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A Slave-Based Economy Is Nothing Like a Dynamic Capitalist One

The “new history of capitalism” has reprised the debate on the economic viability of slavery by rebranding it as an institution with a propensity for innovation and long-term growth. This group of scholars attempts to recast slavery as an institution at the very center of capitalism and the Industrial Revolution. Thus, this school of thought relies on promoting slavery as essentially a capitalistic institution with the same characteristics of entrepreneurship and innovation we have long associated with capitalism. For example, Daniel B. Rood in The Reinvention of Atlantic Slavery: Technology, Labor, Race, and Capitalism in the Great Caribbean challenges readers to recast slavery as a dynamic institution with potential for disruption, rather than as a stagnant system with little inclination for ingenuity.

Yet Rood, like many other “new history” writers before him, greatly underestimates the degree to which slavery-based institutions avoided the dynamism of capitalism in order to preserve a society of status. 

Rood is indeed accurate in arguing that slave economies could appropriate new technologies, and he offers compelling examples of innovations in product design and management. However, there is still a gap to be filled in the historiography of slavery because frequently writers fail to afford primacy to the motivations underpinning invention in slave societies. In slave societies technology is employed to increase the quantity commodities for the export market. Hence incentives emerge to adopt technologies that can augment the efficiency of the manufacturing process.

Although consumers might express preference for a specific type of export product overall, a slave economy is not aimed at product differentiation but at commodification. Plantations in the American South and the Caribbean were never competing to determine which estate could produce unique products for consumers. Instead, the focus was to capture a sizeable share of the export market, and in doing so, slavery shifted resources to exporting to the detriment of innovation-inducing activities.

Quite surprisingly, historians rarely question the association between slavery and this export trap. To survive, planters just had to secure export markets for commodities. As a result, product branding was marginal in the enterprise of slavery. Unlike manufacturing, where success is hinged on delivering novelties for consumers, planters had less incentive to craft products catering to the peculiarities of buyers.

Because planters benefited from subsidies and protected markets, inventions were usually incremental. Planters had a vested interest in preserving special privileges, and resorting to Schumpeterian innovations would have suspended these benefits. Normally, to remain relevant in the business space, entrepreneurs adapt to an evolving landscape and some even migrate to other industries. However, retooling is a risk, so in a slave economy, it’s safer for planters to maintain their prestige by neglecting disruption than to attempt innovation and fail.

This explains on a theoretical level why slave societies lag in innovation, but empirical studies are also consistent with our observation. According to a 2021 paper by John Majewski, in nineteenth-century America on a per capita basis, slave cities trailed significantly in every test of economic creativity. Majewski corroborates our thesis that slave societies are unlikely to promote a vigorous consumer culture:

Historians focusing on the northern industrialization have uncovered a rich consumer culture that represented the confluence of mechanization and markets with fashion, art, and design…. The increasing commercialization of creativity included a dramatic increase in patenting and other forms of inventive activity, which laid the technological foundations for widespread industrialization and greater urbanization…. Economic creativity in the slave South, however, extended little beyond the plantation economy. Much of the region’s manufacturing, such as commodity processing, usually had strong linkages to plantation agriculture.

In fact, as Majewski notes, slave societies retarded creativity, considering that they are based on class privileges: “The combination of slavery and low levels of schooling constricted the supply of creative talent in the South, while enslavers made clear that learning and literacy were prerogatives of race and class. Linking patent records to the 1860 census shows that a shockingly low percentage of residents born in slave states became inventors…. Widespread economic creativity was literally foreign to the slave states.”

Additionally, free societies were more likely to sponsor the growth of private associations, as Majewski explains: “Free-labor states also developed far more robust institutions that made learning and literacy an important part of the public sphere…. The Franklin Institute in Philadelphia, for example, not only supported a library primarily for the city’s mechanics and manufacturers, but also sponsored scientific and engineering lectures, published a prestigious journal, held an annual industrial exhibit, evaluated and publicized new patents.”

However, the classism inherent in slave societies hampers the proliferation of civic institutions:

Libraries in slave cities, especially in the cotton states, were generally far less open than similar institutions in free labor cities. The Charleston Library Society is a good example of how slave-state libraries often reflected class privilege. Founded in 1748, it contained 20,000 volumes on the eve of the Civil War. The Society, however, functioned more as a literary club for South Carolina’s enslaving elite rather than as a means of promoting widespread learning. To join the library, subscribers had to pay a one-time admission fee of $25 and a $10 annual assessment…. In contrast, many northern libraries, like New York’s Mercantile Library Association, kept subscription costs to $1 or $2 per year, and often took pride in serving large numbers of patrons.

Future debates on the viability of slavery may lead to opposite conclusions. But presently the evidence indicates that the history of slavery is a robust predictor of subpar economic growth and a creativity deficit.