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The Revolutionary Cotton Gin By Eli Whitney

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Overspecialization occurs when an economic actor is so excessively-concentrated to a single function that when change arises, it is unable to adapt. The Southern United States experienced, firsthand, the destruction that results from such change. But how could the entire southern half of the United States find themselves trapped in overspecialization? The rising demand of cotton attracted Southern capitalists. African slaves were the laborers of the cotton fields, thus, the Southern capitalists increased their investment in the trading of slaves. In the 1860’s the African slave trade ended, bringing to a close three-and-a-half centuries of forced migration. The once so profitable market had been completely removed from the South’s economy which would expose their oversight in slave-agriculture specialization. Therefore, the Cotton Boom of the mid-19th century enhanced the highly profitable slave-trade market which inevitably weakened the South in the long run due to overspecialization and the displacement of physical capital.
In 1793, Eli Whitney created the revolutionary Cotton Gin which replaced human involvement in the process of separating cotton fibers from their seeds. His invention not only expedited the development of cotton but also resulted in an increase in textile farming in New England and Britain. Cotton production was thus increasing by an average of 7 percent annually from 1800 to 1860. Furthermore, the demand for cotton was rising rapidly and “the soils and climate of the south, especially the new southwest, gave it a comparative advantage in supplying the massive and growing demand for raw cotton”.
With the South’s comparative advantage in the development of raw cotton, it experienced a geographic relocation...

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...ovements of cotton textiles to North and South Carolina. However, “the southern effort to industrialize progressed slowly”.
Overall, the South’s mistake was the decision to overspecialize in slave-agriculture which crowded out other investment opportunities and displaced physical capital. Moreover, the capitalists of the South saw a profitable investment in slaves, thus with the rise of cotton demand their investment in slavery intensified. It is difficult to fault the Southerner’s for their decision in overspecializing. The profitability of cotton farming was increasing at an equivalent rate of slave profitability. Furthermore, with the guaranteed return of investment that was estimated to be equal or above any alternatives, any other decision of investment would seem irrational. However, their decisions eventually weakened the entire economy after the Civil War.
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