Ep. 81 Jeffrey Rogers Hummel on the Economics of Slavery and Why the Confederate States Lost the Civil War
Jeffrey Rogers Hummel joins Bob for an in-depth discussion of the economics of slavery, touching on subtleties such as the labor/leisure tradeoff, and the recent claims by some historians that slavery was efficient. Then Bob asks Hummel to explain the provocative claim in his book, that the Confederacy would have done much better militarily if it had used the same guerrilla warfare tactics that the American colonists had used against the British.
Mentioned in the Episode and Other Links of Interest:
- Jeffrey Rogers Hummel’s book, Emancipating Slaves, Enslaving Free Men. #CommissionsEarned (As an Amazon Associate I earn from qualifying purchases.)
- Hummel’s essay on the deadweight loss from slavery.
- The Bob Murphy Show ep. 71, featuring Mark Thornton discussing his work on the economics of slavery. And BMS ep. 58, on the military blunders of World War I.
- Bob’s mises.org essay on the economics of slavery and the 1619 Project.
- Help support the Bob Murphy Show.
The audio production for this episode was provided by Podsworth Media.
About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
Fantastic episode! Very informative and nuanced. Get that guy on your show more often!
Regarding the per capita income discussion, I think his point was something like this:
Northern per capita output was equal to total Southern output per free man.
If we are to assume Northern and Southern free men were equally as productive, slaves must have produced zero output. That obviously wasn’t the case. Which means Southern whites had lower productivity (but not necessarily income) than Notherners, due to the systematic deadweight-loss of the slave economy.
For something completely different, is there an Austrian critique to Keen’s Debunking Economics? I’ve seen someone make the curious claim that supply functions are bunk, because (most) companies would sell way more quantity at given market prices. There’s only the demand constraint in that view. Is that at all a justified critique? I have to admit it’s a bit baffling. I suppose the answer is that aggregate supply functions work differently from individual firm concerns.
I believe Bob wrote a review of that book and it was mostly negative.
Yep, Gene Callahan and I have a review of that book in the Review of Austrian Economics.
Regarding your question on supply functions, it is not the case generally that companies would happily sell “way more” quantity if only there was demand for it. The situation, however, is complex.
Consider that we normally would expect the worth of the marginal unit of a good to go down as more units are acquired, and to go up as more units are sold. So why do companies offer bulk discounts? That would at first glance seem to disprove the law of decreasing marginal worth, but the answer lies in fixed and marginal costs. I won’t go into detail here, just want to point out the complexities involved in supply chain management. Also note that companies do often charge a higher price for the (N+1)th unit of a good than for the Nth unit. For social, legal, and technical reasons, this is typically done through coupons or “sales”, and the goal is to encourage customers to visit a store without buying more than the supply chain can handle. And now we get to where companies generally don’t want to exceed their sales forecast by too much.
Transportation and other logistics costs can easily skyrocket under sudden stress, which can substantially reduce the per-unit profit made (even push it negative). Yet faced with increased demand, companies generally must try their best to meet that demand, else their competition will gain market *and mind* share, which can hurt for years into the future. Not to mention the possibility for quality control slipping or bad press from shortages or any of a number of other PR problems.
Yes, in the abstract, essentially all companies would love higher demand, if they could meet it, and the higher profits that would come with meeting the increased demand. It’s also easy to say “this factory is only running at 80% capacity, if there were more demand it would run at 100%, that 80% is inefficient”. But that neglects the utilization of associated resources, one (or several) of which would likely push the cost higher in a Pareto-like scale.
Great episode —just taking the time to look back on some of the ones I’ve missed!
But I just wanted to clarify something. Presumably free-market advocates would like to be able to show that for a given scenario (A), where group 1 has enslaved group 2, versus the scenario (B) where both groups are free self-possessing individuals, and all else being equal, that even group 1 is *better*-off in scenario B than in scenario A? i.e. that slavery doesn’t even benefit the masters! (As liberals, this would be doubly satisfying.)
If I was following correctly then, the point seemed to be that the human resources of society were not allocated in the most productive way in scenario A due to the coercive nature of slavery forcing them into the wrong place; that if group 2 had instead been at liberty to auction their services to the most satisfying bidders, that this would lead to the best outcome as the market would soon allocate their labour in a way which benefited group 1 more.
What was niggling me was that given a slave is treated legally (although unjustly) as transferable *property* – and so has a price – why would it not be the case that market forces efficiently allocate the labour in the way which best benefited group 1 anyway? Wouldn’t we say that about the allocation any other resource via the price system, or is it the case that that the conscious decision-making nature of human beings makes a special difference? To put it another way: is the fact that a loom does not have the capacity to sell its own weaving services to satisfy its own preferences, an inherent inefficiency in the potential allocation of looms in society?
(And apologies if this was a dumb question!)