Siblings or Rivals?

Capitalism is an economic system that calls for free, open markets in goods and labor. It demands the ability to invest money for profit. Investors pay money upfront and hope the business makes money. Then the investors make money, too. Between the 1400s and 1700s, capitalism, as we know it today, planted its roots. Networks of production and shipping became larger and more complex. Sea empires and large corporations, like the Dutch East India Company, began.

They helped to spread capitalistic practices. Some of these were bonds and joint-stock companies. Bonds were loans people made to companies. They made these loans because they expected they would get their money back, plus interest. Joint-stock companies, like the Dutch East India Company, let many people pay to own stakes in a business. These were called shares of stock. Shares could be bought and sold on a stock exchange. Supporters of capitalism believed it would make the world a better place.

In this same period, chattel slavery became widespread. Large numbers of people—mainly from Africa—were enslaved. European and colonial American societies considered them property, rather than people. These enslaved people were part of the plantation system. It was a capitalist economic system. Enslaved workers were forced to work, without pay, in terrible conditions. They helped generate profits for people who legally owned them. Plantations and capitalism became widespread at about the same time. They happened in the same regions of the world. But by the late 1800s, slavery became a crime across much of this region.

Meanwhile, capitalism is still legal. It is, in fact, the world’s main economic system. How did slavery relate to capitalism throughout this period? Did slavery and capitalism depend on each other for success, as some people argue? Or did capitalism help to end slavery, as others suggest? Historians have struggled to answer these questions. For example, some say slavery helped to support capitalism in this early period. If so, then it arguably added to the wealth that many people and companies have today. This would mean the descendants of enslaved people have reason to get some of that wealth back. Similarly, say capitalism helped to end slavery. Then we have to give this system credit for helping to free people. But these ideas are still debated.

Rival Systems

Let’s first explore the idea that capitalism and slavery were rival systems. In this view of history, plantation slavery was part of an older way of organizing labor. Then capitalism came along and defeated it. For much of the early twentieth century, almost all historians believed this. But is this an accurate picture of the past? In theory, capitalism promotes labor done by free people, rather than slavery. One of its central ideas is free markets. The idea is that when left alone, a buyer and a seller will decide the price of a good. The seller wants more money. The buyer wants to spend as little as possible. In the end, they agree on a fair price. Capitalism suggests that the same is true for labor. A person should be free to ask for as much money as they can for their labor. An employer will want to pay as little as possible. Between them, they will agree on a fair wage for a person’s work.

Slavery, of course, is not a free market. The enslaved get nothing: just maybe a poor bed, bad food, and pennies. None of that is negotiated. This is not how capitalism is supposed to work. Some historians argue that capitalism helped end slavery. They note that an enslaved person would be unmotivated. Why work hard or offer your good ideas? Why try to impress a boss who “owns” you and will never pay you? Slavery, many historians say, was inefficient.

Meanwhile, they say, the capitalist system has workers who are paid wages. They can push for better pay or get a better position. Many workers in the northern U.S. were paid. Historians such as Eugene Genovese and Mary Beard argued that northern workers were more efficient than enslaved workers in the plantation south. For some historians, the U.S. Civil War showed a victory of capitalism over slavery. They point to the owners of slave-worked plantations in the Caribbean. They were connected to Old European aristocrats or nobles. Meanwhile, many abolitionists, who wanted to free enslaved people, were connected to new industry. They argued that wage labor was more efficient than slave labor. It was also morally right. So, historians have used these two arguments to show capitalism ended slavery: First, they say wage labor was a better system. It made free societies stronger. Second, they argue that people in capitalist, industrial societies were natural opponents of slavery.

Sibling Systems

But capitalism and slavery were maybe more agreeable than this evidence suggests. Supporters of capitalism argue that it is important to make a profit. If people are putting money into a business, they expect to make money on that investment. Many historians have noted that the Atlantic slave trade was, in fact, hugely profitable. People in Britain and elsewhere invested in shares in slave trading companies. They made a fortune. As historian Eric Williams and others have argued, they may have used those profits to start other companies. They too funded many scientific and technical advances. Capitalism and industrialization spread faster this way.

Slave plantations were also often very profitable. Some historians, including Walter Johnson and Ed Baptist, have recently argued that slave plantations actually helped create the modern capitalist world. Johnson focuses on cotton. It was one of the leading crops produced by enslaved workers in the 1700s and 1800s. He reminds us that cotton fed the textile machines. These were among the world’s leading capitalist industries in the 1800s. Most of that cotton was produced by enslaved people. So, it was slavery that made much of this industrialization possible.

Ed Baptist goes even further. He says that plantations growing cotton developed many of the inventions of modern industrial capitalism. These included productivity “targets” for enslaved people. Many modern factories use targets for their workers. He also argued that enslavers developed technologies—especially punishments. Through the technologies, enslaved workers perhaps became more productive than paid factory workers. Altogether, these historians argue that capitalism and slavery worked hand-in-hand. They were like siblings supporting each other. The slave trade and the plantation system created profits for capitalists. The plantation system even helped develop and inspire new industrial methods for future capitalists.

So, What to Think?

So, who to believe? Right now, more historians see capitalism and slavery as intertwined. They mutually supported each other. But this wasn’t always the case. Historians in the future may not agree. Already, there are some historians who question Baptist’s and Johnson’s ideas. Their evidence and data are thin, suggest economists Alan Olmstead and Paul Rhode. They relied on people’s stories and not data. Unfortunately, big sets of data are difficult to find for many issues. This is especially true before computers.

Clearly, however, slavery and capitalism existed together at once. The industrial world economy began with them. It is worth trying to understand how they each shaped today’s global economy.