The Economics of Slavery

April 19, 2008

Not knowing much of anything about history, the most valuable thing I can do is come up with a hypothesis that isn’t obviously false. Posts like this tend to contain a lot of idiotic rambling (see Scott Adams’ blog for examples of this), but I’ll do my best. And maybe someday I can write a book about it, so it won’t have been a total waste.

Is it possible that slavery and colonization are inferior to free-market capitalism, even from the perspective of the slave-master or colonizer? Would slave owners and colonizers be richer if they freed their slaves or gave up their colonies? I would imagine it’s possible that the answers to these questions might be “yes,” when one accounts for the lack of innovation and incentives for innovation inherent in forced labor.

In some economies, certainly in developed economies, it is the case that innovation and human capital play a much larger role than natural resources in the overall wealth in the economy. I would be interested in testing the idea that as economies transition from reliance on tangible goods like gold, rubber, and cotton, to sophisticated goods and services requiring creativity, it becomes much less worthwhile to invest in slaves or colonies. From my perspective, there is a huge loss under systems of force because people have no incentive to innovate. Slaves fear punishment, but inventing new and innovative ways of doing their masters’ bidding brings them no benefit. Slave masters can monitor slave behavior, but the masters have no way of knowing the maximum potential production of slaves. If this loss due to lack of innovation is sufficiently large, masters would do better by allowing slaves to capture a portion of that gain.

You might be able to test this hypothesis by looking at the correlation between the share of GDP created by natural resources and slavery. Any other ideas?

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2 Responses to “The Economics of Slavery”

  1. David Says:

    Don’t know if you’ve seen it (it doesn’t exactly jive with a libertarian worldview) but the movie The Yes Men put out a couple years ago has a bit where they satirically look at slavery from a modern economic perspective. Towards the end they get a little ridiculous, in a kind of “how much can we get away with” way, but other than that they’re pretty clever and tongue-in-cheek. Check it out:

  2. tripinchina Says:

    Hell! As long as we’re entertaining ridiculous ideas, why not entertain the idea that the slaves would be even more innovative if they had a union?


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