Unfair Advantage & Economic Decay

Systems of Control & Self Sufficiency
An Economic Inquest of the American South Pre/Post Civil War

The Crutch of Slavery

Slavery was common in the classical world, with both slaves that lived with you as in Athens or slaves that worked more independently, such as the Helots of Sparta. However, slavery should be termed an unfair social system as it is doubtful that masters would accept a role reversal in the same way they expected/demanded acceptance among their slave class. Exploiting unfair systems can lead to great short term success, but in the longer term it leads to an incomplete economic development by the populace. Imagine a privileged heir that never wants for money, and finds themselves cut off at 30, how prepared are they for the honest economic realities of the outside world?

This unfair system of obtaining labor gave the South a great advantage while the system was in place, but upon its removal they found themselves left with an incomplete economy, gaping holes left by slavery’s absence. Contrarily, the North, while not having the same help from slavery to build their economy, had to find economically justifiable agreements to encourage free individuals to fill unpleasant economic roles. Sometimes what resulted was similar to slavery, like the system of indentured servitude, but eventually workers would have to be dealt with as free men and a workable arrangement found. Systems like this, while more difficult to establish, will survive many more difficulties because every member involved in the organization is receiving negotiated compensation for a needed service.

Creating Equitable Systems

In 1914 Ford raised the wages of his linemen  from $2.34 a day to $5, in an effort to fight his 300% yearly turnover. While in the very short run of pay-periods this would have been a painful decision, overall it was a great success. “The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs” (Wikipedia, Ford entry).

The move would have also given rise to much greater group cohesion, as Ford saw the change as “profit sharing” which alludes that the workmen were now part of the group entitled to profit, and important members of the organization. At first, workers personal lives were investigated by private eyes, with a 6 month wait for the professional wages, but as time went on Ford grew to judge the workers on their work alone, "…paternalism has no place in industry. Welfare work that consists in prying into employees' private concerns is out of date. Men need counsel and men need help, oftentimes special help; and all this ought to be rendered for decency's sake. But the broad workable plan of investment and participation will do more to solidify industry and strengthen organization than will any social work on the outside. Without changing the principle we have changed the method of payment" (Wikipedia, Ford entry).

The real advancements seem to have come when Ford internalized the needs of his workers, broadened the ‘important group’ to include simple laborers, and sought to provide them with a salary that would allow them the ability to advance economically. For many organizations providing avenues of advancement is a risky thing, if you give an employee an opportunity to better themselves you have to be willing to compensate the more valuable employee accordingly, which means there needs to be higher positions for them to move into or they will find another employer. Only growing organizations can offer these opportunities, if there aren’t any positions to grow into, employees who improve their skills will lose morale as they see themselves compensated at the same rate as their lackluster comrades.

Back to the South

How does this relate to the South? Well, maybe being brought in from the fields to become a house slave was enough advancement opportunity for some, the number of violent slave uprisings tells another story. By not allowing advancement to the deserving, discontent and revolution is fermented among the high-achievers who, among the lot, would be the most capable of leading a slave uprising. Therefore you had a huge segment of the population who was intentionally denied advancement opportunities in an effort to maintain the going systems of control.

The North, in contrast, had outlawed slavery throughout New England by 1804; abolition was forced on the South in 1863, two generations later. Through those 59 years, economic advancement was legally open to any resident of the North, which would have created a healthier, more stratified economic system. In 1790 there were .51 slaves for every free man in the South, in 1860 the ratio was .47. (EH.net) That same ratio across such a span of time suggests that the South had found a system of control that worked and had formalized it into tradition. This sort of system where a third of the population was denied the opportunity to advance held back the whole of the society. This can be seen through the flood of carpetbaggers post-Civil War. The South didn’t have enough links in the chain of their economic system to survive, so northern entrepreneurs came to fill in those gaps.

“Many carpetbaggers were businessmen who purchased or leased plantations and became wealthy landowners, hiring freedmen to do the labor. Most were former Union soldiers eager to invest their savings in this promising new frontier, and civilians lured south by press reports of "the fabulous sums of money to be made in the South in raising cotton." Foner notes that "joined with the quest for profit, however, was a reforming spirit, a vision of themselves as agents of sectional reconciliation and the South's "economic regeneration." Accustomed to viewing Southerners—black and white—as devoid of economic initiative and self-discipline, they believed that only "Northern capital and energy" could bring "the blessings of a free labor system to the region.” (Wikipedia, carpetbagger entry)

Takeaway

In a Machiavellian system (like the one we all live in) unfair advantages such as this demand participation because it must be assumed that competitors will take advantage and competitive advantage will diminish. However, it should not be lost that the advantage has been obtained from unfair means and excess profits should be put towards the development of profitable, sustainable systems. A good example of this would be the rum running Kennedy family buying up political capital with their prohibition money, and then parlaying that goodwill into politics themselves.