Like most people, including Alfred Chandler in his magnum opus The Visible Hand, I always accepted that – with a nod to ancient institutions like universities, the army and the Catholic church – the origins of modern management lay in the US railroads and the factories of the Industrial Revolution.
But although long denied or ignored, it is becoming clear that some of the founding practices were already well developed in the 18th-century slave plantations of the Caribbean and the southern states of America. When F.W. Taylor’s The principles of scientific management appeared in 1911, echoes of the earlier ‘scientific agriculture’ practised on some of the sugar and cotton plantations were not lost on contemporary critics who found some of Taylor’s practices uncomfortably reminiscent of ‘slave-driving’ – nor on supporters who on the contrary praised them for the advance they represented over slaveholding.
This is troubling stuff to write about. But the aim is not to pick at the scabs of the past for the sake of it. It is that, as ever, the present is the child of the past, and coming to terms with the history is the first step to resolving the unfinished business it has left behind.
In Accounting for Slavery: Masters and Management, a remarkable piece of primary research, Caitlin Rosenthal, a young McKinsey consultant turned academic, parses surviving plantation account and record books to paint a chilling picture of the blend of violence and innovative data practices that turned plantations into extreme exemplars of scientific management – ‘machines built out of men, women and children’ where ‘the soft power of quantification supplemented the driving force of the whip.’
Slavery, Rosenthal notes, ‘plays almost no role in histories of management’. Whether conscious or not, this is denial, the erasure accomplished by Chandler’s comforting categorisation of plantation management as primitive and pre-modern. Not a bit of it, counters Rosenthal. Sophisticated information and accounting practices thrived precisely because slavery suppressed the key variable that makes management difficult – the human. As she puts it, ‘Slavery became a laboratory for the development of accounting because the control drawn on paper matched the reality of the plantation more closely than that of almost any other American business’.
The combination of labour that was essentially free, unspeakably brutal management and smart accounting meant that slaveholding was exceptionally profitable. Plantation owners were among the one percent of the period; at the time of the Civil War, there were more millionaire slave-owners in the south than factory-owners in the North. In the UK, as we are sharply reminded, many Downtons were built on the trade or forced labour of slaves. Historians mostly don’t include human capital in their calculations, but plantation owners did, using depreciation to assess the changing value of slaves according to age, strength and fertility well before the concept was in use in the North, and routinely using them as collateral for loans and mortgages. By buying and selling judiciously, slave-owners could add steady capital accumulation to the profits from cotton and sugar.
Pace Chandler, plantations were management- as well as capital-intensive: according to one calculation, in 1860, when the railroads were emerging as the acceptable crucible of management, 38,000 plantation overseers, or middle managers, were managing 4m slaves using techniques that included incentives as well as indescribable punishments. Rosenthal recounts that in 1750 a British pamphleteer launched a prospectus for a kind of business school whose target clientele included sons of American planters. Slaveholders, concludes Rosenthal, ‘built an innovative, profit-hungry labor regime that contributed to the emergence of the modern economy… Slavery was central to the emergence of the economic system that goes by [the name of capitalism].’
With some estates numbering thousands of slaves, the plantations represented a milestone in managing scale. Even more important, the tools developed there enabled owners to manage their enterprise remotely. The slaveholder no longer had to suffer the physical discomforts of colonial life – or the mental discomfort of seeing at first hand the appalling human cost of his or her mounting wealth. Studying the numbers in the account books – embryonic spreadsheets – in a study in Bristol, London or Liverpool, he (or she) could see at a glance the productivity and profitability of each slave and decide their fate with a tick or a cross.
This was a genuine management innovation, perfectly aligning the need for distant control with conditions on the ground. It was also crucial in another way. Representing humans as numbers not only put them out of sight and out of mind. It also encoded them as simple instruments of profit, no different in that respect from mules or horses, or the machinery for turning raw cane into sugar. It was to this vision of unfettered capitalism, where the only sanctity was property, that the southern states (and the British ‘West India interest’) clung to so tenaciously for so long – and in the former’s case, went to war to protect.
They lost that battle. But even after abolition the ghost of the old regime lived on in the south in the infamous penal labor and convict leasing schemes – and endures today through the for-profit prison-industrial complex that has seen the quadrupling of the (disproportionately black) US prison population since 1970. A whole raft of blue-chip US companies continue to profit from captive prison labour today.
The debate about economic freedoms and ends and means in business that slavery started rumbles on in 2020. When Milton Friedman wrote in 1970 that the social responsibility of business was to increase its profits, he was reasserting the primacy of capital owners’ property rights, and in an extreme version of Adam Smith’s ‘invisible hand’ argument insisting that anything they do to increase those profits contributes to the common good. Now the management wheel is turning again towards a more inclusive view, although with how much conviction it remains to be seen. If there is any hesitation, slavery should remind us with crystal clarity how far people will go in pursuit of profit if allowed to; that management’s urge to reduce everything to numbers can all too easily result in the destruction of its own humanity as well as the lives of those being managed; in short, that management can be a force for evil rather than for good. Making a clean breast of the dark side of its history is the only way to close off those bleakest avenues for ever.