The Dysfunctionality of Slavery and Neoliberalism – Michael Perelman

Published on naked capitalism, by Yves Smith, May 19, 2015.

… Despite the neoliberal obsession with wage suppression, history suggests that such a policy is self-destructive. Periods of high wages are associated with rapid technological change. For example, after the scourge of the Black Death, which eliminated about a third of the population of Europe, the surviving workers were in a better bargaining position in terms of both wages earned and rents paid. Rapid technological change emerged as a means to cope with workers temporary advantage. The historian, Richard C. Allen, makes the case that wars in the late 18th century removed significant portion of the labor force, again creating higher wages. The combination of higher wages and the availability of cheap fossil fueled another burst of rapid technological change, which we now know as the Industrial Revolution.  

Another historian, H. J. Habakkuk published a book identifying the long-standing domestic labor shortage as the central force pushing the early United States to industrialize so fast that it rapidly caught up with England.

The geography of the United States provided a natural experiment for testing Habakkuk’s theory. The southern states, unlike their northern counterparts turned to a more primitive remedy for its labor shortage in the form of African slaves.

Slavery was not unknown in the northern states, but they did not put much of a dent in the northern labor shortage.

Frederick Law Olmsted, famous for designing New York’s Central Park and also a correspondent of Karl Marx, toured the southern states reporting on their technological backwardness. Recent research does describe significant technological advances in the South in developing machinery to help prepare cotton for sale, but the South remained technologically backward relative to the North, because southern industry was unprepared for modern development.

This split between the North and the South spilled over into a destructive form of economic theory. The South was adamant about ensuring a weak government, fearing that public sentiment might eventually encourage the government to abolish slavery.

Toward that and, the southern states were able to effectively shape the Constitution in a way that would guarantee a weak central government and special political powers for the southern states. For example, the Electoral College gave disproportionate power to the lightly-populated slave states. Counting slaves as 3/5 of a person, although one without a vote, added to South’s the representation of the in the House of Representatives. Including Senate seats in the Electoral College gave large and small states alike had two more votes, further adding to the Southern advantage … //

… With Barry Goldwater’s humiliating defeat in his presidential campaign, the famous Powell Memo helped to spark a well-financed movement of well-finance right-wing political activism which morphed into right-wing political extremism both in economics and politics. Symbolic of the narrowness of this new mindset among economists, Milton Friedman’s close associate, George Stigler, said in 1976 that “one evidence of professional integrity of the economist is the fact that it is not possible to enlist good economists to defend minimum wage laws.” Stigler, G. J. 1982. The Economist as Preacher and Other Essays (Chicago: University of Chicago Press): p. 60. In short, neoliberalism was surging ahead and the economy of high wages was now beyond the pale. These new conditions gave new force to the southern “yelps of liberty.” The social safety net was taken down and reconstructed as the flag of neoliberalism. The one difference between the rhetoric of the slaveholders and that of the modern neoliberals was that entrepreneurial superiority replaced racial superiority as their battle cry.

One final irony: evangelical Christians were at the forefront of the abolitionist movement. Today, some of them are providing the firepower for the epidemic of neoliberalism.

(full text).

(Michael Perelman is professor of economics at California State University, Chico who also writes at Unsettling Economics).


Euro slides on Greece default fears, on Russia Today RT, May 19, 2015;

Emrah and his Brothers: Germany’s Struggle for the Soul of Returning Islamists, on Spiegel Online International, by Özlem Gezer, May 20, 2015 (Photo Gallery): German Islamists are returning from war abroad, some reformed but others more dangerous than ever. Social workers, imams and extremists are fighting for their souls – and for Germany’s safety. Government officials have few answers to the problem;

Video: Ukrainian conflict through the eyes of WWII veterans, 50.41 min, on Russia Today RT;

Innocent Man Who Spent 40 Years in Prison, Suing the Cops Who Put Him There, on The Free Thought Project, May 20, 2015;

Ukraine: A Cancer in Europe’s Heartland, on Steve Lendman Blog, by Stephen Lendman, May 19, 2015;

Million-dollar salaries: This is what UAE’s private sector CEOs earn, on Emirates 24 News, by Shuchita Kapur, May 19, 2015; Top-tier executive salaries have seen a whopping 39% hike in some sectors in GCC;

The Secret Nuclear Threat, on Rob Edwards, by Royal Navy whistleblower William McNeilly, May 12, 2015, 18 pdf-pages; or on Nuclear Information; or on Google Web-search;


Wo kommt unser Gold bei den Amis her – Andreas Popp, 64.15 min, von MrSillyLine am 30. Dez 2014 hochgeladen … (nein, es kommt NICHT von den Nazis) – Einige Auszüge aus diesem Vortrag:

I): Staatsverschuldung weltweit, in Billionen Euro – 2012:

  • us 12,4
  • jp 8,1
  • de 2.1
  • it 1,9
  • fr 1,7
  • uk 1,5
  • rest 8,3
  • Total 36,0 Billionen (36′000′000′000′000.- … oder 36 mal 1000 Milliarden) Euro weltweit;

II) – Die 5 Konten der Volkswirtschaft Deutschland:

  • 1. alle privaten Haushalte = mit 2,124 Billionen Euro im PLUS,
  • 2. produzierende Kapitalunternehmen = mit 280,6 Milliarden im MINUS,
  • 3. Finanzinstitute = mit 313,7 Milliarden im PLUS,
  • 4. Staat = mt 1,158 Billionen im MINUS,
  • 5. Ausland/Exportüberschüsse = (genaue Zahl im Vortrag nicht genannt, sind aber im tiefen MINUS, weil Exportüberschuss heisst, die anderen lidefern keine Gegenleistung = sie bezahlen uns die gelieferte Ware NICHT);

III): Weblinks der /Startseite, /Sitemap, /Exportnarren, /Staat, /Staatsentschuldung, /Veranstaltungen, /Plan B, /Kontakt;

IV): Verschiedenes:

… and this:

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