Why Did the South Remain Poor?

So some people might think I've overdrawn

the picture of Southern economic failure between the 1860s and the 1930s,

and maybe that's the case.

We could argue about that if you want.

But it's still the case that by the 1930s, a lot of people

think it hasn't worked.

And there are a lot of pieces of evidence suggesting

that it hasn't worked, that the South has not been able to transition

to a modern capitalist economy in any real sense.

So then it's interesting to look at why.

Why do people think it doesn't work?

And there are a lot of answers available already by the early 20th century.

And one thing to keep in mind about these answers

is we still hear these answers.

When we talk about why different parts of the underdeveloped world

remain underdeveloped, you will still hear variants of these answers offered.

So let's look at the suggestions or the claims that are made.

There are about four specific categories,

and we'll talk briefly about each one.

The first one is that there's something fundamentally or essentially

different about people in the South.

There's something biologically different, in fact.

And of course, with the South, there's a long and extensive history

of racial arguments that have been offered already by the 1860s and '70s

to explain Southern difference.

In other words, to make a long story short, what's different about the South

is that there are lots of African Americans.

And many whites in the late 19th and early 20th century,

even the descendants of abolitionists, have

shifted to believing that there's something

essentially different about African Americans and essentially sub-standard,

if you will, essentially inferior to whites.

So the argument then becomes, of course the South cannot industrialize,

because it doesn't have enough white laborers,

and it has too many black laborers.

They're inefficient, they're lazy, et cetera, et cetera.

All of these arguments are offered.

So the racism argument is the first argument.

The second argument is a climate based argument.

And that is that the South is too hot.

And this makes it so that people don't work efficiently enough.

And if you don't work efficiently enough,

then you're not going to be successful in a competitive capitalist economy.

We see this again and again, varieties of the climate based argument

appear in talking about areas around the world, particularly tropical areas.

And they don't just talk about climate.

They talk about things like disease as well,

the impact of those kind of factors makes a population supposedly unable

to fully participate in a modern capitalist economy.

So the third argument.

The third argument, which was frequently made by white Southerners,

was that the South itself was treated by northern corporations

and by the federal government as a sort of colonized society.

And they actually had some evidence for some pieces of this.

For instance, the South could boast by the early 1900s

a pretty significant cluster of iron and steel manufacturing factories,

particularly around Birmingham, Alabama.

But Birmingham steel and iron was always priced by the large corporations which

controlled those factories, corporations typically based in Pittsburgh,

at slightly higher than the price of Pittsburgh steel.

Now, obviously, this made Birmingham steel

less competitive than Pittsburgh steel.

But the South didn't have the capital to break the control of US Steel.

There was no individual corporation that was

going to be able to wrest the control of all those factories

away and price Birmingham steel at a price that

was competitive with Pittsburgh steel.

So the idea that unfair pricing practices, unfair trade policies,

and things like that worked disproportionately

against the less politically powerful, less wealthy sectors

of a national economy.

We also see this today.

This is another argument about the international economy, which

argues, for instance, that trade barriers, often ones that

are unseen or hidden deep in the regulations of Western countries,

prevent the exports of particular underdeveloped countries

from being competitive in international markets.

Then there's one more argument which is used

to explain Southern underdevelopment by the 1930s.

And that is the fact that the economy as a whole is a low wage economy.

Now, the low wages of the Southern economy

are precisely what, for instance, get northern textile companies to go

and invest in small towns along the fall line of the North Carolina

and South Carolina Piedmont.

So it might seem contradictory that this keeps them underdeveloped.

But the fact is that there aren't institutions

in Southern society like, for instance, labor unions or governments,

which are willing to protect the rights of workers, that

help these workers to advocate for higher wages.

And if they don't have higher wages, it's hard for them

to consume a lot of locally produced goods.

And this keeps down the number of other factories.

This keeps the economy of those regions in North

and South Carolina focused on textile manufacturing.

It keeps them linked in a dependent relationship to northern markets,

in addition to the lack of labor unions, the lack of advocacy for labor.

So as I said, we still see all of these arguments today, especially when

discussions about why inequality persists in the international economy

come up.

Now, all of these are used, They don't always take the same form.

For instance, the racist argument that was used openly, publicly

until the 1950s in the United States persisted a little longer

in talking about international development.

But it soon also became something that wasn't viewed as politically correct

to talk about in public.

But when we hear people talking about cultural difference,

we might want to think about whether or not

this is just the racial argument in a different form.

We might want to think about whether what we're still hearing

is an argument that says, there's an essential difference

between people A and people B that means that people A

are cut out for and worthy of enjoying the fruits

of modernity and industrial capitalism, and people B

should remain trapped in a low wage economy, essentially

as the sort of support services of the prosperity of people A.

As I said, we still hear that argument.

And we need to be alert for when we hear those arguments.

As I said also, there were a total of four arguments.

And the other three seem to be still in play in some key ways

when we think about the differences between those areas of the world

economy which continue to benefit the most from modern day

capitalism and those which benefit the least.

It still seems that basic problems of climate and disease

and the physical environment, basic necessities, these

are unequally distributed.

And the countries that have the least access

to things like modern medical care and clean water

seem also to be the countries where economic development has

the slowest and most difficult time gaining traction.

And this shouldn't be a surprise for us.

If for instance, women in Africa often have

to walk miles and spend hours every day getting water and fuel,

it's probably no surprise that it's harder for them

to create entrepreneurial efforts in the economy.

It's harder for them to take advantage of things like microlending

and so on than people who have greater access to those kinds of goods.

Meanwhile, I think also the argument that the rules

of international capitalism don't always favor the poorer countries that

specialize in one or two commodities.

I think that's also quite true.

And there's a lot more to be said along those lines.

But that argument seems to have some real purchase as well.

And finally, it's also the case that where economies really take off

the most rapidly, that development is often

associated with a broadening of purchasing power.

More consumers mean more products getting sold, obviously, and also

a greater varieties of products getting sold,

and greater opportunities for entrepreneurs

to open up small, medium, and even large sized endeavors.

These things are simply not possible when

labor is kept poor, where people are paid near starvation wages.

There are arguments that say that labor is getting properly

priced in those kinds of contexts.

But in those cases, we could look at the third argument

and ask, what is it in the international distribution of political power

that allows these kinds of practices of keeping some people extremely low wage

to persist?

So all three of those arguments seem to be still effective, still relevant

in contemporary circumstances.

And that to me suggests that they might also

have a lot to say in explaining why the South remained poor.