Southern Capitalism: The Political Economy of North Carolina, 1880-1980

Southern Capitalism: The Political Economy of North Carolina, 1880-1980

by Philip J. Wood

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Southern Capitalism challenges prevailing views of Southern development by arguing that the persisting peculiarities of the Southern economy—such as low wages and high poverty rates—have not resulted from barriers to capitalist development, nor from the lingering influence of planter values. Wood argues that these peculiarities can instead be best understood as the consequence of a strategy of capitalist development, based on the creation and preservation of social conditions and relations conducive to the above-average exploitation of labor by capital. focusing on the evolving relationship between capital and labor as the core of this strategy, Wood follows the process of capitalist industrialization in North Carolina from its beginnings in the aftermath of the Civil War to the 1980s.

Product Details

ISBN-13: 9780822382928
Publisher: Duke University Press
Publication date: 08/13/1986
Sold by: Barnes & Noble
Format: NOOK Book
Pages: 287
Lexile: 1740L (what's this?)
File size: 1 MB

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Southern Capitalism

The Political Economy of North Carolina, 1880â"1980

By Phillip J. Wood

Duke University Press

Copyright © 1986 Duke University Press
All rights reserved.
ISBN: 978-0-8223-0673-3



This book has its origins in two different but related problems, one empirical and one theoretical. Its empirical concern is the widespread persistence in the southern states of the United States of below-average wage levels and material conditions generally in a context of rapid economic growth. In 1978, despite several decades of rapid capital accumulation associated with the "rise of the sunbelt," the average hourly wage of production workers in southern manufacturing was $5.27, 82.7 percent of the U.S. average of $6.37. In the following year, with less than 27 percent of the U.S. population, the South accounted for 35 percent of all American families living below the poverty line. Similar differentials can be found in a host of other indicators of social well-being.

The theoretical concern of the book is to find a framework that allows the connection between capital accumulation and general social and material conditions to be investigated in a coherent and rigorous yet historically sensitive manner. Crucially, such an approach should not only permit the analysis of situations in which capital accumulation has been accompanied by high wages, mass consumption, and a liberal welfare system (the regime of accumulation that a number of French economists, following Gramsci, have termed "Fordism"), but also those, for instance in the South, where the historical pattern seems to be different.

The orthodox neoclassical competitive model of regional development cannot provide such an analysis. The reason for this is the limited range of explanatory variables that the theory has at its disposal. Most important in this respect is the radical and artificial separation this theory makes between the market and its sociopolitical context. The market economy, as the object of study, is defined simply in terms of final market transactions, that is, in terms of the purchase price of the "factors of production" (land, labor, and capital) in a context in which the formal-legal equality of the factor owners is assumed to permit free and rational individual decision-making.

This model therefore provides no analysis of the origins or historical development of capital and labor, either as factors of production or, more important, as social classes. Nor does it deal with the political and other nontechnical factors, originating in the unequal ownership of productive property, that shape the content of market transactions and open up the possibility that different patterns of capitalist development may occur in different historical contexts, even where levels of capitalization have converged.

According to the competitive model in its most abstract form, in situations characterized by competitive market relations (that is, in an economy without "frictions"), systematic differences between regions in terms of wages, prices, and profit rates will gradually disappear as a result of rational economic decisions by individual owners of capital and labor. As these factor owners invest their resources in areas in which rates of return are highest, capital will flow into formerly capital-short regions, raising productivity, wage levels, and profit rates. Over time a "competitive equilibrium" will be created, within which capital/labor ratios, wage levels, and profit rates converge. In this model the engine of change is capital. Wages and profits are seen as being determined in a technical fashion by the level of capitalization of the production process and the level of productivity that this capital confers upon labor.

To some extent the process of convergence predicted by the neoclassical competitive model cannot be denied. As a result of rapid capital accumulation during the twentieth century, for instance, per capita personal income in the South has risen from 51 percent of the national average in 1880 to 90.8 percent in 1982. Growth has been very unevenly distributed within the South, however, with seven of the eleven states significantly below this level (ranging from 70 percent to 86.3 percent). In addition, as we have seen, progress in terms of manufacturing wage rates has not been as substantial. It is in situations such as these, where convergence is limited and where regional differences persist in the long term despite large-scale capital accumulation, that the limitations of the competitive model show up most clearly. Usually, explanations of such situations that use the competitive model suggest that the persistence of regional differences is the result of "barriers," "frictions," or "rigidities" that impede the market's operation. These factors can be political, demographic, cultural, racial, or historical in nature. What is most important about them is that they enter the analysis only to the extent that they affect supply and demand, and they do so as "exogenous" variables, without theoretical status. Despite their obvious historical and causal importance, they remain outside the competitive market theory. The theory's assumptions are consequently insulated from historical analysis, and discussion of the complex interactions of social and economic factors that are essential to an adequate understanding of southern capitalist development is precluded.

Unlike the competitive market approach to regional change, the "new social history" of the South attempts to develop an explanation of southern development that incorporates its historical peculiarities. This school of southern history rejects the free market hypothesis that incorporation into a wider capitalist market inevitably dissolves regionally specific social relations and suggests rather that the latter can persist in the long term. From this point of view the characteristics of southern development in the twentieth century—widespread black and white poverty, low-wage, labor-intensive production, and retarded social and infrastructural development—are results of the continued domination of an essentially precapitalist planter ruling class. This ruling class pursued a strategy of exploitation that retained a number of components used in pre-Civil War slave-based plantation production. The chief characteristic of this strategy of exploitation was its coercive nature, which was exhibited in a variety of nonmarket constraints on economic activity—agreements to limit labor market competition; anti-enticement and vagrancy laws; the cultivation of racial fears; paternalistic control of religion, education, housing, and credit; the creation of systematic indebtedness among sharecroppers, tenant farmers, and factory workers by means of the lien system and the company store; and the frequent use of violence and state power.

In attempting to move beyond the narrowly economic approach of competitive market theory and to deal with society as a whole, the new social historians make a significant contribution to the study of southern regional development. Yet this approach also has a major limitation. The crux of the problem lies precisely in the focus on the South's peculiarities. In order to stress the regionally specific, coercive production relations that occurred in the South, these authors choose to define the southern pattern of development as noncapitalist. Jonathan M. Wiener and Dwight B. Billings, Jr., follow Barrington Moore's theory of a "Prussian Road" to modernity, characterized by a "revolution from above." Mandle sees the southern economy as a "plantation mode of production." In all three cases the "squeezing" of workers by coercive means is a noncapitalist alternative to "genuinely capitalist" development based on free competitive contractual relations between capital and labor and the use of labor-saving machinery to increase productivity. Whereas the latter results in growth and prosperity, the former, according to these authors, creates stagnation and regional marginalization. They concede that industrialization did occur in the Carolina Piedmont and northern Alabama, for instance, but emphasize that it remained minimal and subordinate to the planters' other interests, duplicating the coercive, noncapitalist production relations of plantation agriculture. It therefore did nothing to disrupt the system the planters had created. Consequently, this noncapitalist, specifically southern mode of production was able to resist internal and external challenges until well into the twentieth century.

This rigid and unwarranted distinction between "genuinely capitalist" development and the coercive, stagnant nondevelopment that is said to have occurred in the South seriously undercuts the value of these authors' contributions to the study of the southern labor process, strategies of social and political control, and the continuities in the ownership of the means of production. On the one hand, it obscures the extent to which a variety of forms of "coercion" and state intervention are present at all levels of capitalist development and exaggerates the theoretical importance of planter values. On the other, it seriously underestimates the impact of the abolition of slavery, the extent of capital accumulation in the South after the Civil War, and the impact of the tendencies thus introduced into the region.

With this distinction the new social history can no more explain the pattern of development in the South than can the competitive market model. In order to direct attention to the peculiarities of southern development, these authors use a theoretical framework that prevents them from developing an adequate explanation of the South's distinctive combination of high rates of capital accumulation and low levels of social and material development. Whereas the competitive market model asserts that capital accumulation eliminates regional social and economic variations (and loses its theoretical coherence when dealing with situations in which these variations persist), the new social history explains their persistence in terms of the absence of capital accumulation in a noncapitalist economy. Ultimately, these interpretations may reinforce rather than undermine each other.

Since neither of these approaches permits an adequate understanding of the pattern of southern development, this book attempts to use the framework of Marxian political economy to develop such an account. To be sure, regional variations in the process of capitalist development were not a central concern of Marx, despite his interest in "regional" issues such as the American Civil War. Nevertheless, it will be argued that Marxian political economy provides a more fruitful framework for understanding the development of the American South than the two approaches discussed above. The chief advantage that this framework enjoys over its challengers, as scholars from a variety of political perspectives have stressed, is that it is an integrated social theory of class conflict and exploitation under capitalism. It is a theory of tendencies subject to historical confirmation, that is, in which real social outcomes are created not as the result of inexorable economic laws, but as the result of the concrete historical struggle between social classes over the power to control production and the values that result from it. Since the struggle is not simply an economic one, but is also political, ideological, and social in the broadest sense, the Marxian framework avoids the positivism of the other approaches, which are forced to abstract economic or social "facts" from their context and wider historical meaning. Consequently, this framework provides the conceptual tools needed to account for the pattern of capitalist development that has emerged in the South. It does not demand that either capital accumulation or retarded social and material conditions be selected as the most significant theoretical or historical factor in southern development. Rather, it is able to integrate both of these characteristics into a pattern of capitalist development that is both theoretically and historically meaningful, and not paradoxical. And it can provide an explanation, in terms of the historical development of productive relations in the South, of why such a pattern has emerged. In so doing, it assimilates the most useful findings of the other approaches, while overcoming their explanatory weaknesses.

The Marxian framework

At the most abstract level the key to Marx's analysis of the capitalist mode of production and to an explanation of the development of the American South is the category of "free" labor. Under capitalism, labor is free in two respects. First, workers are free in the sense that they are able to sell their capacity to work for limited periods of time in exchange for money payments, without legal or other social constraints. In other words, workers are free in a way in which slaves, serfs, and indentured laborers under other modes of production are not.

Second, workers are free in the related sense that they have no commodity to sell other than their capacity to work in order to guarantee their own subsistence. For the vast majority of workers in a capitalist setting, any direct links with an alternative means of subsistence, such as land, are severed. When workers are "free" in both of these senses, the sale of the capacity to work (which Marx called "labor power") becomes an economic necessity. Workers are free to sell their labor power to any capitalist. Otherwise they are free to starve. Thereafter, labor power becomes the necessary foundation for the two main features of capitalist production—the generalized production of commodities for sale on the market, and the production and capitalization of surplus value.

Under capitalism, labor power is a commodity like any other in the sense that it is bought and sold in a market. Yet in another, more important sense, labor power is not a typical commodity. This is because it has the special capacity to produce other commodities, the value of which (defined by Marx as the labor time socially necessary to produce them) is greater than the value of the wages paid to workers. Whereas "constant capital" (c) such as machinery or raw materials simply transfers its value to the final commodities, the value workers give to these commodities is equal to the value of their labor power (v) plus a "surplus value" (s) for which they are unpaid. The capitalist therefore begins production with commodities whose value is (c + v) and ends it with commodities whose value is (c + v + s). If the capitalist is able to sell these commodities, he realizes this surplus value, i.e., he transforms it into money, which can be used to invest in new commodities and to begin a new, expanded round of production. The exploitation of labor power is therefore also the key to capital's potential for expansion.

When he referred to labor power and workers themselves as "variable capital," Marx wished to emphasize that once the worker has sold his labor power to capital, it becomes the property of capital, just as are machines. But he also wished to stress that, in contrast to the situation with constant capital, the contribution of labor power to the value of production is variable. When labor power is sold to capital, it is not necessarily completely alienated. How much value workers create therefore depends upon how effectively their labor power can be controlled and consumed by capital and how well workers can limit or resist its consumption during the production process. The degree of exploitation will therefore depend in part on the technical composition of the production process, as the free market economists suggest. But both the level and means of exploitation will depend in a more fundamental sense on broader historical and political considerations. This point can best be appreciated by considering Marx's theory of wages.

Since labor power is a commodity in the capitalist mode of production, its value and also, within certain limits, its market price (wages) can be determined in the same way as the value of other commodities is determined. According to the labor theory of value, the value of any commodity is the value of the labor time necessary for the production of that commodity. Since labor power exists only in living human beings, its value is based on the labor time necessary for the production of the means of human subsistence—food, clothing, fuel, and other necessities that sustain the worker and his offspring. This total varies in a technical way according to the type of work done, its physical and skill requirements, climatic conditions, and so on. In addition,

the number and extent of his so-called necessary requirements[,] as also the manner in which they are satisfied, are themselves products of history and depend therefore to a great extent on the level of civilization attained by a country; in particular they depend on the conditions in which, and consequently on the habits and expectations with which, the class of free workers has been formed. In contrast, therefore, with the case of other commodities, the determination of the value of labor power contains a historical and moral element.


Excerpted from Southern Capitalism by Phillip J. Wood. Copyright © 1986 Duke University Press. Excerpted by permission of Duke University Press.
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Table of Contents

Tables and Figures
1 Introduction
2 The Origins of Industrial Capitalism in North Carolina
3 The Relocation of the Cotton Textile Industry, 1895–1939: The Political Economy of the “Stretch-Out”
4 Capital, Exploitation, and the State in North Carolina: Theoretical Considerations
5 Capital, Exploitation, and the State in North Carolina: From the Civil War to the New Deal and Beyond
6 State Economic Development Policy and the Pattern of Postwar Industrialization
7 Conclusion: Prospects for the Future

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