The economic significance of the property rights in man

In recent years economists have extended the use of the concept of capital beyond its usual application to machines, building, and othe inanimate objects. They have applied the concept of capital to the wealth in herent in the capacity of human beings to perform labor, calling such wealth "human captial." This extension of the concept seemed odd at first because it was applied not to explain behavior in nineteenth-century slave societies but in twentieth-century free societies. Nobody doubts that human beings were a form of capital in slave society. Slaves who wer traded commanded prices as specific and well-defined as thos on land, buildings, or machines. Since prices of slaves varied by age, health, skill level, and geographic location, it is clear that the vocational training of slaves or their relocation from on region to another were just as much forms of investment as the erection of a building or extension of a fence.

What made the application of the concept of human capital to free societies seem odd is that free people are not traded in well-defined markets and hence do not command market prices. However, the absence of explicit market prices on human being usually prevenets their capital values from being mad explicit. Legal reconition of the fact that free people continue to have capital values takes place whenever courts grant cash awards to the widows of men killed in industrial accidents. The amount of such an award usually turns on a debate regarding the capital value of the deceased at the time of his death.

Viewed in this light, the crucial difference between slave and free society rests no on the existence of pproperty rights in man, in human capital, but on who may hold title to such property rights. Under freedom, each person holds title, more or less, to his own human capital. He is prevented by law from selling the title to this capital except for quite limited periods of time and then only under a very restricted set of conditions. Moreover, one generally cannot sell the title to the human capital of others, or if such sales are permitted (as in the cases of the contracts of movie and athletic stars, or as in the case of the parents or guardians of minors), the title is transferred only for relatively short intervals of time and under strictly defined limitations. In slave societies, however, a large number of individuals were permanently deprived of the title to their own human capital. Those who held the titles ( the maters) were virtuall unrestricted by law in the abilitity to sell them. And ownership of a female slave brought with it title, in perpetuity, to all her descendants.

How did the special way in which the antebellum South treated the matter of property rights in man affect the economic behavior of that society? What special economic advantage, if any, did the system of property rights which prevailed under slaver give the slaveowners? How did this system of property rights affect the real income of the masters, of slaves of free Southerners, and of free Northerners? While these are not new questions, certain of the findings of the cliometricians suggest new answers.

1. Economies of scale in sourthern agriculture were achieved exlusively with slave labor.
   
2. While the urban demand for slave labor was quite elastic, the agricultural demand was very inelastic. ...

[Engerman and Fogel, p232 -238]