The question about the productivity of slavery is a strongly debated issue, for example in the USA the seminal work by Engerman and Fogel (1974), “Time on the Cross”, sparked a flurry of publications debating the issue from different angles.
The debate about the economic worth of slaves in the Cape of Good Hope already started with Pasques de Chavonnes (the only member of the Council of Policy who opposed the principle of using slave labour) who in 1717 remarked that slavery would inhibit economic development since ‘the money spent on slavery is dead money’. In this paper we provide an overview of slave prices and the value of their marginal productivity in the Cape Colony and ultimately we ask whether Cape slavery was “dead money”.
Our approach is to estimate a hedonic price function for slaves in the Cape Colony for the time period 1700-1725 using the Changing Hands database, and comparing these with slave productivity estimates from the opgaafrollen. The initial price paid for a slave is, by conjecture, constituted by current marginal productivity of slaves plus the expected net present value of slave characteristics (which by implication will yield productivity returns in the future). These productive characteristics include gender, age and origin. We furthermore investigate whether the gradual increase in slave prices was driven by overall price levels in the economy, by the importation of “better quality” slaves over time or by the policy induced change in demand for labour away from European wage labour to slave labour.
Lastly, we investigate whether slave prices matched the value of their marginal product by comparing estimates of the hedonic price series with estimates of marginal productivity. Real prices track marginal productivity closely, suggesting that slavery was profitable over most of the period. However, this effect is heterogeneous, with small farmers showing no signs of profitability and the opposite for large farmers. Small farmers attempted to mimic the production process of large farmers unsuccessfully, and consequently many impoverished farmers had made over-investments in slavery.