Accounting for Slavery

I got around to reading Caitlin Rosenthal’s Accounting for Slavery: Masters and Management. Rosenthal does not need me to sing her praises. Plenty of people will be doing that. I’m just doing it because I feel like it.

I do want to warn people that they should ignore some of the press for the book that suggests it is about how slavery inspired modern management. Rosenthal explicitly states that the book is not about the origins of modern management. She draws parallels with modern management practices, but she does not argue that they can be traced back to slavery.

I use the phrase management practices because the subtitle is more accurate than the title: the book is about much more than accounting. Rosenthal examines the techniques that slave holders developed to track productivity, record experiments, organize the flow of information up and down hierarchies, calculate the value of their investments, etc. She shows how these techniques were systematically disseminated through the publication of books with standardized forms, articles in periodicals, and what were essentially how-to manuals on plantation management.  She makes the case that an understanding of the degree to which slave owners developed sophisticated management practices that parallel those in modern management adds to our understanding of both business history and the history of slavery. In telling the story she also makes clear that she would like to bridge the divide that currently exists between some economist economic historians and some historian economic historians. If anyone has a chance of doing that it might be someone who had Sven Beckert and Claudia Goldin as dissertation advisers.

Early in the book Rosenthal introduces an organizational chart for a large sugar plantation, and she describes the parallel between the way she created the chart and the way that Alfred Chandler created organizational charts to demonstrate the development of management practices at large industrial firms. The parallel with Chandler can be extended. Chandler argued that management is an important element of technology. Institutions and developments in production technology in the United States created possibilities to profit from mass production, but to take advantage of these opportunities business people had to develop the techniques to manage these large business enterprises. Rosenthal shows that institutions (slavery) and technology (such as the cotton gin) created opportunities to profit from large scale agricultural production, but to take advantage of these opportunities business people had to develop techniques to manage these large agricultural enterprises.

No book is perfect. I think she slightly exaggerates the neglect of slavery by business historians. For instance, Blaszczyk and Scranton’s Major Problems in American Business History gives as many pages to business in the slaves south as it does to technology in the age of big business. Nevertheless, her overall point that the business of slavery has been treated as distinct from the main story is accurate. She also gives too much credit to Edward Baptist, though she at least relegates this to a footnote. I’ll write a separate post about why I disagree with her assessment of Baptist.  For now, I want to emphasize that I think this is an important book.

Finally, I want to note that it is one of the most well written books I have read in a while. If you are looking for a historian who wants to try to impress you with academic jargon or simply show you how many five dollar words they know, this is not the book for you. On the other hand, if you want to see what it looks like when an author strives to make complicated things as clear as possible you should take a look at this book.

If I were betting on future winners of the Hagley Prize for the best book in business history, I would put my money on Accounting for Slavery.

Accounting for Capitalism

I read Michael Zakim’s new book Accounting for Capitalism: The world the clerks made last week. I saw Tyler Cowen’s brief review on Marginal Revolution, and Cowen included the following excerpt from the book

A single block fronting Wall Street in 1850 was thus home to seventeen separate banking firms, as well as fifty-seven law offices, twenty-one brokerage houses, eleven insurance companies, and an assortment of notaries, agents, importers, commission merchants, and, of course, stationers.  A rental market for office “suites” developed apace “fitted up with gas and every other convenience,” which also included newly invented “acoustic tubes” that allowed managing partners to communicate with porters in the basement and clerks in the salesroom without ever having to leave their desks…

All this office activity spurred a flurry of technological spillovers that included single standing desks and double-counter desks, sitting desks featuring nine or, alternately, fifteen pigeonholes, and drawers that could or could not be locked.  “Office chairs capable of swiveling and tilting became available as well, together with less costly “counting house stools” that lacked any upholstery.  Paperweights, check cutters, pen wipers (the woolen variety being preferable to silk or cotton, which tended to leave fibers on the nib), pencil sharpeners, rulers, copying brushes, dampening bowls, blotting paper (less important for absorbing excess ink than for protecting the page from soiled hands), wastepaper baskets, sealing wax (including small sticks coated with a combustible material ignited by friction and designed to be discarded after a single use), seal presses, paper fasteners, letter clips (for holding checks while entering them into the daybook), writing pads, billhead and envelope cases, business cards, receiving boxes for papers and letters, various trays (for storing pins, wafers, pencils, and pens), and “counting room calendars” spanning twelve- or sixteen-month cycles — all became standard business tools.  So did the expanding inventory of “square inkstands,” “library inkstands,” and “banker inkstands” designed with narrow necks which prevented evaporation and shallow bodies that kept the upper part of the pen from becoming covered in ink, thus avoiding blackened fingers and smudged documents.

He then added that “There is then a whole other paragraph about the different kinds of paper that developed and their importance for clerical work.  This is perhaps the most thorough book I know on the importance of “small” innovations, and it is also a useful book on the history of accounting.”

The impact of small technological changes and the history of accounting, however, are not the central concerns of the book. Zakim’s book is more about the subtitle “the world the clerks made.” It is business history, but it is more on the cultural history part of the business history spectrum than the technological, accounting, or economic history parts of the business history spectrum. Zakim is not trying to explain changes in technology or accounting, their spread, or their impact, or even changes in the number of clerks and the functions they served. Instead, he is interested in the changes in thepeople perceived the economy and their place in it. Those are interesting questions, nevertheless, I found the book frustrating.

Capital and capitalism are words that have multiple definitions, but Zakim doesn’t define how he is using them, and their meaning is not made clear by the context. Often the use does not seem consistent with any of the common uses of the terms.

Here are some of Zakim’s statements about capitalism:

“Anyone could become a capitalist, Americans were told, a possibility that acted as a “spur to exertion to the very news boys in our streets,” as did the popular intelligence that the great majority of the country’s businessmen had “commenced life behind a desk or the counter.” This did not mean, however, that everyone actually became a capitalist, It did mean, however, that everyone became capital---or what we so casually refer to as “human capital” today---rendering their own lives the subject of utility and enterprise.” (Zakim page 7)

“The individual became an asset worthy of the highest credit rating in a cash fraternity born of the axioms of purchasability and personhood. He became human capital.” (Zakim page 70)

“This perpetuum mobile of life under capital---of dialectics at a standstill”---continues to induce bouts of chronic fatigue and irritable bowels, panicked concerns with one’s diet fed by a vast catechism of self help literature, and the body mass ratios of exercise routines including performances of manual labor at the local cross fit gym. Surely too, the treadmill desks of today are worthy successors to Dr. Halsted’s equestrian exercise chair of 1846. Both mediate between our humanity and the exigencies of the market, seeking to ameliorate the fraught relationship between “Mammon and Man” that proves to be the common denominator of capitalism’s reinvention of itself.” (Zakim page 194)

“Pen and paper already engendered such a virtual reality, which was the condition for capitals transmigrations from place to place, and form to form, passing between its merchant, industrial and financial incarnations, and then back again, imbuing the human imagination with the same values of fungibility. The history of capitalism is not, then, about the economic origins of society, but about the expressions that economy assumes in society, about how capital acquired consciousness.” Economists call this process “cognitive regulatory capture.” (Zakim page 197)

Capital and capitalism appear frequently, but Zakim does not say what he thinks those words mean, and it is not clear how his use fits with common uses of the terms. Within economics capital is often used to mean two different things. The most frequent use is as a factor of production. Undergraduate students are taught that output is a function of land, labor, capital and technology. In this context capital is anything that has been produced to enable more production in the future. It includes factories, office buildings, and equipment. It also includes things like roads, bridges, and ports. In addition, it includes knowledge and skills that people have obtained that enable them to be more productive, which is referred to as human capital. I’m pretty sure Zakim’s use of “human capital” is not the same as economists.  Capital is also used, especially in discussions of finance and banking, to refer to the stake of the owners of a business. For instance, after the last financial crisis there was a lot of discussion about increasing capital requirements at banks to discourage excessive risk taking and provide a cushion in case some loans or investments go bad.The Marxist view of capital, as best I recall, is distinct from but related to both of these definitions of capital. I can't tell you what capital is for Zakim, only that it is important.

The book alternates between the sort of concrete descriptions that Cowen highlighted and the less concrete statements about capitalism, like those I have included here. Consequently, I found the book interesting but somewhat frustrating. It is not clear to me what it means to say that “capital acquired consciousness.” I don’t think it is what economists call cognitive regulatory capture, but it may be similar to it.

If you are interested in learning about the evolution of information technology and its impact of business and the economy I would suggest that you might take a look at JoAnne Yates Control Through Communication: The Rise of System in American Management , Margaret Levenstein Accounting for Growth: Information Systems and the Creation of the Large Corporation, or Josh Lauer Creditworthy: A History of Consumer Surveillance and Financial Identity in America. You may also find some of the chapters in Daniel Raff and Phil Scranton (editors) The Emergence of Routines: Entrepreneurship, Organization and Business History interesting as well.