Capitalism and Slavery: A Comparative-Institutions Analysis

According to Thomas Sowell, slavery "is one of the oldest and most universal of all human institutions. (It) has existed among peoples around the world, as far back as recorded history goes." (Sowell 2009, 20) Capitalism, on the other hand, is less than 300 years old. (Mandel 1970, 30) They (capitalism and slavery) are not the same. Some authors, however, have emphasized some rather tenuous similarities between the two to the point of almost homogenizing them. This paper will address these arguments and counter some false impressions that they may leave in people's minds. Forced Labor: True and False Forty years ago it was claimed that a particular author was "probably the most influential exponent of the political economy of scientific socialism in the Western world." (George Novack in Mandel 1970, 3) Since then, he has become less well-known. The author referred to is the Marxist scholar Ernest Mandel. Mandel is perhaps best known for the two volume treatise "Marxist Economic Theory". What concerns us here are his musings on the subject of forced labor. Forced labor, involuntary servitude and slavery are terms that are used interchangeably though they are not necessarily synonymous. (Slavery implies ownership of human beings and could conceivably exist without compulsory labor.) For our purposes, what matters is that slavery and servitude are synonyms and that they connote work performed by the dominated. Mandel, being a Marxist, was a critic of capitalism. He predicted its ultimate demise: "[C]apitalism ... is a product of history. It will perish in due course as it once was born." (Marx [1976] 1990, 13) One of his more noteworthy excoriations is the following: [U]nder capitalism, labour is fundamentally forced labour." (Marx [1976] 1990, 49, emphasis in original) Mandel doesn't take credit for discovering this. It was Marx's insight. However, it is safe to assume that Mandel agrees. How could such an unsettling conclusion be valid? To grasp his position we must first understand Mandel's concept of "economic compulsion". We must, for the moment, think like a Marxist; we must not "accept 'appearances' as they are, without looking for the basic forces and contradictions which they tend to hide from the superficial and empiricist observer." (Marx [1976] 1990, 20) Under chattel slavery, the reality of compulsion is obvious. The overseer brandishes a whip or, perhaps, a gun. If the human cattle do not perform or attempt to escape, woe be unto them! Unlike bondage, capitalism involves voluntary exchange. The "forced labor" that Mandel refers to is not necessarily the kind where someone is compelled to work for a specific individual or organization. It is, instead, the kind where people are compelled to work, ultimately, for a member of a specific class of men. How did it come about that the worker has only one "sensible" choice? As Mandel explains it,

[T[here is an institutional inequality of conditions between capitalists and workers. The capitalist is not forced to buy labour-power on a continuous basis ... The worker, on the other hand, is under economic compulsion to sell his labour-power. As he has no access to the means of production, including land, as he has no access to any largescale free stock of food, and as he has no reserves of money which enable him to survive for any length of time while doing nothing, he must sell his labour-power to the capitalist on a continuous basis and at the current rate. (Marx [1976] 1990, 47 & 48) In his earlier work, Mandel expressed the same sentiment less thoroughly but more pithily: "[O]nly a sufficient amount of property releases a man from the slavery of selling his labour-power to get the means of existence, from this condemnation to forced labour ... [T]he market is characterised by an institutional inequality, without which the capitalist (system) could not last a single day: the monopoly of the means of production in the hands of one social class; the obligation to which another social class is subject to sell its labour-power, in order to be able to exist." (Mandel [1962] 1968, 685, 709 & 710, italics in original) One is free to dismiss Mandel as a polemicist and demagogue but one would, arguably, be remiss for doing so when even an economist as eminent as Joan Robinson once wrote that in "the modern labour market ... the individual worker has no opportunity to decide anything except whether it is better to work or to starve." (Horowitz 1968, 150) If leaving a harsh critique of the market unanswered isn't intellectual dereliction, what is? Because of her prestige, we shall begin with Robinson's point first. She says, essentially, that the worker in a capitalist economy has two choices: work or starve. What are her assumptions? For this we turn to Mandel: 1. The worker has no access to means of production (tools, land) 2. The worker has no access to means of existence (food, clean water, medicine) 3. The worker has no access to means of payment (currency, liquid assets) There is another assumption than has not, thus far, been stated: 4. The worker cannot escape to a "better" territory. This assumption, of course, will need to be clarified. If we wish to be rigorous, we ought to split this assumption into two: 4a. The worker cannot escape. 4b. The worker can escape but there is no "better" territory. For the sake of simplicity, we'll just assume that the worker cannot escape. (If he can't escape, it's irrelevant if a "better" territory exists. He's not going there except for in his dreams.) This raises some interesting questions. Why can't the worker escape? He is not someone's legal property. Even if he was, enforcement is never perfect. When chattel slavery was legal, some slaves did escape. As Thomas Sowell informs us,

"While permanent escape from a slave plantation was very rare - perhaps two percent of the slaves made good their escape without being recaptured - escapes by urban slaves were far more often permanently successful." (Sowell 2009, 42) Unlike the chattel slaves, the laws of the land do not forbid the worker under capitalism from escaping. Why, then, can't he escape? It must be that, although escape is legal, it is not "feasible." In this scenario, escape is not guaranteed. Attempting it would be reckless. The trek is fraught with danger and discomfort. Some, if not most, will perish. A "reasonable" person would have to cross "escape" off of his list of options. He is left with the two that we began with: 1.) work; 2.) starve. For the sake of argument, let's assume that these are the worker's only two options. In this case, is it valid to assert that the worker is being coerced? It depends on one's understanding of the meaning of coercion. As F. A. Hayek expounded, while we can legitimately say that we have been compelled by circumstances to do this or that, we presuppose a human agent if we say that we have been coerced. Coercion occurs when one man's actions are made to serve another man's will ... It is not that the coerced does not choose at all ... Coercion implies ... that I still choose but that my mind is made someone else's tool, because the alternatives before me have been so manipulated that the conduct that the coercer wants me to choose becomes for me the least painful one. Although coerced, it is still I who decide which is the least evil under the circumstances. (Hayek [1960] 2011) If a worker is being coerced in the Hayekian sense, then it must be asked "Who is doing the coercing?" The alternatives that the worker faces are both disagreeable but can it be said that they have been manipulated by an identifiable individual or even a sinister cabal? Clearly not. The constraints that a solitary worker confronts in the market are much more closely related to the circumstances of the physical environment than they are to the compulsion of a domineering agent because the data of the market is the result of a process and was not consciously designed by an individual or group. When authors use the phrase "the tyranny of a free market," they are unwittingly acknowledging that if anything is leaving people with unsatisfactory courses of action it is "the market". "The market," however, is the totality of the actions of everyone participating in the market economy; not a conscious project pursuer. When Paul A. Baran and Paul Sweezy referred to "the compulsions of the system," they also were admitting that "the system" is doing the compelling. (Baran & Sweezy 1966, 364) If this is true, then workers are not being coerced in the Hayekian sense because they are not being made to serve any man's will. Even if we were to agree with Mandel that under capitalism, labor is forced labor it is not correct to assume that workers have only two options and that they choose to work because that is the least bad one. They have an additional option that hasn't been mentioned yet: illegal employment of violence. Recall the three means that the coerced laborer lacks: of production, of existence, of payment. He could avoid work and starvation by illegally appropriating enough of any of the three means. (Unless we

consider criminal appropriation to be a form of work.) It could be objected that breaking the law is not a "serious" option but, for the sake of academic rigor, it will be briefly covered. Recall Mandel's argument that workers are compelled to sell labor power for food and they are, in some sense, enslaved. Let's assume that they in fact are slaves. When dealing with slavery, we are dealing with what Ludwig von Mises called a hegemonic bond. Concerning such a bond, Mises wrote [N]o physical violence and compulsion can possibly force a man against his will to remain in the status of the ward of a hegemonic order. What violence or the threat of violence brings about is a state of affairs in which subjection as a rule is considered more desirable than rebellion. Faced with the choice between the consequences of obedience and of disobedience, the ward prefers the former and thus integrates himself into the hegemonic bond. (Mises [1949] 1998, 197) Under the most grotesque forms of slavery, suicide was an act of disobedience and many, understandably, chose this over obedience. As Thomas Sowell informs us, "in Peru (in the nineteenth century), ... guards were posted to prevent suicide among the Chinese shovelling bird manure into sacks for export as fertilizer, under conditions of stifling heat and stench." (Sowell 2009, 45) Among living slaves, disobedience must, of course, take a different form. Disobedience presents us with a conundrum. Why would a slave disobey when the expected consequences are so horrible? Almost as perplexing is why they would obey. The consequences of obedience can, also, be quite awful. It would be lazy for a social scientist to just assume that human beings rationally and dispassionately weigh the consequences of obedience with the consequences of its antonym and reject the worse scenario. How one evaluates different outcomes will depend on one's subjective value judgments and these value judgments, I suspect, are, for better or worse, normally influenced by various non-rational and/or irrational factors. How an individual will assess his situation will be, in part, determined by what social scientists label "ideology". ("Ideology" here means ideology in the pejorative sense.) In spite of this, we shall, for the moment, try to abstract from "ideology" and endeavor to behold the pure, unvarnished facts of reality. With this digression out of the way, we are now prepared to objectively record the traits that capitalism has in common with slavery. Capitalism or the market economy, as traditionally defined, includes a state or government; it presupposes authority and violence. "The state," according to Mises, "as an apparatus of compulsion and coercion is by necessity a hegemonic organization." (Mises [1949] 1998, 198) The application of force is an element that is common to the social order known as capitalism and chattel slavery. This is relevant because as long as violence is occurring there will be disagreements about whether the violence is legitimate or not. If, as Mandel argued, the violence meted out by the capitalist state leads to conditions that are morally indistinguishable from slavery, then the legitimacy of the aforementioned violence is in question. As interesting as this moral dimension may be, this inquiry will leave these

concerns unaddressed and focus, instead, on the economic differences between capitalism and slavery. By abstracting from morality, a topic where viewpoints are innumerable and consensus is rare, we can embark on a mission we are capable of: deducing the objective dissimilarities between capitalism and slavery. Even if we grant that under capitalism, labor is forced labor, the crucial distinction between capitalism and slavery is that, unlike slaves, workers in a market economy are not forced to work for a particular firm or employer. Slaves, on the other hand are the property of some consumer. These institutional variances have significant effects on compensation. As Murray Rothbard explained, Since the masters own the slaves, they indeed only pay them their subsistence wage: enough to live on and reproduce, while the masters pocket the surplus of the slaves' marginal product over their cost of subsistence. This surplus value extracted from the slave constitutes the profits of the masters from slave-ownership. In the free society, in contrast, the workers, owning their own bodies and their own labour, pocket their full marginal product (discounted ... by the interest return the labourers freely and willingly pay to the capitalists for advancing them the value of their production now rather than wait until after the product is produced and sold.) (Rothbard [1995] 2006) While Mandel's "worker" can't effectively quit working (because if he does he will starve) the slave can't legally quit his job. Regarding slavery, Walter Block wrote, jokingly, "[T]he only thing wrong with that curious institution was that you couldn't quit. Otherwise, it wasn't so bad; you got to pick cotton, sing songs, eat pretty well as much mush as you wanted..." (Block & Four Arrows 2011, 131) The worker in a capitalist country is not only not legally bound to work for a specific employer he is also not legally bound to remain a worker. While slaves are members of a caste, workers are merely the members of a class. There is a fundamental difference between the two and this distinction is at the root of the major divergences between capitalism and slavery. Castes are either legally privileged or legally disadvantaged while members of classes have the same rights as members of other classes. This discovery was made by Ludwig von Mises: Where status and caste differences prevail, all members of every caste but the most privileged have one interest in common, viz. to wipe out the legal disabilities of their own caste. All slaves, for instance, are united in having a stake in the abolition of slavery. But no such conflicts are present in a society in which all citizens are equal before the law. No logical objection can be advanced against distinguishing various classes among the members of such a society. Any classification is logically permissible, however arbitrarily the mark of distinction may be chosen. But it is nonsensical to classify the members of a capitalistic society according to their position in the framework of the social division of labor and them to identify these classes with the castes of a status society ... In the unhampered market economy there are no privileges, no protection of vested interests, no barriers preventing anybody from striving after any prize. (Mises [1957] 2005, 76 &

77) Conclusion Even if we concede that laborers are forced to work for wages, it would be inaccurate to say that they are enslaved. Slavery presupposes both ownership of human beings and a status or caste society. Capitalism and slavery are not mutually exclusive. Slavery can exist within a capitalist society. So can caste privileges and disabilities. Hegemonic relations are a part of capitalism, as commonly understood, and slavery. It may be tautological to say that how coercion is used and how much will determine what social phenomena will exist but statements such as these send, in an admittedly pleonastic way, the important message that economic events have human causes. Under capitalism, private property rights are enforced by the state. If enforcement of such rights in effect compels workers to sell their labor power, it does so indirectly. Under slavery, the overseer directly forces the slaves to work. The choice set is different in the two situations. The choice set is a "function" of the kind and amount of intervention. It is conceivable that the matrix of intervention can be fine-tuned to the point where the choice set of an individual is greatly limited. Man-made obstacles, including government intervention in the market, may leave some castes with few options but there is still a difference in kind between forbidding someone to perform an action and commanding someone to perform one. In a capitalistic economy, the government both commands and forbids. On a slave plantation, the master does the same. In this respect, they are similar but, ultimately, one features the hiring of workers and the other features the owning of human beings. Either someone is someone's property or he isn't.

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