Centerfield

It would seem that a more appropriate comparison is not how well the Southern slave economy was doing relative to the industrial North, but how it did relative to another agricultural economy. Preferably one which was dealing with the same land quality and other conditions. (Plantations, whether slave or free, just aren't suited to the conditions in the North.)

It is at least conceivable, for example, that the South could have been both less well off economically than the North, but still well off relative to most other countries at the time. I don't know that this was the case, not being an economic historian, but I don't see that it is impossible that it could have been.

On the other hand, Fogel's argument about the material conditions of the slaves relative to the free workers seems really dubious. If things were that good, why would slavery even be necessary? People would stay just for the material benefits. Which, obviously, they didn't.

If slavery is so inefficient for manufacturing, why does Nike prefer to open sweatshops in the third world instead of paying first-world wages to unionized first-world laborers?

Beware of any "review" of a book on historical economics that blathers on about "nuance."

Fogel and Engerman did indeed produce a remarkable work, much of which still stands. It was when they got off into "nuance" about social institutions that their conclusions suffered under withering criticism, but their main points--that contrary to popular myth slavery was economically robust, profitable, viable and efficient in the Southern economy and not about to fall apart of its own weight--still stand quite well from a third of a century down the road, and indeed were unremarkable at the time.

TOTC is not, as some have misrepresented it, anything even remotely resembling an apologia for slavery. Noting that it was economically viable and working in the pre-bellum south is in no way a paean to the non-existent morality of slavery. Of F & E's ten major points (not, please note, McArdle's) 7 of the 10 stand as established historical fact today. Where they were weak was in points 7, 8, and 9. Which by no small coincidence is where the authors left economic analysis for imputed sociological intepretation that ignored the destructive psychological aspects of slavery, things that cannot easily be measured.

Your critique falls short in not even beginning with the baseline differences between the Northern and Southern economies. They were indeed quite different, and the differences between the regions very real. For example, in the industrial North the cheap labor was supplied by a steady flow of European immigrants, so there was little pressure to support slavery.

F & E's even bigger if subtler point that so many love to miss (and that McArdle does NOT) is that slavery was simply not going to fall in the South without the Civil War. It wasn't a dying institution, crumbling under its own weight. It had to be dismantled by force.

TOTC spurred one of the largest explosions in topic research ever. Fogel's solo follow-up work, Without Consent or Contract: The Rise and Fall of American Slavery, expanded on the earlier book and corrected many of the problems with that initial work--and contributed enormously to him winning the 1993 Nobel Prize in Economics.

Clearly, the man is an idiot.

wj:
It would seem that a more appropriate comparison is not how well the Southern slave economy was doing relative to the industrial North, but how it did relative to another agricultural economy.

Interesting question.

lucyp:
One reason Nike does so well out of the deal is because burned-out and unhappy employees can and do leave, unlike slavery. (a study showed Nike laborers tend to keep working until they get tired and have good bank balances by local standards).

Oh, and re Nike, American pay and work condition expectations overall have risen high enough that not so many of us even want those jobs.

Tully, I think we might be mostly agreeing disagreeably here. Note that I agreed with him on (2) and (3). Do you really disagree with my analysis of (1)?

Yep, North and South WERE way different. Southerners were mostly intersted in agriculture, and that was reinforced by good soil for a couple of cash crops. And the cotton gin made it not too hard to get a good return on slaves. BUT, they almost certainly could've made more money still industrializing with a free economy. The South was far behind economically when the Civil War broke out. Industrialization has changed the South as much as anti-racism has.

Northern states decided on slavery vs freedom long before the big immigration rushes. There was a wide variety of populations involved.

No, F&E weren't idiots, but I do feel that the work I'm complaining about failed historic research expectations. Historians are expected to use much wider datasets, reflecting broader points of view. That even created a contradiction in their economic statements. How profitable is a slave if you really pay him 90% of gross?

If you're right (and the lack of complaints on amazon on F's followup suggests you are), then he deserves props for learning and being more careful. But he could've saved alot of scandal by consulting more carefully with academic historians.

Jon, yes, I do disagree with your #1. Profitability in the pre-modern era was highly dependent on local resources. See point about the economic differences between north and south at the time. I think you're confusing margin with gross, and are missing magnitudes of scope and scale. Northern manufacturing could operate on slimmer margins with enormously lower capital investments in the labor force--immigrants were cheap disposable elements, easily replaced. Slaves were not. Slavery HAD to have higher margins to be profitable, as the human capital costs were so much greater.

As far as "failed historic research expectations" that's like saying that Henry Ford failed to meet modern CAFE standards with the Model T, or that Robert Goddard failed to ever reach orbit.

F & E were breaking new ground with a broad comprehensive thesis based on economic tools much resisited by academic historians, a revolutionary methodology that disrupted (indeed, shattered) an entrenched academic "conventional wisdom." The cracks were already there--much of what they concluded that has stood up over the years was already accepted within historical circles, but had still not spread into general texts and accepted "wisdom" anywhere but in tight academic circles--and was much disputed there by doctrinal and dogmatic historians. F & E hit that dogmatic worldview with an empirical sledgehammer, and changed the fields of both history and econometric history forever.

Even in the areas where they were wrong, they often weren't so much wrong as somewhat right for the wrong reasons.

Here, maybe this will help. Go look up the history of "cliometrics," and check out exactly what Fogel won the Nobel for. Fogel didn't invent the field of cliometrics any more than Henry Ford invented the automobile, but he's still considered the father of it.

Remember, Tully, yeah, the South has good resources. But the Coats and Clark thread my Grandad made was more profitable than cotton. Here in Texas, yeah, you can do OK as a roughneck, but you do even better refining oil, or best of all, selling related services like Halliburton's oil-related divisions. Or anything to do with discovery.

Although, I don't think factories are all that cheap to build, either, to be sure.

I think you have the causality arrow backward on your defense of F&E.

No, I don't have it backwards. I was even around for some of it as an undergrad--the cliometrics revolution was part of what drew me into economics and got me to love history as well. F & E came under such withering criticism from conventional historians because they were challenging (indeed, destroying) many of the established paradigms of same. And most of their work stood up quite well through those decades of criticism. Fogel wiped out some of the old "historic research expectations" in much the same way that Henry Ford destroyed the buggy whip industry, but that's hardly a bad thing on his part. Failing to live down to flawed and outdated "standards" is hardly reprehensible.

Moving forward, he "failed" to meet standards that to a large extent resulted from his own work, standards that then-current historians rarely if ever employed against their own work, preferring to make qualitative judgements without using any serious quantitative analytics. Once again, only when F & E tried to move out of straight econometric analytics into more traditional subjective and qualitative conclusions did the criticism stick much. To-MAY-toe. To-MAH-toe. Interpretations can differ, but analytics stand. Pioneers break new ground and draw new maps. Their new maps may not be 100% accurate, but are enormously more accurate than the maps they have overdrawn. Those who drew the old maps do indeed resent that, and happily whine about the smaller bits where they were perhaps more accurate than the new maps, or where the new mappers weren't as accurate as they could have been, but that doesn't make the new map less accurate than the old one in toto. Far from. It's not what gets accurately criticized that defines the worth of a work, but what withstands the criticism, and F & E came through in very good shape in that regard, especially considering the pioneering nature of the work.

Fogel's ongoing expansion and refinement of the cliometric methodologies he and Engerman employed in TOTC vindicated them (and him) and ultimately won him the Nobel Prize for revolutionizing the study of history. Causality time arrow? Do you believe they gave him the Nobel Prize for work he hadn't yet done? Heh. They gave it to him for revoutionizing the field, for re-writing and vastly improving the standards of the field. Those whose previous work did not meet the new standards were understandably peeved.

Re: #1--Is it really that difficult understanding the enormous differences between the 1850's and today, and the very different economic resource bases available to the North and the South? Industrial resources versus agrarian resources? Industrial-capital-intensive versus labor-capital-intensive? That each can be highly profitable and efficient in the right conditions? That 1860 was VERY different than 2008, especially in terms of transport and resource costs, and that modern high-mobility conditions with an established national infrastructure simply did not exist?

The south had little industrial base and few native industrial resources. It was an agrarian society and economy with its capital tied up in land--and slaves--and they were tied up there because that was the most efficient use available. The transportation network was very limited. In contrast the north had a massive urban industrial base, with its capital increasingly in hard industry and lots of cheap labor available, and that supply of cheap labor rapidly and continually expanding through immigration. The north had the mines and the coal and the steel mills and the cheap labor, the land for westward expansion and the food base coming to market from same, the direct water routes across the Great Lakes, the road and railroad network to the coast, etc. Even their agriculture was industrializing. The south was bounded in with little transportation available but some river routes and bad roads and had few industrial raw-material resources of any kind other than agricultural. Save for cotton and timber, almost all raw material for southern industry had to be imported--and the South could well afford to buy manufactured goods rather than make them. It was 70% of US exports. That alone should tell you that they were indeed economically efficient. Relative advantage is basic to theory of trade.

But that their capital base was different did not make their use of capital any less profitable or efficient, and that's the point of #1, that they used what they had in a manner at least as efficient and profitable as the industrial north did, and often at higher marginal returns to capital than northern manufacturing enjoyed. They used their capital in the most profitable and efficient way actually available to them, just as the north used its differing resource base in the ways most profitable and efficient and available to them.

This enormous essential difference in fundamental economic base showed up in the Constitutional Convention, for Ghu's sake, in the 3/5ths Compromise. And you can see the basic difference simply in the size of the cities at the time--it took either industry or external trade or both to make a city large in those days. In 1860, only ONE southern city made the top 20 in the US in population, New Orleans, which was THE major trade port for the entire Gulf of Mexico and much of the US interior by virtue of location at the mouth of the Mississippi. And only six southern cities made the top FIFTY, almost all of which were agricultural export ports. There was some slave-based industry in the south, to be sure, but capital in the south stayed in agriculture because IT WAS A MORE PROFITABLE USE OF IT FOR THE AVAILABLE RESOURCES than industry was--agriculture consistently outbid industry for slaves.

Once again, that tells you that F & E's #1 is accurate. The capital flowed to the more efficient and profitable use. Even though slave industry was profitable, it simply wasn't AS profitable as slave agriculture, and capital flowed to the more profitable use. What the south lacked was economic flexibility and industrial resources and expansion potential, all of which which the north had in abundance. That's your #1 in action in the real world of 1860. The south had no intention to end slavery because it was the most profitable and efficient use of their capital and available resources, and changing over would take generations and radically drive down their return on capital--they did not have the raw resource base to compete with the north in industry.

Now, in the long run the north's advantages would have continued to keep it moving ahead of the south in terms of growth and flexibility, but that in no way means that the economy of the south was moribund and would fall, which was the bad conventional wisdom--that slavery would fall under its own economic weight as being less efficient than northern industry. The south was both stable and prosperous and its export income let it buy manfuactured goods instead of make them. Without that forceful intervention to end slavery, it would have continued to be stable and prosperous for generations to come without a need for the extensive industrialization of the north. Slavery was NOT going to die in the south of its own economic weight, not any time soon as of 1860. It had to ended by force.

That's a very long-winded way of backgrounding to bring me back to the point of scope and scale where I think you went off-track. The north had a much larger and more flexible resource base with cheap labor capital, and could thus use industrial resources at a lower rate of return while still enjoying greater gross profits. For a relevant example, a large grocery chain can make much more money overall at a 2% margin than a small specialty grocery store can make at a 20% margin. Scope and scale--and scope and scale applied.

A pretty interesting comment there, Tully. I haven't had

My interpretation of data is that the South failed to industrialize because of cash crops making it easy enough to do OK that there was no need to change, like Saudi Arabia today, and primarily because of culture. E.G., they believed that was the best way, whether or not it was true. I do believe the South was profitable, just not as profitable as the North.

There are two big reasons for my belief. First, EVERYWHERE industrialization happens and has happened that I've read about resulted in a major improvement in living conditions. Concretely, industrial Southern could now afford universal, if shoddy, education, much more reliable food, and decent houses. Of course, we know a handful of families made it big, but the stories I've read suggest most free farm families could barely keep their buildings in repair, and hunger wasn't uncommon, either.

Another major support is William Seward, as quoted in Team of Rivals, who visited the South, and reacted like we do to visiting Mexico's preindustrial spots.

Roads are the clearest example of culture. Most Southerners in DC opposed "internal improvements," because they preferred a lower level of taxation to support just enough roads to ransport farm goods to markets.

In fact, the South was NOT limited to its internal resources for money. I've read could and regularly DID get capital from the North, especially NYC. Some feel that was one of several big reasons NYC was mostly against the Civil War. I can tell you from looking into getting money from NYC myself that they're most into paying for what they're used to seeing working, which would've been industry back then. No, they probably didn't give many loans for industry because they didn't get many requests.

In 1776, neither North or South had factories or serious infrastructure, thanks to mercantilism. The metropoli of New York and Philadelphia, were at 30,000 people, and fast immigration didn't start until much later. No, each side CHOSE their way, it wasn't forced on them. Cotton-spinning machines had already been invented; they could've machine-spun more of their own cotton, and done that much better. There were a handful of factories in the South, of course, but not many.

Of course the South had imports, since, as we both agree, they made ilittle and did make SOME money. A handful of families did incredible amounts of importing, like Mr. Jefferson's library that served to restart the Library of Congress after the War of 1812. But he LOST money. Washington did better, probably thanks to his huge real-estate business, but it was still a close thing.

Yeah, yeah, I understand, he did some good stuff. But, do you think the Nobel gives you an indulgence for checking your own work or the scientific method? Now, if we were talking about Saints Turing and von Neumann, or maybe even Ritchie and Thompson (of Unix and 'C' fame), it'd be another matter. But how can some mere economist hope for such a status? I'm just not seeing it ;-) .