There is a near universal agreement that America’s experience with chattel slavery, where people are treated as the chattel or personal property of an owner and are bought and sold as if they were commodities, was one of our country’s gravest moral horrors. But some people seem to believe that the despicable institution aided the nation’s prosperity.
That’s not the case, explains economist Scott Sumner, who points out that countries with free labor tend to be more prosperous:
Between 1850 and 1880 the market value of slaves falls by just over 100% of GDP. And that decrease is almost precisely offset by a slightly more than 100% increase in capital (industrial and housing.) The total capital stock declines slightly in the Piketty graph, but that’s only because of a fall in the value of agricultural land, not capital.
Now here’s where mislabeling slaves as capital comes into the equation. At first glance it looks like America’s capital stock was unaffected by the abolition of slavery. But the actual capital stock rose by over 100% of GDP—an industrial revolution. If you insist on treating slaves as “capital” it doesn’t change the basic story. Because in that case a separate ledger of “labor resources” would have soared after 1865. Former slaves would now be classified as “labor,” and hence the labor stock would rise dramatically, even on a per capita basis. Either way, abolishing slavery made America a much more productive, and hence richer country.