Mises Wire

How Slave Owners Pushed Marxist “Wage Slavery” and Exploitation Theories

As we noted earlier this week, modern pundits are claiming modern American capitalism was built on a foundation of antebellum slavery. The contention is obviously false for no other reason than the fact the industrial economy didn’t skip a beat when slavery was abolished. Moreover, even in its day, the slave economy of the south was never as impressive as its supporters supposed it was. Cotton production was important. But northern farmers, miners, and factory workers would have been fine without it. So overwhelming is the evidence against the idea that the southern economy built American capitalism, not even the vehemently-anti-capitalist Jacobin is willing to say so.

It’s interesting that modern anti-capitalists are using the arguments of slave owners, but this really shouldn’t shock us.

The slave powers opposed market economies overall, and attempted to portray them as morally inferior to the slave system.

Indeed, the term “wage slavery” and its variants were popular among slavery’s defenders, who sought to portray capitalism as a system more barbaric than the chattel-slavery system of the American slave states.1 The motivation, of course, should be clear: abolitionists were attempting to portray slavery as immoral and incompatible with a decent society. But, if the northern system of wage labor could be shown to be even worse, this would put the abolitionists in an uncomfortable position.

Common to this narrative was the contention that the wage workers of England and the northern US were worse off than slaves.

In his monumental account of American economic thought, The Economic Mind in American Civilization, historian Joseph Dorfman notes how South Carolinian poet and essayist Louisa McCord denounced “de facto white slavery of England and the North” as a cause of starvation and deprivation not seen among slave populations.2

Meanwhile, Senator James Hammond “in a Senate speech in 1858 succinctly summarized the southern position in telling the North that its wage slaves were, like the black slaves, the mudsill of society and political government.”3

According to the mudsill theory, there is bound to be some group that does the unpleasant work that supports the economic foundation of society, and “it makes no difference whether the workingmen are the wage slaves in the North or the Negro slaves in the South.”4

In this case, the pro-slavery writers claimed it was actually the slave owners who were in the superior moral position because they (allegedly) took responsibility for their slaves, as provided for them in a way not found among the northern capitalists.

John C. Calhoun, for example, contrasted the northern wage system with the slave system which sounds nearly utopian:

Every plantation is a little community, with the master at its head, who concentrates in himself the united interests of capital and labor, of which he is the common representative. These small communities aggregated make the State in all, whose action, labor, and capital is equally represented and perfectly harmonized.

Perhaps the most relentless pro-slavery critic of capitalism was George Fitzhugh.

In his most famous work, Cannibals All, or Slaves without Masters, Fitzhugh gets right to the point in the first sentence of the first chapter:

We are all, North and South, engaged in the White Slave Trade, and he who succeeds best is esteemed most respectable. It is far more cruel than the Black Slave Trade because it exacts more of its slaves, and neither protects nor governs them.

In other words, both North and South, employers who pay wages are just as much slavers as those who whip slaves on the plantation.

But, as with Calhoun, Fitzhugh imagined that at least the slaves were guaranteed a living and ensconced within a stable and caring social environment: “[t]he farming negro has double the allowance of the English or Yankee hireling and none of his care and anxiety.”

After all, in England, where the wage “experiment” had already been tried for centuries by Fitzhugh’s day, the system had, in his mind, “proved its total and disastrous failure.”

Fitzhugh thus confidently concludes “there is not one intelligent abolitionist at the North who does not believe that slavery to capital in free society is worse than Southern negro slavery.”5

The Slave Owner-Socialist Alliance

Although advocates for slavery often fancied themselves the defenders of civilization against “socialists, communists, red republicans, [and] Jacobins“ they often agreed with Marxists and other socialists when it came to critiquing the capitalist wage system. While slavery advocates of course rejected the supposed egalitarian aspects of various groups of socialists and communists, all could agree that capitalist employers exploited their workers and reduced them to a pitiable state of scratching out a subsistence while the employer pocketed all the surplus.

The slavery defenders embraced the idea that wage workers are exploited be their employers, and Fitzhugh writes on how employers extract a devilish profit from their workers while the kindly humanitarian slave owners use their surplus to make their slaves comfortable.

As with the labor activists and communists, much of the slave owner critique of wage work relied on the idea of “bargaining power.” By this thinking, many workers live near a subsistence level and must take whatever wage employers offer them so as to starve to death. The employers can sit on their capital and wait to hire anyone until he agrees to take a subsistence wage.  That is, the employers have all the bargaining power, and the workers are not really free to reject a subsistence-level wage.

In his essay on labor movements in the US, Alex Gourevitch summarizes the argument:

The workers “ assent but they do not consent, they submit but do not agree,” said George McNeill. Or, as one “Meddlesome” put it, “freedom of contract is not free, but only seeming free.” The labor contract was a “seeming freedom” because the worker, though legally free to sell or not sell his labor, was nonetheless compelled to sell his labor. As one Knight [of Labor] put it, “the producers are slaves. ...Even the children and women of the American laborer are driven, from necessity . ... to toil from dawn till night, that others may luxuriate in overabundance.”

The basic claim is that wages never grow because employers conspire to constantly drive them back down to subsistence levels.

For his part, Fitzhugh was sympathetic to this critique with its roots in socialist theory, at least according to Dorfman: “Fitzhugh found that the most extreme socialists were right in their criticism if they would only see that slavery was the true answer.”

So consistent on the slavery-versus-wages issue was Fitzhugh, he wanted to enslave working class whites as well. Dorfman notes how for Fitzhugh:

[T]he ideal communism would be to turn over the pauper whites in the North at present to the possessors of capital. The North must realize that the masses require “more of protection and the philosophers more of control.”

Or as Robert Higgs put it, “True to his sociological theories, Fitzhugh wanted to extend slavery in the United States to working-class white people, for their own good!”

Of course, the economic argument for “wage slavery” has always been wrong, as shown here, here, and here.

This is largely because employers are motivated to expand production so as to increase market share. They have an incentive to increase worker productivity, which brings higher wages. And, in an economy with even a reasonable amount of competition from other firms, any employer that makes a sizable profit by pocketing the workers’ surplus will face competition from other employers who want to get their hands on some of that pocketed cash. But to do that, the competitors have to forego some of it to lure workers away. This then drives up wages.

Moreover, historical experience hasn’t supported the idea of wage slavery. In The Rise and Fall of American Growth, historian Robert Gordon writes:

By 1914 [compared to 1906] the average nominal manufacturing wage had increased by 30 percent from seventeen cents per hour to twenty-two cents per hour, which translated to $2.04 per day. Consider the sensation created when Henry Ford announced early in 1914 that henceforth the base wage in his Highland Park factory would be $5 per day. His ulterior motive was to reduce labor turnover combined with a bit of altruism. Labor turnover was an endemic problem at the time, due in part to the reliance of manufacturing plants on immigration workers who were not yet married and planned to move on to another town whenever news came of better wages of working conditions. For instance, the superintendent of a mine in western Pennsylvania alleged that he had hired 5,000 workers in a single year to sustain his desired work force of 1,0000. The fact that unskilled work in manufacturing plants required little or no training made it easy for immigrant workers who were dissatisfied with one type of work to quit and move to another town and try something different.

But if wage work is wage slavery, how could this be? By Fitzhugh’s thinking, these workers should all be stuck working in the same place at the same subsistence wage forever. The idea that workers would voluntarily leave for a higher wages somewhere else can’t be true if the wage system is just another type of slavery.

Fitzhugh, of course, was wrong — as are his intellectual heirs who insist modern capitalist wage work is just a new type of slavery.

  • 1According to historian Maryan Soliman, “In the antebellum period, both reformers and slaveholders had used the term ‘wage slavery’ to describe the condition of northern laborers who contracted their work.”
  • 2According to Dorfman: “[McCord] lumped abolitionists with protectionists and reformers as communists.The de facto white slavery of England and the North was a curse. Starvation and deprivation of what little property he might acquire were the lot of the northern freemen; and the wretchedness of the English wage slaves made them fit material for communism.”
  • 3Joseph Dorfman, The Economic Mind in American Civilization, (Augustus M. Kelley Publishers, 1966) p.632
  • 4Ibid. p. 669
  • 5In truth, wages were probably growing significantly in England during this time. According to Clark Nardinelli:  For all blue-collar workers—a good stand-in for the working classes—the Lindert-Williamson index number for real wages rose from 50 in 1819 to 100 in 1851. That is, real wages doubled in just thirty-two years. Over a larger time period, this study from the Philadelphia Federal Reserve tells us:  “Between 1780 and 1989 [in England], the real wage rose 22-fold.”
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