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Economics

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On slavery in a free market

by Ultramarine

One objection statists can have to a completely free market is that without laws, classical slavery would be ‘legal’ again. By classical slavery, I mean like it was hundreds of years ago, kidnapping individuals and forcing them to work for nothing (more on that below). Slavery was bad and horrible and should never happen, so we need a government to make slavery illegal as well as pursue, capture, prosecute, and otherwise dissuade the slavers. If it wasn’t for that, if we lived in ‘anarchy’, people would go back to the way it used to be and we’d have slave labour again. I mean, look at how profitable it was back then!

Let me pose a question: Why use slave labour? The unsaid assumption in this objection is that slave labour is more efficient than hiring an employee, that slave labour is a ‘shortcut’ that individuals (read: evil smelly capitalists) will take given the opportunity. If it wasn’t as efficient then why do it in the first place? The fact is that in every possible way, slave labour is less efficient and more expensive than hiring an employee. Let’s break it down into several categories — Acquisition of Labour, Cost of Labour, and Retention of Labour.

And one thing to mention: slavery is by definition coercive. If it was voluntary, it would be mutually beneficial and there’s no problem with that.

Acquisition of labour

Slavery requires actually having to go out and get the slaves. They won’t come willingly, so someone needs to physically go out and get them. You need manpower and a method of coercion, either threatening them with violence or lying to them to get them to come with you (fraud). There are umpteen costs and risks associated with the act of going somewhere, grabbing a bunch of people, and taking them back home.

To get an employee, generally the most you have to do is make it public knowledge that you’re hiring, and individuals come to you. Especially now in this economy, if you built a factory in any major city, you’d have a line out the door with prospective employees. In order to acquire labour in a free market, firms need to compete for the labour in multiple aspects, including pay, benefits, and working conditions.

Acquiring slaves is more expensive than acquiring employees.

Cost of labour

The cost of a slave is not just in the initial purchase the owner makes. To say that slaves get paid nothing is incorrect. Slaves do not get paid currency. Slaves need to be fed, housed, clothed, and to some extent kept healthy. These are costs to the owner and gains to the slave. These gains obviously don’t outweigh the cost of being a slave but they are gains nonetheless. The problem with this is that the owner or a subordinate employee needs to handle the task of slave maintenance. Even if maintenance is left to the slaves, they are still consuming resources that you cannot use for something else.

Furthermore, slaves do not have any real incentive to work aside from basic survival. In order for slaves to be productive, you need to somehow motivate slaves, force them to actually work, and if they don’t work hard enough, force them to work harder. Ownership of slaves necessitates additional labour to ensure that the slaves perform at a desirable level of efficiency.

Some employees get signing bonuses. It’s not regular, but it happens. Employee and employer agree on a wage/salary, and that’s the cost of the labour. The employer doesn’t have to house or clothe or feed its employees, the employees take care of that on their own. Employers rarely have to trouble themselves with figuring out where to house their employees. Give the employees the means to do it on their own and they do it by themselves.

Slaves have a higher cost of labour than employees.

Retention of labour:

Slaves don’t want to be slaves. Slaves run away if given the chance. The slave owner must find some way of preventing this, and there are unavoidable costs associated with this.

In order to retain an employee, the employee must be kept happy. If their pay is not worth the costs the employee incurs by working, the employee will go somewhere else. Employment is voluntary, not coercive, so the employee stays because he wants to stay, no need to hire guards or dogs or people to pursue runaway slaves.

Slaves are more expensive to retain than employees.

Conclusion:

In all three categories, slaves are the more expensive form of labour. What this means is that whatever the slaves are used to produce, someone producing that same product without slave labour can do it for cheaper. Everything else being equal, anything made through slave labour will cost more, and any firm not using slave labour will be able to sell their product for cheaper.

If there are two widgets in a store that do the same thing, one widget is cheaper and made by employees, and the other is more expensive and made by slaves, then the only possible way someone would buy the more expensive one is if they valued the fact that it was made by slaves. People shop at Wal-Mart even though they feel that Wal-Mart may not be an ethical company or treats their employees well, because the prices are low enough. Some people specifically do not go to Wal-Mart even though it is cheaper. If Wal-Mart treated their employes far worse and their prices were higher than the competition, would anybody at all shop there?

Not only that, who is going to be associated with a firm that uses slave labour? No bank is going to lend to you, good luck getting a store to stock your merchandise. Even getting a firm to transport your product from the factory to the store would be difficult. Anything a firm does that can be perceived as negative by the customers only creates demand for another firm that doesn’t do that. If there was slave labour, many products would start advertising the fact that they were not made with slave labour. Grocery stores would be able to claim that did not carry a single product made by slave labour and because of that, have lower prices.

In a free market, the true cost of slavery is apparent and unavoidable.

So why was slavery around for so long?

Good question. Slavery is less efficient, so why did we use it?

The short answer is the government. Take slavery in the US. Runaway slaves are an expensive problem for slave owners to deal with. You have to spend the time, money, and labour to recapture the slave or replace it. More often than not there were sympathetic members of the community who would keep the slave safe. The government made runaway slaves illegal and made protecting runaway slaves illegal. This meant that government law enforcement (paid for by taxes) could be used to recover slaves. The government subsidised slaving parties, so the taxpayers were paying to go out and get the slaves.

By passing laws and using tax dollars in a way specifically designed to make it easier and cheaper to own slaves, slavery became efficient enough that it was more profitable to use slave labour than to hire employees. The extra cost that slave labour incurs was spread across the taxpayers and basically disappeared, nobody ‘saw’ the cost. In freedom, the cost is directly put on the employer and the customer and is impossible to ignore.

Often being mistaken for a utilitarian, I get asked by moralists “So if slavery yielded better utility/was more efficient, would you be in favour of that?”

Same response — slavery can never be more efficient.

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