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.