A while back I wrote
an analysis on the future of slavery in a victorious CSA. This time, I'm going to write my thoughts on the future of the CSA as an independent polity.
Some interesting points, though you overstate some of them and the Confederacy was not an amorphous gray mass.
Let’s start with the Confederate economy. While cotton was the largest share of the economy, it was only the majority in the planter dominated states of South Carolina, Mississippi, and Alabama. The rest of the Confederate states had more diversified agriculture. Some, such as Texas and Florida, derived a significant part of their economy from livestock. While the Confederacy lagged badly on industry, Virginia and Louisiana had a per capita manufacturing comparable to most Union states.
You’re quite correct that the Confederacy had almost no hard currency, even a short war will require the Confederate government financing itself on inflation and public debt. Slaves had a fairly high liquidity, but in the short run the Confederate economy will go through hard times. After the war, Confederate slave prices will probably drop as many Union slaveholders sell their slave south to avoid the risk of emancipation.
Two other factors will lead to long term Confederate economic difficulties. Immigrants seldom moved to slaveholding states – several Union states had more immigrants than the entire Confederacy. In addition to capital shortages, the Confederacy would lack consumers and have a shortage of workers. Another problem is that cotton and tobacco, two of the most common southern crops, were hard on the soil. Soil depletion will undermine Confederate agricultural productivity.
The Deep South probably would end up debt ridden with a lack of native industry and dependant on exports, The Trans-Mississippi and the Border States have a chance of avoiding the Third World Trap, but their best chance is if they separate from the Confederacy.
Would the Confederacy be imperialistic? The American south was before, during, and after the Civil War. Independence will not reduce southern support for Manifest Destiny and the Knights of the Golden Circle. I don’t know if the slaveholding economic system would collapse if it could not expand, but Confederate leadership definitely believed so. Soil exhaustion would also lead to economic pressure for Confederate expansion.
Slavery will not breed itself out of existence. Slave and free populations were growing at nearly the same rate in the American South. The Deep South had less slaves than they needed and were importing heavily from Border States. This could indirectly lead to the end of slavery in Confederate Border States. In addition to their black populations decreasing, the Border States used large numbers of slaves in industry and had found slave industrial workers performed significantly better if given enough of a wage they could eventually free themselves and their families.
As you note, Confederate expansion is problematic. The Confederacy of OTL failed abjectly in every attempt to acquire Union territories and slaveholding states or persuade Mexican states to join them. Caribbean expansion will require a navy, which is expensive. Expansion into Mexico would be against greater odds than the US faced in the Mexican-American War.
Short term, the Confederacy will be dependant on foreign capital, but it is not certain whether there would be a dominant foreign investor, or if that dominant investor would be the Union, Britain, or France. The Confederacy clearly considered all of the US slaveholding states, a route to the Pacific, and the major mineral producing parts of the US territories to be rightfully theirs, so short term significant tensions would remain between the Union and the Confederacy.
A war between Britain or France and the Confederacy is quite possible, but the most likely reason would be Confederate expansionism. They will not go to war with the Confederacy to end slavery. Slavery still could trigger an Anglo-Confederate War, but it would be the Confederacy declaring war in response to British anti-slavery patrols. Germany might cooperate with the Confederacy to seize coaling bases in the Caribbean, but that would not be a permanent alliance.
Nobody is going to embargo the Confederacy over slavery in the time frame you envision and the embargo would fail, since it would not be universal. Slavery will not go away if the price collapses, it will expand the number of Confederates who own slaves. There were also social reasons the majority of white southerners favored slavery and these will not go away even during an economic collapse.
There was a lot more to southern society than rich planters, poor whites, and slaves. The governments of Georgia, Louisiana, North Carolina, Tennessee, and Virginia were dominated by smallholders who often had significantly different interests than the planters. Those states favored industry and had relatively diverse economies.
I expect poor white Confederates try to emigrate to the Union in bad economic times and free blacks to attempt it regardless of economic conditions. That doesn’t mean “graybacks” from south of the border will be welcomed by the Union.
The Confederate economy could fold on itself in the first decade or if a Depression hits at the same time as the boll weevil, but otherwise the Confederate economy would be stable, if nothing spectacular. Embargos over continued Confederate use of slaves would not occur any sooner than OTL’s opposition to apartheid and have no chance of bringing down the embargoed economy.
The Confederacy's great weakness was political, not economic. It was founded with the idea that any sate could leave at any time for any reason. Every presidential election and every major political decision risks the Confederacy losing states or even fragmenting. The most likely Confederate end game is balkanization.