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Why Slave Economies Thwart Entrepreneurial Innovation

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Tags CapitalismU.S. HistoryWorld History


The new history of capitalism (NHC) offers libertarians an exciting opportunity to defend the vitality of capitalism. Scholars like Sven Beckert, Walter Johnson, and Edward Baptiste argue that slavery provides fascinating insights into the workings of early American capitalism and that it furnished the capital to fuel industrial development. Consequently, libertarians have responded to this declaration by articulating that slavery cannot explain America’s prosperity. However, in their determination to refute this proposition they are overlooking a glaring conceptual error promulgated by the NHC: slave economies had a propensity for radical innovation. By portraying slavery as a dynamic economic system, left-leaning historians can further validate their thesis that slavery and capitalism are inextricably linked. Slave societies did employ technologies, but they were not outlets for revolutionary developments.

It will be demonstrated that even agents in slave societies were guided by the same incentives present in a capitalist economy, since they too were interested in capturing profits, yet their bouts of technological ingenuity did not revolutionize slave societies. Before we commence our discussion on innovation in slave societies, we must clarify the subtle distinction between capitalism and slavery. An unregulated trade in humans is still a free market, but not a capitalist market. Capitalism is based on mutual consent, whereas participation in slave markets for the enslaved is involuntary. Hence it would be more appropriate to describe slavery as an autarchic market hinged on coercion. Despite the coercive character of slavery, the motivations of players such as entrepreneurs, managers, inventors, and slaves are similar to those of rational economic actors in a typical capitalist economy.

Like their capitalist peers, these players were driven by the desire to attain wealth and status. Slave plantations were businesses and as such owners and managers sought to contain costs. Failing to adopt new technologies would have made plantations less efficient. Therefore, incorporating novel organizational techniques along with the mechanization of plantations served to bolster efficiency in slave economies. In his commentary on innovation in plantation societies in the British West Indies, Richard B. Sheridan notes:

The more enlightened British planters looked for ways to reduce costs and raise revenues by means of managerial and technological innovation. They read the planter manuals written by Samuel Martin and other authorities and applied these ideas to their own estates. They formed agricultural societies which disseminated new ideas and the results of local experiments….The Journals of the House of Assembly of Jamaica contain much information concerning improvements in the mechanical technology of the sugar industry. During the last quarter of the eighteenth century, when inventors and innovators were perhaps more active than in earlier or later periods, the Assembly received applications for patents of monopoly from 28 individuals.

Apparently, improving the efficacy of production ranked highly on the agenda of the plantocracy. As Sheridan further illustrates: “The inventions were variously described as a ‘new invented mill for grinding of sugar-canes,’ ‘an improved cattle mill for sugar estates,’ ‘an improvement on wheels for turning water-mills,’ ‘a hydraulic machine which raises water in any quantity,’ ‘a new method of hanging coppers for clarifying cane-liquor,’ ‘a method of greatly improving the manufacture of muscovado sugar and distillation of rum.’” Sheridan’s analysis is a stark diversion from the commonly held position that innovation is inconsistent with slavery because the free availability of labor discourages planters from implementing labor-saving devices. In fact, as Sheridan explains, technology actually complemented slave labor: “In summing up the slavery era, it appears that slave labor was generally compatible with technological progress, particularly in its mechanical aspects. By taking over skilled plantation tasks which were initially performed by white artisans, the black slaves demonstrated a high degree of adaptability to changing sugar technology. Such slaves, known as ‘privileged slaves,’ were commonly allowed small perquisites by their masters.” As the latter statement suggests, clearly an increase in social status inspired skilled slaves to cooperate with their masters.

We admit that slavery was brutal, but like most humans, slaves were also interested in building relative status. Opportunities to use diverse technologies allowed skilled slaves to display their technical prowess, thus making them elite slaves. Also, quite pervasive is the view that technology makes labor redundant; however, the evidence is more complicated, with numerous studies indicating that technology creates new tasks for employees. As we have seen, technology’s relationship to labor in slave societies was not different. Moreover, investing in technology was the norm for slave economies irrespective of location. Richard Follett argues that Louisiana sugar plantations were among the most industrialized sites in the world, relying heavily on steam power and sophisticated chemical and mechanical processes in distilling. Neither was the involvement of skilled slaves in technical operations an anomaly. “Slaves in the upper South undertook technological as well as agricultural tasks. Thus, at ironworks slaves began as laborers in the early eighteenth century and by the end of the century carried out all of the skilled tasks at most Southern forges and furnaces,” writes economist Robert Gordon in his article “Technology in Colonial America.”

Based on the evidence outlined, it appears insensible to posit that slave economies could not entertain innovations. So, if they had such a proclivity for innovation, why is it, then, that the innovations were usually instrumental instead of transformative? In assessing Louisiana’s sugar industry, Richard Follett observes: “Yet for all the industry’s relative modernity, planters shied away from the most technical innovations.” Similarly, Charles Post opines that unlike capitalism, slavery failed to consistently spur changes: “The introduction of labor-saving techniques in Cuban sugar production and shipping, or in Virginia wheat cultivation did not set off a process of continuous technical innovation. Like other technical innovations under slavery, they corresponded to the introduction of new products or the movement of production to a new frontier. Once established, these new labor-processes remained relatively unchanged until new products were introduced, new geographic regions were brought under production, or slavery as a form of social labor was abolished.”

There is no need for us to be baffled by such conclusions. In capitalist economies, entrepreneurs are attracted to the allure of profits. Admittedly, slave owners also aimed to maximize profits, though not at the expense of dismantling slavery. True capitalists understand the process of creative destruction. On the contrary, several slave owners were myopic men seeking to ensure the profitability of slavery. The capacity of the average plantation owner to envision participating in an industry other than slavery was limited. Unlike capitalists, who are usually willing to switch ventures to obtain new sources of wealth, slave owners opted to preserve the inequalities created due to slavery.

So, for example, if planters could have doubled their earnings by freeing slaves, most would have refrained from doing so. With the existence of slavery, they were perfectly suited to defend their privileges. Invariably, the absence of slavery would reduce the power of the plantocracy, because it eliminated avenues for rent seeking. In contrast to the teachings of the new history of capitalism, slavery was anticapitalism, and neither could it permit the full extent of free entrepreneurial innovation, which might have upended the social order. Planters overwhelmingly promoted instrumental innovations that lowered operational expenses by cutting costs, but they were less likely to adopt radical innovations that would force them to question the relevance of slavery. Essentially, slavery was a rent-seeking institution in which accommodating dramatic innovations proved too onerous for planters preferring the status quo.


Contact Lipton Matthews

Lipton Matthews is a researcher, business analyst, and contributor to Mises.org, The Federalist, and the Jamaica Gleaner. He may be contacted at lo_matthews@yahoo.com or twitter @matthewslipton

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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