“Explaining the relative efficiency of slave agriculture in the antebellum South”

Abstract

The comments by Paul David and others in the March 1979 issue of this Review dealt mainly with technical issues related to the measurement of the relative efficiency of slave agriculture, and so does this reply.1 The debate over these technical issues should not, however, obscure the marked shift in thought about the nature of the slave economy that has occurred during the past two decades. Until the mid-1950's it was widely believed that the slave plantations were unprofitable and inefficient enterprises that were kept in operation by a class prepared to sacrifice its private economic interest, enduring economic stagnation for the South, in order to maintain its political and cultural hegemony. The first critical blow to this thesis was delivered by the now famous 1958 essay of Alfred Conrad and John Meyer. Marshalling the limited evidence available at that time, and using a standard capital model to estimate the internal rate of return on an investment in slaves, they concluded that rates of return on this form of capital compared favorably with rates on alternative investments. This finding set off an extended debate that took more than a decade to resolve. Eventually, refinements in the original capital model and a considerable expansion of the data base, including the Parker-Gallman sample of over 5,000 southern farms and large samples of slave prices and hire rates from probate and other records, placed the rate of return in the 610 percent range, thus demonstrating the allocative efficiency of the slave economy. The second blow to the traditional thesis was delivered by Richard Easterlin's development of regional income estimates extending back to 1840. Both these initial estimates and the subsequent refinements in them (see our 1971a paper) showed that the South experienced a high rate of growth in per capita income between 1840 and 1860, thus contradicting the view that the antebellum South was economically stagnant. These twin blows to the traditional interpretation shifted cliometric attention to the question of the relative technical efficiency of slave and free agriculture in input utilization. While it is obviously premature to declare this question settled, a consensus has emerged on one critical point. It is now clear that the previous view that slave agriculture was less efficient than free agriculture is incorrect. What remains to be resolved is the exact margin of the advantage enjoyed by slave plantations, and the explanation for this margin.