Siblings or Rivals?

Capitalism calls for free, open markets in goods and labor and the ability to invest money for profit. Between the 1400s and 1700s, capitalism, as we know it today, planted its roots. Networks of production and distribution became larger and more complex than ever. Sea empires and large corporations like the Dutch East India Company were started.

They helped to spread capitalistic practices, such as bonds and joint-stock companies. Bonds were loans people made to companies with the expectation they would get their money back, plus interest. Joint-stock companies, like the Dutch East India Company, let many people pay to own stakes, or “shares” in a business. Those shares of stock could be bought and sold on a stock exchange. Supporters of capitalism believed it would make the world a better place.

This same period also saw the development of a widespread system of chattel slavery. 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 a capitalist economic system we call the plantation system. They were forced to work, without pay, in terrible conditions. They generated profits for people who legally owned them. Plantations and capitalism developed and became widespread at about the same time, in about the same regions of the world. But by the late 1800s, slavery became a crime across much of this region.

Meanwhile, capitalism remains not only legal, but the main economic system in the world today. What was the relationship of slavery to capitalism through 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 partly because they have meaning for debates we have today. For example, some say slavery helped to support capitalism in this early period. If so, then it arguably contributed to the wealth that many people and companies have today. It would mean the descendants of enslaved people have reason to demand some of that wealth back. Similarly, if capitalism helped to end slavery, then we have to give this system credit for helping to free people. But both of 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 1900s, 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 principles is free markets. The idea is that when left alone, a buyer and a seller will decide a good’s price. The seller wants a high price. 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 come to a fair wage for a person’s work.

Slavery, of course, is not a free market. The enslaved get nothing, except perhaps a poor bed, bad food, and a tiny amount of money—none of which is negotiated. This is not how capitalism is supposed to work. Some historians argue that capitalism helped end slavery. They note that this system makes the enslaved person unmotivated. Why work hard, offer your good ideas, or do anything to impress a boss who “owns” you and will never pay you? Slavery, many historians say, was inefficient.

In comparison, they say, the capitalist system has workers who are paid wages and can push for better pay or move up the ranks. In particular, U.S. historians such as Eugene Genovese and Mary Beard argued that wage workers in the industrial north of the country were more efficient than enslaved workers in the plantation south. For some of these historians, the U.S. Civil War represented a victory of capitalism over slavery. Other historians have similarly seen the abolition, or end, of the Atlantic Slave Trade as a victory of capitalism over slavery. They point to the owners of slave-worked plantations in the Caribbean, who were connected to Old European aristocrats or nobles. Many abolitionists, meanwhile, were connected to new industry. They argued that wage labor was both more efficient and morally better than slave labor. So, historians have used these two arguments to support the idea that capitalism ended slavery: First, they say wage labor was a better system. It made free societies stronger than those that used enslaved labor. Second, they argue that people in capitalist, industrial societies were natural opponents of slavery.

Sibling Systems

But it may have been that capitalism and slavery were more agreeable than this evidence suggests. In addition to free markets, 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 their 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 and made a fortune. As historian Eric Williams and others have argued, they may have used those profits to start other companies. They also funded many scientific and technical advances. Industrialization and the rapid spread of capitalism were made possible this way.

Plantations that depended on the forced labor of enslaved people 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 labor 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 nineteenth century. Most of that cotton was produced by slave labor. So, it was slavery that made much of this industrial growth possible. 

Ed Baptist goes even further. He says that plantations growing cotton developed many of the innovations of modern industrial capitalism. These included productivity “targets” for enslaved people. Many modern factories also use targets for their workers. He also argued that enslavers developed technologies—especially punishments. Enslaved workers perhaps became more productive and efficient than factory workers who were paid wages when punished. Altogether, these historians argue that capitalism and slavery worked hand-in-hand. They were like siblings supporting each other rather than rivals. 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? Clearly, historians disagree about the relationship between slavery and capitalism. Right now, more historians see the two as intertwined and mutually supporting 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. This is especially true before modern recording and computing technology.

Whatever their exact relationship, clearly slavery and capitalism existed together in the years that set the stage for the industrial world economy we have today. It is worth discussing and trying to understand how they each shaped our modern global economy.