Slave Labor as Labor Hoarding - Input Use Inside the Economic Region of Production

By Smith, Bruce Henry | American Economist, Spring 1992 | Go to article overview

Slave Labor as Labor Hoarding - Input Use Inside the Economic Region of Production


Smith, Bruce Henry, American Economist


If bound to daily labor while he lives, His is the daily bread that labor gives; Guarded from want, from beggary secure, He never feels what hireling crowds endure, Nor knows like them in hopeless want to crave, For wife and child, the comforts of the slave, Or the sad thought that, when about to die, He leaves them to the cold world's charity, And sees them slowly seek the poor-house door - The last, vile, hated refuge of the poor.

This paper is a nontechnical note on the analysis of the use of slave labor as production inside the economic region of production and the consequent reallocation of the fixed slave input to other plantation activities. The planter of the antebellum South's primary staples - sugar, rice, tobacco, and king cotton - would from time-to-time experience a downturn in market demand as a result of European wars or economic stagnation. Supply-side factors, such as unfavorable climate condition, also would affect production, but not necessarily employment, decisions. If the planter were hiring free labor, he would experience no compunction to release from hire labor which he considered, for the most part, unskilled. This attitude would be reinforced by the by the knowledge that such adverse conditions would also affect his neighbors. They were not going to hire "his" laborers. When conditions changed to again make employment of his released labor economically feasible, he would have a ready supply of labor available from which to hire save for the diminution of this reserve due to migration or morbidity.

Since the value of the slave's labor was capitalized over his lifetime, the planter was not in a position to discharge his services as conditions deemed feasible. To my knowledge, U. B. Phillips was the first to allude to this phenomenon. "With large amounts of capital invested in slaves, the system would be maintained even in time of depression, when the plantations were running at something of a loss; for, just as in a factory, the capital was fixed, and operations could not be stopped without still greater loss." [13, p. 259] Earle and Hoffman [4] and Anderson and Gallman [1] also touch on these points. When viewed in the conventional, static, short-run analysis of microeconomic theory, slave labor would be as fixed as the land and capital to which it was applied, i.e., the planter was a labor hoarder.

In fact, this rigidity is one reason given why slave labor did not often find favor in Southern factories.(1) Oscillations in demand frequently necessitate layoffs of industrial workers. When the workers are owned, layoffs are impossible. If the slave is sold, he is sold at a discount. When demand conditions recover so that the slave again may be employed profitably, repurchase is at a premium. Insofar as manufacturing and agricultural production positively correlate, slaves belonging to the plantation could not be hired out to factories when agricultural demand fell.

Human capital theory is helpful in explaining some important aspects of the plantation's reluctance to part with slaves.(2) This literature helps explain the observed pecuniary preference of the purchaser for the domestic over the African slave [9]. The concept of firm-specific training is useful in understanding a planter's reluctance to part with a lifelong household servant. The approach, however, is more limited when production is viewed in the static short run. The planter was forced by economic and legal considerations to maintain even his most unskilled and superannuated slave. Thus, slavery from this perspective takes on the characteristics of pure capital theory as well as a social relationship.

One approach to deal with the planter's problem of the depressed short run is to analyze the production function of the primary staple he grows and secondary products arising from the plantation system. Isoquant theory is so often understood in its two-dimensional form instead of its three-dimensional origin. …

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