A favorite factoid of the neo-Confederate pseudo-libertarians is that slavery would have withered away in the United States, had it not been for Lincoln’s meddling, because slavery is economically inefficient. I can’t pretend to know the definitive answer on this, but I am extremely skeptical of such claims.
Ludwig von Mises made this claim in Human Action, where he wrote that “[s]ervile labor disappeared because it could not stand the competition of free labor; its unprofitability sealed its doom in the market economy.” But this is far from being true. In fact, slavery never has disappeared, and certainly had not disappeared when Mises wrote these words. It remains in existence today, although in many cases it is called by different names, like “laogai.” In those places where it has disappeared it has not done so because of the competition of free labor, but as the result of moral and political crises, as in the United States, or in Russia, where serfdom was not gradually eliminated through competition with free labor, but by government decree. As in the case of most government decrees, economic influences were necessary, but hardly sufficient causes.
“The price paid for the purchase of a slave is determined by the net yield expected from his employment (both as a worker and as a progenitor of other slaves) just as the price paid for a cow is determined by the net yield expected from its utilization,” wrote Mises. But he knew better: the price of a slave is not determined by productivity or any other such factor but merely and solely by the subjective valuation of the slave-buyer and slave-seller, and that subjective value includes many things besides expected productivity—such as what we might call “sentimental” value. In the south, that sentimental value sprang in large part from the social structure, which was based on a romanticized, neo-medieval fantasy of plantation lordship. Domination was a large part of that value. When Mises writes that “For [the slave-owner] there is no ‘exploitation’ boon derived from the fact that the slave’s work is not remunerated,” he is being extraordinarily naive. Much more realistic is Kenneth Stampp, who observes that
slavery in the antebellum South was not purely or exclusively an economic institution; it was also part of a social pattern made venerable by long tradition and much philosophizing. One cannot assume that a Southerner would have promptly liquidated his investment in land and slaves whenever he found some other form of investment that promised him larger returns. For many slaveholders were emotionally and ideologically committed to the agrarian way of life–to the Jeffersonian idea that those who lived on the land were more virtuous than those who engaged in commerce and industry.
The Peculiar Institution 385 (New York: Vintage, 1956). Antebellum Southern mores—in some ways, Southern mores to this day—disdained profit-making and concerns for economic efficiency precisely because slaveowners saw such concerns as beneath them. The debt-chic of the plantation aristocracy is too well known to need much reiteration.
“Now, at no time and at no place was it possible for enterprises employing servile labor to compete on the market with enterprises employing free labor,” Mises writes, evidently ignoring the entire history of slavery—which, sad to say, is the history of the human race. In fact, one of the primary complaints of antislavery men like Lincoln was that slavery tended to drive down the condition of free laborers because business owners could simply terminate free laborers and obtain slaves when free laborers increased their wage demands. In one notorious incident, the owners of the Tredegar Iron Works used slaves to replace striking free laborers. Although Mises writes that “[s]ervile labor could always be utilized only where it did not have to meet the competition of free labor,” that knife cuts both ways: free labor also would be used only when it was cheaper (i.e., when workers demanded less) than slave labor.
Mises continues his wishful thinking: “If one treats men like cattle, one cannot squeeze out of them more than cattle-like performances.” This is nonsense. The history of the human race shows all too well that it is easy to force people to produce—perhaps not optimally, perhaps not permanently, but usually. Put a gun to the head of a man’s daughter and say “give me the secret formula,” and most of the time he will give you the formula. It may be true that you cannot force a man to think, but most of the time, he will think when coerced into doing so. People will yield to fear, pressure, and pain, and often they will collaborate with their persecutors. In some instances, slaves bore arms on behalf of the Confederacy. Why would they do such a thing? Because there are pressures that can push a person to support his oppressors. “And accordingly all experience hath shown that mankind are more disposed to suffer while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed.” Slaves in the south not only produced more than cattle, but often undertook complicated work and operated machinery, as ironworkers, refiners, miners, and in other difficult, and intelligence-requiring work. They did so because, as the totalitarian regimes of the 20th century showed in even more tragic vividness, it is possible to squeeze much out of men treated like cattle. “If one asks from an unfree laborer human performances, one must provide him with specifically human inducements,” Mises continues. Yet it is much easier to whip a man, or to threaten his wife and children, than it is to train a horse.
Mises provides no empirical support at all for his claim that “[w]hen treated as a chattel, man renders a smaller yield per unit of cost expended for current sustenance and guarding than domestic animals.” But not only does history show a great deal more productivity from slaves than Mises recognizes, but most domestic animals actually consume much more food than human beings, and human beings are capable of using ingenuity under compulsion that makes them more profitable. The question, after all, is not whether humans are more or less productive in some absolute sense, since there is no such thing as productivity in an absolute sense; the question is whether humans are more or less productive at particular tasks than are alternative sources of labor or energy. An ox might provide much more power in some senses, but it cannot operate a hoe or a fishing pole or wield a pick-axe in a mine.
“The upper limit beyond which it is impossible to lift the quality and quantity of the products and services rendered by slave and serf labor is far below the standards of free labor,” he continues. “In the production of articles of superior quality an enterprise employing the apparently cheap labor of unfree workers can never stand the competition of enterprises employing free labor. It is this fact that has made all systems of compulsory labor disappear.” This last sentence is particularly risible. “All systems of compulsory labor” have not disappeared, nowhere close, and those that have did so not as a result of competition with free labor enterprise but as the result of political or military revolutions. Indeed, I can think of not a single instance in which slavery withered away simply due to economic competition with free labor.
Now, Mises goes on to recognize that the economic incentives that would have resulted in the free, gradual abandonment of slavery were stopped up by the interference of the state: “the abolition of slavery and serfdom could not be effected by the free play of the market system, as political institutions had withdrawn the estates of the nobility and the plantations from the supremacy of the market.” Mises misleads by his use of the word withdrawn; in fact the plantations had never been subjected to the supremacy of the market at all, since they arose gradually as a social institution from the non-market socities operating on feudal (Russia) or mercantilist (America) principles. The state did interfere to bar market transactions, but how did that interference originate? It was implemented because the social conservatives of that day were determined to preserve the mechanism of slavery. They were motivated, not by the profit motive alone—as we have already seen—but also by their romantic fixations. Appealing to the greater productivity of abandoning agrarian slavery is not likely to have persuaded slaveowners to abandon the practice, let alone to recognize the equal human rights of freedmen.
One might argue that political interference in the market will eventually lead to such economic problems (high prices and shortages) that the voters will act to eliminate such interference, or abandon their romanticism. But we well know from experience not only how long such a thing takes, but that it is never perfectly accomplished. Even the Corn Laws were not abandoned solely due to the high prices of foodstuffs and the moral suasion of free traders. And even then, the end of the Corn Laws was certainly not the end of tariffs! As for abandoning romanticism, that is hardly likely even given the greatest economic pressures. Economic pressures have not persuaded the world to abandon all sorts of inefficient practices that are seen by the general public as more important than economic productivity. And in a slave society like South Carolina, overwhelmingly dominated by slaves, who would doubtless seek revenge on their masters if liberated, it is not in the economic interest of all the members of the society to question those romantic fixations. On the contrary, it was in their economic interest to demand greater and greater protections for what they saw as their property, in the form of a federal slave code which would have turned the United States into a fascist police state.
Most essentially, one great fallacy of the notion that slavery would have withered away is that it presumes to predict how the economic future will (or would have) developed, something which good economists know is impossible. In Washington’s day it was widely believed that slavery would indeed gradually disappear because of its economic weaknesses. It was the cotton gin that changed things, making slavery immensely more profitable, and propping up the argument of social conservatives that slavery was a “positive good.” As Lincoln observed,
Brooks of South Carolina once declared that when this Constitution was framed, its framers did not look to the institution [of slavery] existing until this day. When he said this, I think he stated a fact that is fully borne out by the history of the times. But he also said...the men of these days had experience which they had not, and by the invention of the cotton gin it became a necessity in this country that slavery should be perpetual. I now say that willingly or unwillingly, purposely or without purpose, Judge Douglas has been the most prominent instrument in changing the position of the institution of slavery which the fathers of the government expected to come to an end ere this—and putting it upon Brooks’ cotton gin basis.
It was the same ingenuity which according to Julian Simon makes predictions of economic decline highly dubious that made the decline of slavery equally dubious. And although nineteenth century apologists for slavery claimed that the soil and climate of the southwest naturally barred slavery from spreading, there is little support for such a claim. Slavery has lasted mighty long in all sorts of human climates.
My point is not that slavery is “efficient.” My point is that “efficiency” is basically a meaningless word unless we ask what it is that we’re trying to “efficiently” accomplish. Free market economists tend to think that the increase of society’s wealth is what we are all trying to accomplish. But this was not what the antebellum plantation aristocracy wanted to accomplish, and it is not really what many people today want to accomplish. In the eyes of a slaveowner (as with all of us) an increase in wealth was one among many considerations in an economic transaction. Maintaining his fantastic position as a knight of chivalry was also an important goal in his eyes—not to mention survival in a community in which he was surrounded by potential enemies of another race. The “caste” system which propped up slavery from gradual elimination was not some separate intervening cause blocking the abandonment of the slave economy, but was part and parcel of a social institution, which created, as much as depended upon, the economic value of slaves themselves. And the blame for slavery’s continuation cannot be leveled only at the interference of the state. There were lobbyists for that interference, and those lobbyists expected to profit from such interference, and that profit was more than merely financial.
Update: Stephan Kinsella has never found reading easy, so it's understandable that he would misunderstand what I said above. I did not mean that Mises himself was a neo-Confederate. In fact, he would likely be deeply ashamed of the shenanigans of the Institute that has appropriated his name for their Doughface silliness.
Meanwhile, Jonathan Pearce has some thoughts. "A lot of people imagine that free marketeers like me claim that capitalism will inevitably weaken slavery. There is nothing inevitable about the demise of any human institution, certainly not one that satisifies the human lust for power over others." It should be obvious to libertarians, I think, that tyranny is by far the persistent rule, and freedom by far the rare and delicate exception in human life.