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

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Author Info

  • Johan Fourie

    ()
    (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.

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File URL: http://www.ekon.sun.ac.za/wpapers/2011/wp212011/wp-21-2011.pdf
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Bibliographic Info

Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 21/2011.

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Date of creation: 2011
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Handle: RePEc:sza:wpaper:wpapers149

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Keywords: Slavery; Settler; Proto-industry; Eighteenth century; South Africa;

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References

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  1. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521868273.
  2. Boshoff, Willem H. & Fourie, Johan, 2010. "The significance of the Cape trade route to economic activity in the Cape Colony: a medium-term business cycle analysis," European Review of Economic History, Cambridge University Press, vol. 14(03), pages 469-503, December.
  3. Johan Fourie & Dieter von Fintel, 2011. "Settler Skills and Colonial Development," Working Papers 0009, Utrecht University, Centre for Global Economic History.
  4. Johan Fourie & Dieter von Fintel, 2010. "The dynamics of inequality in a newly settled, pre-industrial society: the case of the Cape Colony," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 4(3), pages 229-267, October.
  5. Johan Fourie & Jan Luiten Zanden, 2013. "GDP in the Dutch Cape Colony: The National Accounts of a Slave-Based Society," South African Journal of Economics, Economic Society of South Africa, vol. 81(4), pages 467-490, December.
  6. Robert C. Allen & Jacob Louis Weisdorf, 2010. "Was there an ‘Industrious Revolution’ before the Industrial Revolution? An Empirical Exercise for England, c. 1300-1830," Discussion Papers 10-14, University of Copenhagen. Department of Economics.
  7. Johan Fourie & Dieter von Fintel, 2010. "A History With Evidence: Income inequality in the Dutch Cape Colony," Working Papers 184, Economic Research Southern Africa.
  8. R. B. Sheridan, 1965. "The Wealth of Jamaica in the Eighteenth Century," Economic History Review, Economic History Society, vol. 18(2), pages 292-311, 08.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. More on the long term consequence of slavery in Africa
    by Economic Logician in Economic Logic on 2012-01-03 16:32:00
  2. Slavenomics
    by Johan Fourie in Johan Fourie's Blog on 2012-03-19 18:36:30
  3. Lessons from the Cape Colony
    by Johan Fourie in Johan Fourie's Blog on 2012-03-15 10:30:02
  4. The sins of the fathers: Political pathologies of inequality
    by Nicholas Gruen in Club Troppo on 2011-12-16 06:33:52
  5. Slavenomics
    by Johan Fourie in Johan Fourie's Blog on 2012-03-19 18:36:30
  6. Lessons from the Cape Colony
    by Johan Fourie in Johan Fourie's Blog on 2012-03-15 10:30:02
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Cited by:
  1. Jerven , Morten & Austin , Gareth & Green, Erik & Uche , Chibuike & Frankema , Ewout & Fourie , Johan & Inikori , Joseph & Moradi , Alexander & Hillbom , Ellen, 2012. "Moving Forward in African Economic History: Bridging the Gap Between Methods and Sources," African Economic History Working Paper 1/2012, African Economic History Network.

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