Latest / Words & Numbers / Episode 486: Slavery and Capitalism

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Episode 486: Slavery and Capitalism · Words & Numbers

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Coming up next on Words and Numbers, Powerball approval
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ratings, slavery reparations. And was capitalism built on
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slavery? All this and more coming up next
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on Words and Numbers, a Civil original production.
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Check us out at civil.com. That's civl.com.
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Hi, I'm James. And I'm Anthony and this.
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Is words and numbers. Aunt, what's new and exciting in
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your world this week? And why are you wearing the same
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vest as you were last week? It's Christmas, James, It is.
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This is a Christmas vest. But the people will be getting
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this long after Christmas has passed.
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I. Spend some of my free time
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reading Gallop. Gallop is.
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Great. They've got all all kinds of
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weird things that you might want to know.
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They've probably got some pole to talk about it.
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And Gallup is there are there are a number of of fly by night
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entities that do polling. And I tell you, it's way, way
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more complicated. I've been involved with this.
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It's way more complicated than simply asking people questions
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and writing down the answers. Polls have to be constructed in
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in a precise manner and delivered in a precise manner so
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that you aren't biasing the people that you're polling.
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But none the less, this was an interesting poll from Gallup
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asking about the president's approval rating.
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And Gallup, and I don't know why they made the comparison
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specifically, but they made a comparison to Powell, the Fed
1:40
chair, Jerome and Jerome Powell. And understand, Jerome Powell is
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he's I'm sure he's not a household name, and that's
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probably better for him given the way inflation has been
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running the past few years, or at least under his tenure.
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But nonetheless, in the Gallup poll, Americans gave a higher
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approval rating to Powell than they gave to President Trump.
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Considerably higher. Yeah.
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What is with that? I don't know, but when you look
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at a a guy like Powell sitting at 44% approval and the same
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poll has Trump at 34. Indeed, the only other
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nationally recognizable political figure to crack 40 was
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Marco Rubio, Secretary of State. Literally everybody else was in
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the 30s except Chuck Schumer, who is all the way down at 28.
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And it's interesting because you you read stuff like this and you
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think, you know, America's going to hell.
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Look at how the poor approval ratings are politicians get.
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And these are people we elected. Can't we get better people?
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But go back and look at some of the writings all the way back to
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People Love George Washington, but like with President number
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23, you start to get the same thing.
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And people, even in Washington's time, people were saying about
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Congress that it can't do anything and they just sit on
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their butts and the country's going to hell.
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So all of this stuff that that's going on is some has been with
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us since the beginning. And yet here we still are.
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Right. Yes.
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What? What's the quote?
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That democracy is the worst form of government, except for all
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the others. That's about right, Bucker
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Rubenza, I said wherever you go, there you are.
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And I think kind of fits, maybe even a little better.
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Believe it or not, Anne, I want to drift into the the territory
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of mathematics for. The.
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Interesting thing of my week, and you probably have no
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understanding of this, but as we record this on December 23rd,
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tomorrow night the Powerball is at 100 by $1.7 billion.
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Billion. Wow.
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And look, we all know that the lottery is a tax on people who
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are bad at math, right? I mean, it just is, and we've
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covered this before. I like playing the lottery
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because I like to dream a little bit during the week.
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And if I could pay two or three dollars and then think about all
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the things I would do with $1.7 billion, which would probably
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end up after taxes being like 750 million.
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But jeez, that's a lot. I could deal with that.
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But here's the thing, you have a one in 292.2 million chance of
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winning. That's actually a positive.
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That's right. Now, with a a a payout so high
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it's no longer a tax against people who are bad at math.
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Not at all. It makes perfect sense to play
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indeed if we could get the technology together and spend
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$293 million to buy all the combinations.
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Right. We'd win more than we paid.
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Right. Well, yeah, except you've got to
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account for the possibility that somebody else pulls the same
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number as you, and now you got to share the prize.
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Yeah, that, that's right. But nonetheless, you would still
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come out ahead. Not if there's more than two
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people sharing it with you. There's never more than two
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people. I mean, there could conceivably
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be, and then you'd be royally screwed, right?
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Right. There's never if it's more
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likely that no one wins than two people win, but.
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Maybe 1.7 billion. Maybe you should go out and buy
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a lottery ticket. No, I'm definitely not going to
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do that. No, because despite the fact.
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That they give you any money. If I win, it's a.
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Net, it's a net positive in expectation.
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The the problem is you've got to spend so much money to move the
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needle that all of a sudden you're looking a situation where
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you got $75 million on the table in exchange for a 70% chance of
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winning. Forget it, I'll just keep the
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75,000,000. Yeah, but for 5 bucks or
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whatever it is I'm going to have to spend to buy 1 ticket, no big
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deal. It's yeah.
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I had a conversation with somebody many, many decades ago
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about this, and my claim was that this is what you're buying
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is the ability to dream for a few days.
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You can dream because there's a chance that you'll win.
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No matter how tiny that chances, there's still a chance anyway.
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This brings us to the foolishness of the week.
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Believe it or not, the lottery is not the foolishness of the
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week. Our good friends in Maryland
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provide us with the foolishness of the week instead, where their
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legislature, you better sit down for this one, has overridden the
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governor's veto to approve a creation of a reparations
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Commission. Wow, OK here.
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We here we go. It was all fun and games when it
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was just places like San Francisco, because of course it
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was San Francisco, right? But now we've got the entire
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state of Maryland getting behind the idea that we need a
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reparations Commission. And I'll give you one guess as
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to what a reparations Commission is going to decide that we
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absolutely need. Oh, that's going to decide.
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We need reparations. Reparations, that's exactly.
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Correct. But they're going to leave you.
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They're going to leave completely unaddressed all of
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the messiness that would follow from that.
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Yes, they are. We won't.
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But they will. Like we will who?
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We will pay who gets paid, White.
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We're going to be on them like white on rice when they start
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saying things, but you could start right now if you like.
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Well, yeah, all. Right.
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So just some things, who gets paid?
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Who pays now you could say, well give.
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Give an aunt that no one right now in the United States has
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ever been a slave and no one in the United States right now has
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ever been a slave owner, we're going to have some problems with
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that. Yeah, you.
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I mean, that's that's a serious problem, but I'm going to wave
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it away and say let's just ignore that.
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But you still have the problem. Who's going to pay?
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Who gets paid? You say, well, white people
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should pay and black people should get paid.
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Define those two things. Good luck with that.
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Now you've got a problem. Because you I've got I've got my
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23andMe report somewhere on this computer that tells me I am 1%
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sub-saharan African. Right, so was that my?
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Reparations. Right.
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Do you, do you get 1% of the reparations and pay 99% of what
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of the cost? I don't, I don't, I don't.
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We have. To plan because I identify as
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sub-saharan African and if I've learned nothing these last 20
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years, it's that I whatever I identify as is simply.
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True. Because nobody can tell me.
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This is why I keep telling everybody I'm a black lesbian.
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I never get hired on any specific pro.
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Oh, I also tell them I'm a crippled black lesbian.
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Because, you know, you might as well go all in on these things.
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But. You can see how foolish.
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This, this nonsense is going to get right.
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Everybody's going to make a claim, and then everybody who
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who can't conceivably make a claim is going to make another
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claim about why they shouldn't be on the hook.
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There, there's all of that and we can make light of it, but
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it's actually a very serious question if indeed we get to the
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point that we're being serious about the reparations.
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But then there's another very serious point, and that is we
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have in this country well established law that that we
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turn to when you have someone who has wronged someone else and
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the person who was wronged is seeking some sort of reparation.
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There's well established law involving how you calculate what
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that reparation is. And that law requires that you
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take into account mitigation. That is OK, This person did
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something to me. The person fired me, for
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example, without Causeway. OK, so I go and I sue and I say
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I want my lost wages. The first thing the court's
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going to do is say, OK, how well have you fared since then?
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And if I can point, for example, to the fact that, yeah, I was
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fired, but I in turn got a job that paid me twice as much, the
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courts going to say, yes, sorry, you're actually better off than
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you were before, and so you don't get anything.
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You're you're about to make a statement that's going to get us
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in a world of trouble. I encourage you to make it.
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Yeah, and I mean they're in and I don't, how should I say here
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you seem to make it. I'll say it well.
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Well, you could say it, but, but let me preface with the fact
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that we're not treating this lightly.
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What we're doing is underlining that there is a procedure for
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dealing with questions like this that we use all the time in this
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country and that if you apply it to this case, you're going to
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have to ask the question. That's right.
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Are you? Are you better off personally
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because your ancestors were brought here in chains?
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Yeah. And I, I am making no positive
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statement about the nature of slavery and about bringing
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people anywhere in chains for almost any reason.
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Chattel slavery is unquestionably a net negative in
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these United States throughout our history, something we're
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going to talk about with Phil Madness in just a minute.
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But, and it's a gigantic butt. And here I I paraphrase Thomas
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Sowell, the the great economist who said I am better off having
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been born in the United States, no matter the reason.
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And the reason for him was that his ancestors were in fact
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slaves. And he said if if I were born in
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Africa, I'd be far worse off than I am right now.
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And on that point, there could be no question.
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That's that's just undoubtedly correct.
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So you start getting into the weeds on reparations and there's
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no cheap, easy answer. There's real cheap, easy answers
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at the beginning, right when you want to make a political
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statement. Oh, these people need to be
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repaid for the the sins of the past.
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Yeah, Hooray. Everybody's going to say yes to
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that until you think about it for exactly 3 seconds.
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Yeah. And then there's nothing.
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But like I said, we're going to get hi deep into this with fill
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in just a few seconds. So we'll let that stand as our
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answer to this foolishness. We're happy to announce that
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Subscribe to Civil for $5 a month or $50.00 for an annual
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subscription. Phil Magnus is back with us this
14:27
episode. Phil is a senior fellow at the
14:30
Independent Institute and the David J Thoreau Chair and
14:33
Political Economy. He has served as senior research
14:36
fellow at the American Institute for Economic Research and as
14:40
academic program director at the Institute for Humane Studies and
14:45
adjunct professor of public policy in the School of Public
14:48
Policy and Government at George Mason University.
14:51
Phil received his PhD from George Mason University's School
14:54
of Public Policy. Phil, welcome back to Words and
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Numbers. Back-to-back episodes.
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What on earth is going on here? Phil, We, we, we wanted to talk
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to you about some lunacy that makes the rounds pretty
15:09
regularly. It seems to pop up every six
15:12
months or so. That holds ultimately that
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modern day capitalism would have been utterly impossible as a
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movement had it not been built on the back of chattel slavery.
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So as our favorite historian and expert in American slavery, what
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say you about this tension statement that is made only?
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Too often it is a recurring theme and we saw this, This was
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a marquee message of the 1619 project of the New York Times.
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But you also see it out of scholarship, historians in
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particular, which is a very left-leaning discipline.
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And what it all comes down to is a very modern present day
16:05
oriented anti capitalist agenda that they used.
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The past is just yet another weapon and another tool to to
16:14
seek policy changes in the present day.
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Most iterations of this argument say, well, if the modern U.S.
16:20
economy, which is very wealthy, very abundant, has lots of
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resources, success is associated with it.
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If we can tie that to a historical sin such as slavery
16:32
in the past, well then it follows that we need to
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recompense and correct for that sin.
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And that means most directly slavery reparations.
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It might also mean that the capitalist economy is tainted by
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slavery and should be directly regulated or reformulated in
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such a way that purges that institution of slavery out of
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it. So you can see where this is all
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going. So there's a strong historical
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interest from people that hate capitalism today to try to trace
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and connect it to bad things that happened in the past
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because that that helps them discredit it.
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It's also a rhetorical tool that the socialist left uses to get
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around the human atrocities and genocidal record of socialism in
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the 20th century. It's the the death count of
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Stalin, Mao and Pol Pot are major discrediting historical
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records on socialism. So what do they do?
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They say, well, that's not real socialism, but oh, have you
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looked at capitalism? So let's play a a game where we
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can take capitalism with its own sins.
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So you see versions of this argument emerging of it
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directly. Had this conversation with
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people before where they say, you point out the death count of
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Marxism in the 20th century. And they say, aha, but
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capitalism brought us slavery and colonialism and all these
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other vices of the past. The problem with this narrative,
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though, it's a complete inversion of the historical
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record. And that's where, you know, we
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can really get into the history of slavery, which goes back to
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ancient times. It's a biblical era institution.
18:16
Every ancient society had it. They also had it in the New
18:19
World. When the New World was cut off
18:21
completely from the Old World. The empires of Mesoamerica
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enslaved their neighbors, and that's why a lot of their
18:27
neighbors were all too happy to join.
18:30
Cortez when he's marching on the ads.
18:32
Aztec Empire. So this is a horrendous
18:36
institution that is also as old as history itself.
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And really what happens is in the New World, slavery does take
18:43
on certain other characteristics, becomes a
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plantation economy built mostly around exports and agricultural
18:50
crops. It also becomes racialized very
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early on in about the 1660s onward and in what become the
18:57
United States a little earlier than that in the Caribbean one,
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because there are slave labor sources that come off of the
19:06
African coast. And usually it's the various
19:09
kingdoms, the powerful kingdoms in Africa selling conquered
19:14
peoples to European traders who brought them to the New World as
19:18
the slaves. So that's the pattern that's
19:20
going on there. It's racialized in North America
19:24
and in the West Indies because race becomes a dividing line to
19:28
determine how slave status passes from the parent to the
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children and they do so on the mother side.
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If the mother is is a slave, then the child is also that same
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status and race becomes a demarcation line because you see
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someone by their skin coloring can determine who their mother
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was and the status of their mother.
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So that institution emerges. But it's really not until the
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modern era of the Enlightenment that people start questioning
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this norm of human history. And one of the first people that
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really does a formulaic deep dive detailed attack on slavery
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is incidentally the father of what we call modern capitalist
20:09
theory, Adam Smith himself. So Smith spends a lot of time in
20:14
The Wealth of Nations. Diagnosing and examining the
20:17
slave economies of the New World.
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He's writing in 1776, so this is the precipice of the American
20:23
Revolution. Britain also has a massive slave
20:26
empire in the Caribbean at the time.
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And Smith does not like what he sees one bit.
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And he does some deep dives into trying to understand how the
20:35
slave economy works. And he actually diagnosis it as
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not only in a moral abomination, but it's it's just a
20:42
horrendously backward economic way of production that's been
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propped up by the mercantile empire that he's also railing
20:51
against on free trade grounds. On all these other indictments
20:57
he makes in The Wealth of Nations, he also directs at the
20:59
slave economy of the New World, and he sees them as ultimately
21:04
servicing politically connected monopolies.
21:08
That exists primarily because they've managed to work their
21:10
way into the government and get favors voted to them by the
21:13
state. Whether that's regulation on
21:15
their competitors, whether that's direct subsidies, you
21:19
name it, whether it's it's a crown chartered companies that
21:23
have a privilege in trading relationships, He says.
21:25
Basically these monopolistic institutions granted by the
21:29
state are propping up slavery. And this has made slavery a part
21:34
of the economic system of the New World.
21:36
Even though if you look at the pure economics of it, slavery is
21:40
an abysmal way to arrange labor because it doesn't reward the
21:43
laborer by anything other than beating them by anything other
21:47
than violence. There's no mechanism to allow
21:51
differentiation and how you choose to direct your laborers,
21:55
there's no means of innovation that that can occur from an
21:59
enslaved labor force. There's no chance, certainly no
22:02
chance to change careers if something's not working out.
22:05
It's just a pure base violence that's extracting labor out of
22:09
it. And Smith objects to this.
22:11
So this is a long way of saying that in so far as Smithy and
22:15
capitalism is the intellectual foundation of what we consider
22:19
capitalism today, it's fundamentally incompatible with
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the claim that slavery is the engine of our economy, or was in
22:27
that era. Yeah.
22:28
And let let me underline that because I think it's important.
22:33
Free market economists who trace their lineage back to Smith at
22:38
the least hold dear this principle of, of property
22:43
rights. That there are things that I
22:46
own, that I am in, that that are mine.
22:48
And it's good and proper that these things be protected from
22:52
people who would try to take them.
22:53
And highest amongst these things is my own, my, my ownership of
22:59
myself. So given that everything that
23:04
you know, Smith is espousing from free trade all the way down
23:08
to to market prices, all of them are negated by the, the, the,
23:15
the existence of slavery. Slavery is antithetical to all
23:19
of that. Absolutely, absolutely.
23:21
Well, and you have in this era, not only is Smith espousing anti
23:25
slavery principles as a core tenet of his economics, let's
23:29
flip over to the pro slavery side.
23:31
What did they think of capitalism in the mid 19th
23:35
century? This era when Smithy and ideas
23:38
are ascendant, free trade is finally for the first time in
23:42
human history, starting to win out in a major way over
23:45
protectionism. A global economy is emerging and
23:48
it's a very wealthy economy. And yes, there are slave owning
23:51
regions that participate in that economy, but you know, that's
23:55
not proof of capitalism any any more than the fact that the
23:58
Soviet Union exported things, made it capitalistic.
24:02
So, so there's kind of the absurdity there.
24:04
But slave owners, if you asked to look at a typical slave owner
24:09
in the 1850s United States, what they thought of free market
24:14
ideas, the ideas of Smith, they'd look at this as, oh, that
24:17
abolitionist guy, We don't like him.
24:20
And in fact, we have records of this.
24:21
George Fitzhugh, who's the one of the major theorists on the
24:24
pro slavery side writing in the 1850s Southern United States,
24:28
opens his book Sociology for the South with an attack on free
24:33
trade because he says free trade will ultimately undermine the
24:36
slave system. And he has a passage in there.
24:39
He says take the books of Adam Smith and Jean Baptiste, say,
24:42
and the rest of these free market economists and cast them
24:45
into the fires because they are at war with slavery and they're
24:48
going to end a slave society. What the slave owners are
24:52
putting forward is an anti capitalist alternative to
24:55
capitalism rooted in the plantation economy.
24:58
And they had elaborate theories that argued for in the 1850s.
25:02
James Henry Hammond is the senator from South Carolina.
25:05
He's probably the most famous articulator of these theories,
25:08
but he comes before the Senate in the late 1850s, and he
25:12
declares that slavery is economically supreme precisely
25:16
because it's not capitalism. It's not free markets.
25:19
It is order imposed on society in such a way that the
25:24
plantation master is a caretaker of a model community on the
25:28
plantation. That was his argument.
25:30
And the base of that plantation is the enslaved laborer.
25:35
He calls them the mud seal of society.
25:37
It's the layer that you put the foundation on.
25:41
The mudsill is there, and you need slavery to sustain the
25:45
higher arts and the more intellectual elite, which are
25:47
the plantation masters. And in exchange, what does the
25:51
plantation master do? He provides food and clothing
25:54
and care and medicine for all these people under his domain,
25:58
basically like a feudal Lord. And they saw these all just the
26:02
errors and continuations of of medieval feudalism, only now
26:06
it's a racialized feudalism on the plantation system.
26:09
Well, feudalism was not all that great of a place to live unless
26:11
you're the king. Neither is a plantation as what
26:14
it's a. Curious thing, Phil, because if
26:17
you really take a step back and look at it and, and I will
26:20
stipulate literally every time that slavery is America's
26:25
original sin, it it runs absolutely counter to our
26:29
founding principle of human equality.
26:32
There's no excuse to be made for it.
26:34
But if you look at the founding generation and then you look at
26:39
that 19th century world that you're talking about, you see a
26:44
big difference in the understanding of slavery.
26:48
The earlier portion, the Founding era, said, OK, it's an
26:53
evil, but it might be a necessary evil right now.
26:57
Under these circumstances and it it will eventually go away.
27:00
And it will and and they set in motion the forces that would see
27:03
to that. But by the time you get to the
27:06
eve of the Civil War, people are making a radically different
27:10
argument. They're they're making the
27:12
argument that slavery is ordained by God and will ever be
27:15
with us no matter what we do. Yeah, yeah.
27:18
So there's a complete repudiation of that earlier
27:21
founding generation. And you read this.
27:23
So George Washington and Thomas Jefferson, they're both slave
27:26
owners, but they write about this institution as something
27:29
that they foresee as not only ending, but something that needs
27:34
to end. They don't know how to end it
27:36
exactly. And they come up with all sorts
27:38
of different schemes, and they have deep foreboding and
27:41
warnings to the future, to precisely of the thing that
27:45
emerges in their wake. I was like, don't let this ever
27:48
take hold. But they're certainly aware that
27:52
there's a contradiction between their own principles of the
27:55
founding and this institution, but they also view it as
27:58
something that's been inherited from history and strictly as a
28:01
historical matter. They're not wrong on that.
28:02
This is something that's existed since ancient times.
28:07
It's a major upheaval the turn the tide against that.
28:11
So hang, hang, hang on, hang on a second.
28:13
Because because somebody listening to you saying that,
28:18
you know, they wanted to Jefferson, Washington wanted to
28:21
end slavery, they didn't know how to make that happen.
28:25
Someone listening to you would say in response, well a good
28:28
first step is to free the slaves you own.
28:30
Absolutely, absolutely. But they didn't.
28:33
They didn't, you know, that they do take some steps, particularly
28:38
what happens to their estates after they die.
28:41
I think that is a moral failing of George Washington and Thomas
28:44
Jefferson, that they did not go far enough personally
28:46
themselves. There are others in the founding
28:49
era. Robert Counselor Carter is one
28:53
of the major slave owners of Virginia.
28:56
He is a religious awakening one day right after the American
29:00
Revolution is 1 and he walks down to the courthouse and he
29:03
basically signs a bill giving his entire plantation freedom
29:07
instantly. And it's seen as just a huge
29:12
upheaval. But it's also a recognition of,
29:14
hey, there was a problem there and he had the moral
29:17
philosophical awakening becomes a deeply religious man.
29:21
Unfortunately, he's also chased out of Virginia with his former
29:25
slaves. They they all leave the state
29:28
and move north as a result of this.
29:31
But there are people in that era that realize the problem and
29:34
they actually do act on their moral inclinations and and try
29:37
to to make it right essentially. And I I think it's it's good to
29:42
underline. On the one hand, you could talk
29:44
about the hypocrisy and and that's a topic, but just because
29:50
there's hypocrisy doesn't mean that what they were saying is
29:55
wrong. Exactly.
29:56
Jefferson's Jefferson Pens all men are created equal.
30:00
And he meant everybody black and white.
30:03
Now, the fact that he owns slaves, yeah, OK, that's
30:06
hypocritical. But it doesn't detract from the
30:08
statement he the truth value of that.
30:11
Statement and that statement becomes a very powerful weapon
30:14
for subsequent generations to use to do the one thing
30:18
Jefferson could not achieve himself.
30:20
Which way in slavery? Right.
30:22
Right. No, in in America, it took four
30:25
score and seven years to to to undermine a human institution
30:31
that had been with us literally since the very first law code
30:37
that we have ever unearthed. But the oldest law code in the
30:41
history of man that we have unearthed, the section that we
30:45
found was on how to treat your slaves.
30:47
How do you treat your slaves? Yeah.
30:50
And, and people honestly believe, I bet if you polled a
30:55
significant number of Americans, you would find that a majority
30:59
of them would tell you that slavery began in the United
31:02
States, right? Right that it's our original and
31:06
unique sin and nowhere else in the world.
31:08
That's not even true of the New World.
31:11
The biggest slave importer by far is Brazil.
31:15
And you know, here, here's a a real world demonstration of this
31:18
claim that slavery and capitalism are wedded at the
31:21
hip. If that were true, why wasn't
31:24
Brazil, the First Nation to emerge from the industrial
31:27
revolution, as the World Economic power?
31:29
It had more slaves. The wealthy.
31:31
Were entrenched in their economy.
31:33
Yep. James and I are delighted to be
31:35
working with Civil. For years we have been pushing
31:37
people to think about how we can make the world a better place.
31:40
Civil's mission of upgrading society fits exactly with what
31:44
James and I have been talking about for years.
31:46
Civil helps us by allowing us to do what we do best, which is
31:50
researching topics that are important and communicating
31:53
these to our listeners in ways that we hope they find
31:56
enjoyable. To see Civil's extensive list of
31:58
content, including our podcast Words and Numbers and our new
32:02
lecture series, Words and Numbers Live, visit civil.com.
32:05
That's civl.com. You can see the argument that
32:11
capitalism was built on the back of slavery.
32:14
If you take a naive view of profit, yes.
32:18
So the naive view of profit is, well, clearly if I don't have to
32:22
pay these people to work that I'm making more profit.
32:26
But but that that statement completely ignores all the
32:30
incentives that are at play that are way more valuable to you
32:34
than the money that you saved by not paying them.
32:37
And that same naivete is the same naive is the naivete that
32:42
people apply in later with socialism when they say things
32:47
like, well, you know, the capital is built, why do I have
32:51
to pay rent for it? Well, because if you don't, you
32:55
remove the incentive of the landowner to maintain the
32:58
property. It's the incentives in both
33:01
cases that are matter way more than the dollars that your naive
33:05
view is focusing on. This is this is essentially the
33:08
core of Smith's argument. He says, yes, slavery can be
33:11
very profitable when it has external political support and
33:15
you're only counting the returns to the plantation owner.
33:19
But if you take a more expansive view of the labor system itself,
33:22
it has something we now refer to as deadweight losses is runs
33:26
rampant in slavery runs rampant through the labor system.
33:30
And some of the biggest instances of that loss are
33:33
incurred by the slaves themselves precisely because
33:36
they're denied any agency in how they expand and develop and
33:41
apply their talents. You know, the foregone
33:44
opportunity to do something with your life if you're bound by a
33:48
plantation master that says you're only ordained to pick
33:51
tobacco. I mean, what can you do?
33:54
Do you have any incentive to improve yourself?
33:56
And this is what Smith is noting.
33:58
And it's not just the simplistic assertion that, hey, this should
34:02
make slavery unprofitable. It's not that at all.
34:05
In fact, it's the political system that sustains it as
34:07
profitable. And, and Smith points this out
34:11
in numerous instances, but he says still, you set aside the
34:14
political support for slavery on an apples to apples comparison
34:20
with free labor. It is a vastly less efficient,
34:25
more detrimental economic system because it's removed any
34:29
incentive or mechanism of human agency from the primary
34:34
participants in the system, and does so at their detriment, at
34:38
their harm. You see?
34:40
In tangible ways. Let me follow up on that because
34:43
James started this whole conversation asking you about
34:47
the claim that capitalism was built on slavery.
34:50
I want to turn turn the question a little bit and ask, absent the
34:56
Civil War, if the Civil War had never occurred, would slavery in
35:00
the US have naturally died out? And if So, what would that have
35:04
looked like? Yeah.
35:06
So the the evidence is the answer.
35:08
The quick answer is yes, it would have eventually died out.
35:12
The question is when. We know yes that it would have
35:16
because almost every other society on earth had abolished
35:20
slavery through 1 means or another by the end of the 19th,
35:23
early 20th century. It persisted.
35:25
And we had, we had partially abolished it.
35:28
If you look at the individual states, yeah.
35:30
Exactly. And it had been creeping South.
35:33
So it starts in New England and the northern colonies, those are
35:38
they abolish slavery immediately after the Declaration of
35:42
Independence from Vermont is first.
35:44
They're not even a state yet. In 1777, they declare that
35:48
slavery is not allowed in Vermont.
35:50
So it does spread across the Northern colonies and then
35:53
eventually states to the point that by about 1800, I think
35:58
almost every northern state except for New Jersey had more
36:03
or less put slavery in the path to extinction.
36:05
And New Jersey follows a little bit after that.
36:07
And then they had also excluded it from the old Northwest or the
36:11
Midwestern territory as they're entering in the states.
36:15
So that's absolutely taking place.
36:17
The problem in the South is slavery is deeply politically
36:20
entrenched. And this is the problem Smith
36:23
pointed out in the 1760s when he first writes about slavery.
36:27
He says that everywhere slavery is most developed as a part of
36:32
the economy, the slave owners themselves have figured out how
36:35
to get themselves elected to public office.
36:38
And once they're elected to public office, it's the classic
36:41
public choice trap. They will never vote anything
36:44
that weakens their own condition.
36:47
And in fact, they'll vote public monies from the Treasury to prop
36:50
up slavery. So by the time we get to the eve
36:54
of the Civil War of the Southern political system is deeply
36:56
intertwined in like this horrendous, malicious, evil rent
37:00
seeking scheme between the slave owners that are part of the
37:02
government in the slavery industry itself, that they're
37:05
voting themselves public monies to recapture fugitives and to
37:10
put down slave revolts. And it's one of the major public
37:13
expenditures is they've exported the burden of slavery onto the
37:18
taxpayers of the United States. And that's why we have a huge
37:22
fight over the fusion of slave Act a decade before the Civil
37:26
War is because people in the northern states are why should
37:29
we be paying to enforce your horrendous institution?
37:34
That's the big question. And the election of Lincoln is
37:37
interpreted in 1860 as a potential imminent loss of that
37:42
subsidy. You read the secession
37:45
declarations of several of the Southern States, and that's the
37:48
one thing that they are all furious about.
37:51
It's not that he's going to come in and abolish slavery tomorrow.
37:55
It's that he's going to turn off the spigot of federal funds to
37:59
sustain this institution. So the question of what happens
38:03
to slavery after the Civil War? So absent the war itself, which
38:07
is a a horrendous, bloody upheaval event that creates the
38:11
opportunity to emancipate the slaves and then pass the 13th
38:16
Amendment. But suppose that event never
38:17
happens. Well, Lincoln contemplated the
38:19
situation and he considered it at length.
38:23
The thought was that there might be a gradual emancipation on the
38:27
British model, where the government essentially buys out
38:31
the slave owners and weans them from the institution.
38:34
That's what the British Empire did in the 1830s to peacefully
38:38
abolish slavery. You ask the question, OK, maybe
38:41
this is you're you're kind of rewarding the perpetrators of
38:44
the crime. But if your goal is to end the
38:47
institution, that's a price to pay.
38:49
And Lincoln held out that even till 1865.
38:53
He made that offer to Alexander Stevens, the vice president of
38:56
the Confederacy. He says we'll buy your slaves
38:59
from you if you just drop your arms and stop this war.
39:02
And Steven says no. So the war itself does bring
39:06
about the end. What you see is probably had the
39:09
war never happened. Suppose alternative universe.
39:12
That's never happens. I think slavery starts to
39:15
dissipate politically. It's a rent dissipation model.
39:18
It becomes harder and harder to sustain through arguments to try
39:23
to justify that political subsidy from the government.
39:27
And as that goes away, the institution itself starts to
39:31
weaken. So Lincoln, for example, you
39:33
predicted that perhaps by about the year 1900 this will have
39:38
happened, This process will have played out.
39:40
And if we look at somewhere like Brazil, deeply entrenched slave
39:43
society, when does it abolish slavery?
39:47
Its movement finally gets underway in the 1880s and it's
39:50
the 1890s. It's that era that Brazil is the
39:53
last major power in the Western Hemisphere that basically in
39:57
slavery. It does persist in a couple of
39:59
places in Africa and then the Arab world beyond that into the
40:04
20th century. There are still slave like
40:06
institutions in some very undeveloped countries today.
40:11
But by and large, it's purged from the world through a a
40:14
series of processes of abolition nation by nation.
40:19
And sometimes that's also the the the force of the
40:21
international community turns against it and says the British
40:25
Empire, after they get rid of slavery, they basically give
40:28
directions to their their entire British Navy, the most powerful
40:31
Navy in the world. They say go hunt down slave
40:34
ships. So you have the world's most
40:39
powerful Navy patrolling the Atlantic, intercepting slave
40:42
ships with a moral cause to exterminate this institution.
40:47
That's a pretty powerful move there.
40:49
It it's funny, Phil, when you really think about it, because
40:53
the, the group of people who are so insistent on viewing slavery
40:59
as the bedrock upon which modern capitalism was built are exactly
41:05
the same people. I mean, with a few exceptions
41:08
around the fringes. But they're exactly the group of
41:11
people who now claim that what we need to do is have state
41:15
ownership of the means of production, right?
41:19
Which which is, if you dive deeply into it, the very
41:23
definition of slavery. Again, that's the that's an
41:26
important insight. This Gordon Tolick made this
41:29
observation as the 20th century economist.
41:33
But I want to go back to our friend who's writing in the
41:36
1850s, George Fitzhugh, this pro slavery theorist, the one that
41:41
wants to cast Adam Smith into the fire because free markets
41:44
are an existential threat to slavery.
41:47
He also writes a long economic doctrine where he comes to the
41:50
basic conclusion. He says the plantation system is
41:54
the world's most perfect model of a socialist economy ever
41:57
invented. I might agree.
42:01
There's an interesting thing, and not only that, he arrives at
42:04
this conclusion A decade before Karl Marx writes Dos Capitol
42:09
using almost identical reasoning and logic as Karl Marx.
42:14
So he's a labor theory of value guy, just like Karl Marx.
42:17
He thinks labor improves upon a product.
42:20
And he looks at the factories of the North and he says, well, all
42:23
these laborers are improving upon the products.
42:26
They're the source of the profit of the factories, But the
42:28
factory owners are not paying their laborers the full volume,
42:33
the full value of their contribution to producing
42:35
something. And the difference between that
42:38
is appropriated by the factory owners unfairly from the wage
42:42
laborers of the north that are being underpaid.
42:44
Therefore wage laborers are being exploited.
42:48
Sounds like the entire argument of Dos Capital.
42:51
He basically comes up with surplus value theory a decade
42:54
and a half before Karl Marx plagiarizes it from some other
42:56
European sources. This is George Fish.
42:59
Surplus value theory as an indictment of the northern
43:03
capitalist economy. And he says, but look, I have
43:06
the counterpart, the perfect system of socialism on the
43:09
plantation where the master knows the interests of the
43:12
people under his care and make sure that each is taken care of
43:17
and and contributes his means to the operation of the plantation
43:23
up to the best of his ability. And is rewarded with shelter,
43:26
food, medicine and and all the things that are are taken care
43:31
of by the master of the plantation on on that person's
43:34
behalf. The perfect socialist society.
43:38
And he says that slavery has allowed us to sidestep the
43:41
surplus value problem of capitalism, the problem of the
43:46
owners of the factory exploiting their workers and taking away
43:51
value that's created by their labor and not paying them back.
43:54
He says This is why the slave system is superior and is the
43:59
true form of socialism compared to the capitalist North.
44:03
I can think of no better way to end this conversation than that
44:06
right there. That just seems utterly perfect.
44:09
So, so with, with these Marxist historians that, that want to
44:12
indict capitalism, you know, cast their lot with George
44:16
Fitzhugh, There's, there's a winner from history.
44:19
But clearly, Phil, it's all capitalism's fault.
44:23
If you read if it's. Just the it's this is the
44:26
default position, right? Anything I don't like, it's
44:30
because capitalism is back. When your only tool is a hammer
44:35
and a sickle. Oh, that's great.
44:45
Thanks once again for joining us and hopefully for the last time
44:49
on this topic, but I don't hold out anyhow.
44:53
Give it another six months, a new version of it'll be out.
44:55
That is correct. We'll see you next time, Phil.
44:58
Thank you, Phil. In the meantime, you people just
45:01
be nice to each other. I mean, my God, look, look at
45:04
the the lengths we will go to to be ridiculous to one another's.
45:08
Just try to be a little nicer. You'll be shocked at all the
45:11
good things that happen, and I'll catch you next time.
45:15
See you at Words and Numbers. We spend a lot of time talking
45:18
about what's going on in the economy and the government, but
45:21
fundamentally, all of this boils down to one thing.
45:23
The greatest threat facing modern society is a lack of
45:27
respect. The people who disagree somehow
45:29
find it difficult, if not impossible, to discuss their
45:32
differences in a civil manner. We at Civil are interested in
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45:38
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45:42
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