I went to the movies last week with my much better half and we decided to watch the emotionnally demanding, 12 years a slave. At many turns, I felt like crying and the scenes were moving (in spite of Brad Pitt’s shameless depiction of the hero who saved Northup from slavery). However, I also noticed many things that are related to the economics of slavery (I like this review article by Thomas Weiss in 1974 of Time on the Cross). These elements, by pure coincidence, ended up being discussed in the graduate class I am giving at HEC Montréal on economic history.
I was trying to explain to student (in the introductory class on institutions) that institutions may persist in spite of generating results below was could be considered to be the optimal thing. In short, institutions can generate a net welfare loss but still persist. I suggested that slavery made investments in slaves more profitable, artificially depreciating investments in improving free labour productivity (like building railroads). Since all the gains from investments in slaves were fully captured by owners, it was better to increase the productivity of slaves (from the owner’s perspective). Moreover, it was more profitable for a slaveowner to invest in labour-intensive methods of production. The reason for this being that the owner taxed the leisure of slaves by making them work more and gained all the proceeds from their work and the foregone leisure of slaves. Consequently, incentives ran in favor of simply increasing the use of inputs rather than increasing productivity of their use. It also incited, as Thomas Sowell pointed out in Markets and Minorities, many individuals to supply the demand of slaveowners for coercition upon slaves (by becoming specialized in hunting down runaway slaves). In short, the dynamic play of the institution was to redistribution welfare in favor of a few and incite behaviours that were less conducive to growth. Although I am not an expert on the economics of slavery, the illustration is a great example of socially non-optimal institutions that have impressive lifespans.
Then, my co-teacher (the class is given by one economics professor and one management professor) mentionned the movie 12 years a slave. She pointed out that many elements of the discussion were well illustrated in the movie. I thought it might be interesting to point out those that I saw and remember for the benefit of my students and my blog readers.
1: William Ford: The most benevolent of the slaveowner who seemed to be resentful of cruelty upon slave. The man seemed like a pawn in a game in which there were little incentives, financially, to defect from the consensus. First of all, Ford was stuck in path dependency by having large investments in the form of slaves (a part of which must have been contracted by heritage). Despite obvious moral objections, he could ill-afford to defect especially when the white carpenter, Tibeats, becomes a threat to his own family – forcing Ford to sell Northup to the cruel Edwin Epps. This is a very good illustration of why the system of slavery must have been preserved, as pointed out by Jeffrey Hummel, by political devices which prevented the defection of men who, like Ford and Robert E.Lee (the latter hated slavery in spite of fighting for the Confederacy), to defect.
2: Not allowing Northup to own money: To follow up on the previous point, it should be noted that Northup was allowed to gain money from playing violin on the count of Judge Turner while being on lease from Edwin Epps. Yet, had Northup played the violin often, he could have eventually earned sufficient to engage in a mutually beneficial arrangement to buy his freedom from Epps or Ford. The problem is that, as Sowell pointed out, voluntary manumission was illegal : slaves and slaveowners were prohibited (or at least severely restrained) to engage in any sort of dealings to sell freedom. As pointed out earlier, political devices were in place to prevent defection from the system of slavery.
3: The slave-catchers: The two men who abducted Northup were paid to do so and so were the men who caught runaway slaves without tags from their owners. Normally, such a market for skills would not exist. But the institution of slavery created its own spawns and children by creating a market for capturing free blacks and recapturing runaways. This created an additional political force to oppose any reforms of the system. Rent-seeking was the name of the game.
4: Cutting on leisure time: when Epps decides to wake his slaves up in the middle of the night to dance, he cut in their “leisure” time (if one can call sleeping “leisure”). In a way, he taxed their leisure for his benefits and made them work anyways because he captured all the proceeds from their work.
5: The fear of an educated slave: an educated slave was one who could, basically, read a map and escape from Georgia to Canada. Clearly, if your capital investment knows how to run away from you and you paid 1,000$ for him (back in 1841) then you must be freaking out.
These are the ones I remember noticing, did anyone see any other elements?
Note: I discovered this article which is worth reading for those interested in the issue
Vincent Geloso 