Jeffrey Rogers Hummel on Slavery
Chattel slavery involves the ownership by one person of another. This entry focusses on the operation of that labor system in the United States. Although chattel slavery dates back to the dawn of civilization, in the area that became the United States it first emerged after the importation of Africans to the Virginia colony in 1619. Prior to the American Revolution, all British colonies in the New World legally or informally sanctioned the practice. Nearly every colony counted enslaved Africans among its population. Only during and after the Revolution did the northern states abolish the institution or begin to implement gradual emancipation. But slavery was more economically entrenched in the southern states and became more so over time. By the outbreak of the Civil War in 1861, slaves constituted one-third of the total slave-state population of 12.3 million.
Slavery has captured the attention of economists since at least the eighteenth century. Two basic questions have remained intertwined throughout the history of economic thought regarding this ancient institution. First, was slavery profitable? And second, was slavery efficient? Was it profitable to individual slaveholders, in the sense of offering a reasonable prospect of monetary return (or some other material reward) comparable to what they could earn from other enterprises? Efficiency refers to overall economic gains. Did the exploitation of slave labor allocate and use resources in ways that fostered aggregate wealth and welfare, regardless of how unfairly it distributed wealth? Did it produce goods and services as abundant and valuable as alternative labor arrangements could have? Often economists and historians have reached identical answers to both questions, concluding that either slavery was both unprofitable and inefficient or both profitable and efficient.
These are the opening paragraphs of Jeffrey Rogers Hummel, “U.S. Slavery and Economic Thought,” in David R. Henderson, ed. The Concise Encyclopedia of Economics. It’s the latest addition to the on-line encyclopedia. It’s very long but well worth reading.
Strictly speaking, economists usually and most broadly employ the term “efficiency” as a measure of welfare rather than of output. Thus, while economic historians now agree that antebellum slavery marginally increased the output of cotton and other products, it still could have diminished total welfare. In measuring efficiency, economists have no precise unit to compare the subjective gains and losses from involuntary transfers. But because most coercive transfers in the Old South were from poor slaves to rich slaveholders, to assume unrealistically that such transfers were a wash in which slaveholder gains equaled slave losses is to bias the analysis in favor of slavery. Thus, if welfare losses still exceed gains, even with this bias present, one can be certain that slavery was inefficient. Hummel, in his dissertation, “Deadweight Loss and the American Civil War” (2001, updated 2012), integrated previous work into a systematic challenge to slavery’s efficiency. He identified three sources of deadweight loss: output inefficiency, classical inefficiency, and enforcement inefficiency.
And an excerpt on the New History of Capitalism:
By the twenty-first century the slavery debates among economists had become quiescent. One major subsequent contribution is Olmstead and Rhode’s “Biological Innovation and Productivity Growth in the Antebellum Cotton Economy” (2008). They found that average daily cotton-picking rates quadrupled between 1801 and 1862, mainly due to new cotton varieties. But among historians, those describing their own work as part of a “New History of Capitalism” now claim that slavery was the primary source of overall U.S. economic growth in the antebellum period. Two of their major works are Beckert’s Empire of Cotton (2014) and Baptist’s The Half Has Never Been Told(2014).  While embracing the finding that slavery was productive, these historians otherwise largely ignore all previous work of economists. Yet the idea that slavery was essential for cotton production, which drove national growth, is belied by the fact that just five years after the Civil War’s end the physical amount of cotton produced was approaching its prewar peak, mainly because of increased acreage devoted to cotton cultivation, despite the fall in southern real income.
Baptist went so far as to ignore Olmstead and Rhode’s explanation for the increase in cotton-picking rates, attributing it instead to a whipping regime of calibrated torture, steadily increasing over sixty years. Horrendous as torture is, the claim that it could account for productivity continually increasing for more than half a century is implausible on its face. Ignorance of national income accounting and Baptist’s double counting led him to attribute almost half of U.S. economic activity in 1836 to cotton production. Although cotton was the largest U.S. export, it never exceeded 5 percent of GDP. Olmstead and Rhode (2018) offers a comprehensive and scathing critique of the New History of Capitalism’s works on slavery.