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    6 Economics of Slavery

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    Yodtoshdlw Geez

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    © All Rights Reserved
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    of 5
    Slavery By the beginning of this century slavery had largely disappeared. But comparing slaves and free laborers and exploring the forces that permit slavery to flourish in some circumstances and notin others not on Provide insight into an extinct institution; such study also sheds light on contemporary ones, enhancing especially the un td owmerhp paces, aul” Hs undesanding of ‘THE SLAVE CONTRACT Labor services, routinely exchanged in the market,’ are subj trace. The typical contract for the services of she wonbe early rather narrow, and usually short-term, set of atributes from the labor nes tots buyer, Savery, 00, maybe viewed as a labor cont ae were, that gave slave owners extensive rights over thes slaves nthe ase of force slavery, the contrat extended over the slave's entire ime ‘orizon. The voluntary slave contract typically specified a shorter dura. tion and gave the owner few fon and gave the owner fewer rights over the slave than did the forced Forced slavery was initiated by theft — as the term suggest if free people were captured and, were forced ino slavery. Voluntary slavery was the ta contract to which both parties agreed, Presumably with the belief tha signing the contract would be beneficial In some cates, vluntary slavery reed fom a loan dea whatever reason, persons who posted themselves as collateral inst debt detauled and lenders took over the cllaea, soning lentured servitude, a form of voluntary This chapter is largely deriv hs caper isagely derived from Bar 76 Slavery slavery, was a direct method of repaying loans. Such loans often served to finance the passage of the servant from Europe to America. To repay the an, indentured servants worked in America for a number of years virtu- iy as slaves. The duration of the servitude was determined in an auction in which the winning bidder was the person who bid the smallest number of years of service and bought the loan contract from its previous holder ~ often the captain of the passage ship; the servant worked out her cor his debt for the final lender, usually an American farmer. term “contract” normally implies a voluntaty relationship; indeed, fa relationship from which both parties expect to gain. The term fits woluntary slavery well but forced slavery less well. Free persons, having been forced into slavery, obviously did not expect any gain from their change in status. Thus, if the term can apply at all to forced slavery, it applies only to the period of time after the persons have already become slaves. Even then, such usage stretches the definition of “contract” to its ‘Nevertheless, it will be seen that the notion of a slave contract is ful in analyzing the institution of slavery. SLAVES? SUPPLY OF LABOR Obviously, slaves were extremely poor people. A recognition of their poverty is essential if various practices under slavery ate to be under- stood. The intensity of slave labor may be explored through the conven sare choice analysis. In Figure 6.r, a typical diagram for such an analysis, a free worker with budget MM will choose to be at point A, which lies on U, the highest indifference curve that the worker ‘attain. A person subject to a budget constraint MM obtains her or his ie income from the use of het of his own time. A budget constraint 'M'M’ implies that the individual has an income equal to the vertical distance between MM and M'M’ from sources other than the use of her ‘or his own time. Similarly M"M" indicates a negative non-labor income, that is, a debt-payment obligation. A positive income elasticity for leisure a highly plausible relationship for a person whose earning power is low and who is a net debtor ~ implies an is i supply of labor as the budget constraint shifts inwatd. Given su as the fraction of a person's potential labor income that must be used for debt repayment increases, the person increases her or his labor supply accordingly.” “The supply of constrained by the length ofthe da fatigue: The effect of fatigue is abstracted from Figure 6.15 the budget line would not be a straight line. Ago abstract tually a choice varia ‘on in my 1974 arc. 7 Economic analysis of property rights ours of leisure day Figure 6x Workers incur maintenance expenditures ~ the on items (e.g., food, medical care, shelter) that wi level. Such expe imal expendicures sustain them at a jrares most likely increase with the sania jum income from work is the lar present value of labor income a worker is able to produce net of he present value of her or his maintenance expenditures. i lor eft soc with producing the avium oe pen alae also permits the largest possible debt payments Such a level of exert = en, defines the largest debs that a person can pay and still earn just gnough to sustain herself or himself A fre person witha co 7 cbt presumably will choose to operate at such a level of exertion, Poli. ing costs aside a forced slave canbe viewed asa person who operates exactly that point, The owner of a forced slave will; heetfort that, netof maintenance expenses, stream. Thus, a forced slave may be compared to a free person who corre © operate ena the sme nay the dv outed Given thatthe slave (or her or his ancestors) was stolen, she or he oper under a contract che terms of which have just been described, Mas sion i he act of buying ou a sae ra when the law permite slavery, the question of manumision \s indicated in the opening paragraph of this book, the * Slavery observation of selfpurchase poses a major puzzle: How could a slave, Gnother person’s piece of property, purchase ber or his own contract? In order to resolve this puzzle, transaction costs, in particular p must be considered. THE COSTS OF SUPERVISION ince slaves were the full-fledged property of their owners, all the income their owners’. Owners who took anything, start wi How could slaves, then, accumulate wealth, sometii ‘enabled them to purchase their own contracts? Had both slaves’ cap. ties and the net output they produced been costlessly measurable, w maximizing slave owners would indeed have extracted every last ounce of productiveness from thei slaves. Under these conditions, conditions that would have permitted owners to be owners in the most complete sense of Fp ionic that the slave status itself would have been inconse- {quential. Had policing been costless, the owner could have let the debtor Sperate asa free person and still obtain the same income, for instance, by fn explicit debt payment ofthe same value as that generated by %s services without requiring a slave contract. The free person, ‘would still have had to work exactly like a slave in order to be het or his debt. Since in realty the evaluation of inputs and is costly, policing is required to induce effort; as we shall see, accumulation by slaves is then possible. “When the net output ofa free worker can be determined at low cost, advantageous for her or him to operate as an independent worker, then no problems of incentive arise in motivating her or him to work. Such vas not the case with slaves; the labor services slaves could provide be- Jonged to their owners. Even when output was easily measured, slaves ‘would have gained from producing less and thus had to be induced to produce more. The distinction between slaves’ and free workers’ incentive Became even more acute for tasks that free workers performed by the hour. Free workers will do best if they can convince their future employers that they are more productive than they actually are, sine, asi is difficult to [certain their rue productiveness, their wages will then be higher. Slaves, on the other hand, would have done bestif they could have convinced theiz Gwners that they were no good, since little would then have been expected ye status become devoid of signif- in the fret place, since one person Economic analysis of property rights of them. Slave own: ofthe Sar owners, hen, had to spend resources to figure out how actualy supervise their efforts or ci ease nee suming that the supervi : ge umn at the supeeviston of fortis subject to diminishing mar 2 uld, in their supervision effort, have stopped The aitference between slaves! Se eee The ference ber maximumoutput and their act bes in ran tse prope dsc ses ‘ain form a5 the product they produced for their ovne Property, property that owners had pers vt ad an interest in protects ig Ctmersbad the choice bereen supervising hl i compar what employers have to do when the free worker Poy work by the pec, and supervising thei clon: whichiesrnee le to what employers have to ploy Kee worker by the Inu The a ued gle wre wecagnied Seg wpevision, since whenever slaves fet on ese Cus a6 to ts quanti, 18 qualiy, and indie Sapam sea Productive series such ab equipment. Saves out they would have produced not have been set by simply ol incentive to produce lite du servi observing past performance, since slaves’ maly obsrving f > since slaves incentive co prod 16 the demonstration period woul teenstronginded, Since quotas Were subject eon andsnce wo gh a ota would have resulted in the destruction of slaves the a rrpers would have selected ro maximize thei own wealth were expected laves withthe ference between the quota andthe mat iota and the m: ‘mum they cou imum they could produce adiference they coud tke advantage of grins contain of dav aosmalation woud have besa equal sing the got, confseton woul have dele he sce owner permite saves vo own and scumelae IE Las Seldom became sich, Nevertheless, the fre time th sain enabled them, among other things, 1 erable fh and hung and also to steal. Ther owners ana What slaves had to eareee tracts were, as a rule, household slaves, sometimes well-trained ones ‘Slaves had ro be cael carta ot to do 10 go ers who thought ves we nt at ving this owners, since ther cos wotld have Youn es “This statement applies do mass er ee ADplis to the average slave. Saves why ney ee ie 30 were mistakenly asked slaves 00 the © : ing were in bad shape ly asked the extent hae they sometimes ted Fam eiaannen eed Bo Slavery s were diverse, they were difficult to supervise, vd with the skill of the performer. Household slaves, therefore, especially skilled ones, had better opportunities to accumulate the fields. than did the slaves who worket ‘The need for supervision and the desire to economize on its cost made ownership of slaves less than fully delineated. Slaves were able to capture Some of these undelineated rights — in this case, rights to themselves. Success, partly due is in feigning inability on the one hand and to tativities such as fishing on the other, and partly due to the luck of having, ‘Gurors made in their favor, eventually enabled some slaves to buy their own contracts. Because theit tasks colty that increases SLAVES” CONSUMPTION “The sharp conflict between slaves’ and owners’ interests was not confined to slaves effort and its supervision; it also affected consumption peac- ees, Owners could not drive their slaves hard unless they made sure that they were properly maintained that the nutrition, medical care, and ther services slaves received were commensurate with the effort required Of them, Correspondingly, in the United States, as Fogel and Engerman (1972) show, slaves received what appears, by nineteenth-century stan Garde, to have been good medical care and a nutritious diet.© Owners, however, had litle incentive to let their slaves consume food other than that incladed in the least-cost diet or to let them consume other services beyond the lowest-cost ones required for maintenance. Slaves, on the ‘other hand, were not necessarily harmed when their productivity was Ipwered, Obviously, they preferred more palatable food, which they would have substituted, in patt, for less pleasant if more nutritious food. ve tool owners possessed for minimizing maintenance costs was they attained this control by rather than allowing slaves a choice. Thus, slaves’ diet in the en consid- ‘white potatoes even poor free farmers chose to consume. of slaves’ constimption, however, was not absolute, Sceasion, avoid taking medicine, since in their eyes remaining Sometimes preferable to returning to work. Slaves also traded food ra~ fons for alcohol on occasion. Owners not only refrained from supplying Sleahol but, most tellingly, also took various costly steps to deny slaves Fogel and Engerman, however, donot interpret thet findings on nuttition the way 1 de Es depeche they do not systematically apply transaction cost notions fo the 8r Economic analysis of property rights access to it. Drinking reduced slaves’ productivity, and owners made a concerted effort to make drinking expensive to slaves, ENFORCING PROPERTY RIGHTS IN THE PRESENCE OF SLAVERY ‘The legal ban on both forced slavery and voluntary slavery is now univer- sal; in other eras, various restrictions were placed on both practices. ‘Voluntary slavery is a contractual arrangement into which neither party ‘would enter if she or he did not expect to gain from it. Forced slavery is an arrangement from which owners obviously gain. Nevertheless, be. cause of problems of theft, the institution of slavery, both voluntary and forced, may entail costs that free persons might consider excessive, Two forms of theft are associated with the institution of slavery. Already ‘mentioned is the fact that theft was the initial step in forced slavery. The other form of theft occurred when slaves escaped; the escape turned what were to their owners valuable assets into assets deprived of some or all of their value. The pro! of slavery constituted the attenuation of individuals’ rights. The gains from extending such rights, however, must bbe weighed against the costs associated with theft. Coercion of free people into becoming slaves has largely been a conse- ‘quence of raids and of full-ledged wars among nations. For many cent ries West Africa was subject to raids and was the main source of the slaves of the American South, of the Caribbean, and of South America Since losers of wars and raids were not the winners’ countrymen, one would not expect states to outlaw that source of slavery. Slavery was permitted at certain times and places and prohibited at ‘others; it is not easy to explain why. I offer one highly speculative hy- pothesis involving policing costs: As the costs to the police of and freeing forcibly enslaved free people and of recapturing escaped slaves increased, the likelihood that slavery would be probi enhanced. Raids in which free persons are captured and turned into slaves against their wills can occur within a country. Free persons vately to protect themselves against enslavement; they state to enhance their rights. The most obvious such use of the state machinery is to make enslavement of one’s countrymen a crime. A more extreme step is to prohibit slavery altogether.’ Enslaved persons would have found it exceedingly difficult to demonstrate that they were forced into slavery in a society that permitted slavery. The returns to such thef, ‘The colonization of Africa probably contributed tothe decline in slavery. Eohance- ‘meat of property rights within colonies increased the colonies’ value tothe colonizers, od was take steps pri- 82, Slavery sed than they are where slavery is avery is permit stv threat to free persons of being ts se tmies that prohibe slavery. The far free Te have of being turned into slaves may explain, at leas in part, the people have of being van aha the case of escaping slaves. It Hfierene argument applies in the case of e a dae Sencall tee that certain costs of proteting rope fom thee are astumed by the stat. In Chapter 7 i will be suggested 262 feneralpropostion that ais willbe banned if he polis protection ts very costly as compared with the at teva TE as compared ith the private value of slavery, the gost the polio of reoveringeseaped slaves as excess slavery woud be banned. The higher te danger toa country’ residents of being fred nto avery andthe higher te cast of ecoveing vaped lave the more yh slaver wb probed For ong nin he Aesinn ing a slave and being black were alm ai sont ei al of them white id not ave fear becoming enslave errtaped slaves could readily be identifed and captured. Asthe pope inom of ee blacks prew, however, the dnncion between a fice person ia slne ere re a oak Consume of Sivery were ineeased, and the net gain from d tion’ sere and slaves would be more dificult: make and he roles Foor ant enslavement of free people and of capturing escaped slaves the fared ender oon ten they were inde ald Sou, Its not ee py hen, hatin many societies slavery was severely restricted an is now prohibited everywhere" a vhatne denise of indentured servitude may geen for sna ee that brought the demise of slavery. Att inception, the Popol: ws a sean secant wet any distinguished fr ae nevertless, eported every once in a wile in the sof slavery a, : wt pare eon he appre sous the se Foe ant pron pane w andthe Ron ‘one to: 1 ee slates, an te Rotman sed he er fr wumission, pechaps in order her states imposed various restrict getans inode the formation of enclaves of free crite ots fe esa ae to release ther during the Sak Economic analysis of property rights fice people. With time, the cape easier and population grew and diversified, making es- perhaps also making the enslavement of free peopleear ¥g the net benefit of the institution to the originally free Populaon the end of the nineteenth centur ished, perhaps because the costs of poli tains. The current prohibition of slavery i {he owner ofthe capital asst embedded inher or hi lavery was accompanied by the transfer of such capi previous slave owners othe slaves themsel also entails additional rest n slavery had largely been aby ing the institution exceeded The abolition of assets from the tion of slavery ‘when work- r services, only short-term ional restrictions may also SUMMARY [Even though forced slaves seem to have been stripped of any ight in Practice ownership over them was not complete. Owner had to spend Fesources on supervising slaves’ work effort and consumption patem aud on preventing thee escape. Such efforts were subject inca Sats and temps to economize on thee costs included ranting aves SHQULEENS Ih toe cate slave? output rate than tha etre a lower the cost of supervision then inclu Eig avs the obo pt ofthe upto crown neh slaves, though legally their masters" proper perere wealth and occasionally to buy their wn cont were able to accumulate 84 7 _ Reconciling restrictions on property rights with maximization of rights’ value Eoonomists concerned with property rights often consider any restric- “

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