Contractual slavery and specialization


The ancient practice of borrowing on personal security—meaning that in case of default the debtor or a family member had to “enter the house” of the creditor and serve him for some time or for life[1]—finds a modern equivalent in charges levied on the future wages of the debtor. Why people ceased using voluntary personal securities to safeguard credit?

[1] See, for instance, Silver (1995, pp. 117-122). This interpretation seems now more widely accepted that previous ones (e.g., Finley, 1965) that consider that many of these contracts were simple sale of labor.


Leaving aside ethical considerations for a moment, purely productive reasons probably made ancient practice unsuitable for today’s economy. Indented labor had enforcement advantages over charges levied on wages but probably missed specialization opportunities. Think that the contractual costs of default-driven servitude increases with the level of specialization, which is now immensely higher. In ancient times, the relative absence of specialization meant that it was more efficient to have defaulting debtors or their relatives entering the house of the creditor. This was kinder and made redemption viable. Interestingly, the creditor was not usually allowed to sell them even when they became slaves. In Greece and Rome, contractually-driven bondage and slavery were two very different institutions: only the second ended up with a sale, usually abroad (Finley, 1965). In addition to likely harsher treatment, sale abroad meant no possibility of redemption.

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