@realnowhereman: From what I read, Mises` own argument is that you literally can't extract above-animal performance from human slaves, and that the generalized demise of slavery in the world had to do with slave owners being unable to compete with capitalists for productivity and quality reasons. This position is one of right-wing bigotry in it's purest form and sheer historical ignorance: slavery was always fought on humane and ethical terms, and always against wealthy slave owners who've seen their profits threatened. Unsurprisingly, Mises never won any Nobel.
Quite so: von Mises didn't win a Nobel. My bad. (some argue that Hayek won the Nobel by extending von Mises work though.
Also true that slavery was always fought on humane grounds. That wasn't the question though. The question is whether slavery is more "economic" than non-slavery. It interesting to note that only the USA went to war over slavery; other countries found other ways to get rid of it.
I'd also appreciate it if you didn't throw ad-hominems like "right wing bigotry" into what, has up to now, been an exceedingly polite debate. I don't believe I am either right wing or a bigot; nor do I believe that "historical ignorance" is the only explanation for my position.
You make a more convoluted argument: you admit that a slave might be coerced to produce economic goods of 5$/hour, but you assert that the same free man will produce 10$/h when he applies himself, and there's no way for a slave owner to exert that productivity by force alone - you are basically making a psychological argument.
I suppose I (or rather all the economists I'm parroting are; I don't claim to be able to be in their or any other economic league) am. It's not an unreasonable assumption though. If you are a paid worker; with the chance of promotion as a reward are you more or less likely to tell your employer that he's wasting half his production because a bolt is loose on his production line than if you are his slave?
That may be true, but you need to understand that most of the productivity of the slave goes to his owner (minus the bare essentials for keeping him alive), while the productivity of the free man on a competitive market will tend to go mostly to the man himself.
The question though; is which is the bigger "productivity". In either case, that productivity ends up in the economy. If a country populated with free men produces more than the country filled with slaves (regardless of which particular individuals in the country are receiving the profit from that productivity), then the free country will become gradually richer.
There is strong evidence for this being the case: in the American civil war, if slavery was such an economic boon, why was the south so much poorer than the north?
What I am saying is that even allowing - for the sake of argument - the idea that a free man is more productive than a slave, a slave owner has no incentive to become a capitalist: by owning two slaves he keeps the better part of 2x5$/hour, while the capitalist must compete on price for the labor of free men, and keep much less of the 10$/hour each employee fetches.
I've never argued that the slave owner has an (obvious) incentive. Just as the man stealing from his company has no incentive to stop (other than him getting caught). The argument is that the company without that drain will do better than the one with it. The businessman employing 20 free men will produce more than the slave owner whipping 20 slaves. The slave owner will therefore eventually go bust. All the while the slave owner will be convinced that he his better off owning slaves.
It's analogous to the businessman who, seeing his sales falling, thinks it would be wrong to lower his prices. Rather he increases them and finds his sales drop more. All the while reasoning that it would be suicide to lower his income by selling cheaper.
There are also human activities that can't reasonably be expected to follow your incentives argument: if I coerce my slave to become a blood donor and sell the blood on the free market, there's no way I can convince him to become a better producer of blood by sharing the profits with him. Quite contrary, a slave with free time and money to burn is likely to score high for alcohol, drugs and VDs, diminishing the quality of the "product".
This is to miss the point again. The question is not production-of-a-particular product, it is whether that individual could be more productive at something else as a free man. Can you seriously not think of a single better use for a human than simply extracting his blood? Let's say I have 1000 slaves. I'm extracting their blood for profit. My neighbour is paying 1000 people to work on creating an artificial form of blood (it's pretty much a given that you can't whip someone into creativity). Assuming he succeeds, which of us has made better use of that 1000-person resource?
I realise it's a silly argument, but I've been extreme to demonstrate the point: there are better ways to use human resource than slavery. Without payment and the market providing price signals to direct that work, you will not find it. Hence slavery will, inevitably lose.
(Note: in case it's not obvious; I don't think that an economic argument is necessary -- it would be morally correct to abolish slavery regardless of whether it is economically right or not; this is simply an interesting argument)