“No, Sarah, Our Prosperity Wasn’t Extracted from Slaves”

The opening lecture that I deliver every time I teach a Principles of Microeconomics course, which I do each semester, is on what the economic historian and liberal philosopher Deirdre McCloskey calls “the Great Enrichment.” I impress upon my students (most of whom are in their late teens) that they and everyone they know are off-the-charts materially wealthier than were the vast majority of all humans who ever lived. I explain that millennia after millennia, our human ancestors breathed, toiled, and perished in poverty so grinding that we today can barely imagine it.

This pattern of existence, when reckoned in historical time, was suddenly shattered just over two centuries ago. First in Holland, and then even more spectacularly in Britain, ordinary people gained steadily greater access to goods and services that in the past either were available only to royals, nobles, and members of high priestly classes, or – more commonly – weren’t available to anyone at all. Even Louis XIV, likely the most powerful man in the world, could not travel in motorized vehicles, escape from the heat of summer into air-conditioned rooms, converse in real time with people out of earshot, avoid having his face disfigured with smallpox, improve his vision with contact lenses or Lasik surgery, or treat his gonorrhea with antibiotics.

A key purpose of my intro econ course is to help my students understand that and how peaceful, commercial cooperation – today spanning the globe and involving billions of people nearly all of whom are strangers to each other – emerges to create and maintain our astonishing material prosperity.

Some students more than others resist my explanation of how. One such student – a freshman who I’ll call “Sarah” – came up to me after our most recent class and asked this question: “Isn’t our wealth the result of slavery?” She continued: “My high-school history teacher taught us that our wealth was extracted from slaves.” Sarah seemed to be convinced by her high-school teacher’s explanation.

Don to Sarah: “Yes, I’ve heard that claim, but I don’t buy it. How do you explain the fact slavery in America ended 157 years ago and ever since then the wealth of ordinary Americans has continued not only to grow, but to grow far more impressively than it did when slavery still existed. Think of what happened in the 20th century. Ordinary Americans got easy access to electrification, radio, television, automobiles, a continent-spanning network of paved roads, air travel, air conditioning, supermarkets, antibiotics, contact lenses, and laptops and smartphones. All of these pieces of prosperity were created long after slavery’s demise.”

Sarah to Don: “Yes, but these things were made possible by the wealth that whites extracted from slaves. Without the wealth produced by slaves and then stolen from them, we wouldn’t have had the foundation to produce what we did after slavery ended.”

Don: “American slaves worked overwhelmingly in agriculture. How did, say, cotton picked by slaves in Louisiana in 1860 turn 160 years later in Michigan into middle-class homes equipped with wi-fi, Google Home, and refrigerators stuffed with orange juice from Florida, pineapples from Hawaii, and sauvignon blanc from New Zealand?”

Sarah: “The wealth stolen from slave labor was eventually invested in factories that produced all these things.”

Don: “Not so. Consider, for example, Henry Ford. He was born into modest means on a Michigan farm in 1863 to a family with no history of slave-owning. What made him successful in business?”

Sarah: “You’re asking me?”

Don: “I am.”

Sarah: “I’m not sure. I don’t know the specifics.”

Don: “Henry Ford had entrepreneurial ideas. He also had the gumption and the freedom, as the economist Deirdre McCloskey says, ‘to have a go’ at putting his ideas into practice. Ford, like countless other lesser-known entrepreneurs, created wealth. Ford grew rich by dramatically increasing the efficiency of producing automobiles that the masses eagerly bought. His business success owed nothing to slavery.”

Sarah: “I get that he didn’t use slaves. But I feel that the capital to start his company probably came from wealth that had earlier been produced by slaves.”

Me: “First, the capital that first backed Ford came from a man named William H. Murphy. Born in 1855 in Maine, Murphy moved to Detroit where he and his father were successful in the lumber business. I’m pretty sure that post-Civil War Michigan lumbermen didn’t earn any income from slavery. Murphy, like Ford after him, created his wealth by running a successful business.

“Second, regardless of the source of the capital that Murphy invested in Ford’s new business, that investment would have been worth diddlysquat if Ford hadn’t had the vision, energy, and freedom to use those resources in ways that produced outputs that the masses wanted to buy and at costs low enough to make it worthwhile for Ford to continue to produce. This is what I mean when I say that Ford created wealth – wealth, obviously, for himself, but also for his customers in the form of automobiles that were worthwhile to purchase, and for his workers in the form of opportunities to earn incomes higher than they could have earned by working elsewhere.”

Sarah: “But I still feel that the seed money for all these later companies like Ford’s came from the slave economy that lasted in this country for centuries.”

Don: “Sarah, don’t feel. Think! Don’t you see that Ford created wealth? Don’t you see that he created value that didn’t exist until he put his entrepreneurial ideas into action? If Henry Ford could, without slavery – as you admit – turn some amount of wealth into a larger amount of wealth, why can’t other people have done the same, before and after Ford? Even if – contrary to fact – all of the seed money for the Ford Motor Co. happened to come from former slave owners, what created Henry Ford’s wealth and the valuable goods that he produced for millions of Americans was Henry Ford’s entrepreneurial vision and effort put into operation in an economy that permitted him to act entrepreneurially. No amount of resource-value grows into a larger amount of resource-value automatically.

“The ability of an entrepreneur to turn some amount of resource-value into greater resource-value doesn’t depend upon the source of the initial funding that the entrepreneur used to launch his or her venture. What matters is the entrepreneurship and the freedom of markets, which emphatically has nothing to do with slavery.”

Sarah: “I don’t know. Capitalism followed slavery. That must be significant.”

Me: “Do you remember my lecture from about three weeks ago in which I warned against the post hoc, ergo propter hoc fallacy? You’re committing that fallacy now. You can’t legitimately conclude that if event A is followed by event B, that A caused B. Maybe it did, but maybe it didn’t. In fact, it’s possible that B happened despite, and not because of, A. Just because people leave their homes in the morning carrying umbrellas doesn’t mean that the rain that started later that day was caused by people carrying umbrellas.”

“Slavery was prevalent throughout human societies for millennia. If slavery was the cause of capitalism, don’t you think that capitalism would have started at least seven or eight thousand years ago? If slavery is the source of our prosperity today, why are not all countries in the world as rich as are the United States and Sweden? Do you realize that Brazil had slavery until 1888, nearly a quarter-century longer than the U.S. had slavery? Yet Brazilians have always been, and remain today, much poorer than Americans.”

Sarah: “I’m not convinced.”

Me: “Well, may I ask that you keep an open mind for the rest of this semester? Perhaps what’s still to come in our economics course will help you to better understand why I’m certain that modern prosperity has no connection whatsoever to slavery except that it is capitalism – and the ideas that support it – that brought about slavery’s demise.”

Sarah: “Yes, I’ll keep an open mind. Good night, professor.”

Me: “Thanks Sarah. That’s all I can ask. Good night. See you in our next class.”

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