The Bear’s Lair: Slavery Makes a Comeback

At the end of the 19th Century, it appeared that slavery had almost been eliminated worldwide. With slaveowners in British colonies bought out by Britain, an appalling Civil War in the United States, confiscation in Brazil and a major effort by the Royal Navy to extirpate the trade, its prevalence had been reduced to a few straggling societies in the Middle East and Africa. Then 20th Century wars brought “National Service,” a concept now extended by the leftist bureaucrat state, while modern cheap-labor-lobby immigration policies have brought the return of indentured servitude. Free labor is an existential condition of a free society; it is fast being eroded.

Slavery was more or less universal in traditional societies. Egypt used it, often slaves of African origin, to build the Pyramids. Athens was only a “democracy” if you ignore the 50% of the population who were enslaved. In Rome, free men existed outside the upper classes, in occupations such as retail and wholesale trade, but they were a minority of the population, when the enslaved and the legions were taken into account. Most labor remained un-free throughout the European Middle Ages, through the institution of serfdom, while slaves captured in battle or the descendants thereof also continued to exist, being mostly urban where the serfs were rural. In China, slavery existed until it was abolished in 1910, although periods of economic expansion and political stability such as the high Song dynasty saw it decline as a percentage of the population.

In Europe at least, the great liberating event, creating free labor markets in which employers and employees negotiated freely for wages paid in cash, was the Black Death of 1348 and repeated outbreaks of plague thereafter. Those plagues, especially the first, reduced Europe’s population by about a third, while leaving the amount of arable land the same – while land would un-clear itself over several decades, it did not do so in the short-term. Hence landowners found land prices fell sharply and food prices tended to fall, while the price of labor needed to work that land went up.

Landowners being the people they are, their first move was to force wages and prices to remain at their pre-plague rate, in Britain by the Statute of Labourers, 1351 and various price ordinances. As with all wage and price controls, in the long run these did not work, despite landlords controlling almost all the political power. The Peasants’ Revolt of 1381 and Jack Cade’s Rebellion of 1450 were symptoms of peasant unrest at attempts to restrict their wages; a notable casualty of the former was the Archbishop of Canterbury, Simon Sudbury (1317-81), who as head of the English Church was personally and institutionally an especially grasping landowner.

After a brief “Merrie England” peak in the late 15th Century, wages in Europe began to decline again around 1500 and continued to do so, reaching a nadir around 1650 in most countries as population pressures surged. Only in the eastern parts of Germany and eastern Europe, however, did serfdom make a resurgence, helped by the Thirty Years’ War. In western Europe free labor remained dominant. Its prevalence was one of the preconditions for the Industrial Revolution since it allowed workers to acquire skills and create opportunities independent of their employers. With a free labor market, slavery died out in western Europe and was not significantly re-introduced there when voyagers gained access to the African slave markets after 1440. Only in the New World, where land needed to be cleared and crops raised, did slavery become common, though for economic and health reasons it was confined to the internationally traded cash crop areas of tobacco, sugar and later cotton.

Slavery need not be total for a free labor market to be impeded. One example of partial slavery was the indentured servitude arrangement by which many U.S. colonists immigrated. Either because of their poverty, because they were Irish Catholics or because of crimes meriting the punishment of “transportation,” poor people and petty criminals were sent to the American or West Indian colonies, on an indenture lasting perhaps 7 years, whereby they could be sold on arrival to any local resident needing additional labor. During the indenture, they received accommodation and food only, but at the end of the indenture, they would be free. This system was devised by Lord Chancellor Francis Bacon (1561-1626) who remarked that it brought double benefits: “the avoidance of people here and in making use of them there.

With the gigantic demand for labor to clear and plant land, much of the early U.S. cash crop economy was generated by indentured labor. There were only 6,971 slaves in the United States in 1680, by which time the colonist population was some 150,000 and tobacco was already providing 10% of the British budget through excise duties. (In the West Indies, indentured British and Irish laborers suffered from the climate, so the sugar economy became dominated by slave labor from about 1650.)

The Industrial Revolution, with its productivity and transportation advances, made slavery uneconomic in the West and caused its disappearance. It was not wholly incompatible with slavery; Joseph Reid Anderson’s (1813-92) Tredegar Iron Works in Richmond, Va., a location where slavery was encouraged, had majority slave labor until the Civil War – afterwards, African Americans were given the same pay and rights as southern white workers, but Northerners of any race were prohibited, being too disruptive. However, the steady upward force on wages from rising productivity ensured the disappearance of slavery, at least temporarily.

In the 20th century, governments got themselves into World War I and after much dithering (Herbert Asquith’s Liberal government resisted it manfully) introduced conscription, thereby recruiting labor at almost zero cost for the Western Front trenches, for which the market-clearing wage rate would presumably have been several million a year in today’s money. In the last years of that war and during World War II, that was deemed to be insufficient for victory, so “direction of labor” was introduced, whereby the principle of providing labor at sub-market rates was extended throughout the economy. In the United States conscription was also used in World Wars I and II, but not direction of labor – the labor market remained largely free, albeit subject to manipulation by the National Labor Relations Board. In any case these wartime restrictions were removed after 1945, albeit with great reluctance – National Service continued until 1960 and the U.S. draft continued until 1973 and compulsory registration for it continues today.

Two factors in recent decades have caused slavery to begin a renewed advance. First, the United States in 1990 introduced H1B visas and around the same time H2B visas, which allowed foreign workers to enter the United States with sponsorship by an employer, without the right to change jobs; they were thus under similar restrictions to the indentured servants of the 17th Century. These programs have been vastly expanded in recent years under pressure from the cheap labor lobby; they have created a large class of indentured servants, paid wages below the U.S. market rates, thereby depressing wage rates for U.S. workers in similar occupations.

This corruption of the labor market, like that of the 17th Century indentured servants, is a halfway house towards slavery. However, it lacks the rationale for Bacon’s 17th century scheme, in that there are already over 300 million people in the United States and no shortage of domestic talent. It has perverse effects on the U.S. labor markets, depressing the number of graduates in STEM subjects, where H1B competition is fierce and increasing the number of law school graduates, who are not subject to this iniquitous foreign competition and whose earnings capacity is thus much higher. There can be little question that these programs have been highly damaging to the living standards of the U.S. population and, through their distortions, to the U.S. economy in general.

The second reversion to slavery is the movement in Britain and several other countries for a return to conscription. Prime Minister “Squishy Rishi” Sunak announced last week that one year’s conscription would be part of “Conservative” party policy after the next election, though community service would be an acceptable alternative to the armed forces (who have shown no great enthusiasm for dealing with a load of recalcitrant conscripted unskilled 18-year-olds). Allegedly, this would enable 18-year-olds to “give back to the community” though why they should give more to the community than Britain’s atrociously high levels of income tax and Value Added Tax is not explained.

The impulse behind Sunak’s National Service idea is the same as it was for slaveholders in the Old South – to get a labor force without paying market wage rates. Britain’s combination of wage rates forced down by excessive immigration and high welfare benefits have produced a large population of the “disabled” who enjoy welfare benefits because they don’t fancy any of the plebeian and underpaid jobs for which they are qualified. The Armed Forces are also having difficulty getting recruits (as they are in the United States – potential recruits no longer see the patriotism in being thrust into endless messy and unsuccessful foreign wars).

There are two much larger employment sinks in Britain, however. One is the catastrophically over-bureaucratized and mismanaged National Health Service, the demand for which is perpetually infinite, particularly with the illegal immigrant flotsam included, and where Tony Blair’s reforms have added a layer of overpaid management that absorbs any extra money, preventing it from going to the provision of services and leaving the front-line service providers hopelessly underpaid.

The other is the care home sector, where the beginnings of the British baby boomers’ aging into decrepitude has produced a rapid rise in demand that is outrunning the supply at the meager wages the state sector is willing to pay. The solution again is to fire all the overpaid bureaucrats and redeploy funds to front-line staff, but the British bureaucratic Blob resists this with all its might.

Economically, the idea that through National Service or illegal immigration we can magically create an extra workforce that will work for less than market wages is the same impulse that since 2010 has set interest rates far below market levels. Both are rebellions by GOSPLAN-like bureaucrats against the dictates of the free market. Both divert the economy from its market-clearing state, killing productivity, innovation and in this case overall work ethics. Both should be fought wherever they appear.

Sunak has a vision of a contented National Service workforce, singing soulfully: “Tote Dat Log, Lift Dat Bale, Ol’ Man Ribber Nebber Fail…” As we have now realized, life on the Old South plantations was not like that, and it will not be like that in Britain’s hospitals and care homes full of recalcitrant dragooned teenagers. In the coming election, the “Conservative” party has shown itself unfit for our support; I recommend either Reform or, in memory of the Asquith government’s noble rearguard action in 1914-16, Liberal Democrat.


(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)