss’s strategy of separating White from Black workers.
   • Cotton production gave rise to the factory which contributed to the industrial revolution.
   • Factories beckoned workers to sell their time rather than products.  There emerged a new factory proletariat.
   • Britain and France had much more robust labor movements between 1830 and 1850.
   • Socialism may have given us a very different American life including larger governmental investments in schools and infrastructure plus a more equitable income picture.
   • America is the only advanced economy lacking a labor party.
   • Wage labor initially was unpopular with working people, but industrialization pulled them into the program.
   • Northern factory workers labored in a manner like slavery.
   • From the beginning white labor unions were seen as ways to improve wages and preventing white workers from descending to the level of Blacks.
   • White workers viewed Black workers, both free and enslaved, as a threat to their livelihood.  Emancipated Blacks were believed to aspire to take factory jobs.
   • White mobs throughout the first half of the nineteenth century attacked free Black workers in Cincinnati, Philadelphia, New York City.
   • Slavery hurts all workers.  If there are free alternatives for bosses to turn to wages are low for everyone.
   • Companies hired Black workers to put down labor militancy in several industries, replacing steelworkers, meatpackers, longshoremen, railroad hands, and garment workers. This practice reinforced segregation in White labor unions.
   • Given the choice between parity with Black people—by inviting them into unified unions—and poverty, white workers chose poverty, spoiling the development of a multiracial mass labor movement in America.
   • In the 19^th century northern elites were forging a working proletariat; southerners were creating an agrarian proletariat.
     • Yeoman farmers were denied grazing rights on land claimed by planters
   • As small farmers lost their land, they clutched their whiteness as a possession that prevented them from descending into the horrors of slavery.
9. Inequality
   • By mid-century 1800’s there was developing an elite, most of whom were enslavers.
   • Alexis de Tocqueville in the early 19^th century remarked that the wealthy in America managed to maintain their common touch and were not much separated from the working classes.  But as the wealthy became fabulously wealthy, they became more separate from the masses.
10. In summary: Many of the political systems, legal arrangements, cultural beliefs, and economic structures that uphold and promote this level of inequality trace their roots back to slavery and its aftermath.

Summary: Chapter 6 “Capitalism” Matthew Desmond

As with the chapters before this chapter about America’s economic development demonstrates how influential slavery and racism has been in shaping the prosperity and economic character of this country.  The author begins by pointing out how the slave interests of the Southern states exerted no small influence on the shaping of the constitution.   The 3/5 compromise is no longer around, but the upper house in the national government and the electoral college are.  These alone are powerful non-democratic elements.  The fact that Blacks and slavery were written into the constitution, plus dozens of high court decisions have left America with a deep institutionalization of race and racism.  Of course, the Emancipation Proclamation ended chattel slavery.  But it did not end several elements of it.  During the height of the cotton boom, planters developed careful accounting systems with which to keep an eye on enslaved workers.  The concepts of workplace surveillance, increasing efficiency, speculation, innovation, unlimited expansion for economies of scale all flourished during the cotton days and continued to characterize American business culture, which Desmond describes as “low road capitalism.”   After Emancipation Proclamation, American economic elites attempted to continue some of the practices of slavery business management in the field of labor relations.  Bosses worked to keep unions segregated so that poorly paid White employees could be pacified with the thought that their working conditions were at least better than those of Black Americans.  The union movement in the United States never grew into a political party.  Much of the unique character of American capitalism can be traced to slavery and its aftermath in business practices.