On the American Left, a familiar idea has taken root: that slavery was not just one feature of the young republic’s economy but its actual engine, the true source of the wealth that later carried the United States into industrial preeminence. This argument, once confined to specialist debate, has since moved into the mainstream, most visibly through the New York Times’ 1619 Project, and it draws further support from a cluster of historians writing under the banner of the New History of Capitalism. These scholars argue that the productivity of enslaved labor and the credit markets built on slave-backed collateral were foundational to American growth rather than incidental to it.
If that argument is right, it should be easiest to prove in the place that relied on slavery more than any other society in the hemisphere, for longer, and at greater scale. That place is Brazil. Brazil imported more enslaved Africans than the United States, the Caribbean, and every other part of the Americas combined, and it kept slavery legal decades after its neighbors had abolished it, right up until 1888. If coerced labor really were a reliable path to prosperity, the Brazilian economy over these centuries is exactly where that success should show up. Instead, as the evidence below makes clear, it shows the opposite result.
For nearly two hundred and fifty years—from 1574 to 1821—the Brazilian economy essentially failed to grow. A newly-reconstructed series of GDP per capita, the first of its kind for this period, draws on more than 30,000 archival price and wage observations gathered from probate inventories, account books, and institutional records across Bahia, Rio de Janeiro, Pernambuco, São Paulo, and Rio Grande do Sul. Because no direct output data survive from this period, the reconstruction relies on an established method in economic history, an Engel elasticity framework that infers income from the relationship between real wages, food prices, and consumption patterns, essentially working backward from what people bought to what they must have earned.
The result is striking in its simplicity: average per capita growth across the entire colonial era comes out to approximately zero and, by some measures, the standard of living at the end of the colonial period was lower than it had been at the outset of settlement. The scale of what was at stake makes this stagnation harder to explain away rather than easier. Of the roughly 8.4 million enslaved Africans who crossed the Atlantic, Brazil absorbed 3.2 million captives, while mainland North America received over 300,000 directly across the entire span of the trade. No other society in the hemisphere leaned on coerced labor so heavily or for so long, which makes the flatness of its economic performance over three centuries a genuine puzzle rather than a predictable outcome of a poor colonial economy.
If two and a half centuries of flat income is the puzzle, the timing of its resolution supplies the clue. Almost precisely as slavery was dismantled, the pattern breaks, and the data trace this shift with unusual precision. While the transatlantic slave trade remained legal, from 1574 to 1850, the economy was not merely stagnant but contracting on a per person basis, at a rate of negative 0.14 percent a year. While slavery itself remained legal, through 1888, growth stayed essentially flat, at negative 0.01 percent. Only after the slave trade was banned did growth turn reliably positive, rising to 0.35 percent a year, and only after slavery was abolished outright did it climb further still, to 0.62 percent a year. The same shift appears when the periods are framed by conventional political eras rather than by the legal status of coercion: growth averaged negative 0.15 percent across the whole colonial period, then rose to 0.45 percent in the century after independence. Whichever way the data are cut—by statute, by era, or by decade—the dividing line in Brazil’s economic performance falls in the same place, where forced labor recedes.
A pattern this consistent invites an obvious objection, that it might simply reflect how the study happened to model slavery rather than any genuine causal relationship. The authors anticipate the challenge directly, reconstructing their estimates 216 separate times while varying every major assumption that could plausibly affect the result, including the size of the enslaved population, the productivity gap between agriculture and the rest of the economy, and the share of the workforce in agriculture. The pattern holds in every version. The relationship between the end of slavery and the beginning of sustained growth is therefore not an artifact of one modeling choice but the floor the entire dataset rests on.
Two mechanisms—examined separately in the surviving evidence—turn out to describe the same underlying failure. On one side, enslaved individuals are modeled as consuming a fixed subsistence basket that did not expand as the wider economy expanded, in contrast to free workers, whose consumption rose and fell with real wages. Because the enslaved share of the population is estimated at roughly a quarter of the total for most of the colonial and early imperial period, before falling to fifteen percent by the first national census in 1872 and to zero at abolition in 1888, a substantial portion of Brazil’s population was structurally excluded from the mechanism through which rising output normally becomes rising prosperity. On the other side, the wages actually paid to free workers confirm the same story from a different vantage point. Wages in Salvador and Rio de Janeiro started out comparable to much of Europe in the earliest decades of settlement, but as the slave trade grew, that position collapsed, and free wages sank for more than a hundred years to some of the lowest levels recorded anywhere in the world, with the worst years lining up almost exactly with the years when the most enslaved people were being brought in.
Recovery began only once Brazil started shutting the trade down, first half-heartedly in 1808, then more seriously in 1831, and finally for good in 1850, with wages climbing by roughly 28 percent, 45 percent, and 42 percent after each successive crackdown, gains too large and too consistently timed to be coincidental. Across the Americas as a whole, the same pattern holds: the more enslaved people a place imported, the lower its wages tended to be. An economy cannot broadly develop while a quarter of its people are held outside the market relationship that carries productivity gains into higher living standards, and it develops even less when the presence of that excluded population pushes down the wages of everyone still inside the market.
This is not simply a story about inequality, though it produced plenty of that. It is a story about growth itself. A society where free labor can be undercut cheaply by coerced labor has little reason to build machines, train workers, or reorganize how work gets done, because the entire logic of investing in technology rests on saving money that would otherwise go to labor, and slavery had already found a way to make labor artificially cheap. Nearly every economy that has grown over the long run has done so by extracting more output from the same number of workers, through better tools, better organization, and better skills. Slavery attacks that mechanism at its root, and it does more than transfer income from free workers to enslavers. It removes the incentive structure that produces growth in the first place, which is why the wage collapse and the stalled economy described above were really the same phenomenon viewed from two angles.
That link between wages and technology sharpens once the system’s self-reinforcing quality comes into view. Every time a task was handed to an enslaved worker rather than a free one, the people performing that work grew more efficient at it through sheer repetition, which made using enslaved labor on that task cheaper the next time around. The reverse held for free labor, so the more a task was worked by enslaved people, the more entrenched enslaved labor became in that niche, and the harder it grew for free workers or machinery to compete their way back in. This produced something closer to two separate stable equilibria, or resting points, an economy could fall into, a high-slavery trap and a freer, low-slavery path, with very little pull between them.
Once Brazil fell into the high-slavery trap, it did not drift out on its own, since its elites had no internal incentive to dismantle an arrangement that worked for them even as it quietly impoverished everyone else. What finally broke the trap was an outside force large enough to override more than a century of accumulated momentum, Britain’s prohibitions on the slave trade, backed by warships that seized trafficking vessels on the open ocean. The trade had to be forced shut from outside because nothing internal to Brazil’s economy was going to do it.
The contrast with the United States over the same broad period is highly instructive. This is not because North America escaped slavery’s heavy economic costs but because the United States eventually paired the end of slavery with powerful institutional innovations that gave free labor and capital an unusually low-cost way to organize business at scale. The most critical of these innovations was the rapid spread of the business corporation after the US Constitution was ratified. This marked a genuine break from colonial practice because before independence, American business corporations were very few, small in size, and had almost no meaningful impact on the economy.
By 1801, the legal foundation was already in place to support roughly 20,000 specially-authorized corporations. These entities would manage billions of dollars in authorized capital over the decades that followed, a rate of formation that quickly made the United States the global leader in corporate development. The great strength of this corporate structure was not abstract legal novelty but practical financial advantages that lowered risk and cut costs for everyone involved. Key features included perpetual succession so the company could continue operating even after owners or managers left or died, the ability to sue or be sued in its own name, limited liability so investors only risked the money they personally put into the business, and shares that could be easily bought or sold.
Even more revolutionary was New York’s 1811 General Incorporation Act, which broke decisively from the old practice of requiring a special legislative charter for every new company. Under the statute, manufacturing firms could obtain corporate status and limited liability for shareholders through a routine registration process, no longer dependent on political favor or a bespoke act of the legislature. This innovation stripped away a major bottleneck to enterprise formation and let capital flow more freely into new ventures, helping to expedite the pace of American growth throughout the nineteenth century. Other states followed New York’s lead in the decades that followed, and the general incorporation model it pioneered went on to become the world’s standard, underpinning how businesses are formed across the globe today.
Inevitably, these features made it far cheaper for entrepreneurs to raise large amounts of long-term capital than was ever possible through individual businesses or small partnerships alone. This affordable access to pooled capital funded the banks, canals, turnpikes, and large manufacturing enterprises that individual fortunes or small groups simply could not afford to build on their own.
Brazil’s centuries-long stagnation and the explosive growth of American corporations are two sides of the same critical historical lesson. For generations, Brazil relied on a system that suppressed worker pay, destroyed any reason to invest in labor-saving machinery, and locked wealth in the hands of a tiny elite instead of letting it spread and multiply across the wider population. In sharp contrast, the young United States built legal institutions that did the exact opposite. These laws made it cheap and safe for people to pool their savings into shared ventures, organize work around skilled employees and advanced tools rather than forced labor, and let entrepreneurs compete to build value through innovation rather than extracting wealth through bondage.
The rise of the United States to become the world’s largest and most dynamic economy was never the result of a single natural resource or lucky windfall. It grew from constant innovation and bold entrepreneurship. Most importantly, it grew from breakthroughs in corporate law that gave organized capital a stable, welcoming home it could find nowhere else on earth. This unique advantage made the United States—within just a single generation after winning independence—the envy of nations still bound by older, rigid, and far less effective ways of organizing enterprise.
