Why Slave Economies Thwart Entrepreneurial Innovation
The new history of capitalism (NHC) offers libertarians an exciting opportunity to defend the vitality of capitalism. Scholars like Sven Beckert, Walter Johnson, and Edward Baptiste argue that slavery provides fascinating insights into the workings of early American capitalism and that it furnished the capital to fuel industrial development. Consequently, libertarians have responded to this declaration by articulating that slavery cannot explain America’s prosperity. However, in their determination to refute this proposition they are overlooking a glaring conceptual error promulgated by the NHC: slave economies had a propensity for radical innovation. By portraying slavery as a dynamic economic system, left-leaning historians can further validate their thesis that slavery and capitalism are inextricably linked. Slave societies did employ technologies, but they were not outlets for revolutionary developments.
It will be demonstrated that even agents in slave societies were guided by the same incentives present in a capitalist economy, since they too were interested in capturing profits, yet their bouts of technological ingenuity did not revolutionize slave societies. Before we commence our discussion on innovation in slave societies, we must clarify the subtle distinction between capitalism and slavery. An unregulated trade in humans is still a free market, but not a capitalist market. Capitalism is based on mutual consent, whereas participation in slave markets for the enslaved is involuntary. Hence it would be more appropriate to describe slavery as an autarchic market hinged on coercion. Despite the coercive character of slavery, the motivations of players such as entrepreneurs, managers, inventors, and slaves are similar to those of rational economic actors in a typical capitalist economy.
Like their capitalist peers, these players were driven by the desire to attain wealth and status. Slave plantations were businesses and as such owners and managers sought to contain costs. Failing to adopt new technologies would have made plantations less efficient. Therefore, incorporating novel organizational techniques along with the mechanization of plantations served to bolster efficiency in slave economies. In his commentary on innovation in plantation societies in the British West Indies, Richard B. Sheridan notes:
The more enlightened British planters looked for ways to reduce costs and raise revenues by means of managerial and technological innovation. They read the planter manuals written by Samuel Martin and other authorities and applied these ideas to their own estates. They formed agricultural societies which disseminated new ideas and the results of local experiments….The Journals of the House of Assembly of Jamaica contain much information concerning improvements in the mechanical technology of the sugar industry. During
Article from Mises Wire