In among those arguments in favour of reparations for slavery is the idea that slavery is what actually built America therefore large amounts should be paid to the descendants of those who did the building. It is true that black familial wealth is generally lower than white and so let’s have some repayment to those who actually built that economic pile, eh?
This strikes as being a bit too Marxist to be true. Not in the sense of being a bit too Soviet and communist, but Marxian, in that it concentrates much too much on capital. One number I’ve seen floating around is that 40% of all American capital was actually the value of those slaves. As economic growth depends upon capital therefore 40% truly belongs to those whose labour was exporopriated from them.
Except that’s the unfortunate Marxism there. Yes, economic growth does depend, in part, upon capital. Primitive capital accumulation is a thing, as is that idea of falling profit margins and so on. But it is an error to say that’s all it’s about.
That being what I mean by it being a Marxist error, perhaps too much emphasis upon the volume of capital to the idiocy of insisting that it’s all and only about that accumulation of capital.
A more modern economics would point out that we humans get richer by increasing productivity. One manner of which is to add more capital to labour – so accumulation of capital does indeed work. The two man potato operation does indeed become more efficient by the addition of the second spade, the doubling of the capital being applied. And again more efficient by 50 such patches being treated by the specialised tractor, seed drill, harvesting machine and so on.
OK, there’s some truth to more capital making the world wealthier. But it is only some truth. There’s also that increase in productivity through advancing technology. Knowing how to build the tractor, breeding up the potatoes and so on.
More formally we talk about the Solow Residual. This is the increase in production that comes from no addition in capital and or labour. That is, the increase in productivity after we’ve included the effects of capital accumulation and deployment.
It’s certainly true – OK, it’s the generally accepted truth – that increases in that Solow bit were vastly more important in 20th century economic growth than more capital was. I think I’d argue that the second half of the 19th went the same way. It’s advancing technology that was important in raising living standards, increasing growth, not just capital accumulation.
Sure, we can look at “capital” in the economy and see that it rises. But don’t forget much of that is the value we’re ascribing – through that dread financialisation – to those advances in technology. Someone invents the new furnace, technological advance, and by the time he’s built it and run it he’s floated the company, the valuation of those shares being now capital. But that’s not accumulated capital at all, that’s created.
So, that initial claim about slavery having produced the wealth of the nation doesn’t work out. Because if it’s technological advance that creates the wealth then the expropriation of the slaves’ labour to accumulate capital isn’t the cause of the growth.
Thus, even if it’s true that slaves were 40% of antebellum capital that doesn’t mean descendants should have 40% of today.
At which point we have a useful proof of the importance of slave capital . Stick with that it was 40% of all US capital in 1860. That’s a claim that’s made out there at times after all.
OK, in 1865 slaves were 0% of US capital. Not so much the war but the Emancipation Proclamation destroyed, entirely and wholly, that 40% of US capital. Change the numbers as you wish, the point is the same whether slaves were 1% or 100% of American capital. That capital all got destroyed in those 5 years.
The American economy continued to grow in the late 1860s. Off into the 1870s and so on. In fact it never stopped doing so. Therefore the slave capital couldn’t have been the unique part juicing that process. In fact, if growth continued, even accelerated (as it did), then the slave capital can;t even have been an important part of the system because destroying it didn’t even slow down, let alone halt, the growth.
This being the real point here. Yes, Marxists do like to insist that it is the accumulation of capital which produces growth. This transfers over to the slavery argument where people look at that capital – number of slaves times price of slave – and insist that US growth came from that capital. Which was, obviously, expropriated from those slaves. But when that capital was destroyed the growth continued. So, that capital cannot have been the source of the growth, can it?