The Dysfunctionality of Slavery and Neoliberalism

Despite the neoliberal obsession with wage suppression, history suggests that such a policy is self-destructive.   Periods of high wages are associated with rapid technological change.   For example, after the scourge of the Black Death, which eliminated about a third of the population of Europe, the surviving workers were in a better bargaining position in terms of both wages earned and rents paid.  Rapid technological change emerged as a means to cope with workers temporary advantage. The historian, Richard C. Allen, makes the case that wars in the late 18th century removed significant portion of the labor force, again creating higher wages. The combination of higher wages and the availability of cheap fossil fueled another burst of rapid technological change, which we now know as the Industrial Revolution.

Another historian, H. J. Habakkuk published a book identifying the long-standing domestic labor shortage as the central force pushing the early United States to industrialize so fast that it rapidly caught up with England.

The geography of the United States provided a natural experiment for testing Habakkuk’s theory.  The southern states, unlike their northern counterparts turned to a more primitive remedy for its labor shortage in the form of African slaves.

Slavery was not unknown in the northern states, but they did not put much of a dent in the northern labor shortage.

http://www.nakedcapitalism.com/2015/05/michael-perelman-the-dysfunctionality-of-slavery-and-neoliberalism.html