This essay was originally published on April 9 2014.

Racialized chattel slaves were the capital that made capitalism. While most theories of capitalism set slavery apart, as something utterly distinct, because under slavery, workers do not labor for a wage, new historical research reveals that for centuries, a single economic system encompassed both the plantation and the factory.

At the dawn of the industrial age commentators like Rev. Thomas Malthus could not envision that capital — an asset that is used but not consumed in the production of goods and services — could compound and diversify its forms, increasing productivity and engendering economic growth. Yet, ironically, when Malthus penned his Essay on the Principle of Population in 1798, the economies of Western Europe already had crawled their way out of the so-called “Malthusian trap.” The New World yielded vast quantities of “drug foods” like tobacco, tea, coffee, chocolate, and sugar for world markets. Europeans worked a little bit harder to satiate their hunger for these “drug foods.” The luxury-commodities of the seventeenth century became integrated into the new middle-class rituals like tea-drinking in the eighteenth century. By the nineteenth century, these commodities became a caloric and stimulative necessity for the denizens of the dark satanic mills. The New World yielded food for proletarians and fiber for factories at reasonable (even falling) prices. The “industrious revolution” that began in the sixteenth century set the stage for the Industrial Revolution of the late eighteenth and nineteenth centuries.

But the “demand-side” tells only part of the story. A new form of capital, racialized chattel slaves, proved essential for the industrious revolution — and for the industrial one that followed.

The systematic application of African slaves in staple export crop production began in the sixteenth century, with sugar in Brazil. The African slave trade populated the plantations of the Caribbean, landing on the shores of the Chesapeake at the end of the seventeenth century. African slaves held the legal status of chattel: moveable, alienable property. When owners hold living creatures as chattel, they gain additional property rights: the ownership of the offspring of any chattel, and the ownership of their offspring, and so on and so forth. Chattel becomes self-augmenting capital.

While slavery existed in human societies since prehistoric times, chattel status had never been applied so thoroughly to human beings as it would be to Africans and African-Americans beginning in the sixteenth century. But this was not done easily, especially in those New World regions where African slaves survived, worked alongside European indentured servants and landless “free” men and women, and bore offspring — as they did in Britain’s mainland colonies in North America.

In the seventeenth century, African slaves and European indentured servants worked together to build what Ira Berlin characterizes as a “society with slaves” along the Chesapeake Bay. These Africans were slaves, but before the end of the seventeenth century, these Africans were not chattel, not fully. Planters and overseers didn’t use them that differently than their indentured servants. Slaves and servants alike were subject to routine corporeal punishment. Slaves occupied the furthest point along a continuum of unequal and coercive labor relations. (Also, see here and here.) Even so, 20% of the Africans brought into the Chesapeake before 1675 became free, and some of those freed even received the head-right — a plot of land — promised to European indentures. Some of those free Africans would command white indentures and own African slaves.

To the British inhabitants of the Chesapeake, Africans looked different. They sounded different. They acted different. But that was true of the Irish, as well. Africans were pagans, but the kind of people who wound up indentured in the Chesapeake weren’t exactly model Christians. European and African laborers worked, fornicated, fought, wept, birthed, ate, died, drank, danced, traded with one another, and with the indigenous population. Neither laws nor customs set them apart.

And this would become a problem.

By the 1670s, large landowners — some local planters, some absentees — began to consolidate plantations. This pushed the head-rights out to the least-productive lands on the frontier. In 1676, poor whites joined forces with those of African descent under the leadership of Nathaniel Bacon. They torched Jamestown, the colony’s capital. It took British troops several years to bring the Chesapeake under control.

Ultimately, planter elites thwarted class conflict by writing laws and by modeling and encouraging social practices that persuaded those with white skin to imagine that tremendous social significance — inherent difference and inferiority — lay underneath black skin. (Also, see here and here.) New laws regulated social relations — sex, marriage, sociability, trade, assembly, religion — between the “races” that those very laws, in fact, helped to create.

The law of chattel applied to African and African-descended slaves to the fullest extent on eighteenth century plantations. Under racialized chattel slavery, master-enslavers possessed the right to torture and maim, the right to kill, the right to rape, the right to alienate, and the right to own offspring — specifically, the offspring of the female slave. The exploitation of enslaved women’s reproductive labor became a prerogative that masters shared with other white men. Any offspring resulting from rape increased the master’s stock of capital.

Global commerce in slaves and the commodities they produced gave rise to modern finance, to new industries, and to wage-labor in the eighteenth century. Anchored in London, complex trans-Atlantic networks of trading partnerships, insurers, and banks financed the trade in slaves and slave-produced commodities. (Also, see here.) Merchant-financiers located in the seaports all around the Atlantic world provided a form of international currency by discounting the bills of exchange generated in the “triangle trade.” These merchant-financiers connected British creditors to colonial planter-debtors. Some of the world’s first financial derivatives — cotton futures contracts — traded on the Cotton Exchange in Liverpool. British industry blossomed. According to Eric Williams, the capital accumulated from the transatlantic trade in slaves and slave-produced commodities financed British sugar refining, rum distillation, metal-working, gun-making, cotton manufacture, transportation infrastructure, and even James Watt’s steam engine.

After the American Revolution, racialized chattel slavery appeared — to some — as inconsistent with the natural rights and liberties of man. Northern states emancipated their few enslaved residents. But more often, racialized chattel slavery served as the negative referent that affirmed the freedom of white males. (Also, see here.) In Notes on the State of Virginia (1785), Thomas Jefferson — who never freed his enslaved sister-in-law, the mother of his own children — postulated that skin color signaled immutable, inheritable inferiority:

It is not their condition then, but nature, which has produced the distinction… blacks, whether originally a distinct race, or made distinct by time and circumstances, are inferior to the whites in the endowments both of body and mind … This unfortunate difference of colour, and perhaps of faculty, is a powerful obstacle to the emancipation of these people.

Even so, the former plantation colonies of the Upper South stood in a sorry state after Independence, beset by plummeting commodity prices and depleted soils. After the introduction of the cotton gin in 1791, these master-enslavers found a market for their surplus slave-capital.

The expanding cotton frontier needed capital and the Upper South provided it. Racialized chattel slavery proved itself the most efficient way to produce the world’s most important crop. The U.S. produced no cotton for export in 1790. In the antebellum period, the United States supplied most of the world’s most traded commodity, the key raw ingredient of the Industrial Revolution. Thanks to cotton, the United States ranked as the world’s largest economy on the eve of the Civil War.

From about 1790 until the Civil War, slave-traders and enslavers chained 1 million Americans of African descent into coffles and marched or shipped them down to southeast and southwest states and territories. They were sold at auction houses located in every city in the greater Mississippi Valley.

Capital and capitalist constituted one another at auction. At auction, slaves were stripped and assaulted to judge their strength and their capacity to produce more capital or to gratify the sexual appetites of masters. Perceived markers of docility or defiance informed the imaginative, deeply social practice of valuing slave-capital. In this capital market, Walter Johnson reveals, slaves shaped their sale and masters bought their own selves.

After auction, reconstituted coffles traveled ever deeper into the dark heart of the Cotton Kingdom (also, see here) and after 1836, into the new Republic of Texas. Five times more slaves lived in the United States in 1861 than in 1790, despite the abolition of the transatlantic slave trade in 1808 and despite the high levels of infant mortality in the Cotton Kingdom. Slavery was no dying institution.

By 1820, the slave-labor camps that stretched west from South Carolina to Arkansas and south to the Gulf Coast allowed the United States to achieve dominance in the world market for cotton, the most crucial commodity of the Industrial Revolution. At that date, U.S. cotton was the world’s most widely traded commodity. Without those exports, the national economy as a whole could not acquire the goods and the credit it required from abroad.

And the Industrial Revolution that produced those goods depended absolutely on what Kenneth Pomeranz identifies as the “ghost acres” of the New World: those acres seeded, tended, and harvested by slaves of African descent. Pomeranz estimates that if, in 1830, Great Britain had to grow for itself, on its own soil the calories that its workers consumed as sugar, or if it had to raise enough sheep to replace the cotton it imported from the United States, this would have required no less than an additional 25 million acres of land.

In New England and (mostly) Manchester, waged-workers spun cotton thread which steam-powered mills spun into cloth. Once a luxury good, cotton cloth now radically transformed the way human beings across the globe outfitted themselves and their surroundings. Manchester and Lowell discovered an enormous market in the same African-American slaves that grew, tended and cleaned raw cotton, along with the same workers who operated the machines that spun and wove that cotton into cloth. According to Seth Rockman’s forthcoming book, Plantation Goods and the National Economy of Slavery, the ready-made clothing industry emerged in response to the demand from planters for cheap garments to clothe their slaves.

The explosion in cotton supply did not occur simply because more land came under cultivation. It came from increased productivity, as new work by Ed Baptist illustrates. The Cotton Kings combined the bullwhip with new methods of surveilling, measuring, and accounting for the productivity of the enslaved, radically reorganizing patterns of plantation labor. Planter-enslavers compelled their slave-capital to invent ways to increase their productivity — think of bidexterous Patsey in Solomon Northrup’s Twelve Years a Slave. At the end of every day, the overseer weighed the pickings of each individual, chalking up the numbers on a slate. Results were compared to each individual’s quota. Shortfalls were “settled” in lashes. Later the master copied those picking totals into his ledger and erased the slate (both mass-produced by burgeoning new industries up North). Then he set new quotas. And the quotas always increased. Between 1800 and 1860, productivity increases on established plantations matched the productivity increases of the workers that tended to the spinning machines in Manchester in the same period, according to Ed Baptist.

Slavery proved crucial in the emergence of American finance. Profits from commerce, finance, and insurance related to cotton and to slaves flowed to merchant-financiers located in New Orleans and mid-Atlantic port cities, including New York City, where a global financial center grew up on Wall Street.

Cotton Kings themselves devised financial innovations that channeled the savings of investors across the nation and Western Europe to the Mississippi Valley. Cotton Kings, slave traders, and cotton merchants demanded vast amounts of credit to fund their ceaseless speculation and expansion. Planter-enslavers held valuable, liquid collateral: 2 million slaves worth $2 billion, a third of the wealth owned by all U.S. citizens, according to Ed Baptist. With the help of firms like Baring Brothers, Brown Brothers, and Rothschilds, the Cotton Kings sold bonds to capitalize new banks from which they secured loans (pledging their slaves and land for collateral). These bonds were secured by the full faith and credit of the state that chartered the bank. Even as northern states and European empires emancipated their own slaves, investors from these regions shared in the profits of the slave-labor camps in the Cotton Kingdom.

The Cotton Kings did something that neither Freddy, nor Fannie, nor any of “too big to fail” banks managed to do. They secured an explicit and total government guarantee for their banks, placing taxpayers on the hook for interest and principal.

It all ended in the Panic of 1837, when the bubble in southeastern land and slaves burst. Southern taxpayers refused to pay the debts of the planter-banks. Southern States defaulted on those bonds, hampering the South’s ability to raise money through the securities markets for more than a century. Cotton Kings would become dependent as individuals on financial intermediaries tied to Wall Street, firms like Lehman Brothers (founded in Alabama).

It didn’t take very long for the flow of credit to resume. By mid-century, racialized chattel slavery had built not only a wealthy and powerful South. It had also given rise to an industrializing and diversifying North. In New England, where sharp Yankees once amassed profits by plying the transatlantic slave trade — and continued to profit by transporting slave-produced commodities and insuring the enslaved — new industries rose up alongside the textile mills. High protective tariffs on foreign manufactures made the products of U.S. mills and factories competitive in domestic markets, especially in markets supplying plantations.

After the Erie Canal opened in 1824, the North slowly began to reorient towards timber and coal extraction, grain production, livestock, transportation construction, and the manufacture of a vast array of commodities for all manner of domestic and international markets. Chicago supplanted New Orleans. By the 1850s, industrial and agricultural capitalists above the Mason-Dixon line no longer needed cotton to the same extent that they once did. With the notable exception of Wall Street interests in New York City, Northerners began to resist the political power — and the territorial ambitions — of the Cotton Kings. Sectional animosity set the stage for the Civil War.

But up to that point, slave-capital proved indispensable to the emergence of industrial capitalism and to the ascent of the United States as a global economic power. Indeed, the violent dispossession of racialized chattel slaves from their labor, their bodies, and their families — not the enclosure of the commons identified by Karl Marx — set capitalism in motion and sustained capital accumulation for three centuries.

Adapted from a lecture in the team-taught course “Rethinking Capitalism” at The New School for Social Research.