The long-term negative impact of slavery on economic development in Brazil

by Andrea Papadia (London School of Economics)

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Jean Baptiste Debret (1826). From “The Atlantic Slave Trade and Slave Life in the Americas: A Visual Record”, https://makinghistorymatter.ca/2014/04/02/journal-of-an-african-slave-in-brazil/

 

Slavery has been at the centre of many heated debates in the social sciences, yet there are few systematic studies relating slavery to economic outcomes in receiving countries. Moreover, most existing work on Brazil – which was the largest slave importer during the African slave trade and the last country to abolish the practice – has failed to identify any clear legacies of this institution.

This research overcomes this impasse by highlighting a distinctly negative impact of slavery on economic development in Brazil. More precisely, it illustrates that in the municipalities of the states of Rio de Janeiro and São Paulo, where slave labour was more prevalent in the nineteenth century, fiscal development was lower in the early twentieth century, long after slavery was abolished.

The identification of this negative effect is tied to separating the true effect of slavery on fiscal development from the fact that the huge expansion of coffee production that Brazil underwent from the 1830s attracted large numbers of slaves to booming regions. In fact, the research shows that:

  • A naïve analysis of the data would suggest that for relatively low levels, more slavery in the nineteenth century was associated with higher successive fiscal development.
  • For population shares of slaves above 30-35%, more slavery was clearly associated with lower fiscal development.
  • Taking account of the impact of the coffee boom on both the demand for slave labour and development, slavery was unambiguously associated with worse developmental outcomes later on.
  • Comparing two hypothetical municipalities – equal in all respects except for their reliance on slave labour – one with 30% of slaves among its citizens would have had revenues 70% lower compared with one with 20%.
  • These results persist even when taking account of a wide variety of other factors that could explain difference in fiscal development across municipalities.

Fiscal development is widely considered as an essential building block in the creation of modern states able to foster economic growth by providing public goods and protecting the rule of law. While the historical process of fiscal development on the European continent is relatively well understood, in other parts of the world the study of the evolution of fiscal institutions is still in its early stages.

There are many reasons why a high incidence of slavery would hamper fiscal development and the provision of public goods:

  • First, a higher incidence of slaves in the population will translate into lower political representation for the masses, even in only partially democratic regimes such as nineteenth and early twentieth century Brazil.
  • Second, the provision of key public goods, such as education, will be less salient in areas that rely heavily on slave labour. These areas will also be less keen to attract workers from other areas of the country and abroad, thus making the provision of public services to their citizens less important.
  • Finally, slavery might make resource sharing though taxation more difficult due to increased ethnic, geographical and class cleavages in the population.

The history of Brazil, which was characterised by large-scale use of slave labour from the sixteenth century until the nineteenth century, provides an idea testing ground to investigate how this clearly extractive institution affected the developmental path of countries and their subdivisions.

The research shows that by accounting for confounding effects due to Brazil’s coffee boom, the pernicious effects of slavery on a key factor for economic growth – fiscal development – can be strongly identified.

British engineering skills in the age of steam

by Harry Kitsikopoulos (academic director, Unbound Prometheus)

Side-lever_engine_1849
Wiki Commons. The side-lever Engine, 1849 ca.

 

Engineering skills in Britain improved during the eighteenth century but progress was not linear. My research uses a novel approach to quantifying the trends from the first appearance of the technology of steam power (1706) through to the last quarter of the century (the Watt era), using a large amount of data on fuel consumption rates.

Britain was a very unlikely candidate for the invention of steam engines, as I argue in my 2016 book, Innovation and Technological Diffusion: An Economic History of the Early Steam Engines. It was French and Italians who first rediscovered, translated and published the ancient texts of Hero of Alexandria on steam power; they also discovered the existence of vacuum in nature, the main principle of a steam engine’s working mechanism.

But Britain had two advantages: first, a divorce-obsessed king who detached the island from the Catholic dogma and its alliance with the Cartesian epistemological paradigm, both denying the existence of vacuum in nature. The same king also brought a seismic institutional transformation by passing monastic properties under the ownership of lay landlords, a class far more keen on solving the water drainage problem plaguing the mining industry in its drive to exploit mineral wealth.

Britain was also fortunate in another respect: it was relatively backward in terms of mining technology! That proved to be a good thing. While mining districts in Germany and Liège used a technology that resolved the drainage problem, Britain failed to imitate them, hence forcing itself to seek alternative solutions, thereby leading to the invention of the steam engine.

Grand inventions earn glorious references in school textbooks, but it is the diffusion of a technology that contributes to economic growth, a process that relies on the development of relevant human capital.

The records reveal that there were not much more than a dozen engineers who were active in erecting engines during the period 1706-75, including Thomas Newcomen, the obscure ironmonger from Devon who came up with the first working model. The figure increased to at least 60 during the last quarter of the century through the action of the invisible hand: the initial scarcity of such skills raised wages, which, in turn, acted as stimuli transferring talent from related engineering occupations.

My new study traces the production and marketing strategies of this group, which ranged from the narrow horizons of certain figures concentrating on the erection of engines in one locality, a single model, or focusing on one industry all the way to the global outlook of the Boulton and Watt firm.

The last question I pose is perhaps the most interesting: did British engineers get better during the eighteenth century in managing these engines?

Measuring skill is not a straightforward affair. Two well-respected experts at the time came up with tables that specified what the ideal fuel rates ought to have been for engines of different hp. When plotted in a graph these two variables depict a curve of ideal rates.

My analysis uses two distinct datasets with 111 fuel rate observations recorded in working engines – one for the older Newcomen model and another for the newer Watt engines. These actual fuel rates were plotted as bullet points around the respective ‘ideal’ curves. A progressively narrower distance between the curves and the bullet points would indicate higher efficiency and improved engineering skills.

The results reveal that for the first 25 years following the appearance of both models, there was no consistent trend: the bullet points alternated coming closer and moving away from the ideal curves. But the data also reveal that these initial patterns gave way to trends revealing consistent progress.

In an era of practical tinkerers lacking a formal educational system when it comes to this particular skill, British engineers did get better through a classic process of ‘learning-by-doing’, But this only happened after an initial stage of adjustment, of getting used to models with different working mechanisms.

From The NEP-HIS Blog: Fifty Years of Growth in American Consumption, Income, and Wages

Fifty Years of Growth in American Consumption, Income, and Wages By Bruce Sacerdote (Darmouth) Abstract: Despite the large increase in U.S. income inequality, consumption for families at the 25th and 50th percentiles of income has grown steadily over the time period 1960-2015. The number of cars per household with below median income has doubled since […]

via Is the Glass Half Full?: Positivist Views on American Consumption — The NEP-HIS Blog

From convergence to divergence: Portuguese demography and economic growth, 1500-1850

by Nuno Palma (University of Groningen) and Jaime Reis (ICS, Universidade de Lisboa)

When did Portugal’s economy diverge from the European core? This paper constructs the first time-series for Portugal’s per capita GDP for 1500-1850, drawing on a new and extensive database. Starting around 1550 there was a highly persistent upward trend on per capita income, which accelerated after 1700 and peaked 50 years later. At that point, per capita incomes were high by European standards. Portuguese per capita GDP was about as high as that of Britain, Italy and the Netherlands, and higher than that of France, Spain, Germany and Sweden. But as the second half of the eighteenth century unfolded, a phase of economic decline was initiated.

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Throughout 1550-1750, the population did not catch up with the growth that resulted from increasing opportunities in the colonies and in exports, and from the introduction of highly productive crops resulting from the Columbian exchange, notably maize. The colonial empire also offered opportunities to migrate. But as the second half of the eighteenth century advanced, these sources of growth were becoming increasingly depleted and the decline of Brazilian gold remittances coincided with the beginning of a phase of economic decline. By the late eighteenth century almost all recent per capita GDP and real wage gains had been lost, and their level had become considerably lower than those of Britain and the Netherlands, although still not low by continental standards. As the right conditions were not in place for Portugal to industrialize in the nineteenth century, the country was left behind relatively to the continental European economies that did. Portugal would not experience modern economic growth until mid-twentieth century.

Click here for the full paper