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

Author

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  • 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.

Suggested Citation

  • Johan Fourie, 2011. "Slaves as capital investment in the Dutch Cape Colony, 1652-1795," Working Papers 21/2011, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers149
    as

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    File URL: https://www.ekon.sun.ac.za/wpapers/2011/wp212011/wp-21-2011.pdf
    File Function: First version, 2011
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    References listed on IDEAS

    as
    1. 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.
    2. Johan Fourie & Dieter von Fintel, 2011. "Settler skills and colonial development," Working Papers 213, Economic Research Southern Africa.
    3. Feinstein,Charles H., 2005. "An Economic History of South Africa," Cambridge Books, Cambridge University Press, number 9780521616416, January.
    4. 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.
    5. Johan Fourie & Dieter von Fintel, 2010. "A History With Evidence: Income inequality in the Dutch Cape Colony," Working Papers 184, Economic Research Southern Africa.
    6. R. B. Sheridan, 1965. "The Wealth of Jamaica in the Eighteenth Century," Economic History Review, Economic History Society, vol. 18(2), pages 292-311, August.
    7. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521868273, October.
    8. R. C. Allen & J. L. Weisdorf, 2011. "Was there an ‘industrious revolution’ before the industrial revolution? An empirical exercise for England, c. 1300–1830," Economic History Review, Economic History Society, vol. 64(3), pages 715-729, August.
    9. Feinstein,Charles H., 2005. "An Economic History of South Africa," Cambridge Books, Cambridge University Press, number 9780521850919, January.
    10. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    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 22:32:00
    2. Slavenomics
      by Johan Fourie in Johan Fourie's Blog on 2012-03-19 23:36:30
    3. Lessons from the Cape Colony
      by Johan Fourie in Johan Fourie's Blog on 2012-03-15 15:30:02
    4. The sins of the fathers: Political pathologies of inequality
      by Nicholas Gruen in Club Troppo on 2011-12-16 12:33:52
    5. Slavenomics
      by Johan Fourie in Johan Fourie's Blog on 2012-03-19 23:36:30
    6. Lessons from the Cape Colony
      by Johan Fourie in Johan Fourie's Blog on 2012-03-15 15:30:02

    Citations

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    Cited by:

    1. Sophia du Plessis & Ada Jansen & Dieter von Fintel, 2014. "Slave prices and productivity at the Cape of Good Hope from 1700 to 1725: did all settler farmers profit from the trade?," Working Papers 17/2014, Stellenbosch University, Department of Economics, revised 2014.
    2. 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," Lund Papers in Economic History 124, Lund University, Department of Economic History.

    More about this item

    Keywords

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

    JEL classification:

    • N57 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Africa; Oceania
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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