The Economics of Slavery

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The Economics of Slavery

• A Guide to Business Ethics

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• Champions of the slave reparations movement
  are denouncing as "insulting" and a "joke" an
  offer from J.P. Morgan Chase Co. -- parent
  company of Bank One -- to create a 5 million
  scholarship fund for African-American students in
  Louisiana to make amends for the banking
  behemoth's past ties to slavery.
• --The Chicago Sun Times (1/23/2005)

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• The decades-old slavery reparations movement
  was re-energized in March 2002 when legal
  researcher Deadria Farmer-Paellmann filed a
  history-making lawsuit in New York that became
  the first of nine suits across the country. All
  were consolidated last summer into one
  class-action complaint in Chicago on behalf of
  "35 million descendants of African slaves" to
  trace whatever might be left of the profits from
  that infamous institution of slavery and to sue
  the holders of those assets.
• --The Chicago Tribune,
  (2/7/2004)

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What is Slavery?

• Some of Hellies points
• Type of property that belongs to someone else
• Sometimes movable
• Objects of the law, not subjects
• Few rights and less than the owner
• Limits to how much slaves can be abused
• Slaves are removed from lines of natal descent
• Their product claimed by someone else
• Owner has right to control physical reproduction

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Other forms of bonded labor in the U.S.

• Indentured servitude
• Indentured servitude appeared in Viginia around
  1620, and became a central institution of
  colonial British America.
• Although servitude dwindled in importance over
  time, servitude continued to exist at least until
  the 1840s.

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• Between ½ and 2/3 of of all white immigrants of
  the British colonies between the Puritan
  migration (1630s) and the Revolution came under
  indenture (Smith 1947).
• Why did it appear?
• Indentured servitude may be traced in concept to
  servants in husbandry, and the Virginia Company
  tried to introduce it to the New World as a way
  to grow the labor force
• Transportation costs
• Why indentured? Problems solved by selling the
  contract to a master at the port of entry.

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Why was the U.S. slave population so large
despite the relative unimportance of slave trade?

• U.S. slaves had a large natural rate of increase
• Although large natural rate of increase, below
  whites
• In other Europes New World colonies there was a
  natural rate of decrease
• U.S. slaves had higher fertility and lower
  mortality

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Slavery as an economic system

• Most scholars agree that the slave economy was
  profitable for plantation owners and provided
  strong regional growth, as well as a relatively
  high standard of living for the free population
  of the south.

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• Why was slavery predominantly in the south?
• Agriculture and weather
• Gang labor
• Slavery was the main labor input in the cotton
  crop
• While white indentured servitude died peacefully,
  slavery ended only through the Civil War and a
  constitutional amendment
• Especially during the last decade of existence,
  the salve economy flourished like never before.

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The debate over the Economics of Slavery

• Antebellum period common view that black labor
  inferior to white labor
• U.B. Philips (Early 20th century) slavery was
  inefficient and could not succeed
• The Phillips School (Mid twentieth century)
  slavery would have disappeared without the Civil
  War
• Conrad and Meyer slavery was profitable

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Time on the Cross (Fogel and Engerman1974)

• Slavery was a rational, profitable way for
  southerners to maximize their profit and wealth.
• Material conditions of slaves were compared
  favorably with free whites.
• Before 1861, slavery was thriving and growing
  mire than ever.
• Slave owners were not pessimistic about the
  future of slavery before the Civil War.
• Slave agriculture was more efficient than free
  agriculture.

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• Slaves more hard working and efficient than free
  labor.
• Demand for slaves was increasing in urban areas
• 1840-1860 GDP/P grew mor rapidly in the south
  than in the north. So southern economy was not
  stagnant.
• Rate of expropriation was 10
• Slave breeding and sexual exploitation had been
  overemphasized.