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Slavery Could Not Persist in an Otherwise Free Market, Part II

Slavery Could Not Persist in an Otherwise Free Market, Part II
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In a previous post, I elaborated on Ludwig von Mises’ comments to argue that human slavery could not persist in an otherwise free market. Mises claimed that free labor was more productive than slave labor, and I used this empirical twelve-years-a-slaveclaim to argue that even if (somehow) we started out with a market where some humans owned the bodies of other humans, that market forces would eventually rearrange those titles so that everyone owned his or her body. I got some pushback on my post–even from Austro-libertarians–so I thought it worthwhile to come back to this important topic.

First, let’s switch contexts away from the emotional one of slavery. Instead, think about tools. Suppose in the middle of the night, gnomes sneak into carpenters’ toolboxes across the country, and sneak thousands of handheld electric drills out of their starting places and deposit them into the desks of secretaries. For whatever reason, the next morning the law recognizes the secretaries as the legitimate owners of the electric drills. The secretaries find the tools quite useful as paperweights and doorstops.

Now: In this silly example, does anyone think that it would take a massive war, with hundreds of thousands of deaths, to return the electric drills to use in carpentry? Of course it wouldn’t. Even though the secretaries can use their new property in the office setting, the electric drills are far more productive when in the hands of carpenters (and electricians, handymen, etc.). Even though the secretaries are the legal owners, they wouldn’t retain the drills in their desks, for use as paperweights and doorstops. Instead, they would realize they could sell the drills for their market price, and (if they wanted) use the proceeds to buy “real” paperweights and doorstops for a fraction of the money raised. It would be ridiculously inefficient to persist in using electric drills as doorstops, when they are so much more productive in other lines and under different ownership. Yes, this movement of property titles would involve payment of money from the carpenters to the office workers, and that would be unfair since the carpenters had been robbed by the gnomes, but the point is that such a payment would occur.

The same pattern holds for human bodies. Besides being immoral, it would be ridiculously inefficient if TODAY the black surgeons, dentists, accountants, musicians, etc. were instead transported by gnomes into the hands of large landowners, to be put to work in the fields picking cotton under threat of whipping. If, somehow, we found ourselves in such a ridiculous situation, then market forces would quickly rearrange the property titles so that these very productive “factors” were held by new owners, working in different lines. This movement of property titles would involve payment of money from the (former) slaves to the plantation owners, but it would be in the form of “future money” since the slaves initially wouldn’t have any money of their own. (Perhaps the slaves would make arrangements with third-party financial institutions who would effectively make a loan of the spot price of a slave and then hold a lien against the former slave’s wages until the loan were paid off.) This obviously wouldn’t be fair, since the original enslavement would have involved a robbery from the human beings so imprisoned, but the point is that such payments would occur; slavery wouldn’t last in an otherwise free market.

To see just how inefficient the South’s chattel slavery was, consider that it was effectively a collection of many different local jurisdictions in which the authorities imposed a 100% income tax. This would never persist as an equilibrium among city governments even in today’s heavily regulated markets.

Now the above theoretical discussion sounds convincing, but it raises the obvious question: Why did slavery persist so long, if market forces should have abolished it quickly? The answer is that we didn’t have an otherwise free market, within which the slave system operated. There were all sorts of regulations on slave holders; they weren’t actually able to do whatever they wanted with “their property.” For example, there were state laws regulating or banning outright manumission (the practice of an owner freeing his slave), and in some places it was illegal to teach your slaves how to read.

That last bit is just perfect for the point I’m making in these posts: The legislatures banning slave literacy were no doubt thinking, “We can’t just let individual slave owners do whatever they want with their property. Sure, it might be in a plantation owner’s immediate self-interest if his slaves are educated, but that ignores the harm imposed on society at large when the slaves get funny ideas in their heads and revolt. The government has a legitimate role to intervene in private affairs and make sure the anarchic market doesn’t end up hurting society at large.”

Say what you will about the institution of slavery, but it is not at all a “logical extension” of free-market capitalism. Not only does the act of enslaving a human being violate the entire spirit of free markets, but even if–for the sake of argument–we started with an initial arrangement where some humans held property titles in others, that would constitute a horribly inefficient outcome which market forces would quickly eradicate.

As is the case with so many other social ills, slavery too needs the active support of government intervention in the free market.

 

  • sethmacleod

    Fantastic argument! My only quibble is that I don't think you can necessarily claim that "market forces would *****quickly***** rearrange the property titles so that these very productive “factors” were held by new owners, working in different lines."

    Unless I'm misunderstanding you, I think there is the possibility that some people will be reluctant to sell their slaves (some people might get some sadistic pleasure even if it doesn't make financial sense). So while I think the trend would be to move away from slavery, I don't think we can say that it will necessarily be a quick transition — it might take a generation for bad ideas to die out.

    Or I might be misunderstanding you.

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Profile photo of Robert P. Murphy

Robert P. Murphy is the Senior Economist at the Institute for Energy Research, and a Senior Fellow with the Fraser Institute. He holds a PhD in economics from New York University. Murphy is the author of Choice: Cooperation, Enterprise, and Human Action (Independent Institute, 2015) as well as numerous other books and hundreds of articles.

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