The Economics of Slavery

In a recent review of my book, The Real Lincoln, for an economic history website (EH.Net) Gerald Gunderson of Trinity College in Connecticut creates a straw-man and then attacks it by misstating what I say about the profitability of slavery in the mid nineteenth century. He claims that I "dismiss" slavery "as an inefficient institution, lacking incentives for growth such that it probably would have disappeared if left alone."

I do not say this at all, however. I basically concur with Jeffrey Hummel’s analysis in his book, Emancipating Slaves, Enslaving Free Men, that antebellum slavery was propped up by such laws as the federal government’s Fugitive Slave Act (which Abraham Lincoln strongly supported) and that the abolition of that law would have greatly reduced the profitability of slavery and quickened its demise. I also agreed with both Northern abolitionists such as William Lloyd Garrison, and Confederate Vice President Alexander Stephens, that in 1861 slavery was more secure in the Union than out of it because of the Fugitive Slave Act. Garrison advocated Northern secession for decades precisely because that would have nullified this insidious Act and greatly encouraged runaway slaves, breaking the back of that institution.

Gunderson does not devote a single word to any of this. Instead, he makes the false statement that I "ignore much of the relevant scholarship" about the economics of slavery, pointing only to a single publication that I supposedly ignore: the book Time on the Cross, by Robert Fogel and Stanley Engerman. In fact, I cite them on page 48 and discuss their book for several pages.

Gunderson simply ignores what I actually say in my book about the political economy of slavery. Instead, he repeats the claim by Fogel and Engerman that high prices of slaves signified that the institution of slavery was productive and "boosting the wealth" of the slave owners. Consequently, says Gunderson, ending slavery would require a little "outside push" (i.e., murdering some 50,000 Southern civilians, 620,000 battlefield deaths, the pillaging, plundering and burning of entire cities, confiscation of hundreds of millions of dollars in personal property, rape of Southern women by federal soldiers, destruction of nearly half the nation’s economy, overthrowing of the old republic created by the founders and replacing it with a consolidated empire to compete with Great Britain’s, demolition of civil liberties in the North, including the mass arrest of tens of thousands of civilians, etc. Just a little push).

Gunderson’s (and Fogel and Engerman’s) reliance on this one statistic – the price of slaves – as "evidence" that slavery could not have been ended peacefully is poor economics as well. For one thing, the Fugitive Slave Act socialized the enforcement costs of slavery, thereby artificially inflating slave prices. Abolition of the Act, as would have been the reality had the Southern states been allowed to leave in peace would have caused slave prices to plummet and quickened the institution’s demise. That, coupled with a serious effort to do what every nation on the face of the earth did to end slavery during the nineteenth century – compensated emancipation – could have ended slavery peacefully. Great Britain did it in just six years time, and Americans could have followed their lead.

But Lincoln never said that he was launching an invasion for any reason that had anything to do with slavery. He denied that he had any intention or power to interfere with Southern slavery, and only wanted to "save the Union." In reality he destroyed the Union as a voluntary association of states.

Gunderson ignores the simple economic fact that the high price of slaves that did exist in 1860 created strong incentives for Southern farmers to find substitutes in the form of free labor and mechanized agriculture. It also increased the expected profitability of mechanized agriculture, so that the producers of that equipment were motivated to develop and market it in the South. This is what happens in any industry where there are rapidly-rising prices of factors of production of any kind. As Mark Thornton wrote in "Slavery, Profitability, and the Market Process" (Review of Austrian Economics, vol. 7, No. 2, 1994), by 1860 "slavery was fleeing from both the competition of free labor and urbanization towards the isolated virgin lands of the Southwest." Gunderson does not cite any literature past 1974 on this point, so he is probably unaware of such facts.

Gunderson does not understand that there is a difference between slave labor being "efficient" for the slave owner and its effect on society as a whole. Of course slavery was profitable to slave owners. This government-supported system helped them confiscate the fruits of the slaves’ labor. But since slave labor is inherently less efficient than free labor, and since so many resources had to be devoted to enforcing the system – most of which were the result of government interventions such as the Fugitive Slave Act, mandatory slave patrol laws, and laws that prohibited manumission – the system imposed huge burdens ("dead weight loss," in the language of economics) on the rest of society. Free laborers and non-slave owners in the South (at least 80 percent of the adult population) were the primary victims of these government-imposed costs, and would have been a natural political constituency for their eventual abolition. As Hummel concluded, "In real terms, the entire southern economy, including both whites and blacks, was less prosperous" overall because of slavery.

There was net internal migration from South to North, confirming the fact that free laborers in the South were also indirectly exploited by the slave system which forced them into lower-paying jobs. But again, Gunderson cites no literature on the economics of slavery past 1974; Hummel’s book was published in 1996.

Gunderson argues that "this wealth" (of slave owners) was the reason why peaceful emancipation – the road taken by the British and Spanish empires and literally dozens of other countries during the first half of the nineteenth century – was supposedly not possible in the US. But in fact slavery was a drag on the Southern economy overall, despite the fact that it enriched a relatively small minority. Gunderson’s case against peaceful emancipation and in favor of total war does not hold economic water.

Gunderson does not believe that individual politicians or military commanders should be held accountable for murdering civilians or destroying cities populated by only civilians, as was the policy of the US government for the duration of the war. He dismisses all of this as merely "the implication of modern war." But someone had to decide to wage war on civilians as a war strategy, in violation of international law and codes of morality that existed at the time. General Sherman’s chief engineer, Captain O.M. Poe, advised Sherman that the bombing of Atlanta was of no military significance since the Confederate army had evacuated. Sherman commenced destroying 90 percent of all the buildings in Atlanta, killing hundreds of civilians, and then evicted the remaining 2000 citizens from their homes just as winter was arriving. It was not "modern war" that did this, it was William Tecumseh Sherman with the endorsement and under the orders of the Lincoln administration. Sherman admitted in his memoirs that he was taught at West Point that he could have been prosecuted and possibly hanged as a war criminal for doing the things he did.

Another large body of research that Gunderson ignores has to do with the reasons Lincoln and the Republican Party gave for their opposition to the extension of slavery into the new territories (but not Southern slavery) in 1860. Gunderson repeats the myth that the Republican Party had some kind of "secret plan" to eventually end slavery, which reminds one of Richard Nixon’s "secret plan to end the Vietnam War," which of course was never revealed. Gunderson claims to somehow know that the "median Republican voter" believed that "slavery was wrong and should be nudged toward eventual elimination." Of course, just about everyone believed this at the time, not just Northern Republicans. Robert E. Lee was as eloquent as Abraham Lincoln ever was in this regard and he personally liberated the slaves that his wife had inherited.

Lincoln and the Republicans were very clear on why they opposed the extension of slavery into the new territories: They wanted to pander to white voters there by promising them a whites-only preserve. They were labor market protectionists. As Lincoln’s Secretary of State William Seward explained: "The motive of those who protested against the extension of slavery had always really been concern for the welfare of the white man, and not an unnatural sympathy for the Negro" (emphasis added). New York Tribune editor Horace Greeley concurred, adding that "All the unoccupied territory . . . shall be preserved for the benefit of the White Caucasian race – a thing which cannot be except by the exclusion of slavery." And Congressman David Wilmot of Pennsylvania, author of the historic proviso to exclude slavery from the territories acquired after the Mexican War, explained that he "had no morbid sympathy for the slave," but "plead the cause and the rights of white freemen."

Lincoln himself stated on October 16, 1854, that "The whole nation is interested that the best use shall be made of these territories. We want them for the homes of free white people. This they cannot be, to any considerable extent, if slavery shall be planted with them." Gunderson makes no mention of these well-known statements despite all of his boasting of being in tune with all the "relevant research."

Gunderson also completely ignores what I have to say about Lincoln’s claim to having "saved the Union" when he argues that "the Union had significant appeal to Northerners" and, therefore, the war was supposedly justified. In The Real Lincoln I cite dozens of Northern editorialists who were in favor of peaceful secession precisely because of their belief that holding a union together at gunpoint would destroy the voluntary union of the states. They frequently cited the Jeffersonian dictum in the Declaration of Independence that governments derive their just powers from the consent of the governed, and since the South no longer consented to being governed by Washington, D.C., they favored peaceful separation.

There were literally hundreds of newspapers and many prominent politicians in the North who opposed Lincoln’s war, which also contradicts Gunderson’s claim about how devoted Northerners in particular were to the Union. Lincoln illegally suspended the writ of habeas corpus and had his military arrest literally tens of thousands of these people. There were also tens of thousands of deserters in the Union army.

Most Southerners were also attached to the Union as long as it wasn’t destructive of their liberties, and this does not mean the "liberty" to own slaves. Virginia, North Carolina, Tennessee, and Arkansas originally voted to remain in the Union after the Gulf states had seceded. It was only after Lincoln (unconstitutionally) launched an invasion of their sister states that they reconvened their political conventions and voted to secede. Gunderson implausibly claims that "reductions in transportation costs" somehow created such a powerful attachment to "the Union" that Northern men were willing to die by the hundreds of thousand for it. One would assume, however, that this doesn’t necessarily hold for all of the military conscripts in Lincoln’s army.

As this article has shown, Gerald Gunderson’s commentary on The Real Lincoln ignores the past twenty-eight years of research on the economics of slavery; constructs numerous straw-man arguments; makes assertions about the motivations of Republican Party politicians in opposing the extension of slavery that are flatly contradicted by the words of those very politicians; demonstrates no knowledge at all that the big majority of Northern opinion makers in 1861 were opposed to maintaining the union by force; and misunderstands the elementary economics of markets with his obsession over a single statistic, the price of slaves. He does this while incredibly claiming to be up on all the "relevant scholarship" and an expert in the "basis in history" of the War Between the States.

September 21, 2002

Thomas J. DiLorenzo [send him mail] is the author of the LRC #1 bestseller, The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War (Forum/Random House, 2002) and professor of economics at Loyola College in Maryland.

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