by Lipton Matthews
Slavery enriched slaveholders but not societies, which is why slave economies consistently lagged in growth, innovation, and industrial development across history.
Over the past two decades, the New History of Capitalism has transformed debates about Western development by restoring slavery to the center of the story of modern economic growth. A burgeoning literature now contends that slavery was not simply a moral atrocity intertwined with capitalism but the essential engine that powered the rise of the Atlantic economy itself. According to this interpretation, slave labor generated the capital accumulation, commodity production, and financial sophistication that made the modern West rich. When British politician Kemi Badenoch publicly opposed this argument, critics accused her of minimizing slavery’s economic significance. Yet the central empirical difficulty with the enrichment thesis remains unresolved: if slavery is such a powerful generator of prosperity, why did societies organized around slavery remain poor for most of human history, despite slavery existing across nearly every major civilization?
At the heart of the argument lies a subtle but consequential confusion between entanglement and causation. Western economies undeniably became deeply entangled with slavery, but this does not establish that slavery created Western prosperity. Long before the Atlantic slave trade reached its height, countries such as England and the Netherlands had already developed sophisticated commercial institutions, secure property rights, advanced legal systems, and increasingly complex financial markets. These institutional advantages enabled slavery to become integrated into Atlantic commerce on an unprecedented scale. Slave traders could insure voyages, mortgage slaves, mobilize international credit networks, and circulate slave-produced commodities through organized exchanges not because slavery created these institutions, but because those institutions already existed and were sufficiently advanced to absorb slavery into their operations.
Comparison with other slave societies makes this point even clearer. Slavery existed throughout the Arabic world, sub-Saharan Africa, and numerous Asian empires, often for longer periods than in the Atlantic world. Yet historians do not argue that those regions generated modern capitalism through slavery. Therefore, what distinguished the Atlantic economies was not slavery but the institutional environment where slavery was embedded. The Atlantic world possessed the accounting systems, insurance markets, corporate forms, and financial instruments capable of incorporating slavery into an expanding capitalist order. As one study notes, management technologies such as accounting books “were adopted by the largest slave plantations.” The significance of this observation is frequently misunderstood. It reveals the sophistication of Atlantic capitalism before slavery’s expansion rather than demonstrating that slavery spawned capitalism.
Once the debate moves away from moral narrative and toward empirical analysis, the evidence begins pointing consistently in the opposite direction from the enrichment thesis. Research examining the long-run economic consequences of slavery in the American South shows that slavery generated institutional structures that suppressed development rather than accelerated it. Counties with larger slave populations before the Civil War developed post-Emancipation systems that artificially depressed black wages, restricted labor mobility, and weakened incentives for mechanization over generations. Through Black Codes, vagrancy laws, anti-enticement provisions, and convict leasing arrangements, Southern elites preserved a pool of cheap labor whose bargaining power was systematically constrained by law and violence. Instead of fostering dynamic economic transformation, slavery locked large sections of the South into labor-intensive production patterns that delayed industrialization.
The consequences of this institutional environment were visible across agricultural development. Counties with higher historical slave ratios shifted toward crops less exposed to labor-saving technological change and away from crops where mechanization promised the greatest productivity gains. These same counties lagged substantially in tractor adoption during the mid-twentieth century, precisely when improvements in tractor design made mechanization especially productive for Southern farming. Cheap labor fundamentally altered the economic incentives facing landowners. Where labor could be artificially suppressed, investment in labor-saving machinery became less economically rational. Slavery therefore weakened one of the central drivers of modern growth: the pressure to innovate in response to labor scarcity.
Labor market evidence complements this conclusion with striking force. Counties with larger slave populations continued paying significantly lower wages to black agricultural workers well into the twentieth century, and those depressed wages were closely associated with lower rates of tractor adoption. Crucially, these disparities cannot simply be attributed to differences in skill or education. Black workers with educational backgrounds comparable to white workers still received lower wages and lower returns to additional schooling in counties with higher slave ratios. Mediation analysis further demonstrates that the effect of slavery on delayed mechanization operated overwhelmingly through this wage suppression channel. The deeper economic consequences extended far beyond agriculture itself: counties that mechanized more slowly also experienced weaker manufacturing growth and delayed structural transformation into industrial economies. Rather than serving as a foundation for development, slavery entrenched conditions that prolonged stagnation.
Approaching slavery through the lens of labor economics produces a remarkably similar conclusion. Slavery created an unusually elastic labor supply because slaves lacked the ability to leave employers, bargain over wages, or relocate in search of better opportunities. Free labor markets are constrained by labor scarcity, worker mobility, and bargaining frictions. Plantation owners faced far fewer of these limitations, allowing large-scale enterprises to expand more easily than farms dependent on free labor.
Yet the apparent efficiency of this system concealed deep developmental distortions. Because plantation agriculture did not face intense labor scarcity, entrepreneurial talent and capital flowed disproportionately into plantation management rather than manufacturing or industrial innovation. This shaped the direction of technological change. In the North, labor scarcity encouraged labor-saving inventions such as mechanical reapers and industrial machinery. In the South, innovation largely focused on increasing the productivity of coerced labor within the plantation system. As such, Southern innovations included reinforced “planters hoes” and agricultural improvements designed to maximize the output of slaves rather than reduce dependence on labor altogether. Innovation existed within the slave economy, but it evolved in ways that strengthened coercive labor systems instead of transcending them.
Similarly, the example of Brazil presents a cogent test of these claims, and one the New History of Capitalism has conspicuously failed to engage. Brazil imported more African slaves than any other country in the world, 4.9 million captives between the sixteenth and nineteenth centuries, representing 46 percent of all arrivals in the New World. Slavery in Brazil was not a peripheral or sectoral phenomenon: it pervaded every region and almost every economic activity. Slavery in nineteenth-century Brazil was so ubiquitous that between 20 and 30 percent of all households owned at least one slave, and slaves composed roughly one-third of the total population at independence in 1822. If slavery were truly the engine of modern economic growth, generating the capital, institutions, and industrial momentum the New History of Capitalism claims, Brazil should have industrialized faster and more thoroughly than almost anywhere on earth. It did not. Between 1820 and 1900, the ratio of United States to Brazilian per capita GDP widened from two to seven. Persistent economic growth only commenced in the years following emancipation in 1888.
The quantitative evidence from within Brazil supports this finding with precision. Examining the two neighboring southeastern states of Rio de Janeiro and São Paulo, Brazil’s industrial heartland, across the censuses of 1872 and 1920 reveals a consistent negative association between the share of slaves in a municipality’s population and its level of manufacturing employment. Before abolition, the slave share of the population was statistically significantly and negatively correlated with manufacturing employment, a relationship that became stronger once other factors such as geography, agricultural orientation, and access to ports were controlled for.
In 1872, Rio de Janeiro state held almost 300,000 slaves, over 37 percent of its population, while São Paulo, with half the slave population and around 19 percent of its total population enslaved, already had twice as many factory workers per capita. Following emancipation, the picture changed rapidly: municipalities that had been well-positioned for industrial development but suppressed by slavery were able to leverage immigrant labor, higher literacy rates, and coffee export revenues to industrialize quickly. The contribution of immigration to manufacturing, known from other historiography to be large, only became statistically visible after abolition, precisely because slavery had been crowding out free labor and deterring European workers who refused to compete with coerced labor.
The Brazilian cotton industry also directly undermines the claim, advanced most forcefully by Edward Baptist, that coercive violence was the primary driver of productivity gains on slave plantations. During the American Civil War, global cotton prices spiked, and Brazilian exports more than tripled almost overnight. This cotton boom took place simultaneously across provinces with very different labor regimes: in Maranhão, where slaves composed over 21 percent of the population, and in Ceará, where the slave share was below 5 percent, and agriculture was conducted “almost exclusively by free arms.” Crucially, the increase in production across these provinces was statistically indistinguishable; provinces relying on free labor performed no worse than those relying on coerced labor.
Historical records show that productivity improvements during this period were driven primarily by new seed varieties and improved ginning machinery, not by any intensification of violence or supervision. Even in the country with the world’s largest recorded slave trade, the “pushing system” that Baptist identifies as the engine of American cotton productivity has no explanatory power.
The institutional legacy in Brazil mirrors what the American South experienced. As in the post-bellum United States, Brazilian landowners deployed vagrancy laws, debt bondage arrangements, and racial prejudice against manual labor to keep former slaves in conditions of constrained employment after emancipation. The regions most dependent on slave labor, such as the Paraíba Valley in Rio de Janeiro state, where slaves had represented nearly half of plantation owners’ capital, entered prolonged stagnation after 1888, while São Paulo, which had anticipated emancipation and replaced slaves with European migrants, became the country’s industrial center and, by 1920, was responsible for over one-third of all Brazilian industrial output. The Brazilian evidence therefore does not merely corroborate the findings from the American South; it extends and strengthens them. It demonstrates that slavery’s retarding effects on industrialization were not an American peculiarity but a systematic feature of slave-based economies wherever they existed and were most severe precisely where slavery was most entrenched.
However, perhaps the clearest rebuttal against slavery as a source of national prosperity comes from examples of contemporary slavery. If slavery genuinely promoted economic development, countries with higher levels of modern slavery should display stronger economic performance. The evidence instead shows the reverse. Cross-national analysis covering 162 countries demonstrates that higher slavery prevalence is consistently associated with lower Human Development Index scores, lower GDP per capita, reduced access to financial services, and greater economic inequality. The relationship remains statistically significant even after controlling for geography, literacy, and political institutions. The study estimates that a one percentage point increase in slavery prevalence is associated with an average decline of roughly $52.6 in GDP per capita; this translates into a $526 decrease in GDP per capita, thereby indicating how even relatively small increases in coercive labor correspond with measurable reductions in national economic output. Rather than functioning as a motor of development, slavery appears closely associated with economic stagnation and social underdevelopment.
Part of the explanation lies in the fundamentally exclusionary character of slavery itself. Slaves cannot freely accumulate assets, invest in education, access financial institutions, or participate meaningfully in labor markets. Coercion suppresses human capital formation while concentrating economic gains within a narrow elite. The study describes slave populations as “an untapped economic resource” because slavery systematically denies individuals access to education, political participation, and economic self-direction. Instead of broadening economic participation, slavery narrows it, weakening the foundations upon which long-run development depends.
Contemporary slavery also exposes a critical distinction between private profitability and national prosperity. Slavery can certainly generate large profits for slaveholders themselves. The International Labour Organization estimates that slavery-derived profits amount to roughly $44 billion annually worldwide. Yet these profits do not diffuse throughout the wider economy in the way proponents of the enrichment thesis often imply. In industries such as cocoa production, farmers using slave labor receive the same global market price as farmers employing free labor; the difference is simply that the slaveholder retains a larger profit margin because labor costs are lower. The gains remain concentrated within coercive networks rather than producing broad social prosperity.
Examples from contemporary slavery describe how extreme these private gains can become while simultaneously generating little wider economic benefit. Forced prostitution enterprises in Thailand were found to generate profit margins approaching 850 percent. Brick kilns in Pakistan using slave labor earned substantially higher profits than kilns employing paid workers. In northern India, hereditary debt bondage persists because entire families can be trapped into labor over debts amounting to only a few dollars. Yet despite these extraordinary profits for individual exploiters, the broader economies in which slavery flourishes remain characterized by inequality, underdevelopment, and weak institutional capacity.
Another revealing feature of contemporary slavery is the dramatic collapse in the cost of acquiring slaves. In the nineteenth-century American South, slaves represented expensive capital assets worth the equivalent of tens of thousands of modern dollars. Contemporary slavery operates differently. Workers can often be acquired for sums ranging from $10 to $100. Because acquisition costs are so low, slaves are increasingly treated as disposable inputs rather than valuable long-term investments. Hence, modern slaves are often regarded as “disposable inputs into criminal enterprises rather than capital investments.” This transformation intensifies both the brutality and the economic irrationality of slavery, since owners have little incentive to preserve the welfare or long-term productivity of workers who can easily be replaced.
Global supply chains provide further evidence that slavery enriches narrow coercive elites without generating meaningful national development. Slave labor has been documented in the production of coffee, sugar, textiles, gemstones, agricultural goods, and minerals essential for electronic devices. Armed groups in the Congo force slaves to mine minerals used in mobile phones and computers. Slavery has even entered financial markets indirectly through subcontracting arrangements and investment portfolios linked to firms using forced labor. Yet none of these activities has produced broad prosperity for the societies in which they occur. Instead, coercion enriches small networks of exploiters while surrounding populations remain economically impoverished and politically unstable.
Taken together, the historical and contemporary evidence points in a remarkably consistent direction. Slavery may enrich slaveholders, just as organized crime may enrich criminals, but this is fundamentally different from generating broad economic development. Across different methodologies and historical contexts, slavery repeatedly appears as a system that suppresses wages, delays technological adoption, weakens human capital formation, discourages industrialization, and concentrates wealth within coercive elites. Western Europe and North America became wealthy because of institutional strengths such as secure property rights, financial sophistication, technological innovation, and legal stability. Those same institutions allowed slavery to become deeply embedded within Atlantic commerce, but they were not created by slavery itself. The West was undoubtedly entangled with slavery. What the empirical evidence does not support is the claim that slavery was the source of Western prosperity.
Photo: Title: Southern U.S. cotton picking Abstract/medium: 1 photographic print. Source: Library of Congress (Wikipedia Commons)
Lipton Matthews
Source: https://amgreatness.com/2026/05/30/the-myth-of-slavery-as-an-engine-of-growth/
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