A quick note on Piketty, slave-wealth, and US capitalism.
Matthew Yglesias had a Vox article thundering “American prosperity was built on slavery and torture” as part of his reaction to Edward Baptist’s book on slavery and American capitalism. Yglesias reproduced a chart from Piketty’s Capital in the Twenty-First Century to illustrate how valuable slaves were as capital :
To which Scott Sumner at Economics & Liberty responded by arguing “ending slavery made America richer” :
Sumner kind of buries his point, but he’s basically saying the chart plays accounting tricks. If you treated all labour resources in the same way, there wouldn’t be any (or much) change in the trajectory of American capital assets before and after emancipation.
But that’s the same thing Piketty says, except he said it an economically more compelling way ! A chart from earlier in Chapter 4 of his book doesn’t even mention slave-wealth :
Capital in the 20th Century :
Since labour, whether free or slave, receives flows of income, you could value labour just as you would a bond or an annuity or other assets with returns.
In fact, without the above reasoning, the irrelevance of emancipation to the economic growth of the United States would be a little puzzling in a micro sense. The wealth that had been held in the form slaves did not disappear into thin air, but was partially (*) transferred to the slaves themselves. Except nobody counts the present value of returns to human capital as “wealth”.
So ultimately, aren’t Piketty and Sumner saying the same thing ?
( * I say “partially” only because emancipated slaves did supply less labour than before.)
But still the slave-owners surely made a killing. Slave-cotton was certainly profitable year by year, but another question is, where did all the expropriated value of slave labour go ? Slave prices from Baptist :
You have to think of these prices as you might with those of tech stocks or housing prices. Just as high stock prices incorporate high expected returns, so the run-up in slaves prices incorporated expectations of profit from using slaves in production. People who owned slaves from early in the cotton era, or those few contrarians and “value-investors” who bought them when prices were low, must have made a killing. But investors and speculators who bought high might not have been able to amortise their investments.
Anyway, since both Southern raw cotton and British cotton textiles approximated perfectly competitive markets, the biggest beneficiaries of the value extracted from slave labour were almost certainly the consumers of British cotton textiles, i.e., tens of millions of people not just in Europe and North America but around the world. Even India had become a net importer of British textiles.
EDIT : A reader pointed me to this piece by Brad DeLong which makes a much more textbook case for the distribution of the expropriated value of slave labour amongst the pioneers in slave cotton as well as the world’s consumers of British cotton textiles.