Capitalism And Slavery

 

DON BOUDREAUX
DECEMBER 15, 2016
FREE MARKETS & CAPITALISM

Wrongheaded notions about the economy are always in high supply. Most calamitous was the idea that central planning outperforms the market. The pulverizing poverty and tyranny of the former Soviet Union, North Korea, and similar Workers’ Paradises have ended that particular illusion.

Other less disastrous but equally mistaken notions about the economy remain on the loose — for example, that tariffs promote prosperity.

But the most far-fetched myth that I’ve encountered recently is that the wealth of the modern Western world, especially that of the United States, is the product of slavery.

I first encountered this notion during a talk I gave in Toronto. I explained to the college-age audience how extraordinarily wealthy all of us are today compared to our preindustrial ancestors. I wanted them to understand the great benefits of capitalism. During the Q-&-A session, a young woman informed me that the wealth we enjoy today is the product of slavery.

At first I thought she was speaking figuratively, as in “workers under capitalism really are slaves.” Having heard such an argument before, I was half-expecting it. But no. What she meant is that the modern world’s prosperity is the product of the pre-20th-century enslavement of Africans in the Americas.

“But slavery ended in the United States in 1863!” I responded. “Look at all the wealth produced since then — telephones, automobiles, antibiotics, computers. None was built with slave labor.”

She anticipated my response. “Not directly. But the capital that made these innovations possible was extracted from slave labor. The wealth accumulated by slaveholders is what financed the industrialization that makes today’s wealth possible.”

I looked at her in raw disbelief. (Not a good strategy, by the way, for a public speaker.)

Collecting my thoughts, I pointed out that slavery had been an ever-present institution throughout human history until just about 200 years ago. Why didn’t slaveholders of 2,000 years ago in Europe or 500 years ago in Asia accumulate wealth that triggered economic growth comparable to ours? Why is Latin America so much poorer today than the United States, given that the Spaniards and Portuguese who settled that part of the world were enthusiastic slavers? Indeed, the last country in the Americas to abolish slavery was Brazil — in 1888, a quarter-century after U.S. abolition. By American and western European standards, Brazil remains impoverished.

And why, having abolished slavery decades before their Southern neighbors, were Northern U.S. states wealthier than Southern states before the Civil War?

I don’t recall my young challenger’s response. I recall only that I was as little convinced by it as she was by my answers.

The fact is that slavery disappeared only as industrial capitalism emerged. And it disappeared first where industrial capitalism appeared first: Great Britain. This was no coincidence. Slavery was destroyed by capitalism.

To begin with, the ethical and political principles that support capitalism are inconsistent with slavery. As we Americans discovered, a belief in the universal dignity of human beings, their equality before the law, and their right to govern their own lives cannot long coexist with an institution that condemns some people to bondage merely because of their identity.

But even on purely economic grounds, capitalism rejects slavery because slaves are productive only when doing very simple tasks that can easily be monitored. It’s easy to tell if a slave is moving too slowly when picking cotton. And it’s easy to speed him up. Also, there’s very little damage he can do if he chooses to sabotage the cotton-picking operation.

Compare a cotton field with a modern factory — say, the shipyard that my father worked in as a welder until he retired. My dad spent much of his time welding alone inside of narrow pipes. If you owned the shipyard, would you trust a slave to do such welding• While not physically impossible to monitor and check his work, the cost to the shipyard owner of hiring trustworthy slave-masters to shadow each slave each moment of the day would be prohibitively costly. Much better to have contented employees who want their jobs — who are paid to work and who want to work — than to operate your expensive, complicated, easily sabotaged factory with slaves.

Finally, the enormous investment unleashed by capitalism dramatically increases the demand for workers. (All those factories and supermarkets must be manned.) Even if each individual factory owner wants to enslave his workers, he doesn’t want workers elsewhere to be enslaved, for that makes it more difficult for him to expand his operations. As a group, then, capitalists have little use for slavery.

History supports this truth: Capitalism exterminated slavery. 

I LOVE Diversity

 I absolutely love it. Here is a recount of my day today...

I arrived at work to find my Indian/Canadian office mate in the office, we chatted a little about martial arts and what not, than I immediately went to the lab to do some work. As soon as I arrived in the lab, I started talking to an Iraqi friend, this friend is from northern Iraq, and overall supports the war in Iraq. He is always up to date on all the news, and fills me in on what it's like to be in Iraq. Today's topic of choice was the movie I let him borrow, Voices of Iraq, he hadn't watched it yet, as I was interested in his perspective on the movie.

Soon after that, I bumped into another friend at work, a native of Canada. This is a friend that I have long economic conversations with. He grew up amongst anarchists (damn Chomsky!!) and has leanings towards communism (yikes!!!). Needless to say, I immediately proceeded to talk about the wonders of Capitalism. Today's topic was some books I had recommended him (Friedman, Sowell, and Hazlitt). He is a smart cat, with a huge heart, it won't be long before he connects the dots.

Later, I chatted with a different Indian friend, not my old house mate, but a friend that is part of my group at work. We chatted about work stuff here and there, but overall touched on the topic of colonization (Queen Elizabeth, give them their Diamond back!!!) and what it does to a country. Nothing too long, just simple conversations.

I than headed to class (UCSD) with my other office mate (it's a big office, ok!!), who I have known since I started college, and who happens to be a Vietnamese refugee. His father, after the USA withdrew from Vietnam, was imprisoned for 10+ years for fighting with the USA for South Vietnam. President Reagan (may he rest in peace) went to Vietnam, and gave every family that had a family member imprisoned for a certain number of years (can't remember the exact number, I think it was 2 or 3 years) for fighting with the USA, free passage to the United States. My friend came, worked for a few years, saved saved and saved. Eventually enrolled into college, while still waking up at 4 amish to deliver newspapers, and graduated top of his class (I was second :-( ). He is now one of the top Engineers at our company. Imagine, with no help but his own will and dedication, in fact, there were many times where he had to go out of his way to support him and his father. Yet he did it, with no complaints and nothing but love and joy for this country. He never stops telling me how absolutely horrible it is to live under a communists regime, and always reminds me how lucky I am to be in the United States (God Bless America!!).

Upon arriving at school, I got the updates from our (school) lab partners. There are five of us, myself, my Vietnamese work mate, two foreign exchange students from Iran, and one Sikh from India (btw, Turbans in the USA pretty much means Sikh NOT Muslim). We chatted a bit, and than headed back to work.

When I got back to work, another friend of mine was in the (work) lab. This is another Mexican/American friend who, like myself, speaks fluent Spanish. When I was younger my dad used to give me a 'coscoron' everytime I spoke English to someone who you could clearly tell spoke Spanish better, and it's no different with this friend. I don't care how many people are around that don't know Spanish, when me and him communicate it is always in Spanish (Remember the Treaty Of Guadalupe Hidalgo, before giving me an English Only lecture ;) ). Sometimes we talk about his kids, who btw, were raised by him and his wife of SEVERAL years (they were married very early, both are natives of Mexico). His oldest son just completed, at age 25ish, his Masters in Electrical Engineering from UCSD and now works for Nokia (making BIG bucks), and his eldest daughter is a public school teacher, his second oldest daughter is getting her bachelors degree at UCSD in Physics. Yeah, you heard that right, I am very proud (on a side note, my 13 year old sister is very good at math, I have high hopes for her, more news in a few years)!!!

While walking down the hall, I chatted with a white friend, about another Chinese friend who had been in a bicycle accident. Everything is ok, he will be back to work on Monday.

After this, I came home and chatted with my white roommate about this upcoming weekend. You see, I have friends coming over this weekend, mostly old college friends, but some friends I knew outside of college. As a matter of fact, I have a very close college white friend of mine driving from San Jose as we speak, he is due to get here at 3am in the morning. Who is coming you say, well if everything works as planned, it should be possibly two black guys, two white guys, four Mexican guys, two Cubans, and a guy from Peru. And those are just the ones staying over my place. I invited some friends from work, friends from school, and just friends that live in San Diego (Oso and Derek, you guys are invited too).

All in one day. I haven't even started talking about how my meetings at work are...It's almost a mini United Nations (except we get things done, and don't steal from the poor).

For all the crap some people give to California, this is certainly not part of it. This is the America I've known, the America I love, and the America that makes this country great. Sometimes I think it is even better than all the hot women here (ok, you're right, the hot women are better, but it's a close second). And it is very enriching.

With that out of my system, see you all on Monday, I got some partying to attend too.

PS: I also got A LOT of work done in the blank spots above...don't want anybody getting the impression... (Originally published: 1/21/2005)

Two Ways At Looking At The Same Thing - Slavery In America

 I remember when I was younger, my mom used to always tell me that there are three sides to every story: his, hers, and the truth. Throughout the years what she said has been shown to be true over and over again. There is no greater example of this than the history of slavery in the United States.

Nobody doubts that the United States, for a good portion of its history, participated in one of the worse acts in human history, slavery. This is the 'true' part of the story. This is the part that has the facts behind both his side of the story and her side of the story. However, how it gets interpreted, and what it says about the United States are two very different, I would even say, opposite conclusions.

You have 'her side' of the story, the one we're all familiar with, that says that this fact demonstrates that the United States is inherently racist. It claims that because of this part existed in the history of the United States, the members who trace their roots to those generations should be ashamed, some even go as far as saying that they should pay 'reparations' for what they have done. This past is forever engrained in her image, and determines how she looks at all aspects of the United States history and future.

Than you have 'his side' of the story that says that a part of the history that has been left out shows a greater picture. Yes, the United States participated in slavery, but the portion that is often left out is that so did practically every other race, religion and continent. Slavery has been a part of human history for as long as history has been recorded. And every group has participated in one way or the other. Christians, Atheists and Muslims all had a big hand in it, so did the vast majority of cultures. Bernard Lewis, emeritus professor at Princeton University, writes "The institution of slavery had indeed been practiced from time immemorial. It existed in all the ancient civilizations of Asia, Africa, Europe, and pre-Columbian America. It had been accepted and even endorsed by Judaism, Christianity, and Islam, as well as other religions of the world." In fact, the name slavery comes from the word Slavic, because of the frequent enslavement of Slavs in central Europe.

So it is not slavery that makes the United States unique, since it was actually practiced by every race and color and for every reason imagineable. In fact, a good portion of African slaves were sold to Europeans by Africans themselves. So undoubtedly, all people making the charge that the United States is racist have somewhere in their history, some roots in slavery, both being enslaved, and being the slave owners. So what is it that makes America unique, if it's not in having slaves? Thomas Sowell hints at it when he writes,

...nowhere in the world was slavery a controversial issue prior to the 18th century.

People of every race and color were enslaved -- and enslaved others. White people were still being bought and sold as slaves in the Ottoman Empire, decades after American blacks were freed.

Everyone hated the idea of being a slave but few had any qualms about enslaving others. Slavery was just not an issue, not even among intellectuals, much less among political leaders, until the 18th century -- and then only in Western civilization.

Among those who turned against slavery in the 18th century were George Washington, Thomas Jefferson, Patrick Henry and other American leaders. You could research all of 18th century Africa or Asia or the Middle East without finding any comparable rejection of slavery there.

Deciding that slavery was wrong was much easier than deciding what to do with millions of people from another continent, of another race, and without any historical preparation for living as free citizens in a society like that of the United States, where they were 20 percent of the total population.

It is clear from the private correspondence of Washington, Jefferson, and many others that their moral rejection of slavery was unambiguous, but the practical question of what to do now had them baffled. That would remain so for more than half a century.

In 1862, a ship carrying slaves from Africa to America, in violation of a ban on the international slave trade, was captured. The crew were imprisoned and the captain was hanged in the United States -- despite the fact that slavery itself was still legal in both Africa and the U.S. at the time.

What does this tell us? That enslaving people was considered an abomination but what to do with millions of people who were already enslaved was not equally clear.

That question was finally answered by a war in which one life was lost for every six people freed. Maybe that was the only answer. But don't pretend today that it was an easy answer -- or that those who grappled with the dilemma in the 18th century were some special villains, when most leaders and most people around the world at that time saw nothing wrong with slavery.

So the United States isn't unique in having slaves, the United States is unique in fighting against slavery. Yet little of this is mentioned in 'her side' of the story.

Furthermore, if you factor this into the fact that the United States is the most pro-immigration country in the world, you arrive at opposite conclusions than those arrived at by 'her side' of the story.

So the United States, when looking at the big picture, is not the 'racist' country it is made out to be, but the exact opposite. Compared to other countries in the world, it is one of the most open, unracist countries in the world. And its about time 'his side' of the story gets told more. (Originally published: 10/17/2004)

The Clinton Years vs The Bush Years - A Pet Peeve I have

 Casey B. Mulligan, professor of economics at the University of Chicago, made a comment that he should know is disingenuous, he wrote:

the "big spending Democrat" stereotype is incorrect -- government spending / GDP fell under Clinton and increased under Bush.

This comparison, used to argue that when it comes to spending there is no difference between Republicans and Democrats,  is made often, both in the blogosphere and by academics who should know better. The main problem I have with it is that it is not comparing apples to apples.  Milton Friedman argued that the best form of government, from a small government and low spending perspective, is a Democratic president and a Republican Congress, where Republicans control the spending (congress), and Democrats control foreign policy - precisely what we had under Bill Clinton. The worst form of government is when the same party controls the presidency and congress - precisely what we had under George W Bush.

In other words, you are comparing arguably the best scenario under a Democratic president with the worst scenario under a Republican president - of course they are going to be alot closer than what they really are. Don't get me wrong: I am not arguing that Republicans are true fiscal conservatives, no, I am arguing that the gulf between the two is larger than what these "Clinton years vs Bush years" argument would lead you to believe.

The difference between the two is even larger when you compare the kind of spending each does: Republicans tend to overspend on wars while Democrats tend to overspend on entitlements. Wars are temporary, they are one time events that come to an end, whereas entitlements are forever and worst of all, they get more inefficient and expensive with time. Take FDR and LBJ - both were involved in wars and both created entitlements, FDR with World War II and social-security and LBJ with the Vietnam war and medicare. Yet today we worry about the growing costs of social-security and medicare while the financial costs of World War II and Vietnam, though expensive at the time, are now but forgotten.

And Bill Clinton would not have been any different, had he had more control of congress, Matthew Yglesias explains:

If the health care bill that the Clinton administration authored, pushed for, and staked its presidency on had passed you would say that FDR, LBJ, and Bill Clinton were the three main architects of the modern welfare state. Because the bill didn’t pass, the institutional legacy of the Clinton years is considerably more moderate than that and the Clinton administration is instead remembered for its responsible stewardship of national affairs. But that’s because congress blocked the bill not because of Clinton’s moderation.

That was the Republican controlled (for the first time in ~50 years) congress that blocked the bill.

A better comparison is between the Bush years and the Obama years - but given the fact that in Obama's first 100 days in office, he's already proposed spending more than Bush spent in his entire 8 years, including both wars, its a strong argument that there really is a difference between the two parties. Especially considering that most of Obama's spending comes in the form of very expensive entitlements - entitlements that Obama is hoping will last forever.

You can argue that entitlements are worth the costs, that is an argument for another day, but you can't make the argument that the spending is the same between the two parties. (Originally Posted: 6/5/2009)

Beverly Hills As The USA

Imagine that you lived in Beverly Hills, among the richest people in the United States. Some of your friends were the kids of executives at Fortune 500 companies. Others were the kids of famous Doctors, Lawyers, and some were the kids of hedge fund managers. While all relatively rich, assume there was quite a range of wealth from really rich, to filthy rich.

Further assume, that one day, a bleeding heart liberal starts feeling bad for the really rich. Her complaints are along the lines of: "The really rich can't eat out at the $500/plate restaurants, they have to settle for the $100/plate restaurants, or, god forbid, make sandwiches at home". Her complaints continue: "The really rich can't afford the Lamborghini's or Ferrari's, they have to get by with the - GASP! - BMW's and Mercedes Benz's". Worst yet, "the really rich actually have to live in mansions with no ocean view, or golf courses". Most heartbreaking of all, "the really rich have to actually prioritize their lifestyle and set a budget. They can't go to Europe on a moments notice, they can't eat out everyday".

Now further assume that said bleeding heart liberal decided to set up an "alleviate suffering" fund that took away from the filthy rich to give to the really rich. Such a fund would help equalize Beverly Hills and "bring people together". But instead of making this fund voluntary, the bleeding heart liberal wanted to enforce this through the city. She wanted to make it a city tax that merely takes from the filthy rich and gives to the really rich. Her arguments, again, are to "alleviate suffering".

What would your reaction be if you were suddenly transplanted to that society and debate? Would you support the "Beverly Hills tax"? I am not one of those that believes there are absolutely no circumstances that justify forcibly taking the wages of one to give to another. But such circumstances have to be met with atleast reasonable justification. Yet simply moving money around amongst the worlds richest people does not seem to me like an acceptable justification.


Such is the image that comes to mind whenever I have a discussion with a liberal about increasing redistribution via taxes to help the USA "poor".  It's the image my dad and uncles, who immigrated to the United States in their twenties from ranch life in the poorest parts of Mexico, gave me. It is certainly how they viewed me and my cousins growing up - no matter what our circumstances, be it growing up in Compton (as I did), living off of the income of mechanics, gardeners, or window tinters - we were all blessed beyond their wildest dreams. Where they had to eat tortillas off the dirt floor, work in fields in the scorching heat where there were no "sick days" or "vacation time", even the McDonalds cashier can seem privileged. And this view isn't far from reality. Even the "poor" in the United States are among the richest in the world (see here and here).