economics of coercion2

American Negro Slavery

04/18/23Greg Pratt, Mesa Community College

Slavery is the ubiquitous institution in human history

Stanley Engerman


Formal Institution Informal institution


Greg Pratt, Mesa Community College 04/18/23

Command/centralized



Economic Decision Making


Trans Atlantic 25%

North Africa/Europe and Asia

25%

Intra Africa 50%

New World

Europe Africa

1600 25 100 50

1700 3 120 45

Today 310 500 1 Billion


Negro males listed in the 1850 census were engaged in fifty-four different occupations; only 9.9 percent of them were unskilled laborers. Some of them even held jobs as architects, bookbinders, brokers, engineers, jewelers, merchants, and musicians.


draymen, porters,carpenters, masons, bricklayers, painters, plasterers, tinners,

coopers, wheelwrights,cabinetmakers,blacksmiths,shoemakers, millers, bakers, and barbers


Tobacco per pound 0.50Corn per bushel 0.969Sweet potatoes per bushel 3.02Wheat per bushel 3.24

Cotton per bale 271.00


Demand for labor is a derived demandPrice of outputProductivity of labor

Free laborIndentured servantsRedeeptionersDebt peonageSlavery


LibertyIndividualismLaissez faireEgalitarianismPopulismExcept for slaves – their position was increasingly subject to greater coercion


The major

expansive force

in the US

economy from

1800 -1850:

Douglas North


Time on the Cross Fogel and Engerman


To this point it might be useful to pause and consider this nascent slavery in the United States along the lines of economic growth, welfare and decision making.

Economic growth – hazyEconomic welfare – general improvement for

society – slave welfare evolving – much less free – we’ll see what Fogel has to say in a minute

Decision making – evolution overall


antebellum Southern farms were 35 percent more efficient overall than Northern ones and that slave farms in the New South were 53 percent more efficient than free farms in either North or South.


This would mean that a slave farm that is otherwise identical to a free farm (in terms of the amount of land, livestock, machinery and labor used) would produce output worth 53 percent more than the free.


“Economic history is about the performance of economies through time.” North


Are you better off today, than . . .

Braudel – material lifeExamplesLive longerLive “better” reduction in average work week from68 to 36 – seems to be a preference for leisure over work


Adam Smith – system of natural libertyemergent and evolutionary – a spontaneous order that allows participants in society to use their own knowledge for their own aims without coercion

Hayek


Contra to Smith’s system of natural libertyCentralizedCoercivePlannedAdaptively inefficient


FlexibleError and TrialReceptive to change

It is adaptive rather than allocative efficiency which is the key to long run growth.


Successful political/economic systems have evolved flexible institutional structures that can survive the shocks and changes that are a part of successful evolution.


VoluntaryInvoluntary


Buy and SellLife timeInherited through the mother


Nature of man – angels or humans?Theory of Moral Sentiments – impartial spectator

as a mechanism to address humanity

Slavery inefficientThe Wealth of Nations – pursuit of self love will

guide society to ends that no one could either anticipate or intend


Was Adam Smith correct?Who benefited?What was the nature of the institution?


Slave auction recordsEstate inventoriesPlantation recordsSlave narrativesAbolitionist materialsChurch records


Slaves worked more intensivelyMethods of production – gang systemPlantation v diversify farmSlaves responded to incentives?



Negative – Simon Legree

Reduced RationsPrevent marriageSell familyWhippingsMutilationDeath

Positive – InducementsDays offPrivate plotsCabinsMarriagePayManumission

Sundays offBonuses in cash or in kind, or Quit early if they finished tasks quickly. Keep part of the harvest Own small plotsSell their own crops.


In antebellum Louisiana, slaves even had under their control a sum of money called a peculium. This served as a sort of working capital, enabling slaves to establish thriving businesses that often benefited their masters as well.


because slaves constituted a considerable portion of individual wealth, masters fed and treated their slaves reasonably well. . . , teenaged and adult slaves lived in conditions similar to -- sometimes better than -- those enjoyed by many free laborers of the same period.


US South - slaves

West Indian Slaves

Africans White workers in the US

102.0 88.0 89.0 100.0


Calories – potatoes v sweet potatoesLiving conditions – city v ruralType of work – indoors v outdoorsImpactHealthChild mortalityHeight


The entire US and world – cotton was the grease for the Industrial Evolution – textile industryTextile manufacturers – increasingly inexpensive inputMerchant capitalists – financing and shipping raw materials and finished goodsTransportation


Banking and financeConsumers (greater access to and much cheaper clothing)In short, . . . the south benefited and, to a greater extent

THE NORTH


1800 – 1860Prices secular declineIncreasing output per acre and in totalExpansion of the activityProfits

Adaptively efficient?


• Founding fathers in the late 18th century believed slavery would die out within 50 years

• What happened . . .

• The Cotton Gin04/18/23Greg Pratt, Mesa Community College

The immenent economist Abe Lincoln, in 1858 said that, with his plan, slavery would die out?Steve Douglas said, ok, lets accept your assertion . . . When?

Abe said . . . 100 years


Some would argue that the American Negro slavery was so adaptively efficient . . .New areas for cotton growthIncreasing innovation and productivityExpansion of types of activityIncreasing complexity of activity


AN ADAPTIVELY EFFICIENT

INSTITUTION


Leads to economic growthDoes not necessarily lead to an increase in individual welfareCannot persist with coercive economic decision making . . . in the long run.


UN – official end 1970China - 1910Thailand - 1905Brazil - 1888Cuba - 1886US - 1863Haiti - 1804


1860 4 million slaves with a value of 4 billion dollars

This was the size of the US economy (estimated GDP)

This was 40 per cent of total bank assets in the US


600,000 dead (over 50% to disease)600,000 injuredIn 1863 Union estimated daily cost was

2.5 million10 billion in direct costs by both sides14 billion in pensions to surviving

soldiersInflationCoercion and loss of liberty


NET DIRECT COSTS OF THE CIVIL WARin millions of $1860 discounted to June 1861 @ 6%

Category Union Confederacy

Government expenditures

2,291 1,011

Labor Costs UndercountedBecause of Draft

11 20

less Labor Costs OvercountedBecause of Risk Premium

-256 -178

Net Cost of Resources

Destruction of Physical Capital

0 1,487

Destruction of Human Capital

Killed 955 684

Wounded 365 261

Total 3,366 3,286

Source: Claudia Goldin and Frank Lewis, "The Economic Costs of the American Civil War: Estimates and Implications," Journal of Economic History


The Costs of the Civil War (Millions of 1860 Dollars) South North Total

Direct Costs: Government Expenditures 1,032 2,302 3,334 Physical Destruction 1,487 1,487 Loss of Human Capital 767 1,064 1,831 Total Direct Costs of the War 3,286 3,366 6,652 Per capita

376

148

212

Indirect Costs: Total Decline in Consumption 6,190 1,149 7,339 Less: Effect of Emancipation 1,960 Effect of Cotton Prices 1,670 Total Indirect Costs of The War 2,560 1,149 3,709 Per capita

293

51

118

Total Costs of the War 5,846 4,515 10,361 Source: Ransom, (1998: 51, Table 3-1); Goldin and Lewis. (1975; 1978)


Government borrowing Loss of economic growth during the

period 1861-1865 (never to be recovered)

Expansion of the doctrine of Total WarGiven the cost to eventually eliminate,

this institution had deep economic underpinings, was productive and, in aggregate, stimulative to growth and


Doomed to failure due to the coercive nature of the institution, not due to the moral reprehension of the practice.

Adaptively efficient institutions persist (Adam Smith was wrong)

Slavery is a moral vice (Adam Smith was right)


Institutions that are adaptively efficient and coercive can be very, very difficult to change peacefully.


economics of coercion2

Education

commandcentralized greg

nascent slavery

american negro slavery

ubiquitous institution

north africaeurope

douglas north

intra africa

negro males