(Bloomberg Opinion) -- In honor of Black history month, allow me to revisit a view of the past in need of greater scrutiny: the idea that slavery in the U.S., while morally wrong, was nonetheless an “economically productive” practice that helped form the foundation of American capitalism.
True, slavery generated substantial wealth for its practitioners. The income generated by enslaved labor was much higher than its financial costs. This difference was capitalized in the market value of enslaved people, which is estimated to have been $4 billion as of 1860 — more than every bank and railroad combined at the time. Annual expected returns were 7% to 10% per year, which would be an impressive performance even today.
The institution also featured “efficient” (albeit morally repugnant) markets, which allocated enslaved labor across tasks and places to achieve high levels of output per worker. After emancipation, crop yields, output value, land value and agricultural profits all declined substantially in the South — a phenomenon that has led historians and economists to talk about the “cost” of the Civil War, or the “lost wealth” resulting from the end of chattel bondage.
Yet such assessments of efficiency and productivity consider only the perspective of the enslavers. This takes the traditional logic of “firms/owners” and “workers/labor” much further than it should go. Any proper analysis should encompass not only enslavers’ ability to extract value, but also the vast costs imposed on the people whom they exploited. It should include, for example, the emotional pain of being torn away from one’s family. It should recognize the pervasive coercion — even outside of work hours — required to maintain the high output of enslaved people, who produced in 35 minutes what their free northern counterparts did in an hour.
Thinking through the costs to the enslaved themselves reveals the tremendous economic inefficiency of slavery. The practice was both a moral and a market failure, violating a key tenet of free enterprise: the ability to control one’s supply of goods and services (in this case, labor). Conversely, emancipation unlocked immense value for formerly enslaved Black people. Simply coming and going as they pleased during leisure time was a remarkable source of freedom and agency. Mundane tasks took on new meaning when done outside of chattel bondage. Neglecting to account for the value of freedom ignores those most affected by the institution.
In work with Richard Hornbeck, I have sought to quantify the value of freedom to those who were freed — the wealth created by reallocating 13% of the population from slave labor to using their time as they saw fit. We found that the benefit to the formerly enslaved far exceeded the associated declines in output of cotton and other relevant goods. So instead of destroying wealth, emancipation actually delivered the largest positive productivity shock in U.S. history. Under conservative assumptions about the value of non-working time to enslaved people, we estimate that the productivity gain was roughly 10% to 20% of gross domestic product.
Debates about the role of slavery in American political and economic development need to pay more attention to the experience of the enslaved. Doing so reveals that emancipation didn’t destroy an efficient system and lead to economic decline. On the contrary: Freedom, which for too many remains elusive, is the engine of economic growth.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Trevon Logan is a professor of economics at the Ohio State University and a research associate at the National Bureau of Economic Research.
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