Economic History Case Studies: The Industrialization of the South (1865-1965)

Does Socialism arise naturally within the Totality of a nation-state? A compelling thesis which I continue to profess on The Fourth Estate is the argument that certain Totalities are more inclined toward Socialism than others. One compelling theory states that the German-speaking world formulated the concepts behind Socialism over the past millennium as a gradual development in World History. The prevailing interpretation is that because the Roman Empire never fully conquered the German-speaking world like France, Great Britain, Spain and Italy, concepts related to Socialism flourished. What we would call “Socialism” today was originally referred to as “Cameralismus” (Cameralism) in the German Reich. While I intend to explore Cameralism in a future Economic History Case Studies entry, allow me to cite a long economic history textbook describing the characteristics of Cameralism:

“To readers of English only, Cameralism is virtually a lost chapter in the history of
the social sciences. Although everything now belonging to German polity has a part
of its heredity in that type of social theory, not every reputable student of the social sciences in America could correctly define the term, and few could name more than one or two writers to whom it is properly applied.

In a word, the Cameralists were a series of German writers, from the middle of the sixteenth to the end of the eighteenth century, who approached civic problems from
a common viewpoint, who proposed the same central question, and who developed a coherent civic theory, corresponding with the German system of administration at the same time in course of evolution. To the Cameralists the central problem of science was the problem of the State. To them the object of all social theory was to show how the welfare of the State might be secured. They saw in the welfare of the state the source of all other welfare. Their key to the welfare of the State was revenue to supply the needs of the State. Their whole social theory radiated from the central task of furnishing the State with ready means.

The situation which actually existed in Germany in the seventeenth and eighteenth centuries was a resultant of purposes which were conditioned first by these chief objective factors, viz., the soil and climate of the country; the state of the arts required for using natural resources; the domestic industrial structure, and the foreign trade relations; the ecclesiastical organization; the Holy Roman Empire; the character of the states within the Empire, and outside of it in Europe including nearer Asia; the prizes for national competition in the wealth of the Americas, the Levant, and the remote East; and the personal equation of the citizens. Then, second, there were first-rate subjective factors, which may be scheduled as the contemporary science, the theology or philosophy, the legal tradition both from Roman and Teuton sources, the political philosophy, and the rule-of-thumb conclusions which passed as wisdom in the conduct of life, from individual habit to the policies of states.

In this situation, as a matter of fact, the idea of the State and of government dominated all the other factors. So far as interests of the State could be distinguished, they settled the relative importance of everything else. The purposes of the State were paramount. The Cameralists were servants of the State. Cameralism was the system elaborated by the chief agents of the rulers, partly as mere classification of practices which rulers had already adopted; partly as ways and means of accomplishing more of the purposes which the State proposed.

Another thesis from my research as part of The Fourth Estate is the determination to challenge the prevailing definition of “Revolution.” Most “Revolutions,” as they are supposed to be understood true Socialists, are not violent affairs. They have often been technological and financial ones or else the byproducts of Wars. They serve as the means by which an entire people, a Totality, enters the modern world. Similar results are capable of being achieved with the Work-Standard in allowing entire nations to truly enter the “Postmodern world” (assuming such a realm even exists).

Here in America, we like to assume that our Industrialization began when Alexander Hamilton and the Federalist Party were still around. Unfortunately, American Industrialization did not occur in its entirety and the results were discernible in the decades leading up to the American Civil War during the 19th century. At best, only half of the Union was fully industrialized, and that was the Northern States.

Those who have read The Work-Standard will recall in US History that the American North was far more industrialized than the American South. The immigration of Europeans to the Northern States contributed to population growth and the rapid growth of cities like Chicago and New York. Meanwhile, the Southern States continued to rely on Slavery as the primary economic activities were still centered around Agriculture. Very few cities in the South had compelling industrial capabilities.

The American Civil War never culminated in the Industrialization of the American South nor did it result in changes to the economies of the Southern states. This is a significant historical fact because when Revolutions do not lead to Industrialization, Wars tend to be the secondary basis by which a Totality enters the modern world or, in some cases, adopt some variation of Socialism. It took an entire century of events in US History for Southerners to finally witness changes to their overall economic life. Not even the Jeffersonian FDR and his New Deal programs or the war effort in World War II shifted the economies of the Southern States away from agriculture and toward industrial production.

“The aftermath of the Great Recession brought WWII back into the spotlight, as policymakers looked for historical analogies to inform their response to the crisis. At the time, the debate focused on the lessons to be learned regarding the role of government stimulus in economic recovery. Another issue that has emerged in the decade since is what role the government has for an economy in transition, or when some regional economies are lagging behind others. Here too, the experience of the US during WWII can be instructive.

Mobilisation for WWII was a massive undertaking. The government spent $108 billion on supply contracts to arm Allied Forces around the world, while at home, investment in equipment and the construction of new factories totalled $26 billion. Looking back after the war, many observers saw a production miracle that served as the ‘arsenal of democracy’ in the 1940s. They also saw recovery from the Great Depression and speculated about potential positive effects on industries and regions into the future. This was particularly true in the context of the American South, where industrial development prior to 1940 appeared stymied and the economy stagnant.2

With respect to the link between southern industrialisation and WWII, the consensus view that emerged in the immediate post-war period can be summarised as follows: before 1940 the barriers to industrialisation were slow to erode, and the shock of mobilisation allowed new investment to flow to industries starved of capital but ready for growth. Indeed, aggregate evidence suggests that new investment nearly doubled the regions’ capital stock and, as shown in Figure 1, increased its share of manufacturing activity. Yet, this evidence alone is not enough to conclude that war-related investment played a decisive role in southern industrialisation.

Figure 1 Trends in the share of manufacturing activity in the US South, 1880-1987

Notes: The panels of the figure show the share of establishments, employment, wage bill, and output/value-added located in the US South, which includes Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of Columbia.

Industrialization occurred after 1945, specifically during the height of the Civil Rights Movement between the 1950s-1960s. Outside of some European economic history documents, no American historian (economic or otherwise) is interested in arguing that the Civil Rights Movement coincided with the Industrialization of the American South. This is significant at a time when Northerners were migrating from the North as a consequence of Deindustrialization after 1945. The reason for anyone to entertain such a thesis is related to the so-called “Big Push Hypothesis” as promoted by this 2017 research paper, entitled, “World War II and the Industrialization of the American South” :

After [1945], the southern economy expanded: income per capita converged to the national average and the regions share of manufacturing increased substantially. The South attracted modern industries, such as automobile assembly, and aggressively implemented policies to entice Northern firms.
However, the South’s distinctiveness as a region did not dissipate. In many cases, older patterns of production persisted along with exclusionary labor market policies. The postwar economic development of the South was closely related to changing political-economic dynamics that directed a large share of federal defense spending
to the South. However, the specific link between mobilization for World War II and the growth of manufacturing in the South in the postwar period remains an open question.

Did Southern Industrialization occur during or after World War II? Another prevailing argument on The Fourth Estate is that World War II did not legally end in 1945, but in 1990. Distinctions between 1945 as the official end and 1990 as the legal end are important because Peace Treaties are the legal documents required to end any war. If we go by the argument that World War II did not end in 1945, but 1990, then it becomes tantamount for me to argue an alternative thesis regarding Southern Industrialization. In essence, the Southern states could never have industrialized on their own without the Federal Government and the push toward further Industrialization coincided with the Civil Rights Movement within the same timeframe. The enforcement of Civil Rights in the American South also required intervention by the Federal Government because Segregation and Jim Crow were both historical phenomena specifically related to the Southern states.

Before anyone can begin to determine the veracity of my thesis, I would like to mention that there should have been an Industrialized South competing against an Industrialized North. That was not what happened since the Death of Bretton Woods. What happened instead was a massive migration of Northern manufacturing and equipment from the Northern states to the Southern states. This bears an uncanny resemblance to the sort of Carpetbagging which plagued the Southern states during Reconstruction. Or, put another way, not everything related to the Deindustrialization of the Northern states can be pinned entirely on Globalization and Automation. Some aspect had to have been caused by the Southern states.

This Chart depicts the number of Americans involved in US Manufacturing from 1970 to 2015. The dark gray shades indicate Recessions. The 1970s saw the highest number, which was around 19,000,000 and 20,000,000. If we are believe that Deindustrialization occurred in the US during the 1970s, the spike in employment had to have been occurring in the Southern and Southwestern states. Even so, Deindustrialization spiked between the Clinton and Bush 43 presidencies, which can be attributed to Globalization and Automation. Just note the massive drop in 2000-2001.
For reference, here’s a different chart depicting the employment share of US manufacturing by the Northern states. The Northern states are, ironically enough, referred to in economic history as the “Rust Belt states.”

Meanwhile, historical data regarding the Deindustrialization of the Southern states remains elusive. I have yet to find the relevant information, but I am nevertheless convinced that somebody else collected some in the past. It would be interesting for me to determine the extent of Deindustrialization in the Southern states because I am curious if the Deindustrialization in the Union as of late is still a regional phenomenon (which is what the historical data and US History are both pointing toward) or a national phenomenon (as we are often led to assume by the Jeffersonians and the Democratic-Republican Party). There is no doubt that Deindustrialization, at least among the Northern states, has played a role in shifting American perceptions toward Hamiltonianism, in addition to renewed interest in the Weltanschauung of Alexander Hamilton. What I also want to know (and this is a very important one) is whether this renewed interest is related to a specific segment of the US population or a specific region within the Union.

Categories: Economic History

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