Thursday, February 17, 2005

Forged From Liberty

Congratulations to Don Boudreaux who published his first of many columns in the Pittsburg Tribune Review. This initial essay addressed the claim that slavery created capitalism—it was responsible for making the initial components that capitalists built on to make the wonders of today.

Don correctly pointed out that slavery existed for thousands of years but we only experience unprecedented growth after its destruction. Capitalism does not require slavery—slavery is only productive for mindless work because only then is it easy to monitor. In fact, slavery fundamentally doesn’t work with capitalism. Twentieth-century assembly lines were a kin to the farms of two hundred years prior, but they weren’t manned by slaves. The real question is: what is it about emancipation that makes it enhance society’s living standards?

Don offers a piece of the puzzle: freedom makes it easy for companies to expand. If a worker can quit one job and move to another unhindered, it reduces the barriers of taking the operations to the next level. Because the prospect of an industrial empire becomes more likely, competition becomes fiercer. This is to everyone’s benefit.

The monitoring and inflexibility of labor point to what slavery is: control. Centralized power. But knowledge is decentralized which is why markets work better when they are decentralized, too. A slave may see an opportunity to be more productive but he has no incentive to act upon it. A hired hand, however, might get a pay raise or a promotion so he goes for it. A slave may imagine a new or better way to provide a service unconnected with farming, but since she can’t leave her job the opportunity remains vacant. A free person, however, would act on her awareness.

Inventions, innovations and entrepreneurship rarely—if ever—originate from the enslaved. They might have the knowledge, but they lack the ability and incentive to act on it. But free people not only have the ability and incentive to act on opportunities, they have the ability and incentive to search out new ones. The more free minds at work, the better off we all are.

1 comment:

Jenny said...

:roll: It's amazing that people just assume that Western European = capitalism! Now if Adam Smith invented capitalism - as many insist - than how could the Portuguese slave trade be created by a capitalist economy? Sorry to fume, but next week I'm giving a presentation on colonial economics...and I might get in trouble...