The Decline of Slavery and the Advent of Capitalism

Capitalism, and indeed the foundations of venture capitalism, began in brutality. Exploitation, plundering, and slavery enabled Britain and the fledgling US to become the powerhouses in the global economy they are today.

Slavery and industrialization fed each other. Many slave traders, planters, and merchants diversified into manufacturing, agriculture, and infrastructure, or kept their money in banks and finance houses that loaned to the developing capitalist economy. Some slave profits were spent on conspicuous consumption, yet, even this helped to boost the market economy. As the slave economy grew, credit, banking, and insurance became ever more important.*

As Robin Einhorn has argued, tax codes also reflected the exceptional wealth stored in enslaved people, with virtually every Southern legislature choosing to discount human property assessments that would otherwise dwarf all other taxable assets in value.* There are several other examples of how practices developed to systemize and maximize profitability during slavery have flowed through to modern venturing. When a CFO depreciates assets for tax purposes, and when work rates are tracked, recorded, and data analyzed for optimal performance rates, it may feel as though we are managing metrics for scale with forward-thinking management approaches, when in fact, many of these operations were developed by enslavers to optimize their plantations. Andrew Carnegie, founder of a company that eventually became part of U.S. Steel, is famed for embodying similar rationality. Carnegie was particularly famous for his industrial activities’ “vertical integration.” By investing in iron ore and coal mines and railroads to transport the ore and coal to his steel mills, he dramatically reduced the cost of the final product and won market share from competitors.*

Though both historians and economists long-contested this point, a broad consensus has emerged over the last several decades that plantation slave labor was a highly efficient system of labor exploitation.* Slaves labored under drivers in gangs that gained significant momentum. Between 1800 and 1860, modern “human resources” tactics such as speed-up and measured task working, enforced by the whip and other forms of torture, drove a 400% rise in cotton-picking output in the United States. Industrialization did not reduce the workload of slaves; rather, it increased it as slaves were pushed harder to keep up with the steam-powered processing of harvested cane. A slave picked 200 pounds of cotton a day in 1850; in the 1930s, despite technological advances, a “free” laborer picked just 120 pounds.*

Before it was abolished in 1888, slavery had become a central feature of the modern economy. It had its origins in feudal times and helped industrial capitalism take off. Samuel Greg, who opened the first water-driven yarn spinning factory in England near Manchester in 1784, also owned Hillsborough Estate on Dominica. His brother-in-law, Thomas Hodgson, owned slave ships, and his banker brother-in-law, Thomas Pares, made his fortune through slavery. Moses Brown, who made his money in the West Indian provisioning trade, opened the first US cotton mill with mechanical spinning in 1790 in Pawtucket, Rhode Island.*

Eric Williams’s Capitalism and Slavery (1944) essentially asserts that after European elites accumulated enough surplus wealth from slavery to fund the Industrial Revolution, capitalism swiftly superseded slavery. According to Williams, slavery began a rapid decline in the early 19th century after fueling Europe’s modernization. As industrial capitalism became the worldwide standard, anti-slavery sentiment grew in favor of a more efficient and less capital-intensive manner of commodity production. Slavery was unnecessary. Ideology followed the economy. Sharecropping and wage peonage continued after freedom, proletarianizing former slaves. Technological development, modern agriculture, and industrial industries replaced traditional anarcho-syndicalism and slavery.

Sidney Mintz argues in Sweetness and Power (1985) that slave-plantation sugar fueled European industrialization, urbanization, and class formation. “A transatlantic trade network linked the daily nourishment they put into their bodies directly to the institution of slavery and the slaves who suffered to produce it. Surplus calories from sugar and surplus capital from slavery fueled capitalism’s industrial march and unbridled consumption.” Slavery produced consumer goods while providing a market for European-made goods. Slaves would be forced to consume before being consumed.

The sugar-slave complex boosted international trade in manufactured goods, raw materials, and foods. Those North American colonies without slave economies earned enough from supplying the slave colonies to correct their balance of payments with Britain. The sugar-slave complex increased international trade, capital, manufactured goods, and raw materials, as well as the need for shipping and shipbuilding.*

Leonardo Marques furthers that America’s maritime supremacy grew out of the slave trade. According to him, “the United States became unquestionably predominant” in constructing ships for the slave trade, taking maximum advantage of the country’s “abundant supplies of cheap lumber and improvements in the US shipbuilding industry, which saw advances in vessel design theory.” This made American ships the best and fastest vessels globally and allowed them to dominate the whaling industry during the early 19th century.*

This proffers an entirely new layer of meaning to the phrase “profiting off the backs of others”—it would appear that the transatlantic slave bubbles that were never allowed to burst conveniently provided wealth for the few. This wealth went on to fuel the whaling industry and the Industrial Revolution, which has since filtered down into the wealth gaps that are entrenched in society today.