The Past Speaks

In the last week, there has been an epic social media flame war between some members of the business history community about the historical relationship between business and slavery. The debate has been frustrating to watch because it has involved scholars, some of whom are hardworking publishers with good research outputs, throwing around vague claims that would be hard to test empirically. Even worse, there has been name calling among the community of academics who do historical research and who work in management schools.

In any event, the debate can be summarised more or less as follows. The implied theory of historical causation that is lurking in the position of one side of this debate is that African slavery (the middle passage, the cotton plantations of the American south, etc) was the foundation of the cluster of economic institutions that we today label as “capitalism”. The apparent claim is that capitalism today, particularly the variant of capitalism in existence in the United States, is different than it otherwise would have been because slavery was, for a long time, an integral part of the economic system of part of the Western world. There is a slightly different claim which says that “managerial practices” were changed because of slavery — the insinuation is that how some or all managers today do their jobs is slightly or significantly different than would otherwise have been the case because of slavery. Precisely how “capitalism” or “management” is measurably different because of slavery’s legacy is never really stated and there is zero effort to quantify or to specific examples of actions in the present that are influenced by the slavery. A closely related implied claim is that GDPPC in the US and the UK today are somehow higher than would otherwise have been the case. This claim or rather insinuation was made by some of the non-academic authors associated with the 1619 project. In plain English, the argument is that white British people and white Americans are richer today than otherwise would have been the case because some of their ancestors enslaved and exploited Africans. (For a fair and recent summary of this debate, see this new paper in the JEL by Gavin Wright).

The other side in this debate hates these three claims and seems to see painstaking scholarly research trying to document the historical legacies of slavery as all a pile of crap of the type Jordan Peterson warned you about. There is a large dose of ideology running through these debates.

Personally, I think that the debate over the historical relationship between historical slavery and present-day capitalism is long on gross generalizations and short on details. I’m also disturbed that the terms of the debate are being framed by a series of articles in a freaking newspaper (!!!). Rather than talking about capitalism in general, they should talk about capitalism in specific places. I used to share the view that we shouldn’t use the vague term “capitalism” at all in academic research, since it was originally a term of abuse coined by snobbish people who just didn’t like businessmen. However, I’ve been convinced that it can helpful to use this term as a shorthand for what the WTO and international trade lawyers call “countries with Market Economy Status (MES)” or what I might call “societies in which market mechanisms and price signals play a leading role in coordinating production”. If the term capitalism is good enough for Oliver Williamson, it’s good enough for me.

However, if we are going to use the term capitalism in historical analysis, we should be very attentive to differences between forms of capitalism in different times and places. There is a vast literature showing that institutions of capitalism vary considerable even among OECD countries. There is also a hell of a lot of variation in institutions within countries, both between industries and between regions. Is capitalism in Manhattan really the same as capitalism in rural Maine? Similarly, what we mean by “business” varies by time and place. Keep these distinctions between types of capitalism and types of business in mind is crucial in thinking carefully about the legacies of slavery. I’m pleading for nuance and following the evidence here.

I would strongly suspect that the institutions of capitalism in, say, present-day Munich or Salt Lake City, were not affected that much by African slavery. Other local histories made capitalism in those places different from what might be called generic capitalism. However, I strongly suspect that capitalism in Alabama or Brazil is different from capitalism elsewhere precisely because of slavery and its legacies. We know from an AMJ paper by Pierce and Snyder (2020) that there are measurable differences between the institutions of capitalism in those African countries that were directly affected by the slave trade compared to those that weren’t visited by European slave traders. It is very plausible to argue that these differences are somehow caused by the legacies of slavery because we know from other research that the parts of Africa where Europeans sourced slaves were permanently changed by all of the slave-raiding and slave-trading. According to research done by Nathan Nunn and colleagues, African people from those tribes were targetted by the slave trade are less trusting of strangers than are other Africans, even after you control for other variables (understandably so!). Given that so much of what we call business/capitalism is based on trust (e.g. in a restaurant, the staff bring food to the table in the hopes the customer will pay for it after), it would be strange indeed if the legacies of historical slavery didn’t produce a measurable impact on business activity in some way. The fact Alabama is a relatively poor state probably isn’t exclusively a function of the fact it was a slave state, but it is plausible to hypothesise that slavery has something to do with its present-day economic position and that the US as a whole would today be wealthier if there had never been slavery in the South. We know that the homicide rate in the Deep South is about three times higher than in the parts of the US than in the states that remained in the Union during the Civil War. Counties in the western states that were settled by white Southerners after the abolition of slavery are today more violent than are countries in the west that were settled by whites from the North after the abolition of slavery. (Yes, there are mass shootings even in New England, but in general the old slave states are more violent).

I suspect that the best way to research the impact of slavery on present-day capitalism in the United States would be to use county level data. You would look at the US counties that had the most slaves in 1860, then do a regression analysis to see how business and management in those counties today is different. The same basic procedure found that homicide rates are today highest in the US counties that had the most slavery in 1860. Even after you control for all of the other variables, the historical incidence of slavery as reported by the 1860 census explains much the variance in homicides rates between US counties. Lots of studies have found that the  proportion of slaves in a UC county’s population in the 1860 census is associated with lots of negative socio-economic outcomes in the present. Why not use that tried and tested methodology to investigate the long-term impact of slavery on management and business? I suspect that we would find that the presence of many slaves in a county in 1860 is associated with fewer patent filings per capita in the present.