In Human Action, Ludwig von Mises highlights the importance of human cooperation as a prerequisite for the division of labor and free exchange. Without this, humanity remains mired in poverty:
The “state of nature” that the reformers and utopians depicted as paradisiac was in fact a state of extreme poverty and distress. “Poverty,” says Bentham, “is not the work of the laws, it is the primitive condition of the human race.” Even those at the base of the social pyramid are much better off than they would have been in the absence of social cooperation. They too are benefited by the operation of the market economy and participate in the advantages of civilized society.
Mises emphasizes that free exchange does not merely benefit specific groups but benefits everyone in society. He argues that “everybody is interested in the preservation of the social division of labor, the system that multiplies the productivity of human efforts.” He calls this “the theorem of the harmony of the rightly understood interests of all members of the market society,” because all members of society benefit from free market exchange. He debunks the theory propagated by Marxists that capitalism is about “class affiliation” and their claim that economics is about promoting the “class interests” of the bourgeoisie at the expense of the proletariat. In what are often described as “Neo-Marxist” theories, class interests are now seen by many people as analogous to race interests, so they depict economics as an attempt to promote the interests of one race at the expense of another. They claim that “oppressor” races represent a threat to the economic interests of “oppressed” races. Failing to understand the social and economic benefits of free exchange, they cling to the false notion that economic development is a zero-sum game, in which anyone who gains can only do so at the expense of others who must lose—the fallacy that some are rich because others are poor.
This is one of the fundamental errors made by race-hustlers who claim that black people are poor because white people are rich. They view market exchange as just another platform for racial conflict, in which different races compete against each other for a fixed amount of wealth. They promote racial hostility and treat peaceful cooperation with disdain. They wage all types of wars—real and metaphorical—such as the “war on hate” and the “war on racism,” which assign blame for social and economic problems along racial lines. For example, an article published by the Economic Policy Institute claims that the economic model of the American South is deliberately racist and aims “to extract the labor of black and brown Southerners as cheaply as possible.”
Although slavery in the United States was abolished in 1865, these economists claim that “the Southern economic development model ensures that businesses continue to have access to cheap Black labor even after the abolition of slavery.” They are champions of the twisted Orwellian notion that “war is peace” as they attempt, in vain, to bring about economic progress, not through peaceful cooperation and exchange, but instead through fomenting racial conflict. Yet this racial rhetoric—far from inspiring economic progress—leads only to persistent hostility and resentment, which, in turn, yields more poverty and destitution.
Punished with Poverty
In their book, Punished with Poverty, Ronald and Donald Kennedy reject such insistence on viewing the economy of the South through the prism of race. The Kennedys point out that after the war of 1861-1865, policies of subjugation and poverty were deliberately pursued to the detriment of the entire South. They argue that this was harmful to all races—and the poorest suffered the most. The view was widespread at the time that subjecting the South to poverty was no more than a people who lost a war should expect. The Kennedys illustrate this with the example of Horace Greeley, who in May 1861 said that:
When the rebellious traitors are overwhelmed in the field, and scattered like leaves before an angry wind, it must not be to return to peaceful and contented homes. They must find poverty at their firesides, and see privation in the anxious eyes of mothers and the rags of children.
While Greeley’s views, like those of many others, may have evolved as the war unfolded, the view he expressed in 1861 was once again featured during the Reconstruction era, in an article published in 1872 by The New York Times. It is clear that the economic policy of Reconstruction was not designed to rebuild the South, but to “punish it with poverty” as the Kennedys put it. In a similar vein, Tom DiLorenzo observes that:
The main purpose (and effect) of the 1865–1877 “Reconstruction” policies was to centralize and consolidate state power and to establish Republican Party political hegemony. It was not to “heal the nation’s wounds” or economically revitalize the South. Indeed, Reconstruction created new wounds and economically destroyed the South. Its purpose was to continue the economic plundering of the Southern states for as long as possible, and to establish a national Republican Party political monopoly.
Therefore, the Kennedys argue that the economic interests of the South during Reconstruction should not be understood purely by reference to race, but instead ought to be seen as the common interest of the South. They point out that, “The Northern desire to put Southern children in ‘rags’ was not directed just at white Southerners but it was directed at all Southerners, both white and black.” Contemporary economic challenges, then, cannot be understood as pertaining to specific races. Thus, the Kennedys argue that:
…the South’s impoverishment will not be corrected by improving one part (black or white) of the South’s population while leaving the other in poverty… The propagandists for the Federal Empire have done a masterful job in convincing black Southerners that if the white South gains then the black South will lose. This false Yankee narrative began during the War and Reconstruction and continues today.
This narrative of the Radical Republicans, which claimed that white Southerners were against economic progress for blacks, was countered by both black and white speakers at an event organized by a black group, the Pole-Bearers’ Association, in July 1875. A speech given at this event by Gideon Pillow emphasized that “the two races have a common interest in each other and in each others’ welfare…the interests of the white and colored races in the south are inseparably intermingled, and are dependent on each other. What advances the interests of the one advances the interest of the other.” Pillow was echoing the words of Nathan Bedford Forrest who in his address at this event said: “I have an opportunity of saying what I have always felt—that I am your friend, for my interests are your interests, and your interests are my interests. We were born on the same soil, breathe the same air, and live on the same land. Why, then, can we not live as brothers?”
