Why the History of Capitalism Subfield Got Slavery (and Almost Everything Else) so Terribly Wrong

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.