ABSTRACT
Adam Smith forcefully argued that slavery was highly inefficient, implying that freeing the slaves was Pareto improving: both slaves and their masters could be made better off without slavery. In modern, developed economies, the judicial system maintains the rule of law and enforces contracts, affording credible solutions to double-sided commitment problems. But the economies Smith discusses, such as medieval Europe, lacked a functioning system of justice associated with the rule of law. Smith’s argument about slavery, as reported in the notes on his Lectures on Jurisprudence, begins with an examination of incentives and the inefficiencies of slavery. The slave or villain who cultivated the land cultivated it entirely for his master; whatever it produced over and above his maintenance belonged to the landlord. Simple abolition may create a larger net product in the society, but if it makes slaveholders worse off because they are deprived of their property and income, they will oppose emancipation.
