Capitalism & slavery - Pittsburgh Tribune-Review

Donald J. Boudreaux, chairman of the Department of Economics at George Mason University writes,

The fact is that slavery disappeared only as industrial capitalism emerged. And it disappeared first where industrial capitalism appeared first: Great Britain. This was no coincidence. Slavery was destroyed by capitalism.

To begin with, the ethical and political principles that support capitalism are inconsistent with slavery. As we Americans discovered, a belief in the universal dignity of human beings, their equality before the law, and their right to govern their own lives cannot long coexist with an institution that condemns some people to bondage merely because of their identity.

But even on purely economic grounds, capitalism rejects slavery because slaves are productive only when doing very simple tasks that can easily be monitored. It's easy to tell if a slave is moving too slowly when picking cotton. And it's easy to speed him up. Also, there's very little damage he can do if he chooses to sabotage the cotton-picking operation.

(via Newmark's Door)

In addition to involuntary servitude, in industrialized capitalist countries the law also places limits on voluntary servitude, or many other features of employment contracts. This is not always to benefit of the job seeker.

In the Gulf, however, there is a two-tiered legal system. The privileged can enter into contracts which severely limit their ability to change employers and which give the employer the freedom to fire them at will. The underprivileged cannot. The underprivileged are the citizens of the country.

The underprivileged, the citizens, have difficulty finding work at the same salary as the privileged, the imported foreign workers. The law requires foreign workers to have a employer sponsor, and it requires foreign workers who want to change jobs to obtain the permission of their sponsor -- it is this second part which so severely limits job mobility of the foreign worker in the Gulf. Firms obligate themselves to fly the foreign worker home at the end of the term of the contract; if the worker leaves before that the worker bears the cost. Nationals prefer the salaries and working conditions of government jobs -- most open only to them. And it is difficult to dismiss a national employee. Thus, firms are reluctant to hire nationals because they are likely to quit and because it is difficult to fire them. The citizens' rights create barriers to their employment.

Recall my earlier post where Saudi taxi drivers had trouble attracting riders because the riders knew Saudi drivers were unlikely to be disciplined if the customer had a complaint against them. Same thing.

The foreign workers freely enter into these contracts, choosing them over their work opportunities in their home country. Thus, they gain. (This is not to say there are not recruiters who misrepresent the terms and working conditions -- there are.)

(Aside: Amusing anecdote picked up in dinner conversation last night. While the couple was living in Saudi Arabia, the wife (seven months pregnant at the time) had the misfortune to be in a taxi that stalled when the driver attempted to cross a pool of water in the rain. She had to get out and push the car while the driver steered the stalled vehicle. Because women cannot drive in the Saudi Arabia.)