Was slavery necessary to western industrialisation ?

Did western industrialisation require American slave cotton ? What coal and sugar might tell us. (Short answer: It’s reasonable and plausible to argue slavery accelerated the industrial revolution, but not enabled it. It’s profoundly unreasonable to say the IR could not have happened without slave cotton.)

In a rather hyperbolical claim, Edward Baptist argued in his book The Half Has Never Been Told that American slave-picked cotton was a prerequisite to the Western world’s escape from the Malthusian trap :

It’s the latest in the long history of attempts to ground the “rise of the West” in slavery, colonies, and/or natural resources. I already criticised the productivity claim above in my earlier blogposts Baptism by Blood Cotton and Plant breeding…drove cotton productivity gains, but I have meant to address the industrialisation issue also. First I have a small detour.

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In The History Manifesto, Jo Guldi and David Armitage claim, in passing, that historians are fond of counterfactual logic, but it is foreign to the “theoretical toolset…that currently dominates corporations and policy”. But most people realise historians (trained in history) almost never engage in counterfactual logic at all. In fact, there’s a pronounced allergy to it.

By contrast, every piece of economic analysis about the past, whether short or long, is implicitly or explicitly counterfactual. What was the effect of the increase in the statutory minimum wage ? What did the Fed’s quantitative easing accomplish ? How big was the impact of railroads on the American economy ? Sometimes there are natural experiments which permit tests, but very often they don’t exist. So each of those questions would be answered by comparing the actual world that unfolded with the hypothetical world where either the event did not take place, or in which a different factor might have been substituted.

Robert Fogel, before doing his famous work on the economics of slavery, had cut his teeth by studying the impact of railroads. He modelled an American economy in 1890 that had not built railroads, but had instead expanded canals and other transport systems. Only by at least trying to answer such questions can you really begin to understand the impact of any particular event in the past. In fact, arguing that just because X happened, it must have been terribly important can be just as speculative as any counterfactual.

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Gregory Clark and David Jacks attempt to assess counterfactuals, in ascending order of speculativeness, about the importance of Britain’s coal deposits to the industrial revolution. First, they consider what might have happened if there had been no improvement in the productivity of coal extraction. (Their answer: not very much difference.) Then they consider what might have happened if Britain had had no coal deposits and had to import them, but from nearby. (The cost of coal would have been higher, but its quantitative effect on the Industrial Revolution would have been limited by some substitution of water and wind power. The lack of coal would have affected some industries more than others, so the productivity gains by industry would have had a slightly different pattern.)

Most speculatively, C&J consider what might have happened if Europe had no coal deposits at all. They do this in order to address the arguments made by Kenneth Pomeranz, but China did have a lot of coal in the Northwest. And even Pomeranz is reduced to arguing that the benefits of making those large deposits more accessible via transport investment were simply not obvious ex ante. So I’ve never found the no-coal-at-all-in-Europe counterfactual particularly necessary. C & J argue nonetheless there was sufficient quantity of Baltic timber to complement wind and water (complete with calculations of the shipping costs of timber…). Energy would have been much more expensive, but British industry would have been more energy-efficient. Britain also might have specialised in something other than the iron industry which was profligate in its consumption of coal. I don’t necessarily endorse this view ; I merely note it. (*)

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After The Economist “withdrew” its review of Baptist’s book they kept the article on display but removed the hundreds of hostile comments the review had provoked. Several commenters acclaimed Eric Williams’s Capitalism and Slavery and condemned the lack of willingness to “come to grips with it”. But that had been done a long time ago !

Thomas & McCloskey, which was collected in Floud & McCloskey, has got a nice overview of the research from the Jurassic age of cliometrics on the importance of the West Indies in the late 18th century. The social rates of return on the British capital invested in the Caribbean sugar colonies were deliberately overestimated, but were still considerably lower than the returns from putting the same amount of money in gilts (British bonds). This was because the prices of imports from the British West Indies were higher for the British consumer than world market prices of the same goods, on account of the preferential access given to BWI producers by mercantilist policies. (Only ginger was cheaper !) Moreover, the British Exchequer doled out considerable sums to protect those islands from rival colonial powers. “…British national income would have been considerably higher ‘if the West Indian colonies had been given away'”.

So all those people who now cannot see past the blood sugar riches in Jane Austen novels are revolted at private fortunes made at the expense of the British public.

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What does all that have to do with the cotton produced by American slaves ? Well, I think any counterfactual about cotton is less speculative than coal or sugar. First and foremost, there were ready substitutes for American cotton, as was proven by the “cotton famine” induced by the American civil war.

After the war broke out, the Confederate States of America embargoed the export of cotton in the belief that Britain and France could be blackmailed into supporting the South. By the time it dawned on them it was a futile strategy, the US blockade would effectively prevent any CSA cotton from reaching Europe. And other parts of the world had lept into action to make up for the American shortfall. Britain’s cotton imports in 1856-70 (Surdam) :

At least from India, there was a fairly quick response to the “cotton famine”, which today would surely be called the “cotton supply shock”. India increased its production quite dramatically, and by 1865 Britain was able to import ~70% of its 1860 level from combined sources. The supply response must have been muted in the early years by the uncertainty of the war’s outcome.

Beckert‘s article (which apparently serves as a precursor to the book soon to be released, Empire of Cotton: A Global History) contains many fascinating details, including the observation that the Russian cultivation of cotton in Central Asia really began as a response to the American famine. Or the earliest impact of the United States on Egypt :

Beckert also makes a big deal out of British cotton merchants encouraging subsistence farmers (not slaves) in Pernambuco in Brazil to grow cotton for the British market. But the data above show the short-term elasticity of supply in Brazil was modest compared with India.

Most of the global response to the American civil war should be interpreted in much the same way as fracking or ethanol becomes cost-effective only when conventional crude petroleum reaches a certain price. The USA, with its high yield, could supply more cotton at cheaper prices than India or Egypt, who could only supply more cotton at higher prices. The countries which sought to replace the lost US cotton were primarily expanding acreage by using new land or shifting out of other crops, not increasing yield per hectare.

When prices fell and American cotton finally rebounded in the 1870s, Indian production receded. The expansion in Brazil and Egypt was more enduring. From Wright :

Of course by the 1880s the rest of Europe was a major consumer of raw cotton, and India began selling more to continental Europe than to Britain. Also, after the turn of the century, Japan industrialised with Indian cotton. But I don’t see any indication that the proportions for India, Brazil, and Egypt in global consumption were very different from the above.

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The reason American cotton had become so dominant in the world by 1850 was both price, which slavery did help lower, and quality, which was thanks to nature. New World cultivars produced naturally longer lint than the Old World varieties, making for superior yarn-spinning productivity ; and southern planters also had spent at least 75 years improving on the yield. During the US Civil War British textile manufacturers repeatedly complained about the staple length of Indian cotton lint and its brittle quality. Clothing made from Indian cotton would look “‘poor and thin’ after washing”, but, worse, it was more expensive to work with Indian cotton :

On the basis of such information the counterfactual of no-American-cotton could be worked out. Indeed there must be more detailed archival information about the costs of working with American versus Indian and Egyptian cotton. It seems like an ideal hellhole for Greg Clark to set one of his students into…

But of course in the absence of American cotton, Lancashire mills would have optimised their machinery to work with Indian and other cotton, which would have mitigated some of the disadvantages noted above. Logan reports plenty of testimony that British mills refused to retool their machines even though they could have worked more efficiently with Indian cotton, precisely because they expected the resumption of American supply and they feared losing their competitive edge against rivals like France.

And the plant breeding experiments would not have sat still. Logan also reports the British East India Company, in the 30 years before 1860, had experimented with the humidity-adapted American cultivars in the more arid Indian cotton-growing areas and had achieved one small success by the 1850s, the “Dharwar American” variety. But then the Indian Mutiny/Rebellion broke out and in its aftermath the British East India Company was no more. Ultimately the improvement of Indian yields and quality depended on the local long-staple cultivar (Broach).

So in the absence of American cotton there would surely have been an earlier, less haphazard, and more organised attempt to exploit India’s native resources. The government of the Bombay Presidency directly involved itself in cotton issues only during the US Civil War. Beckert also reports the wartime hyperactivity of textiles manufacturers’ associations in Britain, France, Germany, and Russia pressurising their governments to do something about cotton sources.

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A more realistic counterfactual would make American cotton available without slaves, under free labour. It is now well established, especially by Ransom & Sutch, that after emancipation ex-slaves were not willing to supply, under the prevailing wage, the same amount of labour as they had been compelled to do under slavery. The decline in labour supply was between 25% to 33%. I’m not sure if higher wages or better tenancy terms might have induced ex-slaves to work more, and, if so, why that did not happen. What ever the case may be, ex-slaves experiencing freedom chose a substantial substitution of leisure for work.

But the point is, even after Emancipation, the American South could still meet at least 1/2 of the world’s demand for cotton. That just lowers the burden on the counterfactual.

So even with all the disadvantages of Indian cotton, and even with the revealed preferences of emancipated American slaves, no reasonable person should imagine that western industrialisation would have ground to a halt in the early 19th century in the absence of slave cotton from the southwest frontier of the United States. The dramatic rise of America’s King Cotton in the half-century before the civil war was not an “absolutely necessary increase” for the end of the Age of Malthus.

(*) Note : Anton Howes adds to Clark & Jacks’s observations in his arguments against Wrigley’s coal hypothesis. I particularly like Howes’s points 7 to 11. The coal hypothesis  relies excessively on the importance of James Watt, but Watt’s inventions were not exogenous. One could make Watt endogenous in an “ordinary” way like Robert Allen. In that model Watt responded to a particular cost structure, viz., coal may have been cheap in England but the existing technology was also wasteful in coal usage, so there was an incentive to reduce its consumption. But even that does not explain, as Howes elaborates in the manner of Joel Mokyr, the prevalence and persistence of innovation across industries and across time in Britain and in Europe. There was a general air of innovativeness starting in the mid-18th century which can’t be explained just by reference to prices and costs alone. Howes’s observations echo some arguments made by Deirdre McCloskey in chapter 22 of Bourgeois Dignity, but I think he has better, more concrete examples. By the way the McCloskey book is full of arguments, chapter by chapter, which I endorse, although I’m not keen on her “bourgeois dignity” thesis itself.