Slavery was bad A hotter economic history take than you might think. By MATTHEW YGLESIAS

 MATTHEW YGLESIAS

OCT 25, 2023

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To the best of my understanding, the slaveowners among America’s “founding fathers” generally understood the institution to be, in some sense, bad.

George Washington embraced perhaps the most chillingly real version of this in that he freed his slaves upon his death — he knew it was the right thing to do, he just liked profiting from slavery too much to do it until it wouldn’t cost him anything. But there were real ideological and policy elements to this, too.

Slavery in the territories became controversial later in American history, but the Northwest Ordinance of 1787 that prohibited it in the area that became Ohio, Indiana, Illinois, Michigan, and Wisconsin wasn’t particularly controversial at the time. Thomas Jefferson was a major force behind the legislation, and he wasn’t pushing to expand slavery into the northwest. He was extremely racist and not at all prepared to live side by side with a population of free Black people, but the Founding generation was generally not enthusiastic about trying to spread the slave-plantation socioeconomic model.

Later, though, as slavery came under more severe criticism from abolitionist and Free Soil types, the ideological currents in the South shifted.

During the 1820s, southerners started instead articulating the “positive good” theory of slavery. Or, as governor Stephen Miller of South Carolina put it in 1829, slavery was really awesome. Not just convenient for the slaveowners or an alternative to racial equality, but “a national benefit” that drove the prosperity of the whole country:

Slavery is not a national evil; on the contrary, it is a national benefit. The agricultural wealth of the country is found in those states owning slaves, and a great portion of the revenue of the government is derived from the products of slave labor—Slavery exists in some form everywhere, and it is not of much consequence in a philosophical point of view, whether it be voluntary or involuntary. In a political point of view, involuntary slavery had the advantage, since all who enjoy political liberty are then, in fact, free.

This was an important shift in American political discourse in the first half of the 19th Century. Free Soilers and the early Republican Party had developed the concept of the “Slave Power,” a mechanism by which a group of plantation owners who were a numerical minority even in the South, managed to drive national policy to serve their interests. The Positive Good theory was designed to debunk this. Over time, it failed to convince the majority of northerners, but it did convince the majority of southerners, leading to political fracturing and the American Civil War.

You would think that 160 years later this would be a definitively settled issue. But in a weird way the old Positive Good idea keeps ricocheting around as people look for cute history theses to advance, and most oddly of all as leftists try to indict capitalism by agreeing with Positive Good theorists’ exaggeration of slavery’s benefits.

So a new paper by economic historians Richard Hornbeck and Trevon Logan with the thesis that the costs of the slave system greatly exceeded the benefits is more important than you might think.

The bleak economics of slavery

I think the most straightforward way to think, economically, of enslavement is that it functions like theft. If I take something of yours, that is good for me and bad for you, but no wealth or income has been generated. There’s no prosperous society created —the wealth is just being shifted from victims to perpetrators.

Slave cultivation on plantations differs from plunder in that you’re not (or at least not just) stealing the crops that free laborers would have grown on their own, you are stealing the free time and agency of enslaved workers and forcing them to raise output over what they would create of their own volition. Normal people do not work as many hours as they theoretically could. And normal employers bear non-zero costs for the sake of the comfort and quality of life of their employees. To convince non-enslaved people to work 100 hours a week in bad conditions would require a high hourly wage, and the marginal output of that labor almost certainly wouldn’t be worth it. If you were allowed to enslave your workforce, that changes the game. You can make them work more even if the value of their work is not that high.

In their new paper, Hornbeck and Logan argue that most of the literature on this “has largely conflated the ‘economics of slavery’ with the ‘business of slavery,’ analyzing slavery from the perspective of its operation as a business.” Stealing other people’s time and agency turns out to be good for business, but in economic terms, it’s still just stealing because you are destroying rather than creating value on net.

What's the difference? Well, a Sopranos fan interested in economic policy issues might ask two kinds of questions about the DiMeo Crime Family's operations in northern New Jersey. One would be whether all this extortion, racketeering, and occasional acts of theft and murder is really viable as a business. In other words, is this an effective way of making money? And based on what we see from the show, it is. Tony is really rich, and his key lieutenants seem to be doing well. That's the business of the mafia, at least as portrayed on the show. But the economics of the mafia asks whether Northern New Jersey, as a whole, is made more prosperous by the presence or activities of these rich mafiosi. When we look at the operations of the pharmaceutical industry in New Jersey, we don't necessarily find every single thing they do to be admirable or appropriate. But it's clear that the industry's presence in New Jersey is good for the state. And it's also clear that the world as a whole is better-off for having a pharmaceutical industry than it would be if we didn't have a pharmaceutical industry. But the mafia is not like that — its aggregate economic impact on New Jersey is bad, introducing corruption into the political system, inefficiency into the management of garbage routes, undermining useful infrastructure investments in the Newark Esplanade, and raising the costs of union construction projects, among other harms.

The point Hornbeck and Logan are making is that a lot of the literature on slavery conflates the question of whether it was a dynamic, profitable business that could have had a long-term future absent anti-slavery political activism and the question of whether it was a net generator of welfare. The answer is "yes" to the former but "no" to the latter — stealing is profitable if you're allowed to do it (good business) but it's a negative-sum interaction (bad economics).

Historiographically speaking, that focus on the business of slavery was driven by interest in the idea that slavery was a decaying or archaic economic institution. Some of that came from people who wanted to argue that the Civil War was a tragic failure of compromise and that slavery would have withered away without violence and bloodshed. Some of that came from a Marxist viewpoint that we should understand the Civil War as reflecting an inherently antagonistic relationship between northern capitalism and southern feudalism. And I think the consensus in the literature is now that this is all wrong and that slave plantations were lucrative enterprises featuring strong complementarities to the cotton gin and the booming global textile manufacturing industry.

The Hornbeck and Logan point is that just because this was good business doesn’t make it good economics. Comparing slave production to post-war production, we see that output was higher under slavery because people could be made to work in an unpleasant chain gang system and for longer hours. That makes enslaving people look great unless you count the cost to the enslaved, but that’s of course the whole point. It’s not obvious exactly how to quantify these costs, but that’s what economics PhDs are for. And the most conservative estimate (Row 6 in the table below) in Hornbeck and Logan’s paper looks at the wage premium land owners had to pay after emancipation to convince people to work under the gang labor system. They get higher estimates by treating slavery as a form of “social death” (you could be involuntarily separated from your family, etc) and using Value of Statistical Life metrics that are employed in a regulatory context.

Row 6 is plainly too conservative, but Row 5 makes no real claims about slavery other than you had to use the gang system and you couldn’t set your own hours, and still finds that emancipation generated massive economic surplus, equivalent to 12 percent of US GDP or 33 percent of the GDP of the states where slavery was used.

Slavery and capitalism

Hornbeck and Logan mention and cite, but do not really discuss in detail, a parallel conversation that’s been playing out over the past 10-15 years. A group of historians — most notably Sven Beckert and Edward Baptist, but probably channeled to the public most prominently by a Matthew Desmond essay in the New York Times Magazine — that has advanced the extraordinary claim that American plantation slavery is the foundation of all modern industrial prosperity.

This work suffers from a number of problems, but really benefitted from a sloppy early negative review by The Economist that seemed to complain that Baptist was too negative on slavery.

But the problem, if anything, is that Baptist is much too favorable to slavery. He’s working in the context of contemporary American academia where the big political question is whether Elizabeth Warren is unacceptably conservative. In his view, the real demon to slay is not slavery but capitalism, and he wants to argue that the enslavement-induced increase in cotton output was the key driver of industrial development in the United States and around the world. Miller was advancing this as a pro-slavery argument in the 1820s, and if he’d had the facts available about how rich the world would get over the next 200 years, he could have strengthened his argument a lot. Baptist, of course, is not trying to make the case for slavery, he’s trying to damn capitalism via association with slavery. But his analysis still suggests a harsh moral tradeoff in which enslavement was maybe wrong, but also we should maybe all be glad that it happened because it helped us get so rich today.

The good news is that while cotton was an important agricultural commodity, it wasn’t that important — roughly six percent of American GDP — and of course the world continued to have cotton after emancipation. Per Hornbeck and Logan, what the enslavers were accomplishing was extracting a quantity of cotton that it wouldn’t have been worthwhile for landowners to pay for, and making it profitable by imposing huge costs on the enslaved. The hit from emancipation to global cotton consumers (basically everyone who wears clothing) was real but manageable, and the upside to the emancipated was enormous. On low-end estimate (their scenario five), the increase in welfare from freeing the slaves was equal to around 12 percent of GDP — and that’s true even though post-emancipation conditions as sharecroppers in the Jim Crow south were not, to say the least, fantastic.

This all supports the commonsense antislavery politics of the time, which held that while enslaving people was obviously a great deal for the slaveowners, it was not the central economic pillar upholding western civilization. It was just plunder.

Liberals versus the left

It’s worth noting that a lot of intra-academic disputes have this kind of structure.

Going back to classic political disputes about imperialism in the west, you have liberals arguing that empire building is costly and pointless. Sure, there are individuals getting rich off the scramble for Africa or the colonization of the Philippines, but as a society, England or America or France or whomever is not actually benefitting from this and it would be better to have peaceful trading relationships. On the right, they’re saying no, that’s wrong, we desperately need to conquer and dominate foreigners in order to secure their natural resources or have captive markets.

My view is that the liberals had this right all along — as I wrote in “Why Does Switzerland Work So Well,” everyone’s favorite banking haven has been the richest country in Europe since at least the 1870s and they never built a colonial empire. Denmark and Sweden had token colonies, but they were much smaller than those amassed by much less economically successful countries like Portugal. And of course Germany rose to become the dominant economic and military power in Europe before obtaining colonies.

But in contemporary academia, the take that colonialism and empire-building was mostly pointless would be considered a spicy right-wing take, because leftists want to denigrate the achievements of the liberal/democratic/capitalist order by emphasizing the idea that all this modern prosperity was, in fact, built on bloodshed and brutality. To own the libs, they want to embrace the old conservative idea that this exploitative and immoral conduct of the past was also highly efficacious.

I think this is a dangerous game. Most people are somewhat selfish most of the time, and if you tell them that their prosperity hinges on the cruel exploitation of others, they are likely to say “well then, let’s do some cruelty and exploitation.”

The good news is we do not currently have rightists arguing in favor of enslavement or suggesting we need to build colonial empires. But the general idea that the path to prosperity for our community is to be bigger assholes to some other community is very much alive and well in the hearts of various strands of right-wing politics in many countries around the world. And it’s not, in general, true. We build a better world based on positive-sum interactions. Dramatically more wealth has been generated over the past couple of centuries via innovation and investment than via theft and plunder. Of course, theft and plunder are nonetheless very real aspects of world history. But any account that exaggerates the extent to which they were real generators of prosperity plays into the hands of the forces of darkness.