Emancipation May Have Generated the Largest Economic Gains in US History

For at least the past half century, most economists have viewed the history of slavery in the United States as morally abhorrent but economically advantageous. The argument has run that allocating work to forced laborers was productive, yielding tremendous wealth even if the wrong people received that wealth. Emancipation, correspondingly, has been seen as economically damaging. For example, several studies estimate that southern agricultural output fell by one-third from 1860 to 1880, a period of time during which slavery ended in the US.

But this perspective overlooks the costs imposed upon the people who were enslaved, and the implications for aggregate economic performance when centering those costs in the analysis. Chicago Booth’s Richard Hornbeck and the Ohio State University’s Trevon D. Logan performed a reaccounting and conclude that slavery was highly inefficient.

The researchers contend that emancipation generated aggregate economic gains for the US economy that were worth between 4 and 35 percent of US GDP, making it, even at the low end of their estimation, one of the most important economic events in US history—bigger than the introduction of railroads, by some estimates, and worth 7 to 60 years of technological innovation in the latter half of the 19th century. That boost came from reducing the substantial costs imposed by slavery, even though the result was significantly lower output in former slave states. Calculations of other economic events include costs, they point out: for example, technological innovation generates aggregate gains not only by increasing output, but by increasing output beyond any accompanying increases in input costs.

To get a more complete picture of the economics of slavery, the researchers first considered the amount paid to emancipated people to continue to do gang labor—a system used under slavery for agricultural production, particularly in cotton—for one year. This figure, which they estimated to be $100, was still generally insufficient for emancipated people to voluntarily work under the physically intense gang labor system. But this amount was substantially more than the average annual value that slaves produced for their slaveowners ($60, by their calculations), thus the researchers conclude that slavery cost the aggregate economy at least $40 per year for each enslaved person. Multiplying $40 by 4 million, the number of people held captive in the US, produced an aggregate gain from emancipation equivalent to about 4 percent of total GDP in 1860.

Hornbeck and Logan then drew on research by Harvard’s Orlando Patterson that characterizes slavery as a form of “social death,” in which an enslaved person, robbed of agency and humanity, has no life outside of enslavement. To estimate the cost of this, the researchers used a methodological tool known as the value of statistical life, which measures the economic value of life, typically done using a multiple that’s between 100 and 200 times annual income. Because VSL estimates people’s willingness to risk their lives, economists regularly use it to analyze the trade-offs that people weigh when making decisions such as whether to take a risky job, drive fast, or have a medical procedure.