American Cotton and American Slavery: A Deleted Scene from My "Slouching Towards Utopia?: The Economic History of the Twentieth Century" Ms.
The first half of the nineteenth century prefigured what was going to come over the 1870-1914 period with the creation of the first true global economy.
The first half of the nineteenth century saw the creation of a much more limited form of trans-oceanic economic integration--the growth to maturity of the trans-Atlantic trade in the first industrial staple: cotton. The ménage a trois between the United States’s African-American slaves, the rich river valley cotton-growing soils of the American south, and Eli Whitney’s cotton gin together produced a cheap material input to an important manufacturing industry. This time the industry was dynamic enough and the raw material important and cheap enough that the presence of the Americas did change the shape of the leading European economy, that of Britain.
The availability of cheap American slave-grown cotton, as opposed to more expensive and more distant Egyptian and Indian varieties, may have saved Britain as much as four percent of national product in the reduced prices it had to pay for raw material inputs in peak years in the first half of the nineteenth century, and saved perhaps two percent of national product in reduced foreign materials prices in average years.
If the pattern of consumption had been maintained in the absence of slavery in the U.S. south, then this reduction in real national product would have come entirely out of investment–and would have reduced the pace of growth of the pre-Civil War British economy by perhaps 0.3% per year (cumulating to perhaps 15% over fifty years). If the cut had come proportionately out of investment and consumption, the reduction in growth would have been only 1/4 as large (cumulating to perhaps 4% over fifty years).
In an era in which British standards of living and levels of productivity are grew at roughly 1/2 a percent per year, the availability of slavery in the U.S. cotton south could have been responsible for between 15 and 60 percent of British economic growth in output per capita and per worker before the midpoint of the nineteenth century.
Yet cotton was a uniquely important good. And British imports of cotton were a uniquely strategic pressure point to apply to a pre- or an early-industrial economy. No other commodity, or set of commodities, had the potential to affect the destiny of any European economy in the years before the late nineteenth century. Trade was simply too small relative to domestic production for it to have been the prime mover or the balance wheel of any of these economies.