More on slavery and economic efficiency
Dmitry Chernikov makes one good point and one not so good point. First, he writes that "the political activists [who] destroyed slavery used the higher productivity of free labor and therefore greater gains to society and to the common man as one of the reasons for pushing their reforms." That is true, although I would phrase it somewhat differently. I think it's more accurate to say that the principles of classical liberalism, which include the principles of free market exchange, were among the reasons urged by anti-slavery activists for the abolition of slavery. They argued that all men are created equal, and have certain inalienable rights, and this, of course, includes the right to labor for oneself and earn a living. Among the most articulate spokesmen for this view was one Illinois politician who said, “in the right to put into his mouth the bread that his own hands have earned, he is the equal of every other man, white or black. In pointing out that more has been given you, you can not be justified in taking away the little which has been given him. All I ask for the negro is that if you do not like him, let him alone. If God gave him but little, that little let him enjoy.”
As to the not so good point, Chernikov writes that I must “provide empirical support for [my] own claim, which is prima facie implausible, that slave labor can effectively compete with free labor?” First, let me emphasize that I did not say that slave labor is equally efficient or even close to equally efficient. Second, since Mises is the one making the claim, the onus is on him to provide evidence, not on me to doubt it. Third, as to whether slavery can compete effectively against free labor—obviously! The whole history of humanity is one of slavery, and only somewhat rarely of free labor.
What does it mean to “compete effectively”? It means to be “more efficient” than other forms of production. But as we’ve noted before, the question of whether something is efficient depends on what goals one is trying effectively to accomplish. It’s really inefficient to go around murdering people—unless your goal is to murder people. If your goal is to maintain a social hierarchy of racial oppression and self-righteous fantasy, as it was with the antebellum plantation aristocracy, then slavery can be mighty efficient, even though its material rewards are less than one would get through free labor.
Now, you might say, “yes, but by ‘compete,’ we mean compete freely in the marketplace in terms of productivity.” I think this would beg the question. A free market is premised on the absence of coercion. Something can qualify as economically efficient only if it is the product of exchanges free of coercion. This is implied by the subjective theory of value that says that we can judge the value of a product or service only when people freely choose to exchange for it. This is why there is no such thing as an “economically optimal” amount of coercion. Since slavery inherently ignores the choice of the slave, it is literally impossible to rate the economic efficiency of slavery. We cannot say whether slavery is or is not more “efficient” than free labor since we would have to take into account the slave’s own valuations, and that is logically inconsistent with the nature of slavery. I think it is therefore technically senseless to speak of the economic efficiency vel non of slavery. Slavery was quite profitable to the political elites in the old south. Not so much for the slaves, but they did not have a say in the matter. Suggesting that they ought to have had a say, so that we could assess slavery’s economic efficiency, would involve a self-contradiction, because they would not then be slaves. Moreover, it would be to escape the question of mere economics and enter the realm of political philosophy (a realm which, incidentally, Mises made some embarrassing mistakes).
So do we mean “slavery produces goods and services that are more expensive and or of lower quality to the consumer than are the goods and services produced by free labor”? This too is false. Although some abolitionists like Lydia Maria Child tried to boycott slave-produced products like sugar, the fact is that such products were much cheaper than products produced by free labor. After all, in countless instances, American consumers chose to purchase slave produced products over products produced by free labor.
Writes Kenneth Stampp,
To be sure, the slave’s customary attitude of indifference toward his work, together with the numerous methods he devised to resist his enslavement, sharply reduced the master’s potential profits. It does not follow, however, that a slaveholder who was a reasonably efficient manager would have found free labor cheaper to employ. Slavery’s economic critics overlooked the fact that physical coercion, or the threat of it, proved to be a rather effective incentive and that the system did not prevent masters from offering tempting rewards for the satisfactory performance of assigned tasks.
Besides, slave labor had several competitive advantages.... In the first place, it was paid less.... In the second place, masters exploited women and children more fully than did the employers of free labor. Finally, the average bondsman worked longer hours and was subjected to a more rigid discipline. Slaveholders were less troubled with labor “agitators” and less obligated to bargain with their workers. The crucial significance of this fact was dramatically demonstrated by a Louisiana sugar planter who once experimented with free labor, only to have his gang strike for double pay during the grinding season.... Many employers “hire slaves in preference to other laborers,” explained a southern judge, “because they believe the contract confers an absolute right to their services during its continuation.” These advantages more than compensated for whatever superiority free labor had in efficiency.
The Peculiar Institution 399-401 (New York: Vintage, 1956).
I differ strongly from Jeffrey Rogers Hummel on questions relating to the Civil War and slavery, but here is what he has to say:
[S]laves were as profitable on average as any other asset traded in the market. Southerners also bought slaves for conspicuous personal consumption.... [P]rices were flexible enough to keep the return on slaves in the South hovering between 8 and 12 percent, comparable to the antebellum return on the capital of New England textile firms or railroad companies.... Over the passage of time, above-normal returns during a cotton boom might signal slaveholders generally to expand cultivation in order to satisfy mounting industrial demand, as happened during the 1850s....
But overall, rather than facing economic demise, slavery was thriving right up to the Civil War. Cotton was the American economy’s leading sector, constituting half of all exports. For ambitious white Southerners, the primary avenue to greater wealth and status remained slave ownership.
Jeffrey Rogers Hummel, Emancipating Slaves, Enslaving Free Men 38-39 (1996).
Hummel observes that slavery was not “beneficial to everyone living in the region,” of course—certainly not to the slave. But to be “efficient” an institution need not benefit everyone living in a region; it need merely provide an effective return on the investor's cost, and slavery did that. It did so sufficiently to permit southern elites to demand (and often to receive) governmental protection for their peculiar institution.
Update: I changed this post a bit to make my point more precisely and eliminate some errors.
