White Rage: The Unspoken Truth of Our Racial Divide, by Carol Anderson

For every advance African Americans make in American society — no matter how small — white America is there to push back with the full weight of America’s most cherished and feared institutions — the courts and the police. Nowhere is this more obvious than with Donald Trump’s Presidency.[1]Author Carol Anderson refers to this complex reactionary backlash as White Rage.[2]Anderson had been outraged by the death of Michael Brown in Ferguson Missouri, where she use to live. While watching television, she noticed the media’s bias and use of stereotypes against black males, which lead her to research and write White Rage.

Anderson reports that in 1954, in response to Brown v. Board of Education, Missouri “declared all its schools would be integrated, only to announce that it would leave it up to the local districts to implement the Supreme Court decisions.”[3] Brown v. the Board of Education (1954) did virtually nothing. “In the 21stCentury, Michael Brown’s school district had been on probation for fifteen years” for racial inequality. “It was the same with [inequality in] policing, housing, voting, and employment.”[4]

“What rage is not about visible violence, but rather it works its way through the courts, the legislatures, and a range of government bureaucracies. It wreaks havoc subtly, almost imperceptibly. Too imperceptibly, certainly, for a nation consistently drawn to the spectacular — to what it can see. It’s not the Klan. White Rage doesn’t have to wear sheets, burn crosses, or take to the streets. Working the halls of power, it can achieve its ends far more effectively, fare more destructively.”

“The trigger for white rage, inevitably, is black advancement.” White rage is, in effect, part of America’s status quos. That is why it has the use of the courts and other governmental bureaucracies. It is built into the fabric of America since the Constitution and it has been a battle, ever since, for minorities to have a voice in America. Unfortunately, this ‘voice’ is too little too late. Obama did not do enough, perhaps he could not, but now we are faced with the maniacal rantings of a rich white racists whose only policy seems to be to undo everything Obama did. After all, when Obama was elected, “voting rights were severely curtailed [and] the federal government was shut down.”[5] Black Americans did more to build this country than any white Americans and they are the least respected class of Americans. As Anderson argues in White Rage, whites’ use their power as the status quos to push back the rights and opportunities of blacks.

Her book along with The Color of Law: A Forgotten History of How Our Government Segregated America (2017), by Richard Rothstein and White by Law: the Legal Construction of race(2006), by Ian Haney-Lopez, reveal institutional and legal racism that still haunt America today. For those who say that racism does not exist, these books offer ample evidence that it not only exists, but that it is enforced for the benefit of white people — on purpose.


[1]Even before he accidently became elected, he did everything ion his power to undermine Barak Obama’s presidency. Remember the “Birthers”? They were an irate group of white men, led by Trump, who claimed Obama was not an American.

[2]See: Anderson, Carol. White Rage: The Unspoken Truth of Our Racial Divide, 2017.

[3]Ibid., 3.

[4]Ibid.

[5]Ibid 6. The curtailment of voting rights has been a policy of Republicans to cut Democratic voting district in half to give Republicans more power, it is not a new phenomenon, but it certainly accelerated after Obama came to office.

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The American Empire and Neo-Colonialim: Both Foreign and Domestic

Empire is materializing before our very eyes. Over the past several decades, as colonial regimes were overthrown and then precipitously after the Soviet barriers to the Capitalist world market finally collapsed, we have witnessed an irresistible and irreversible globalization of economic and cultural exchanges. Along with the global market and global circuits and production has emerged a global order, a new logic and structure of rule — in short, a new form of sovereignty. Empire is the political subject that effectively regulates these global exchanges, the sovereign power that governs the world.

— — Michael Hardt and Antonio Negri

It’s little secret that the US is a global Empire. It functions on the precepts of neo-colonialism loth foreign and domestically. America’s binary colonial governmentality is creating a more stratified world for both citizens and non-citizens. Through proxy financial governance, globalization, and neoliberalism, America’s solution to poverty and quality of life are consumer oriented, but these policies could easily undermine its global hegemony Since the fall of the Soviet Union, it has maintained and extended its hegemony over the world. It maintains its power over underdeveloped countries by forcing free trade liberalism on glob al trade, often using proxy institutions, such as the World Bank and the International Monetary Fund, and the World Trade Organization, The use of proxy institutions makes the US an informal Empire. One of the key tools, used by the IMF, are Structural Adjustment Loans (SAL) and subsequent Structural. Adjustment Programs The (SAP), which come with a crippling terms and conditions. In order for a country to receive loans, Structural Adjust Loans, the country must change its form of government and economy to favor free trade — often at the coast of social programs.

However, unlike its European predecessors, such as the British Empire, the US does not use its imperial reach to benefit the American people as a whole. It protects the so-called “Homeland” from violent attacks by terrorists, but it uses its global capitalist hegemony to benefit a small percentage of its population. A large proportion of those receiving economic aid and security are part a quickly rising rentier class who benefit from economic rent in the form of debt collection. (This class does not invest capital to create jobs, but instead uses Americans consumer habitus and medical needs to enrich themselves). Neoliberalism has not only created greater stratification between the Global North and South, but it has also contributed to domestic stratifications as social programs have been cut and wages have stagnated below inflation. Ronald Reagan dismissed Keynesian demand side economics in favor of Hayekian supply side economics, promising that the money industry leaders saved would trickle down to the bottom echelons of society. Not only did this not occur, but that money was used for foreign investments in underdeveloped countries to create manufacturing jobs. Unfortunately, this money did not help the countries, such as Malaysia because businesses were not taxed and workers were paid sub-par wages. All of this was part of neoliberal free trade imperialism.

The US’s global economy is run by companies that outsource production to the global south and sell their products to Americans whose buying power has been declining since the 1970s. The US’s global informal power, not only stratifies countries around the world, but it is also working to undermine and further stratify its domestic populace. Combined with financial capitalism, practices both globally and domestically, it is only a matter of time before the US public can no longer sustain a consumer economy. Either today’s leading corporations will have to seek markets elsewhere, thereby leaving the US population in dire circumstances, or else the post-industrial service economy will have to start paying its employees higher salaries; salaries compatible with industrial salaries that helped make the US middle class in the Golden Age of American capitalism c.1950–1973.

I.

Informal Empire

“Informal empire describes the spheres of influence which an empire may develop that translate into a degree of influence over a region or country, which is not a formal colony in the empire, as a result of the extension of commercial, strategic or military interests of the empire.”

“The difference between formal and informal empire,” John Gallagher and Ronald Robinson wrote in ‘the Imperialism of Free Trade,’ was not one of fundamental nature but of degree.” The main difference lies in their method and proximity of governance. Formal empires are often known for colonizing a specific area and either extinguishing or forcing native people into the dominant culture, whereas informal empire allows a degree of autonomy and rules through negotiations, trade, finance, technological or other assistance (development, etc.), threats, etc. Although the US has maintained a sense of informal empire, it should not be forgotten that it conquered North America by force annexed places like the Philippines and Hawaii. Its last two wars Afghanistan and Iraq the US army has become an occupying force even though that was not their intention. Sometimes the line between formal and informal empire is paper thin. Today, however, the US hegemony has spread, not by force, but through the covert expansion of capitalism — neoliberalism to be more exact — and the US uses international proxy institutions, such as the World Bank and the IMF to open the world to “free trade imperialism.”

II.

Proxy Rule and Globalization

The Worlds Bank and the IMF were created in 1944 at the Bretton Woods conference and were initially intended to help rebuild Europe after the War, but it wasn’t long until these institutions were used to help non-European nations of the Global South. As the US gained hegemony over international political economic policies, especially after the fall of the Soviet Union they sought to make free trade neoliberalism dominate the economy, especially after the collapse of the society union, this meant that underdeveloped countries had to get on board and open their markets to free trade and their banks to foreign investment. The IMF and World Bank became the means through which western powers were able to infiltrate the economies of the Global South. With the help of these institutions, underderdevelope3d countries are faced with severe poverty if they do not take loans from the IMF or World Bank, but if they do take loans, they are subject to Structural Adjustment Programs and austerity economics e.g. a rock and a hard place. Structural Adjustment Programs give the reins of government of debtor nations to the IMF, which restructures the economy according to the general rules of global trade — known as comparative advantage. The World Trade Organization policies countries to ensure that they follow the dictates of neoliberal free trade. This is an informal, covert means of economic and cultural imperialism, a continuation of practices begun by Europe, primarily, in the nineteenth century, however, today, imperialism has gone underground and become covert.⁠1

Global capitalism is based on the economic theory of comparative advantage. Comparative advantage is based on the relative opportunity cost a nation must forgo in order to trade a certain good. Nations will seek to trade a good or goods with which they have a low opportunity coast (what they give up in order to produce a certain good). For instance, say that for every car the US produces it must give up producing 5 cartons of cigarettes, this is their opportunity cost. Comparative advantage is easier to understand if we approach it from personal less abstract sense. Let us say that a lawyer wants to find a good typist. The lawyer is a good typist, but she makes more money as a lawyer and not as a typist, so she higher a typist with which she has a comparative advantage and can get more work done. Back to the American example. Let’s say that for every car Mexico produces, it has to give up ten cartons of cigarettes. Americas comparative advantage is cars, while Mexico’s is cigarettes. Mexico can make more money by giving up on car production and instead focusing on cigarette production, while America can give up on cigarette production and focus on car production. This, or course is an over simplified version of comparative advantage.

The World Trade Organization (WTO) helps encourages or rather enforces nations to open their borders to trade and to help them understand their place in the array of global markets. Create in 1995, the WTO came on the scene when globalization was booming after the fall of the Soviet Union and the capitalization of the former Soviet bloc. According to its website, the WTO “is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other.” It also serves as judge and juror of trade violations, which often involve tariffs and other protectionary measures. Although the website suggest that the WTO does promote protectionists policies where need be, there is little empirical evidence to support this claim. Most of its work is to keep boarder open. The WTO is one place where America does not exert its authority over the institutions oversight. For instance, in April 2017, Mexico complained to the WTO that America’s embargo on Mexican Tuna violated free trade. America claimed Mexico was not practicing safe tuna fishing, thus harming dolphins and therefore refused to buy Mexican tuna. Mexico brought their charges to the WTO, where the WTO ruled in Mexico’s favor, “allowing it to impose trade sanctions worth $163 million a year against the U.S.”⁠1 The WTO is notorious for its anti-environmental and anti-labor policies in preference of free trade.

Sociologist Walden Bello gives a brief overview of SAPs in “Structural Adjustment Programs: ‘Success’ for Whom?’ Bello claims that Structural Adjustment Loans were originally created to assist Northern “banks that had become over extended in the Third World.” And secondly, “the longer term objective [of SAPs] was to further integrate southern countries into the Northern-dominated world economy.”⁠1 “To accomplish these twin goals, the World Bank and the International Monetary Fund became the linchpin of a strategy that involved providing complaint Third World debtors with billions of dollars in quick-dispersing SAL or ‘standby loans’ that would then be transferred as interest payments to the private banks.”⁠2 In order “to receive SALs, the southern governments had to agree to undergo structural adjustment programs (SAPs).”⁠3 The conditions of the programs were as follows:

1. Removal of restrictions on foreign investments. Local investments cannot be politically favored over foreign investment.

2. Building an export economy, thereby becoming more dependent on the global economy. The basis for this export industry derived from Comparative Advantage, an economic policy that decided which goods a nation should trade for its mutual advantage.

3. Breaking up unions, reducing wages. Roll-back social programs, prevent government spending on social benefits.

4. Cut tariffs.

5. Privative state enterprise.”

6. Deregulation of state safety and environmental protocols.

The general plan of trade for lending institutions and global capital economists was to get underdeveloped nations to become completely reliant on international trade e.g. globalizations. Sovereign self-sufficiency was not an option, in fact progenitures of the SAPs worked hard to prevent this. (ideals of nation-state vs. this ideals). David Korten writes: “through the structural adjust programs, the World Bank and the IMF have pressured countries of the South to open their borders and change the economies from self-sufficiency to export production. Trade agreements through GATT (precursor to the WTO) have reinforced these actions and opened economies in both North and South to increasingly FEWEW IMPORTATION OF GOODS AND MONEY.”[1] What they wanted debtor nations to do was focus all its attention on a specific industry (just which industry depended on the nation, comparative advantage, capital, infrastructure, etc.) that would complement global trade thereby benefiting the debtor country and the world at large.

If a nation agreed to the SAP’s stipulations, foreign investment could help the nation improve and expand whatever industry was chosen to support the economy. These institutions were so insistent that the nation focus on one industry that it ran the risk of becoming a monoculture, where all labor and assists were connected to one particular export commodity. Workers not employed in this industry could lose their jobs and because social assistance programs were cut — as a stipulation of the SAP — workers would fall through the cracks and poverty would increase. Also, if a foreign firm owned the particular industry and brought in labor saving technology, this could also create poverty and social stratification. Unions were considered bad because it made industries less competitive as workers bargained for better wages or working conditions.

The stipulations of SAPs enticed capitalist from the Global North. They could build a factory without satisfying certain building safeguards and pay laborers what they wanted. What is more, is that the profits earned by these foreign capitalists does not go to the nation via taxes, it is not part of the nation’s GDP, it goes to the share h9lders. Any financial benefits a debtor nation receives this specialized industry (whether foreign or domestic) goes to pay off the loan and its interest. The Global North not only receives profit from the industries it sets up outside the US, but it also receives financial rent from the interest payments on loans.

Another negative trade factor concerns the development of industries. Free-trade is the buzzword of today’s global economy. Western nations are some of the strongest advocates of free trade, this is primarily because their industries have matured beyond the point of worry. For instance, neither the US nor England promoted free trade when their industries were fledglings. In other words, they had to protect their markets so that these industries could develop and thrive, then and only then were they ready to compete on a global free trade market. This protection is not afforded to industries in the Global South.

Goldsmith, in “Development as Colonialism,” best sums up the free-trade pitch made by the US before the end of WWII, during the Bretton Woods discussions. US intellectuals and economists decided that the best way to reshape the global economy after WWII was through “economic development… and it was by promoting free trade that development could be maximized. Free trade is seen to involve competition on a ‘level playing field,’ and nothing could seem fairer. However, when the strong confront the weak on a level playing field the result is a foregone conclusion, as it was at Bretton Woods. At the time of that conference, in the twilight of WWII, the US totally dominated the world political-economic scene; the European industrial powers had been ruined by the war, their economies lying in tatters; and Japan had been conquered…”. “A century earlier, it was Britain that was preaching free trade to the rest of the world and for the same reason. At the time, she effectively dominated the world economy…. If free this is what is meant by free trade imperialism did not work, the answer was to take over those countries where goods could be sold at a profit without having to worry about competition.” This is what is meant by free trade imperialism. What Goldsmith is getting at is that development and free trade are tools of colonialism and that the US’s glob al free trade informal empire continues to practice colonialism, despite pandering to the word ‘free’ om free trade.[2]

III.

The Chilean Phenomenon and the advent of neoliberalism

The Chilean military dictator, backed by the U.S. seized control of the country on September 11, 1973. Former president Salvador Allende had been killed in an air strike on the presidential palace the day before Pinochet’s military coup took command. Andres Solimanos argues that “Chile became a testing laboratory for free market economic policies that included the privatization of state owned enterprises, the deregulation of markets, opening to foreign trade capital inflows…”. Chile’s neoliberalism was more radical than Thatcher or Regan, but they were of the same; philosophy. Foreign Aid and SAPs took notes from the Chilean phenomenon. As can be seen above, policies of the SAP, reflect some of the core features of neoliberalism. The “Chicago Boys” traveled to Chile to help Pinochet implement neoliberal friend policies. Milton Friedman had a significant impact on Pinochet, who made Friedman’s work a reality — at the cost of many lives (Global Capitalism in Disarray).

Section II.

Debt and Domestic Colonialism

America’s neo-colonial tactics of governmentality extend as far inward as they do outwards.Americans’ ability to consume is an aspect of capitalism lost in the rhetoric of supply-side — or trickle-down — economics. The neglect of demand side economics, or Keynesianism, may prove to be the new specter haunting capitalism. The undoing of global neoliberal capitalism does not come from an external threat, but instead comes from within capitalism itself — the momentum is building and implosion appears emanate. Supply-side economic theories and policies were not designed for a global economy. The trickle-down formula was developed to solve a market anomaly called stagflation and it has haunted American capitalism ever since. Designed to induce incentives for capital reinvestment in companies, so that they would provide more jobs, supply-side economics not only did not work domestically, but its strategies helped move capital overseas, thereby rendering private incomes inadequate. Today’s global “sharing” economy in addition to business strategies such as planned obsolescence has taped private incomes and threaten to suck the well dry.

In the 1970s, the U.S. faced high unemployment, inflation, and a stagnate economy — three factors that were not supposed to occur simultaneously, this anomaly became known as stagflation. According to Brian Snowdon and Howard R. Vane, stagflation was at its height from 1973 to 1983. The causes of stagflation are the subject of debate.[1]Snowdon and Vane list several causes under debate including, but not limited to attempts by the government to scale-down unemployment, rising gas prices, and other fiscal blunders by the government. According to economist Paul Krugman, stagflation is a myth, which serves as propaganda for conservative economic policies e.g. trickle-down economics. Krugman is right in arguing that conservative economists use stagflation as a scare tactic, but he does not mention how supply-side economics has become an American mantra and when it is mixed with neoliberalism (from both Democrats and Republicans) it has dire consequences.

From the Great Depression to the 1970s, the U.S. economy was governed by Keynesian, or demand-side, economic policies. Between 1950 and 1973 is also known as the “gold age of capitalism,” because unemployment was low and incomes high.[2]Under Keynesianism, the federal government created jobs for those who could not find work during the Depression. Both strategies were designed to expand and maintain capitalism by creating incentives to either increase demand, thereby positively affecting supply or vice versa — creating jobs by offering incentives for capitalist investment.[3]Demand-side economics, also known as Keynesianism, is attributed to saving America (U.S.) from the Depression. For instance, President Roosevelt’s federal Work Projects Administration (WPA) provided jobs for unemployed laborers. Finances for the WPA acted as capital to provide new jobs. Workers spent this money, thereby putting it into circulation, which helped revitalize the economy. The general idea behind demand-side economics is that if people are given money, they will spend it. As business owners make more money, they will use it as capital and reinvest it, thereby creating new jobs. Some scholars argue that Keynesianism helped the U.S. achieve its status as a financial superpower.

But in the 1970s, the U.S. faced high unemployment, inflation, and a stagnate economy — three factors that were not supposed to occur simultaneously, this anomaly became known as stagflation. According to Brian Snowdon and Howard R. Vane, stagflation was at its height from 1973 to 1983. The causes of stagflation are the subject of debate. Snowdon and Vane list several causes under debate including, but not limited to attempts by the government to scale-down unemployment, rising gas prices, and other fiscal blunders by the government. According to economist Paul Krugman, stagflation is a myth, which serves as propaganda for conservative economic policies e.g. trickle-down economics. Krugman is right in arguing that conservative economists use stagflation as a scare tactic, but he does not mention how supply-side economics has become an American mantra and when it is mixed with neoliberalism (from both Democrats and Republicans) it has dire consequences.

Supply-side economics is similar, but it works from the other direction. Policies shift focus from the general public to capitalists and seek to stimulate the economy by providing capitalist with incentives, through tax breaks and other means, to investment money in businesses with the hopes that investments will go to areas that create jobs. Both strategies were designed to expand and maintain capitalism by creating incentives to either increase demand, thereby positively affecting supply or vice versa — creating jobs by offering incentives for capitalist investment. According to a report by the Brookings Institute (1985), supply-side economics “is essentially a capital formation strategy: new capital will create productive capacity, jobs, and wealth in an accelerating and self-sustaining cycle.”[4]Economist Martin Feldstein explains the connection between neoliberalism and supply-side economics by claiming that trickle-down theory “was a return to basic ideas about creating capacity and removing government impediments to individual initiative” common to Adam Smith’s idea of a free market.

According to Emmanuel Saez and Gabriel Zucman, in “The Explosion in U.S. Wealth Inequality Has Been Fueled by Stagnant Wages,, Increasing Debt, and a Collapse in Asset Value for the Middle Classes,” argue that since the late 1970s disparities in incomes between the 1 percent and average American households increased from “seven to twenty-two percent.”[5]Although most scholars agree that economic stratification increased significantly in the 1970s, scholars have yet formed consensus on what caused the disparities. A recent paper by David Jacobs and Jonathan C. Dirlam, however, provides ample evidence indicating that the causes of stratification are best explained by “national-level neoliberal economic determinants” i.e. supply-side economics.[6]For instance, they cite a paper by Walter Korpi who connects political decisions with economic outcomes in relation to unionization. “Neoliberal forces aligned with business will yield strong explanations for changes in income inequality.”[7]In other words, supply-side economics holds a positive causal relation with decreases in labors’ political and economic agency.

In the 1990s, under the presidency of Bill Clinton, U.S. businesses used the World Trade Organization and the North American Free Trade Association to migrate transnationally in search of cost efficient capital, such as labor. Although businesses moved production overseas or throughout the Americas, their target audience were American (U.S.) consumers. Prior to these remanufacturing jobs in the U.S. provided adequate income for most workers, but when these jobs moved overseas, America lost a majority of its high paying jobs. Today, the U.S. is a post-industrial service-oriented economy. And as we saw above, spending power of U.S. households is declining, while profits of a wealthy few are increasing. If the U.S. continues on this path, consumer demand will decline from the sheer weight of expenses, thereby setting-off a chain reaction to businesses. Because the tax burden falls on the middle class — not the corporate elite — the proverbial safety nets of unemployment and other assistance programs (almost nonexistent already) will be underfunded, thereby exacerbating the problem.


[1]Korten, David C. “The Failure of Bretton Woods” Goldsmith, Edward, and Jerry Mander.The Case against the Global Economy: And for a Turn towards Localization. Earthscan, 2001.

[2] , Goldsmith, Edward, “Development as Colonialism “Goldsmith, Edward, and Jerry Mander. The Case against the Global Economy: And for a Turn towards Localization. Earthscan, 2001.

Calvin Schermerhorn on Bank Bonds, Slavery, and Financial Capitalism in the early 19th Century

In February 1843, entrepreneur Hughes Lavergne to a ferry from New Orleans across the Mississippi River to Algiers point, where he sat in his family’s cemetery and wrote a suicide letter before ending “his financial career by stabbing himself in the heart.”  A state representative and banker by trade, Lavergne helped revolutionize domestic and international banking by “leveraging plantations and bondspersons (slaves)” so that slaveholders could raise capital by allowing them to “access… bank credit that would help [them] buy thousands of enslaved people, hundreds of cotton and sugar plantations, and improvements such as refineries.”

Economist Michael Hudson, among other scholars, view finance capitalism as a threat to democracy and the overall economy itself.  Finance capitalism, according to Hudson, leads to more economic crisis than product oriented capitalism.  He also argues that the financial trend began in the 1970s along with stagflation and supply side economics.  Although finance capitalism might have become more prevalent since the 1970s, it was around a lot longer.  In the early 19th century, for instance, Southern Americans mortgaged their plantations and slaves to procure more land and slaves, thereby expanding slavery in the South West (Louisiana, Alabama, etc.).  The great domestic migration of African slaves from the East coast to the South West, which Edward Baptist discusses in The Half Has Never Been Told, was funded by finance capitalism and the mortgaging of property and slaves.  Just like in the 2008 housing bubble, this early form of finance capitalism also lead to a bubble that also burst, but not before it revolutionized American and international banking.  The story of Hughes Lavergne, as told by (), reveals “the integration of international financial sectors at the heart of ear United States economic development.”

Schermerhorn’s “Bank Bonds and Bondspersons” reveals several important qualities of slavery in relation to the development of America in the early nineteenth century (1920s-1930s).  For instance, he reveals that state’s role in financing and expanding slavery by securing financial institutions.  He also shows the dual status slaves held as both laborers and property, whereby owners could mortgage.  Lavergne’s created a record of mortgages in the state of Louisiana, thereby expanding the state’s overview of its internal financial dynamics.  “Bank Bonds and Bondspersons” also provides insight into early finance capitalism and subsequent bubbles that continue today.

Joshua Rothman’s Flush Times and Fever Dreams: a Story of Capitalism and Slavery in the Age of Jackson (2012), provides a provocative background to the story of Hughes Lavergne and  Consolidated Association, which expands our understanding of these ‘flush times’ in America.  For instance, Rothman writes that “in the early 1830s” America thrived with “technological advances, infrastructural improvements” and expansion into Choctaw and Chickasaw land, leading to the trail of tears.  This opened land that would be settled primarily by cotton producers as the “southwestern frontier (Georgia, Alabama, Mississippi, and Louisiana) possessed some of the most fertile soil on the continent for growing cotton.” British demand for textiles was reaching its height as its industrial revolution turned raw goods into textiles.  “Cotton crops brought to market by southwestern growers swelled capital accumulation that accelerated national economic development, furthered the rising position of the U.S. as a global power and cemented cotton’s place as the most significant commodity on earth.”

Along with these so-called ‘advances,’ and the subject of Schermerhorn’s “Bank Bonds and Bondspersons,” came “increased money supply and government policies that enabled rapidly proliferating state and local banks to unleash a deluge of paper notes and liberal loans.”  These were ‘flush times’ for white Americans.  For contemporaries, it seemed that there was limitless pools of money and access to credit with few questions asked.”  “Everyman had a scheme for realizing a fast fortune,” and Lavergne helped make the requisite institutions to realize these dreams a reality through his bank Consolidated Association.

Lavergne worked for Consolidated Association, a new bank, and he sought to get the backing of Thomas Baring in England, a credible capitalists with plenty of social capital and trust.  If Lavergne could get Baring’s backing, he could help inject finances into Louisiana’s agriculture and agricultural related enterprisers, such as refineries.  At the time—c.mid 1820s—Lavergne was interested in increasing sugar production, although finances would also go on to help the cotton industry.  He worked as a notary on Charters St. in New Orleans, which gave him insight into the demand for credit.  Notaries recorded transactions of property including that of slaves and other property.  Schermerhorn states, “they [notaries] kept a large storehouse of information as they recorded deeds, sales, mortgages, and other transactions.”  

Banks generally lent to commercial entities—not agricultural endeavors for obvious reasons.  Lavergne, however, needed to create security or at least the appearance of security to induce Baring to invest.  His ideas revolutionized the transparency of mortgages to the state.  For instance, he convinced Louisiana State legislatures to record the mortgages held in the state, thereby providing a proverbial catalog of collateral to investors, which offered them security and offered creditors with financial opportunities.  He most likely got the idea while working as a notary—noted above—and he bragged to Baring “‘that this was the first time in Louisiana that title to property were thoroughly investigated,’ thanks to Consolidated Association.”

Before Lavergne set off for England to finalize the deal with Baring, Baring had been to New Orleans and he liked what he saw, but he wanted more security than Consolidated Association had originally offered.  Therefore, Consolidated Association approached the state to further secure the deal.  Schermerhorn writes that “the state of Louisiana saved the bank (Consolidated Association) and became its principle backer… Lavergne and his allies persuaded the legislature to revise the bank’s charter so that the state would meet its bond obligations should Consolidated Association go bankrupt.”  “The state issued 2.5 million in state bonds payable by the Consolidated Association at 5% interest.”  The state’s decision was part of a wider federal program to protect domestic industries against foreign companies, such as the importation of sugar from the West Indies and Cuba.  West Indies sugar production was unstable because Britain was considering outlawing slavery, which placed the West Indies in a precarious position for investors.  In fact, the American financial and banking revolution at the time was predicated on slavery because most other countries were moving away from slave based production.  

When Lavergne arrived in England, Baring Brothers drove a hard bargain and made stipulations that benefited the Barings.  The Barings wanted the interest paid in sterling rather than dollars and the Barings also wanted to buy the bonds at a 5% discount.  Lavergne agreed, because it gave Consolidated Association prestige.  “The linchpin of a new financial scheme was in place and Baring Brothers’ bills of exchange would fund slavery’s expansion in Louisiana…Lavergne and Consolidated Association had, with the backing of Louisiana, turned lands and leaves into paper—paper that was readily convertible into gold.”

Under the Jackson administration business thrived and grew.  At this time the cotton industry was booming and the domestic slave diaspora from the East coast to the SouthWest (New Orleans) was booming.  “Banks lent to cotton factors as well as to sugar interests, and the rising tide lifted their vessels and demands for banking facilities.”  Barings interests in New Orleans commerce grew and with it a plethora of banking schemas opened throughout the U.S.

Mortgages multiplied by the dozens and property values increased.  Same Watts, a slave on the east coast tidewater.  He like so many other slaves at the time was shipped from the East coast to the South as cotton boomed.  Watts was a mortgagee who produced great amounts of credit and investment for his owner Rice C. Ballard.  The domestic slave trade of which Watts was a part was founded “on a sea of credit and a federally protected slave market.”  Increasing demand “for commodities grown chiefly by enslaved Americans were helping fuel domestic demand for slaves.”  “In the 1830s the slave trade surged nearly 84% over the previous decade.”  Watt’s was bought for twice what Ballard purchased him for.  He found himself at work in a sugar refinery, where he “was at the center of a web of finance that gave competitive advantages to Louisiana sugar producers.  On an international level, transactions. Centering on Sam Watts involved British merchant bankers and European investors buying state securities…”. Watt’s body produced credit and financial income outside of what he produced physically.  This is the irony and crux of slavery and American capitalism.  African bodies were mortgaged to purchase more land and more slaves.  

But the bubble began to rub apart at its seems.  From 1835 to around 1837, credit expanded quicker than actual “economic capacity” i.e. speculation got ahead of itself.  The Baring Brothers lost confidence.  “The sharp downturn in cotton and other commodity prices affected slave and land prices as well as merchants and everyone else up the supply chain.”  Banks had not diversified nor had they created means to build reputations that people could trust.   There was a no federal mandate, not FDIC, and states were generally left to their own devices, which faltered with commodity prices.  The 1840s spelled hard times for capitalist—North, South, and across the Atlantic.  

“As debtors sold out and creditors seized property, financial transactions converging on enslaved people like Same Watts assumed tragic proportions.  Desperate slaveholders continued to mortgage slaves./. Creditors bore the financial risk, but enslaved people paid the real costs of bad debt with shattered families and shortened lives.”

Mississippi banks failed and did not “honor its commitments,” some debtors fled to Texas.  The Democratic Party went on an anti-bank tirade and undermined banks across the U.S.  This bad repair with foreign banks was not forgotten when the South succeeded from the North and sought foreign investment.  Britain and France did not forget the unsound schemes of the South.

Louisiana forced Consolidated Associates to close.  Lavergne could not cope.  He traveled across the Mississippi River to Algiers where he plunged a sword through his chest.  His obituary read:  “a gentleman of great amenity and elegance of manners, of distinguished connections and in addition to the advantages of his elevate social position, he possessed the unqualified confidence and esteem of our business community.”

Immigration Part 1: Deterent?!

Asked whether separating children from their parents is a deterrent for illegal immigration, Jeff Sessions commented: Yes, hopefully people will get the message and come through the border at the port of entry and not break across the border unlawfully.” He added: “If you cross this border unlawfully, then we will prosecute you. It’s that simple. … If you are smuggling a child, then we will prosecute you and that child will be separated from you as required by law. If you don’t like that, then don’t smuggle children over our border.” Trump stated:”The United States will not be a migrant camp and it will not be a refugee holding facility. … Not on my watch.”

Since May, “2,342 children have been separated from their parents after crossing the Southern U.S. border,” reports NPR journalists Camila Domonoske and Richard Gonzales. Separating children from their parents is part of Trump’s new ‘get tough’ on illegal immigration policy. Trump’s predecessor, President Obama, was not much better. He deported more illegal immigrants than previous presidents. Although Obama was one of the toughest Presidents on immigration, he did not go as far as Trump. Do to public outrage, form Democrats, Liberals, and everyone in between, Trump decided to resend this aspect of his immigration policy.

A bit of background: According to Domonoske and Gonzales, separating children form their parents was actually part of the new “‘zero-tolerance policy’ for illegal border crossings,” ordered by U.S. Attorney Jeff Sessions. Their plan was to prosecute anyone caught illegally crossing the border. So, in effect, the parents are arrested and the children become wards of the state just like if someone was arrested here in the U.S..

Homeland Security Kirstjen Nielsen: Under the “zero tolerance” policy, when families cross the border illegally, “Operationally, what that means is we will have to separate your family. That’s no different than what we do every day in every part of the United States when an adult of a family commits a crime.”

As noted from above, Sessions clearly sees the separation of children from their parents as a deterrent from illegally entering the U.S., despite evidence that harsh punishments do not effectively deter crimes. Harsher punishment for crimes is more of a political tool used by politicians to show the public that they are actively trying to reduce crime, but in the case of illegal immigration this tactic is sickly inhumane. It is sickly inhumane because it is political.

Bryan Lufkin’s article, “The Myth Behind Long Prison Sentences,” shows the cultural dynamics of punishment, rehabilitation, and why the myth of long prison sentences prevails in places like the U.S.. Corey Adwar find similar evidence in “Here’s Evidence That Insanely Long Prison Terms Are A Bad Way To Deter Crime,” for the Business Insider.

“What We Know: Family Separation And ‘Zero Tolerance’ At The Border.” NPR.org. Accessed June 21, 2018. https://www.npr.org/2018/06/19/621065383/what-we-know-family-separation-and-zero-tolerance-at-the-border.

Lufkin, Bryan. “The Myth behind Long Prison Sentences.” Accessed June 21, 2018. http://www.bbc.com/future/story/20180514-do-long-prison-sentences-deter-crime.

Adwar, Corey. “Here’s Evidence That Insanely Long Prison Terms Are A Bad Way To Deter Crime.” Business Insider. Accessed June 21, 2018. http://www.businessinsider.com/report-says-long-sentences-dont-deter-crime-2014-5.

Colonialism Comes Home

Image Source: shaunynews.files.wordpress.com/2014/08/colonialism.jpg

The British Empire ascended to global dominance by colonizing territories; importing raw materials; manufacturing goods domestically; and reselling these goods internationally. A similar process is underway, but the nation, America, plays a lesser role than its British predecessor. Today, Americans are economically colonizing themselves.[1]

Neoliberal supply side economics and globalization have encouraged companies to export industrial capital to the Global South (Asia, South America, India, Africa, etc.). For instance, companies, such as Nike, acquire raw materials and produce goods overseas. America is the primary consumer market and corporations, like Nike, target American audiences. As companies expand, Americans loose the impetus for self-sufficiency and are thereby forced to consume more and more foreign products. British colonists were not allowed to produce their own goods, instead they were forced to purchase goods manufactured in Britain.

World Regional Geography: People, Places and Globalization, Publisher: Saylor Academy Year Published: 2012 (CC, Creative Commons)

The main difference in these two models is the role of the nation. Britain saw itself as a commonwealth. Contemporaries thought in terms of nations — not corporations. As a commonwealth, they believed that the entire country should have been enriched through trade Today, however, corporations have attained transnational sovereignty unlike their predecessors. They are not bound by national sentiment.

World Regional Geography: People, Places and Globalization, Publisher: Saylor Academy Year Published: 2012 (CC, Creative Commons)

Corporate dominance is not new. The English state, for instance, ruled through the use of various corporate entities. Not all corporations were commercial companies. In the 17th and 18th centuries, commercial companies expanded, maintained, and thus created the British Empire, but unlike their contemporary American counterparts, British companies remained loyal to the nation. Today, American corporations are loyal to their shareholders.

In India, Britain socialized the populace through various institutions and taught them that Britain, and Europe, was superior. Americans already thing America is superior, but advertising socializes and re-socializes us not only to become consumers, but also to treat one another as consumers. Advertising creates demand; it shapes and molds thought; it creates ‘us’ and ‘them.’ Colonization comes home.

[1] The historical content of this article is broad and brief, many details are left out for the sake of expediency.

[2] World Regional Geography: People, Places and Globalization, Publisher: Saylor Academy Year Published: 2012 (CC, Creative Commons)

Democracy and Capitalism in the Shadow of Reason

The U.S. Constitution was the result of the European Enlightenment. Capitalism, as understood by Smith, also resulted from the Enlightenment. At the center of political and economic liberalism lies Reason, without it, neither capitalism nor democracy will work — at least not according to how it was supposed to work. Reason, as understood by Enlightenment thinkers is gone, but its institutions remain. The American Empire is the result of political and economic practices that have outlived their guiding principal — Reason.

According to philosopher Jürgen Habermas, writing several decades ago, we are still participating in the Enlightenment Project e.g. modernity, which began in the eighteenth century by thinkers who wanted to “to develop objective science, universal morality and law, and autonomous art according to their inner logic.” Working together, Enlightenment thinkers would use science and reason to “accumulate knowledge…for the pursuit of human emancipation and the enrichment of daily life.” Scientific thought and reason would allow people to be free from scarcity, free from dogmas, free from tyranny, superstition, and other factors that impinge human liberation. Peter Hamilton, writing in the Formations of Modernity (1992) defines Reason as “a faculty which allows the person to make informed decisions between good/ bad or right/ wrong.”

With the use of Reason, there is only one outcome or one True answer to a problem. And the right answer will always prove itself — someway, somehow. This is why democracy and free market capitalism rely on Reason, because the True will reveal itself and silence any dissent, because dissent would be based on false reasoning. Alexander Hamilton, a federalist, like his peers distrusted democracy because they knew that the public often believed in false news, rumors, hysteria, etc. If the public were allowed to vote, which they were not, it could lead to utter ruin. Therefore, Hamilton suggested that the founders create and Electoral College to oversee democracy in case the public gets it wrong. As we know in the U.S. electors’ votes trump the popular vote.

Electors were to be men of education, men with the capability of using Reason instead of giving into emotions or hysteria. It was not the job of electors to represent the populace; it was their job to be white, male, property owners, who were smarter than the public.

To use Reason appropriately, a person needs information — accurate information — without which a person would be unable to make an informed decision guided by the light of Reason. Imagine the quality of the previous presidential debates. Political figures work hard NOT to answer questions. Moderators ask questions that cannot be answered in a fifteen second window of time. And if they do — we probably shouldn’t vote for them.

The role of accurate information is also important in capitalism. In the same way that a person makes the Right decision for president given the facts at their disposal, they do likewise when purchasing goods. According to the self-interest modal, the individual know what is best for her. People, using Reason, will buy only what they need or want. Producers will note the people’s demand, shift their production to meet demand, compete with each other, and produce a superior product that people want — all the time Reason is the driving force behind the decisions consumers and producers make.

But imagine a world, where producers create demand. Imagine a world where Reason doesn’t exist, where the ‘best’ possible choice of products is determined by an aura of hyper-reality. This is capitalism today. We could even go so far as to say that producers have hegemony over demand. They create demand and fill it the individual is a medium through which producers create more capital ad infinitum.