Why the History of Capitalism Subfield Got Slavery (and Almost Everything
Else) so Terribly Wrong
By Robert E. Wright, Nef Family Chair of Political Economy, Augustana
University
Abstract:
This article summarizes
the argument of my 2017 book, The Poverty of Slavery: How Unfree Labor
Pollutes the Economy, which
critiques the work of “historians of capitalism,” especially Ed Baptist’s The
Half Has Never Been Told. It then explains how those historians were able
to convince themselves, despite all the evidence to the contrary, that slavery
and other forms of unfreedom can spark economic growth and development. It
concludes by suggesting that governments should continue to ban even so-called
“voluntary slavery” because they cannot effectively enforce labor contracts.
JEL codes: J10, N00, N01, O12, P51
Keywords: slavery,
economic growth, economic development, negative externalities, deadweight
losses
The thesis of my 2017 book, The Poverty of Slavery: How Unfree
Labor Pollutes the Economy, will seem trite to many readers of this
journal. It is, simply, that enslaving others, which I define according to a 20
point scale, has never anywhere caused economic growth or development. From the
beginning of recorded history, enslavers have coerced laborers to build great
monuments, complex systems of infrastructure, and even entire cities. Their
societies, however, were poor in per capita terms and their economic
development was stunted and always eventually reversed. Vide, for example, the
Dark Ages that followed the fall of Rome. Although some slave nations, like the
U.S. and U.K., grew rich, others, like Holland, Switzerland, and the Asian
Tigers, grew wealthy without being slave societies, proving that the widespread
enslavement of human beings is not a necessary cause of growth. Moreover, the
U.S. and the U.K. jettisoned forced labor in its most virulent forms as
slavery’s inimical effects on growth and development became ever clearer with
the aid of natural experiments, especially that offered by the division of the
United States into free and slave states.
Freedom leads to prosperity and
unfreedom to poverty. Communist and other types of rent-seeking dictators
essentially enslaved their populations, depleting their incentive to work
harder and smarter, i.e., to make the innovations necessary to drive
productivity growth. Economic stagnation, it turns out, is just one of the many
negative externalities created by unfreedom. Numerous others abound, like the
deadweight losses associated with restricting the economic and civil liberties
and controlling the behavior of the enslaved. In the aggregate, the negative
externalities created by slavery swamp the marginal profits of slaveholders,
past and present. Slavery, in this view, is the most socially expensive and
virulent form of pollution in history.
Why would I spend years writing about something so obvious? In short,
for almost the last decade ‘historians of capitalism,’ the group of scholars
writing in the new subfield called the ‘new history of capitalism,’ have been
asserting the exact opposite. In their view, most clearly stated in Ed
Baptist’s screed The Half Has Never Been Told, slavery caused the
Industrial Revolution and hence America’s and Great Britain’s current economic
prosperity. I trash that view in Poverty and eminent economic historians,
from Alan Olmstead to Peter Rousseau, have subjected the book to detailed
criticism, down to its own bailiwick, the interpretation of narrative primary
sources (Murray et al 2015).
Richard Kilbourne also argues that
historians of capitalism also have badly misunderstood the financial system’s
role in America’s system of chattel slavery, while David Blair shows
that they have missed the large negative externalities created by the international
trade in human beings. Putting all this criticism together, any objective
observer must conclude that Adam Smith and today’s economic
historians are right and that slavery did not, and cannot, cause economic
growth, which of course was the consensus view in the century and a half
between the start of the U.S. Civil War and the rise of the history of capitalism
subfield circa 2008. (Historians of capitalism have also botched most other
topics they have tried to address but there is insufficient room to detail
their failures here and, thanks to a recent article by economist historian Eric
Hilt, little incentive to do so.)
This conclusion of course raises the troubling question of why
historians of capitalism were so wrong about the economic effects of slavery.
At one level, the answer is that they are engaged in low-quality activist
scholarship that seeks to make a case for the payment of reparations to the
descendants of American chattel slaves. The general gist of their story is that
slavery made America rich so its government ought to make restitution to the
descendants of slaves. None of the historians of capitalism, however, propose
adequate answers to the difficult decisions that such a policy would entail.
Would, for example, the descendants of slaves fathered by plantation owners have to pay reparations to themselves? Would an impoverished Appalachian whose
great, great, great, great grandfather owned a single slave for a single year
have to pay reparations to a multi-millionaire actor, basketball player, or
entrepreneur who happened to be descended from a slave on one half of his or
her family tree? Would the descendants of coal miners and textile factory
operatives who were subjected to coercive labor methods themselves have to
contribute to the reparation fund as well? The mind quickly boggles at the
complexity of the problems a real world reparations policy would entail even
without considering the political mire into which it would almost certainly
fall. It seems likely, then, that historians of capitalism are simply trying to
score ideological points rather than set forth an actual policy agenda.
But in trying to put themselves on the ‘right side’ of history,
historians of capitalism have put themselves on the wrong side of the present.
By some counts, over 40 million people in the world today are enslaved, as in
physically and/or psychologically prevented from leaving a place of work to
seek employment elsewhere. Many are the victims of the sex trade, but about
half beg, fish, or manufacture bricks, carpets, cigarettes, or other
commodities entirely for the benefit of their masters. Slavery, arguably worse
than the chattel slavery of the Old South because the market price of slaves
has plummeted to just a few dollars (and hence the incentive to keep them alive
and well is low, creating what Kevin Bales [1999] calls “disposable people”),
remains endemic in parts of South Asia, Southeast Asia, Africa, and Latin
America. Many governments, including the U.S. government, have been pressuring
nations with significant ‘human trafficking’ problems to shape up or face
various sanctions.
Today’s enslavers and the local government officials tasked with
stopping them are thrilled to hear that slavery creates economic growth because
it gives them an excuse to maintain the status quo. They point to the
claims of historians of capitalism and say, in effect, see, the West got rich
off of slavery and now wants to keep us poor by denying us the goose that laid
their golden eggs. (They use similar logic to argue in favor of looser pollution
controls, higher tariffs, and a host of other policies that favor special
interest groups rather than actually drive economic growth and development.)
So, to score some points for a policy that has little to no chance of ever
being implemented, but which sounds good in certain ideological circles,
historians of capitalism have helped to doom to slavery tens of millions of
people alive today.
How could historians of capitalism justify such a tradeoff? Simply
put, they had no clue on either end of the transaction. None of them really
understand the economics of growth or slavery, past or present, because they
know almost nothing about economic theory or thought. Most graduate programs in
history do not require any training in economics, even for those students
interested in pursuing topics with significant economic content. Field and
dissertation advisers are supposed to guide history Ph.D. candidates to read
the books they need to understand their areas of interest. The problem is that
most top Ph.D.-granting history departments have no real economic or even
business historians on their staffs and those that do typically have only one,
who since the revival of interest in economic and business topics in history
departments following the Crash of 2008 are stretched unconscionably thin
(Townsend 2015).
History departments, in other words, have a real human capital
problem, and it is one of their own making. Prior to 1970 or so, historians
considered economic history to be an important subfield and hence stayed staffed
up. After the so-called Linguistic Turn, history departments began leaving
economic history slots unfilled, concentrating their increasingly meager
resources on various types of cultural history. By the mid-1990s, when I was
earning my Ph.D. in History, it was difficult to find any economic historians
still taking graduate students. Some, like Stu Bruchey and Ed Perkins, were
getting too old and disillusioned, while others, like John McCusker and Thomas
Doerflinger, fled the Research I life for smaller institutions or left academe
altogether. At SUNY Buffalo, I had to study under Richard E. Ellis, a brilliant
historian but a specialist in political and legal history, and teach myself
economics by reading Hume, Steuart, Smith, Hamilton, Ricardo, Mill, and
eventually modern economists.
By the time I was on the tenure track job market in the late
1990s, literally no History department wanted anything to do with economic
history so I taught economics at the University of Virginia and the Stern
School of Business instead! The few other graduate students so brazen and/or
daft to study economic history in that era suffered similar fates instead of
ending up in the Research I history departments where we belonged. So when the
worm of historiography finally turned after 2008, not only were we not
available to mentor History Ph.D. students interested in the history of
capitalism, our work was not even as widely known or read by historians and
their students as it should have been. The result was the disastrous path the
history of capitalism subfield has taken.
Thankfully, Robert Plant’s admonition in Stairway to Heaven,
that there is still time to change the road you are on, holds here. The past
failures of the history of capitalism subfield are sunk costs that can never be
recovered but they need not be repeated. For a start, History departments need
to admit that they have a problem. They should not allow graduate students to
conduct research, even in a hot field like the history of capitalism, without
having the proper professors on staff in sufficient numbers. That means making
senior level hires, many at salaries that will have to be more akin to those
paid to economists and business or law professors. (They can think of it as
reparations for not hiring such people at the assistant level ten, twenty, or
thirty years ago, as they should have. But economists will
recognize it simply as the result of competing for talent with the professional
schools where most such scholars sought remunerative work after being eschewed
by the History Establishment.) When making hiring decisions, History
departments will have to forgo the usual signals of quality, like publication
in the American Historical Review, and defer to the judgments of
journals like Business History Review, the Journal of Economic
History, and even the American Economic Review, as well as book
review authors they have never heard of before. They should look for
historians, in other words, who have proven that they are astute in business,
economic, and financial matters because they alone are the ones who can guide
graduate students in History to make substantive contributions to academic and
policy discourse in economic history. Think people similar to Naomi Lamoreaux,
now at Yale, one of the few bona fide economic historians helping to
train history graduate students.
Despite its obvious conclusion, The Poverty of Slavery is
still worth reading for all the details it provides about slavery, in all its
many forms, from prehistory to the present. It is also valuable as a teaching
tool because it situates something that almost Americans today find repulsive,
slavery, on a scale of economic unfreedom. Every downward tick in a state’s or
the nation’s economic freedom index, therefore, can be thought of as a step
closer to government enslavement of the population and hence economic
impoverishment (Miller and Kim 2017).
Finally, Poverty also
clarifies a few seeming anomalies in libertarian thought, especially the
concept of “voluntary slavery,” which posits that free individuals should be
allowed to contract to become slaves if they so choose (Block 2003). The book
shows that society should never allow a free individual to give up the right to
seek new employment because governments cannot be trusted to enforce labor
contracts fairly. In other words,
employers can, and do, break contract terms with impunity and the right of a
worker to leave is the ultimate self-enforcement mechanism in the face of almost
inevitable government failure. Ergo, even "voluntary slavery" should be against
state policy.
References
Bales, Kevin. 1999. Disposable People: New Slavery in the Global
Economy. Berkeley: University of California Press.
Baptist, Edward E. 2014.
The Half Has Never Been Told: Slavery and
the Making of American Capitalism. New York: Basic Books.
Block, Walter. 2003.
“Toward a Libertarian Theory of Inalienability: A Critique of Rothbard,
Barnett, Smith, Kinsella, Gordon, and Epstein.” Journal of Libertarian Studies 17 (2): 39-85.
Hilt, Eric. 2017.
“Economic History, Historical Analysis, and the ‘New History of Capitalism’.” Journal of Economic History 77 (2): 511-536.
Miller, Terry and
Anthony B. Kim. 2017. 2017 Index of
Economic Freedom. Washington, DC: The Heritage Foundation.
Murray, John E., Alan L.
Olmstead, Trevon D. Logan, Jonathan B. Pritchett, and Peter L. Rousseau. 2015.
“Review of The Half Has Never Been Told: Slavery and the Making of American
Capitalism.” Journal of Economic History
75 (3): 919-931.
Townsend, Robert B.
2015. “The Rise and Decline of History Specializations Over the Past 40 Years.”
Perspectives on History (December). https://www.historians.org/publications-and-directories/perspectives-on-history/december-2015/the-rise-and-decline-of-history-specializations-over-the-past-40-years
Wright, Robert. 2017. The Poverty of Slavery: How Unfree Labor
Pollutes the Economy. Cham, Switzerland: Palgrave Macmillan.
