Many parts of the world, including the United States, have in the past used syst

Question

Many parts of the world, including the United States, have in the past used systems of unfree labor (slavery is a prominent example), whereby individuals are compelled to work for minimal/no wages (for this problem, assume no monetary wages). (a) Imagine an area where such a system existed but has recently been eliminated (i.e., the southern United States circa 1870). What do you expect to happen to the quantities of capital and labor used in production? Specically, what can you say about the output and substitution eects on quantities used of these inputs? (b) Do you think slave rebellions, even if unsucessful, could reduce the incidence of slavery? Why/why not?

Explanation / Answer

When the slavery is abloshed, labor and capital are supposed to be compliments and not substites. Basically, the subsitutability between the labor and capital is used. It is expected that quantity of capital used in the production process will increase as the dependence on labor will decrease.

b. Yes, slave rebellions could have reduced the incidence of the slavery. If the labors get united they can fight against the slavery.

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