Reading Slavery and American Economic Development

Slavery is a bad and we should rid ourselves of it. One of the arguments made by abolitionists before the Civil War in the United States is that slaves make poor workers and therefore it’s not that costly to get rid of slavery. Of course, it doesn’t matter if slaves worked hard or not. Slavery was a moral abomination, regardless. However, it does make it easier to argue that we should direct government resources to fight enslavers when we can make a case that slavery makes the entire country poorer.

On the one hand, there were many non-slave workers and farmers in North America, demonstrating that products including cotton could be produced by free labor. On the other hand, slavery as an institution expanded into the South and the West, presumably because of the economic advantage it gave to slave-owners.

In Slavery and American Economic Development, economist Gavin Wright states that whether or not slaves were as productive as free/wage labor is hard to measure and also is not hugely important. Slavery might have provided wealth to slave owners in the South, but that is only because of the institutional setting that was created explicitly to maintain the slave society.

The American South had some of the best land in the world for growing cotton and cotton became a lucrative export crop thanks to British demand before the Civil War. Before the Civil War, there were some extremely profitable plantations on which slaves worked. It is true that some enslavers became rich and that drives up what appears to be the GDP per capita in the South at the time.

Wright explains that a slave owner living closer to the East Coast was better able to go on an entrepreneurial venture into Alabama to clear a large plantation for cotton farming than a typical free family farmer. The slave owner could obtain large loans and had a future guarantee of workers (thanks to the local laws and police state). So, something like a modern corporation employing free labor could also have accomplished the venture. But, at the time, it was an opportunity that was easier for enslavers to take advantage of. Free farmers also expanded West into the United States, but they tended to move more slowly and focus on subsistence (e.g. wheat for consumption). That is, partly, what Wright means when he speaks of slavery as a “system of property” as opposed to just a “system of production”. That helps explain why slavery was on the rise in the American South.

Wright also examines slavery as a political regime. In a place with many slaves, resources had to be allocated to policing and preventing revolts. It might have been individually rational for a landowner to offer freedom to slaves as a form of compensation for work, but this was disallowed by that broader political environment. So, everyone was somewhat trapped. Most importantly, the slaves were abused and trapped. But the free residents of the South had to live in a stagnant society. Governments did not invest in schooling, even for white children.

Municipalities in the North were booming and attracting free migrants with public investments. These investments set the North on a path to overtake the South economically and demonstrate which system is superior for creating wealth. Wright blames property owners in the South for continuing to fail to vote for good institutions that foster economic growth after the Civil War.

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