Defending federal greed

Professor Gerald Gunderson has recently reviewed Professor Thomas DiLorenzo’s book, The Real Lincoln and found it lacking. Professor Gunderson is Shelby Cullom Davis Professor of American Business and Economic Enterprise at Trinity College in Hartford Connecticut and is editor of the Journal of Private Enterprise. He is the author of several articles on economic growth and entrepreneurship and an important article on the "The Origins of the American Civil War."

Professor Gunderson’s main criticism is DiLorenzo’s claim that the Civil War was not fought over slavery, but in order to promote the Republican Party’s mercantilist platform. The Professor’s book review seems to rest entirely on two publications.

The first is the 1974 book by Robert Fogel and Stanly Engerman, Time on the Cross: The Economics of American Negro Slavery, which found that slavery was a vibrant institution of capitalism. The book provides a justification for the American Civil War, a position that became snuggly integrated into the historians’ lore for twenty-five years. That is until the recent clamor for reparations for slavery, where black leaders are arguing that the war had nothing to do with slavery. In any case, I have already written a great deal about Fogel and Engerman’s work. While economists and historians have poked many holes in their book, and Fogel has had to retreat from his initial positions, I have shown their work to be fundamentally flawed and completely misleading.

The second publication is Professor Gunderson’s own article, "The Origin of the American Civil War," which was published by the prestigious Journal of Economic History, during the same year as the Fogel and Engerman book, 1974. By estimating the value of slaves and the cost of the war, the article very cleverly suggests that the Southern states fought to defend slavery and the Northern states fought to abolish slavery; the Civil War was basically fought over the issue of slavery, with the Union fighting to end black slavery and preserve union. There is of course a kernel of truth to the story. The northern and southern States were divided in terms of economic interests and politics and this generally coincided with the slave status of the states. It is also true that white southern slave owners were interested in defending slavery because it allowed them to exploit income and wealth from the productivity of slaves to themselves. Slavery then is loosely related to a necessary condition of bringing about war, but it was in no way a sufficient condition.

Gunderson’s ingenious story clearly describes slavery as the cause of the war, but it is his well-placed caveats where the real story is told. For example, the South's secession need not have been a reaction against abolitionism, but to "any program which implied some reduction in the returns from slave ownership" (p. 917) such as high tariffs which would have threatened their self-interest. True the Republican Party was hostile to slavery, but there was no immediate threat of abolition. DiLorenzo and I believe the real threat was the economic impact of high tariffs and the Republican economic program. As Gunderson notes:

The reduction in the value of slaves within the Union given Lincoln’s election, measures the basic cause of the war. This is the "coercion" to which the southerners had frequently objected. It suggests that the Republicans were not viewed as abolitionists; that is, it was not expected that the slaves would be freed in the immediate future. It does represent a sizeable loss in slave values within the Union, however. Lincoln’s election is foreseen as the beginning of an erosion in returns from bondsmen which is reflected in an immediate $700 million drop in their present value. (p. 933)

I would not argue that Professor Gunderson’s estimate of the value of slaves cannot be used as a measure of self-interest, but would question what he sees as the cause for the loss in value of slave property. He does mention federal taxation (p. 941) as a possible cause but dismisses it because slavery is a sufficient explanation and therefore taxation is not a necessary reason. Gunderson’s story loses plausibility when he attempts to use the same basic evidence on slave value and war costs to explain Northern motivation. He finds that the antislavery motivation was twenty times as strong as that of preserving union and that preserving the union was just a superficial cover story to start the war. He therefore maintains that while everything is explained by resort to rational self-interest, the actual cause of the war was an ideological drive to help black strangers in foreign states. Anyone familiar with either public choice theory or with Northern attitudes towards blacks and slavery will find this conclusion completely implausible.

Gunderson does offer a "consistent, and not unreasonable explanation as to why the relevant self-interested parties would opt for war" (p. 934) and to be fair he does call for further study and verification, but the real threat was the tariff and the effect of the tariff is captured in the value of slaves. Low tariffs mean that slave-based plantation agriculture would be profitable, but high tariffs would reduce net income, profits, and the value of slaves.

The size and strength of the abolitionist movement was modest. While a large number of Americans did not approve of the idea of slavery, few were interested in going to war over the issue. In terms of economic interests, there were northern industrialists who approved of both war and the freeing of slaves. Freed slaves would compete against free labor and drive down wage rates and serve as a new source of consumers for the products of northern factories.

In opposition to the small group of extreme abolitionists and industrial capitalists was the bulk of the population in the northern states. These people did not necessarily approve of slavery, but neither did they want freed slaves moving into their areas. This is why many northern states passed laws prohibiting slave owners from freeing their slaves and moving them to Free states. It is also the reason that the Underground Railroad generally ended in Canada rather than in the northern states. Both slave owners in the South and labor in the Northern states supported the Fugitive Slave Act which required that slaves who successfully escaped to Northern states be returned to their owners.

As Gunderson notes "the Lincoln administration insisted on upholding its authority as the federal government in the South. The South responded by firing on Fort Sumter." (p. 928) And Gunderson’s own evidence could be used to make the case that Lincoln started the war (p. 935, n. 24 & pp. 937–8).

Professor Gunderson concludes his review by claiming that there have been many explanations for what caused the American Civil War "But again, as so often in the past, the pattern appears to repeat, the effort to reach a conclusion has outrun its basis in history." Austrian economists would agree with him that history alone cannot lead you to the proper conclusion without resort to theory, but DiLorenzo’s book is built solidly around Austrian theory and public choice theory.

Perhaps Professor Gunderson can take solace in the systematic evidence on civil wars presented by Paul Collier and Anke Hoeffler which provides a clear and compelling case for what causes civil wars in general. They studied the entire history of modern civil wars and tried to determine what factors were related to civil war such as income, population, ethnic division, and the importance of resources and exports. They found, not surprisingly, that low income and high population increased the probability of civil war. More importantly they found that countries that had a high share of primary exports to GDP were more likely to experience a rebellion and that natural resources increase the risk of war "We interpret this as being due to the taxable base of the economy constituting an attraction for rebels wishing to capture the state" but it could also encourage secession (p. 571). These results of course fit the American Civil War. The South had a large natural resource base in its farmland (and slaves), which produced primary exports such as cotton and tobacco. This was the attraction of the "rebels" from the North who wished to exploit these resources via the tariff.

Their evidence also works against the case that slavery and abolitionism was the cause of the American Civil War. "Analogously, ethic division is the most common political explanation for civil war. We have found that these interpretations are incorrect." They find that non-economic reasons for civil wars only matter in the sense that ethnic and linguistic differences allow rebel leaders to divide the population and help reduce the coordination costs of rebellion (p. 571). In subsequent research the authors tested the "grievance model" of rebellion against the "greed model" of rebellion. "We find that most of the proxies for objective grievance are insignificant and that the best-performing grievance model has very low explanatory power. By contrast, the simple greed model performs well. The extent of primary commodity exports is the largest single influence on the risk of conflict. Strikingly, ethnic and religious fractionalization makes a society safer, as predicted by the greed model, rather than more dangerous as predicted by the grievance model" (p. 25). Grievance from past wars does contribute to future wars but they explain that this is because it makes it easier to raise troops and resources to fight.

Only this last point seems not to fit the case of the American Civil War, for it would suggest that Southerners would have a grievance against Northerners and would be willing to raise troops for another fight.

Gunderson's article was only a short notice not a full-scale, comprehensive review. And he didn't intend to refute DiLorenzo in full. He did come up with some good points, though.

All the talk about Lincoln or Grant or Sherman "inventing" total war is nonsense. Modern war is what it is because of the mass drafts pioneered by the French Revolution and the application of technology to war in subsequent generations. The tactics and practices objected too in the American Civil War were present in the Thirty Years War, the American Revolution and the French Revolutionary and Napoleonic Wars. What made the Civil War different was that steam power and other advances in technology meant that battles could be bloodier and campaigns longer. And the application of technology to war meant that factories and railroads would become the targets of war.

Also, the idea that the Civil War marked a sudden massive transformation in our understanding of the union and Constitution has become an unchallenged myth. We might do well to look back to how people really thought in 1820, 1830, or 1840. There was much sentiment that the union was unbreakable, and secession was hardly an everyday topic of conversation. Before we assume that "Lincoln destroyed the union as a voluntary association of states," we ought to ask just how valid or significant this concept was. Although periodic crises did generate secessionist ideas and fears it's doubtful that this concept was part of the everyday mental vocabulary of most antebellum Americans.

Di Lorenzo's argument that the high cost of slaves would have lead to their replacement by agricultural machinery is also flawed. It took three generations after the Civil War for the cotton harvest to be fully mechanized. And with such an amount of capital sunk in slaves it's not likely that this would be wiped away by Confederate leaders anytime soon. Those funds to compensate slave holders would have to come from somewhere, and it's not likely that Southern non-slaveholders would willingly pay the price of compensated emancipation.

And having lived through the days of the Iron Curtain, we all recognize how foolish it is to suggest that an independent Confederacy would have left its Northern border as porous to runaways as the antebellum South did. The costs of enforcing slavery weren't just "socialized" by the Fugitive Slave Act, but by the slave patrols, internal passports and Black codes of the antebellum South, and it's naive to think that Confederate leaders wouldn't do what they could to preserve the cost of their investment. Probably, the Confederacy would have abolished slavery at some point, perhaps long after the 1860s, but DiLorenzo and Hummel come off sounding like Doctor Pangloss: All is for the best in this most perfect of Confederate worlds.

It's hard to know just what a "civil war" is and how it differs from a revolution, a national uprising, a colonial or guerrilla war, a national liberation struggle or a terrorist campaign. Are there civil wars now in Sri Lanka, Indonesia, or the Philippines? How about Algeria? Or Spain, France, or the UK, so far as the Basque country, Corsica and Ulster are concerned? How you define a "civil war" will affect the answers you get about what causes them.

It's doubtless true that ethnic divisions and grievances can persist without breaking out in war. How else were English, Scots, Welsh, and Irish able to coexist under one government for so long. Some current conflict is necessary to touch off a war, not just ancient grievances. That conflict may involve money and the power over money. It may also be cause by mass suffering, or by the opportunity war provides for a subjected group to overthrow its masters. There has to be some trigger or catalyst, but it would be prejudicial and premature to assert that "greed" is always the cause.

Offhand it seems like Thornton's friends' thesis has some real problems. If you give a question to an economist, they will come up with an economic answer to it. The problem is that they'll also ignore or minimize non-economic factors.

But let's make a "greed" or economic model of the Civil War. Southern slaveholders felt that their slave property would eventually be threatened by the new Republican administration. They sensed that their power in the union was decreasing. Therefore they tried to break away to establish their own government. That's a very economic model -- in both senses of the adjective. It certainly makes more sense than making the unionists rebels covetous of the South's economic resources and export crops. Someone else will have statistics for 1860, and show just how much more productive capacity the North had, but it looks like betting on King Cotton rather than coal or iron would have been a very bad bet.

There's an irony in a purported economist like DiLorenzo creating a simple villain, rather than studying the deeper economic currents that affected the war. And another in a "free marketeer" espousing a mercanitlism that makes big cash crop exports more imporant than productive industry. The final, biggest irony is latter-day Confederates embracing the "dismal science" so often associated with modernity and industrialism and the Northern victors.

DiLorenzo and I believe the real threat was the economic impact of high tariffs and the Republican economic program.

Nice theory, but the fact is the Republicans didn't have a majority in Congress and could not have passed higher tariffs without support from Democrats who both North and South were opposed to higher tariffs.

It suggests that the Republicans were not viewed as abolitionists; that is, it was not expected that the slaves would be freed in the immediate future. It does represent a sizeable loss in slave values within the Union, however. Lincoln’s election is foreseen as the beginning of an erosion in returns from bondsmen which is reflected in an immediate $700 million drop in their present value.

It is true that the "immediate threat" was was not abolition which could not have been accomplished without a constitutional amendment which would have been opposed by 15 slave states meaning that it would require 45 other states to pass such an amendment. Abolition was impossible then, and it still would be now with 15 states opposed.

The "immediate threat" was blocking expansion of slavery to the west which had the dual effect of creating more free states changing the balance of power in the senate while at the same time decreasing the value of existing slaves due to slavery being isolated and frozen in place where it then existed. There was enough support in congress, among northern Democrats and even a handful of slave state Democrats, to block further expansion and over turn Kansas Nebraska which is what Lincoln and the Free-Soil Republicans campaigned on. I don't beleive the issue of tariffs was ever raised by either side during the 1860 elections. It was a non-issue. The entire contest on both sides was about the slavery question and specifically westward expansion with the Republicans opposed and the Democrats split between the northern Douglas moderates and the Brackenridge fire-eaters.

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