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Enslaved by Anti-Market Ideology

Here’s a letter to the New York Times Magazine:

Dear Editor:

Princeton sociologist Matthew Desmond’s case that modern American capitalism is a direct descendant of slavery is a commotion of confusion (“In order to understand the brutality of American capitalism, you have to start on the plantation,” August 14). Never mind, for example, that history’s first modern economists – scholars such as Adam Smith, David Ricardo, and James and John Stuart Mill, all of whom marveled at, and applauded, the generally beneficial functioning of free markets – not only opposed slavery, but did so with such eloquence that the anti-capitalist and pro-slavery Thomas Carlyle was incited in 1849 to warn against what he believed would be the baneful and enterprise-freeing effects of the budding discipline of economics by calling it the “dismal science.”

Instead, note this astonishing assertion from Prof. Desmond: “When an accountant depreciates an asset to save on taxes or when a midlevel manager spends an afternoon filling in rows and columns on an Excel spreadsheet, they are repeating business procedures whose roots twist back to slave-labor camps.”

Not so. Modern accounting dates back, not as Prof. Desmond implies to antebellum America, but to 13th and 14th century northern Italy, where merchants developed it to keep track of their commercial affairs. As explained in 1955 by the great business historian Raymond de Roover:

“[D]ouble entry was developed almost simultaneously by the merchants of several Italian cities who had been searching for a system that would minimize errors, facilitate control, and give them a comprehensive view of the financial state of their business. Since trade rests on the exchange of goods and services, the duality which forms the basis of double-entry bookkeeping is rooted in the nature of things. Is it then surprising that eventually the merchants would evolve an accounting system founded on a balance between debits and credits? By 1300, the times were ripe: the merchants were already using equity and expense accounts and were about to take the final step which would perfect the system by adopting the rule that there should never be a debit without a corresponding credit and vice versa.”*

Prof. Desmond’s commission of such an egregious error thoroughly discredits all that he writes about economic history.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

* “New Perspectives on the History of Accounting,” The Accounting Review, Vol. 30, July 1955, page 405.


Phil Magness has a splendid and devastating rebuttal of Desmond’s unhinged ‘history.