Slaves as capital investment in the Dutch Cape Colony, 1652-1795

Stellenbosch Working Paper Series No. WP21/2011
 
Publication date: 2011
 
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch)
 
Abstract:

The Cape Colony of the eighteenth century was one of the most prosperous regions in the world. This paper shows that Cape farmers prospered, on average, because of the economies of scale and scope achieved through slavery. Slaves allowed farmers to specialise in agricultural products that were in high demand from the passing ships – notably, wheat, wine and meat – and the by-products from these products, such as tallow, skins, soap and candles. In exchange, farmers could import cheap manufactured products from Europe and the East. Secondly, the paper investigates why the relative affluence of the early settlers did not evolve into a high growth trajectory. The use of slaves as a substitute for wage labour or other capital investments allowed farmers to prosper, but it also resulted in severe inequality. It was this high inequality that drove the growth-debilitating institutions posited by Engerman and Sokoloff (2000). The immigration of Europeans was discouraged after 1717, and again during the middle of the century, while education was limited to the wealthy. Factor endowments interacted with institutions to create a highly unequal early South African society, with long-term development consequences.

 
JEL Classification:

N57, N27

Keywords:

Slavery, Settler, Proto-industry, Eighteenth century, South Africa

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1 March 2021
Even with the release of data showing a record high unemployment rate in 2020Q4, it turned out to be a fairly good week for the SA economy. Daily new COVID-19 infections remained well contained, while the second batch of 80 000 J&J vaccines arrived (albeit controversially with the grounded SAA being the carrier). In addition, relative to the October...

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