A recent one virtual reading group explored “what if” around the Reconstruction period. One possibility we explored was whether financial compensation could have prevented the American Civil War. The British compensated slave owners in 1837 after the abolition of slavery in 1833. In 1862 the United States paid loyal slave owners $300 per freed slave in compensation for abolition in the District of Columbia. In both cases, slavery was abolished without bloodshed.
That “What if?” it’s still not too bad. Our group discussed Claudia Goldins “The economics of emancipation,” which estimated the cost of voluntary emancipation by giving enslaved people enough money to purchase their freedom. (This, of course, would not have succeeded in compensating the people who suffered the greatest injustice: the enslaved.)
We also talked about Richard K. Vedder’s “The percentage of slave exploitation (expropriation).‘, which attempts to calculate how much more economic value the enslaved people produced than what they were ‘compensated’ for through the costs of their care.
It is valuable to understand that slavery is not only unjust, but also expensive. Yet questions about adequate compensation for slaveholders and just compensation for freedmen miss something important when they try to remain alone. We can be led astray by focusing on what we think we can measure and forgetting what we are actually trying to understand.
We would be better served by considering some of the questions that Liberty Fund is so keen to ask and consulting the reliable information available. Let’s apply some of the Liberty Fund’s favorite thinkers and some readings from this group.
Putting on my Hayek hat: we do not and cannot know the prices that either party would have accepted here because the choice was never put to them. The data do not exist for us to perform these calculations. The market was too corrupted by slavery.
What would Adam Smith participation? The marginal product estimates used to calculate exploitation are underestimates that would shortchange freedmen in compensation for lost income. Smit says that the “liberal reward for labor‘ is what results in the diligence and higher production of workers. This goes beyond the simple motivation to work harder for a good wage. Without the benefits of free labor, enslaved people would have been discouraged or prohibited from increasing their human capital; they were not rewarded for moving into—sometimes not allowed to move into—the jobs that solved the problems they thought they could solve best. Even if we could be sure that the data were good, the realized marginal product and hours worked of enslaved workers could not be the counterfactual scenario for which they should be compensated.
Counterfactuals are difficult, even when we’re talking about contemporary situations! They seem insurmountable when we talk about nineteenth-century American slave labor.
If we have good reason to regard the available data as highly speculative, it might be more fruitful for more general observations about freedom, responsibility, and power.
Smith made comments not only about slavery, but also about the motivation to maintain a slave society like the one the Confederate South aspired to. He did not think that economic incentives would be sufficient to overcome the following: “Man’s pride makes him eager to dominate, and nothing wounds him so much as the necessity of condescending to persuade his inferiors.” (WN III.iiWe have good reason to think that such economic considerations could never – or at least not quickly – save the situation in the southern states. We read some of that evidence in our reading group.
We learn more about the (unbelievably low!) economic price the freedmen would have accepted after emancipation and the Union victory by reading what they asked for (e.g. Freedmen from Edisto Island, South Carolinato Andrew Johnson). While I’m sure they would have been happy with full compensation if that was even possible, what mattered most was freedom, not money. They wanted emancipation (which they got) and the means to secure it in the long term (which they did not get).
We should also think of power and freedom rather than money to help us see that the exploitation of slaves was complete, and did not vary depending on how much value was extracted from them and how comfortably they were kept.
From one of the most important passages Wealth of nations: “The blacks, who constitute the greater part of the inhabitants of both the southern colonies on the continent and the West Indian islands, being in a state of slavery, are undoubtedly in a worse condition than the poorest people either in Scotland or Ireland. We must not, however, on that account, suppose that they are worse fed, or that their consumption of articles which might be subject to moderate duties, is less than that of the lower orders of the people of England. (WN V.iii)
It doesn’t matter what “wage” was paid to enslaved workers when you consider how exploited they were, because the exploitation was not merely economic. There is no material compensation sufficient to make slavery just or eliminate its exploitation.
We learn more about whether there was a price the Confederates would have accepted by reading what they saw as their goals after the Confederate defeat (Pollard, The Lost Cause; Black Codes of Mississippi and South Carolina). We could also look further our lectures to the Confederate Constitution. Not only the war, but the violence of the Redeemers and the century of segregation and despotism they brought about and maintained despite the economic costs, are difficult to explain if the Southerners wanted money. They are easy to explain if they were concerned about power and domination.
It is tempting to believe that there could be an amount of money that could have produced an economically just outcome, avoided the Civil War, and set things right with people who had been enslaved. If it were, it would make the enormity of the horrors of war and slavery scientific, rational, and comprehensible. But ultimately, these estimates are more of an interesting exercise for a certain type of modeler than they are helpful in understanding the practical opportunities missed by Lincoln, the Union, or the U.S. government during Reconstruction. .
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This piece is an adaptation of my comments in the recent VRG, Reconstruction: What If Lincoln Lived? If this type of discussion appeals to you, check out the list of upcoming reading groups at the Online Library of Liberty.