John Stuart Mill, Private Property, and Slavery

In recent years, there has been a growing literature among historians regarding the relationship between slavery and capitalism, known as the “New History of Capitalism,” which postulates that slavery was the institutional basis for the rise of capitalism and economic development in the U.S. 

The rise of this discipline can be partially attributed to the divide that emerged after the 1970s between the empirical methods deployed by historians and economists regarding the economic effects of slavery (see Geloso and Gluck 2021; Olmstead and Rhode 2018). The increasing application of quantitative evidence, grounded in economic theory, among economic historians in the field of “cliometrics,” drew an increasing wedge between economic historians and the methods of historians, the latter being drawn away from applying economy theory or quantitative evidence in their historical narrative. 

 My point here is not to adjudicate why the New History of Capitalism emerged as a field of study, but to motivate our attention back to John Stuart Mill, particularly over the relationship between private property and the economic effects of slavery. In doing so, what I want to suggest is that much confusion over the economic consequences of slavery has deeper roots in conflating slavery with private property over the labor of another human being, when in fact slavery refers to a privilege over the labor of another human being. My point here is not to suggest that Mill was unaware of this distinction. However, by disentangling this distinction, economists and historians alike can better clarify the economic effects of slavery by avoiding semantic confusions. 

 The relevance of John Stuart Mill can be grounded in the fact that he was an abolitionist, whose exchange with Thomas Carlyle, resulting in Carlyle dubbing British political economy as the “dismal science” since economic science could provide no defense of slavery (see Levy 2001a, 2001b). As Levy states, “this put [Mill] in permanent opposition to racist theorizing” (2001a: 7), placing the source of the inefficiencies of slavery not on the nature of the individuals in bondage, but on the institutional framework that places individuals in bondage. In Chapter V of Mill’s Principles of Political Economy, entitled “On Slavery”, Mill writes, “after allowing the full value of these considerations, it remains certain that slavery is incompatible with any high state of the arts of life, and any great efficiency of labour. For all products which require much skill, slave countries are usually dependent on foreigners. Hopeless slavery effectually brutifies the intellect; and intelligence in the slaves” ([1848] 2006: 247). As Mill furthers this point, “[h]ired labour is generally so much more efficient than slave labour, that the employer can pay a considerably greater value in wages, than the maintenance of his slaves cost him before, and yet be a gainer by the change” ([1848] 2006: 249).

 There is no doubt, therefore, that John Stuart Mill, one of the greatest economists of his time, shared similar conclusions about the economic effects of slavery with other classical political economists going back to Adam Smith. However, his description of slavery as “an institution of property” generates an ambiguity that misdirects attention from the fact that slavery is an institution of privilege. To be fair, Mill elsewhere discusses “rights of property in abuses” ([1848] 2006: 232) and singles out “at the head of them, is property in human beings” ([1848] 2006: 233) There, he states further that it “is almost superfluous to observe, that this institution can have no place in any society even pretending to be founded on justice, or on fellowship between human creatures.” However, through his word choice, the unfair reader may conclude that calling slavery an institution of property justified compensation for its elimination, after the British Parliament had legislated to abolish slavery in 1833. As Mill states, “iniquitous as it is, yet when the state has expressly legalized it, and human beings for generations have been bought, sold, and inherited under sanction of law, it is another wrong, in abolishing the property, not to make full compensation. This wrong was avoided by the great measure of justice in 1833, one of the most virtuous acts, as well as the most practically beneficent, ever done collectively by a nation” ([1848] 2006: 233). 

 In what way can we reconcile what seems to be a contradiction between Mill’s abolitionist credentials and deeming compensation to slaveholders a “great measure of justice”? What would seem to be a tension can be chalked up to the fact that what Mill means by slavery as property is the physical assignment of a “good,” in the case another human being’s labor. However, private property refers to the assignment of consequences of one’s choices exercised over that good. The inefficiencies that Mill identifies with slavery are analogous to the costs of rent-seeking (Tullock 1967). Holding individuals in bondage implies that in the process of coercively transferring wealth, such the value of a slave’s labor, costs are incurred by the slaveholder attempting to appropriate this wealth as well as the fact that slaves themselves are incurring costs attempting to avert this coerced transfer of wealth, either by shirking or fleeing. Resources that could have otherwise been utilized to create new wealth become dissipated in the transfer of wealth, generating a negative-sum game. The consequences of such wealth dissipation are involuntarily borne by society, which is left poorer than if slavery did not exist. It is in this sense that Robert Wright (2017) has correctly associated slavery with a negative externality, which implies the absence of private property and the existence of privilege. 

Once we draw this distinction and appropriately label slavery as an institution of privilege, we can better understand that the attempt to abolish slavery by government decree, without compensation, would have only incited further rent-seeking on the part of slaveholders to lobby against such legislation and prevent a transfer of wealth vested in the privilege of holding individuals in bondage. Moreover, drawing this distinction between property and privilege further illustrates the paradoxical conclusion drawn by the New History of Capitalism, namely that economic development – which implies a creation of wealth across society – is predicated on the destruction of wealth resulting from slavery. This is not to deny that slavery had enriched a landed elite in the ante-bellum South, but enriching a landed elite is not synonymous with economic development. Such concentration of wealth was predicated not on private property, but on private privilege, the costs of which were dispersed across not only by slaves but the masses of the population in terms of foregone wealth.  


Geloso, Vincent, and Judge Glock. 2021. “The New History of Capitalism and the Methodologies of Economic History.” Essays in Economic & Business History, vol. 39: 206–221.

Levy, David M. 2001a. “How the Dismal Science Got Its Name: Debating Racial Quackery.”   
Journal of the History of Economic Thought, vol. 23, no. 1: 5–35.

Levy, David M. 2001b. How the Dismal Science Got Its Name: Classical Economics and the Ur-Text of Racial Politics. Ann Arbor: University of Michigan Press.

Mill, John Stuart. [1848] 2006. Collected Works of John Stuart Mill, Vol. II: Principles of Political Economy (Books I–II). Indianapolis: Liberty Fund.

Olmstead, Alan L., and Paul W. Rhode. 2018. “Cotton, Slavery, and the New History of Capitalism.” Explorations in Economic History, vol. 67: 1–17.

Tullock, Gordon. 1967. “The Welfare Costs of Tariffs, Monopolies and Theft.” Western Economic Journal, vol. 5, no. 3: 224–232.

Wright, Robert E. 2017. The Poverty of Slavery: How Unfree Labor Pollutes the Economy. New York: Palgrave Macmillan, 2017