There’s a way to ease the slavery reparations headache, and it isn’t cash

When it comes to slavery, sorry no longer seems to be the hardest word – reparations is. At this week’s Commonwealth heads of government meeting in Antigua, the King and the prime minister, Andy Burnham, will express plenty of regret for Britain’s role in capitalism’s original sin – Burnham said last week he is open to making a formal apology – while trying to deflect pressure to back their remorseful words with hard cash. As Burnham argues, today’s Britons cannot be liable for wrongs “in which they played no personal part”.

The economics of slavery – and how best to address its terrible legacy – has been increasingly hotly debated since 1944, when the economic historian and future prime minister of Trinidad and Tobago Eric Williams published Capitalism and Slavery, arguing that slavery financed the Industrial Revolution. That claim has not been wholly supported by subsequent academic research, which shows that the barbaric trade in people was but one among several contributing factors to Britain’s emergence as an industrial superpower: not an insignificant factor, but not the whole story.

Recent mainstream academic work by Stephan Heblich, Stephen Redding and Hans-Joachim Voth suggests that slave wealth gave Britain roughly a decade’s worth of extra economic growth. One live question is whether the timing of that extra growth was serendipitously crucial in helping turn Lancashire, where its benefits were concentrated, into the workshop of the world – giving Britain a valuable first-mover advantage in industrialisation that persisted for many decades.

Researchers have also documented huge profits from slavery banked by a number of prominent British families, including royalty, and by institutions such as the Church of England, which is actively debating an increase to the £100m reparations fund it set up in 2023. In 2023, the Brattle Group, an economic consulting firm, published an influential report, “Reparations for Transatlantic Chattel Slavery in the Americas and the Caribbean”.

This calculated that Britain owed monetary reparations of $24tn (about £18tn) to 14 countries in which it oversaw slavery. (The report also calculated that, among others, the United States owed $27tn and Spain $17tn.) Such huge numbers have inevitably been hugely controversial. A new, highly polemical report by the rightwing Institute of Economic Affairs (IEA), alleges that Britain is suffering from a damaging “atonement complex” based on bad economics.

It points out that, in Britain’s case, the sum for reparations far exceeds the country’s current net worth of £13.3tn, as calculated by the Office for National Statistics. It also notes that much of this bill is for compound interest on liabilities incurred in the distant past (the Brattle Group acknowledges that reducing the assumed rate of interest by just one-fifth of a percentage point would lower what Britain owes by $7tn). The IEA also argues that Brattle ignores costs incurred by Britain to end the global slave trade in the 60 years after it withdrew from it – though bizarrely it includes as a “cost” both foregone revenue from slavery and the £20m loan the government took out in 1835 to compensate slave owners for the loss of their business.

This was only finally paid off in 2015 and not one penny of it went to victims of slavery. Related articles: Britain’s slavery debt can’t be wished away – no matter how hard the new right tries The people vs populism But focusing on the precise number misses the point . When the Brattle report is cited by Caribbean leaders such as Mia Mottley, the prime minister of Barbados, it is probably not with any serious expectation of such a large cheque ever being written.

Their goal is to use it as leverage to secure British help in addressing the costly legacy of slavery that persists today. In crucial ways, Britain’s break with slavery with the passage of the Slavery Abolition Act in 1833 did not fundamentally transform the former slave economies. As the analysis of Arthur Lewis, the St Lucian development economist who won the Nobel prize in 1979, implies, the 800,000 people freed in the Caribbean after abolition often had nowhere to work but the plantations that had enslaved them.

Subsequent research has consistently shown that former slave economies left lasting inequality and weak institutions. Much of that inheritance was handed down under British rule, which in Barbados lasted until 1966 – hardly the distant past . Nor are Caribbean leaders asking for what Burnham doesn’t want to give. The official Caribbean Community (Caricom) commission’s 10-point plan for reparatory justice doesn’t contain any specific financial number.

It seeks an apology, then help with education, public health and technology, and relief of those debts that can be traced back to historic injustice. “Nobody is asking the UK taxpayer to write a big cheque,” says one senior Caribbean economist, pointing to Glasgow University’s £20m partnership with the University of the West Indies, funding joint research and scholarships, as a template. Burnham might find discussing expanding development partnerships a far easier conversation than talking about financial reparations.

Also, Mottley, through her Bridgetown Initiative, has been an effective champion of efforts to increase the lending capacity of the World Bank and other international development banks – something Ed Miliband, Burnham’s foreign secretary, plans to make central to Britain’s G20 presidency next year. Ensuring that former slave economies qualify for some of that money is key. Many of them are considered too well-off to qualify for the cheapest loans.

Creating a new climate-resilience instrument, say, might be another way to provide reparations (in this case, at little cost to the British taxpayer) without actually saying the word. By focusing on future development, rather than pricing the past, Burnham may yet find there is a deal to be struck with his fellow Commonwealth leaders. The nuggets AI and productivity Economists have long been puzzled by the process of turning technological innovation into higher productivity across the economy.

In 1987, Robert Solow famously quipped that “you can see the computer age everywhere but in the productivity statistics”. There had been a massive boom on spending on computers by companies during the 1970s and 1980s, yet the rate of US productivity growth had roughly halved since 1973. This “productivity paradox” was not solved until the mid-1990s, when productivity surged with the arrival of the internet. When it returned again in the smartphone era, the supposed benefits barely registered in the numbers.

The economists Erik Brynjolfsson, Daniel Rock and Chad Syverson argue there is a “productivity J-curve” whereby general-purpose technological innovations initially depress measured productivity as firms make intangible investments, and productivity benefits are only reaped much later. A lot of money is now being wagered on artificial intelligence boosting productivity far more quickly. Yet as Torsten Slok, the chief economist of Apollo Global Management, argues in a recent article , currently there are “no signs of an AI payoff outside the tech sector”.

Only the “Magnificent Seven” technology companies have seen AI boost their revenues or lower their costs, while the remaining companies in the S&P 500 are starting to view AI spending “not as a source of growth but as a cost centre that weighs on margins”. The bottom line, concludes Slok, is that “the AI story will be decided in the S&P 493, not the Mag 7, and so far, there is no evidence that revenue growth or margins are improving outside the tech sector”.

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