Can economics rank slavery against free labor in terms of efficiency?

Politics, Philosophy and Economics

Volumn 7, Issue 3, 2008, Pages 327-340

  White, Lawrence H ^a  

^a UNIVERSITY OF MISSOURI ST LOUIS   (United States)

Author keywords

Kaldor Hicks efficiency; Pareto efficiency; Property rights; Welfare economics

Indexed keywords

EID: 47249105674     PISSN: 1470594X     EISSN: 17413060     Source Type: Journal    
DOI: 10.1177/1470594X08092106     Document Type: Article

References (31)

1. In the familiar two-person, two-good exchange economy illustrated by the Edgeworth-Bowley box, we can map the Pareto efficient range of allocations only once we have located the point representing the initial endowments of the two agents (and we also need their indifference curves).
2. I thank an anonymous referee for emphasizing this distinction.
3. James M. Buchanan, 'The Relevance of Pareto Optimality', Journal of Conflict Resolution 6 (1962): 341-54.
4. Robert William Fogel and Stanley L. Engerman, Time on the Cross: The Economics of American Negro Slavery, 2 Vols (Boston: Little Brown, 1974), Vol. 2, p. 139, Table B.24 reported indexes of total factor productivity for all slave farms of 120.8 in the Old South and 135.8 in the New South, where the index for free farms in each region is normalized to 100. Disaggregated by farm size, the range runs from 105.0 (for the smallest farms in the Old South) to 156.3 (for mid-sized farms in the New South).
5. The authors later reproduced the table and discussed the sensitivity of the estimates to various corrections and adjustments. See Robert William Fogel and Stanley L. Engerman, 'Explaining the Relative Efficiency of Slave Agriculture in the Antebellum. South', American Economic Review 67 (1977): 279.
6. Fogel and Engerman clearly specified the type of 'efficiency' they were talking about, namely 'relative total factor productivity' (see, for example, ibid., p. 275).
7. But in summary statements (for example, Fogel and Engerman, Time on the Cross, p. 5) they spoke of slave agriculture being simply 'more efficient' than free agriculture. It is unfortunate that they did not consistently refer to 'productivity' rather than 'efficiency'.
8. See Paul A. David et al., Reckoning with Slavery (New York: Oxford University Press, 1976);
9. Paul A. David and Peter Temin, 'Explaining the Relative Efficiency of Slave Agriculture in the Antebellum South: Comment', American Economic Review 67 (1977): 213-18;
10. and Gavin Wright, 'The Efficiency of Slavery: Another Interpretation', American Economic Review 67 (1977): 219-26.
11. See Jeffrey Rogers Hummel, Emancipating Slaves, Enslaving Free Men (Chicago, IL: Open Court, 1996), p. 65.
12. Here they refer to Fogel and Engerman, Time on the Cross, Vol. 1 pp. 244-5, Vol. 2 pp. 160-2. Their Table 3 sets a dollar estimate of the 'non-pecuniary loss' to slaves due to the gang labor system (the estimate being based on the size of the compensating differential that had to be paid to hire gang laborers after the abolition of slavery) against the estimated 'pecuniary gains' to slaves and cotton consumers. Such estimates do not bear directly on the fate of slaves outside of labor gangs, for example household or urban slaves.
13. Hummel, Emancipating Slaves, Enslaving Free Men, p. 47.
14. Thomas So well, Applied Economics: Thinking Beyond Stage One (New York: Basic Books, 2004), p. 65.
15. For a technical exposition and critique of the Kaldor-Hicks-Scitovsky approach from, a Pareto-Robbins perspective, see John S. Chipman and James C. Moore, 'The New Welfare Economics 1939-1974', International Economic Review 19 (1978): 547-84.
16. For the argument that judges cannot know willingness to pay under hypothetical circumstances, and thus cannot have all the information they would need to implement the Kaldor-Hicks criterion accurately, see Edward Stringham, 'Kaldor-Hicks Efficiency and the Problem of Central Planning', Quarterly Journal of Austrian Economics 4 (2001): 41-50.
17. Ronald Coase, "The Problem of Social Cost', Journal of Law and Economics 3 (1960): 1-44.
18. Harod Demsetz, 'When Does the Rule of Liability Matter?' Journal of Legal Studies 1 (1972): 13-28.
19. Donald A. Wittman, 'First Come, First Served: An Economic Analysis of Coming to the Nuisance', Journal of Legal Studies 9 (1980): 557-68.
20. Walter Block criticizes the Coasean prescription on ethical grounds, contrasting it to the Lockean principles that men are naturally self-owners and that first use establishes rightful ownership. See Walter Block, 'O.J. ' s Defense: A Reductio Ad Absurdum of the Economics of Ronald Coase and Richard Posner', European Journal of Law and Economics 3 (1996): 265-86.
21. Thomas Sowell, Markets and Minorities (New York: Basic Books, 1981), p. 96.
22. The view that no sane individual would ever sell himself into slavery, except under violent threat, raises the question of how we are to explain the historical cases, such as medieval Russia, where self-sales were apparently numerous. See Orlando Patterson, Slavery and Social Death (Cambridge, MA: Harvard University Press, 1982), pp. 130-1. Were self-sellers seeking the protection of stationary masters only because the alternative was continual subjection to roving predators?
23. Northern American states did abolish slavery peaceably through the political process even without compensation to slave-owners. Slave-owners did not lose much wealth because the abolition legislation allowed them time to sell their slaves into remaining slave states. Even so, we are entitled to doubt that slave-owners unanimously agreed to the abolition. Clearly the small loss to slave-owners would not apply to the last jurisdiction to abolish slavery without compensation.
24. For example, the Louisiana Code Noir of 1685 forbade slave-owners to set conditions for self-purchase 'without having obtained consent of our Superior Council', raising a barrier to mutually beneficial trade between slave-owner and slave. See Stanley Engerman, Seymour Drescher and Robert Paquette (editors), Slavery (New York: Oxford University Press, 2001), p. 118.
25. Self-purchase and other forms of manumission appear to have been far more common for urban than for agricultural Roman slaves.
26. John Madden, 'Slavery in the Roman. Empire: Numbers and Origins', Classics Ireland 3 (1996): 109-28. URL: http://www.ucd.ie/classics/ classicsinfo/96/Madden96.html.
27. Sowell, Applied Economics, p. 65.
28. Recall that the Kaldor-Hicks criterion requires only hypothetical trade (or ability to pay fully utility-restoring compensation) and not actual trade (or actual compensation). Sowell's argument is in that sense a Kaldor-Hicks argument, not a Pareto argument. I place it within the discussion of Pareto arguments for the sake of continuity.
29. Hummel, Emancipating Slaves, Enslaving Free Men, p. 46.
30. Ibid., p. 47.
31. Buchanan, "The Relevance of Pareto Optimality'.