Strictly Business: The Slavery & Capitalism Question.

So here's the gist of the story.

A guy writes a book about the history of slavery in North America that looked like this:

The magazine The Economist published a review that looked like this:

The review says the book is one sided presenting the slaves as victims and their enslavers as villains, and both the reviewer and the book's author claimed that slavery played an important contribution to the development of American capitalism. The review sparks much controversy and mockery all over the web, was seen as a defence of slavery, and was promptly pulled.

Now I'm not here to discuss the rights and wrongs of slavery, since it's a big fat wrong, or who is the victims or victimizers, since the answers to those questions are pretty damn obvious to anyone with a minimum of brain power. What I am here to discuss is the misconception that slavery was a positive participant in the development of western capitalism.

That's something you see in everything from academic textbooks to movies and TV shows. So many so-called experts talk about how "American capitalism was built upon the backs of African slaves."

Well, not really.

For the full story, let's look at the Southern USA during the "slave era" that lasted from the first colonies until the end of the US Civil War.

During that time the Southern USA was stagnant in the fields of economic growth, technological innovation, and even population when compared to the "Northern" or "Free" states. There was wealth, and there was lots of it, but it was held almost entirely by a tiny minority of politically connected slave-owning landowners who made up about little more than 1.4% of the population at their biggest. The economy of the region was dedicated almost entirely to serving that tiny minority. Industry, innovation, and immigration avoided the slave states both for the same reason: Slavery.

Industrialists seek a playing field where the odds are not stacked against them by a landed class that requires their back passage be smooched for permission to fart, and it's believed that they can easily undercut your efforts with their so-called "free labour." 

Also, that "free labour" from slaves is limited in its ability based on the ancient maxim: "You get what you pay for." For an industry to grow it needs a workforce that is skilled, understands the technical aspects of its work, conscientious of the quality of their work, and able to see and act on potential for improvement. To get that kind of workforce you need to promise them something and that something is the improvement of quality of life. That improvement may not be in the first or even second generation, but its potential has to be there, and it must come in the form of being paid for work, and the possibility of advancement. 

Slave labour is, for the most part, unskilled. It's really only fit for large scale plantation-economies where everything is built around a single cash crop, and the workforce needs only a few rudimentary skills. 

Why?

Because the slave has no pay and no hope.

The slave will not improve their life by working hard. The best the slave can hope for is to eat and not be beaten. So slaves tend to do the bare minimum it takes to get food and avoid abuse, and that's that.

Innovation also stagnates in slave economies. A classic fable about the issue was Hero of Alexandria. In the first century A.D. he developed the world's first steam engine prototype. According to legend he went to his king and said: "With some more work and research we could probably figure out how to use this principle to power great machines, and that would enable us to to lots of amazing things."

The king looked at the machine and said: "Then what will we do with all our slaves?" All further work was shelved. The King unknowingly understood that getting rid of a reason for slaves, meant that he might have to get rid of slavery, and such a drastic social change threatened his grip on power.

Failure to innovate starts at labour saving devices, because why bother saving on labour when the labour is technically already paid for when you bought the people from the slave dealer. It then spreads throughout the slave owning society until it finds a way out.

In Europe that way out was caused by plague, famine, and outmigration to the New World by many skilled tradespeople. Serfdom had been broken, and a new dynamic had to be found to replace the old one of Lord and Serf. That new dynamic was Employer and Employee, and that simple change revolutionized the world. Suddenly people had income that wasn't dependent on the whims of someone with a crown on their head. A middle class grew out of what used to be just peasants with trades, prosperity grew, and with it came first invention, because you could profit from your ideas, and then came industrialization.

It wasn't a perfect transition. Feudal tendencies are hard to break, many persist to this day and regularly threaten to make a comeback under a host of names and political causes.

Slavery was one of those feudal institutions that needed to be eliminated.

Immigration also stagnated in the slave states, because of the main reason people emigrate in the first place: Life sucks in the homeland.

So imagine that you're an immigrant. You've scrounged together enough for passage to America, you just have to decide which disease addled vessel will take you. There's The Potato Muncher, it's heading for the slums of the northern free states, and your other choice is The Southern Dandy heading for the fertile fields of the American slave-holding South.

Which ship do you take?

Well, the bulk of immigrants would choose to take the Potato Muncher. Sure, it'll dump them into crowded, rat infested slums, but those slums come with the promise that beyond those narrow streets there's a chance at owning your own land, and being your own boss at some time, if not for you, at least for children or grandchildren. 

The Southern Dandy will dump you in a land where all the good property is taken, and no one is interested in letting anyone else having a piece of their own, because they need it to grow the local cash crop that's the only thing going economically, be it cotton, tobacco, or sugar. Got skills, got really good ideas? Sorry, they're not interested, the powers that be in the region have to keep things exactly the way they are or they might have to get off their seersuckered backsides and work at something that might justify their existence.

What did create American capitalism then if not slavery?

To answer that question you must ask yourself: 

What does capitalism want?

Where did it get what it wanted?

The answer to the first question is: To grow. Like a living thing it seeks growth. Growth comes in the form of prosperity, not just for an elite few, but for everyone, because the more that prosper, the bigger and stronger the growth.

Where did it find this growth? In the Northern States. Now they weren't alway "free" but slavery didn't have the stranglehold on the economy that it held in the south. Land ownership was too widespread, and agriculture wasn't based around a narrow field of cash crops picked by unskilled labour. Agriculture in the north was all about food and growing food requires a smaller, but highly skilled workforce.

The key to the North's economy was commerce in a diverse and expanding array of goods and services, and the new fields of mass manufacturing. Both fields required skilled workers who were being paid competitive salaries, because if they weren't being paid they wouldn't be buying the goods they were manufacturing.

As commerce/industry grew in the north, slavery declined, and immigration poured in. The rise of the merchant, the skilled tradesmen and the industrial worker was accompanied by the rise of anti-slavery or abolitionist sentiment, first in the churches, then in the voting booth. Since so much of the wealthy of the North emerged from the tradesmen/industrial working class to become mercantile/industrial owner class, they not only didn't suppress abolitionism, they embraced it.

That's because a true capitalist society, one that is scraping the scales of feudalist attitudes from its eyes, cannot abide slavery. Even if you discount the fact that slavery is an absolute moral wrong, and go by purely icily logical economic factors, it cannot be accepted as a part of doing business.

First, it narrows prosperity in the hands of a politically connected elite who have no interest in growth, innovation, or anything that might involve change that could weaken their grip on political power. It also removed a big chunk of the population from taking part in the economy in three ways:

1. Partially as producers of wealth. As I explained earlier the fact is that slaves will only work as hard as it takes to be fed and avoid abuse, because they have no hope to enjoy the fruits of their labour, and improve their own lives. 

2. Almost entirely as creators of new products and services. If you were a slave with a brilliant idea, would you give it to the guy who would most likely just take it,  have you flogged for making him look bad, and then most likely do nothing with it? No, you wouldn't. Ideas thrive where the creators of their ideas have a chance of profiting from the expression of their ideas.

3. Almost entirely as consumers of goods and services. How much does the average slave shop? Definitely a lot less than a paid skilled worker with even a smidgen of disposable income.

Slavery, even in the cold eyes of the free market, was a vestigial remnant, that had to be eliminated in order for capitalism to grow and evolve.

In conclusion, did slavery create American capitalism?

No, it didn't. 

Despite the fact that some people who could be described as "capitalists" participated in it, the "peculiar institution" of slavery seemed to do everything it could to suppress real capitalism to maintain a comparatively primitive feudal order. A big chunk of American history can be described as a war between the growing forces of capitalism, and the feudal order of slavery.

Can we please let the myth that slavery invented capitalism die now.