Why The World’s Governments Should Pay Polluters

Lloyds of London. The British Railways. The Bank of Senegal.

What do these have in common? They were all funded by investments of compensation money provided to former owners of enslaved people at the moment of slavery’s abolition in the British and French empires.

Compensation for the owners of enslaved people emancipated in the 19th century was controversial at the time and still is. It seems clear, morally and economically, that it should have been the people being forced to work for free who were compensated for their labor. Arguments for reparations make this case forcefully. The people who were freed from enslavement were given nothing and had to start their new lives with nothing, a position that made them dependent on their former employers for wages, unable to buy land for themselves, and unable to set up businesses with access to capital.

Because this is so obviously unjust, it can be hard to see the unpalatable logic—and potentially crucial lesson—lying behind Britain’s decision to award slaveholders the equivalent of £100 billion in today’s money (as a percentage of modern government expenditure). France, Denmark, the Netherlands, Brazil, Mexico, Argentina, Sweden, Cuba, and Washington were among those that quickly followed suit. But there was a logic to it, and it is one we need to urgently consider to face the unfolding climate crisis.

Just like climate campaigners today, anti-slavery campaigners around the world spent much of the first part of the 1800s trying to convince people through moral persuasion techniques, consumer boycotts, ethical purchasing, writing, petitioning, protesting, and even revolutions conducted by the enslaved themselves. They made the case in a hundred different ways, drawing on a wide variety of voices and forms of activism, that slavery was wrong, and, by extension, so were slaveholders.

But since slaveholders had a powerful lobby in British Parliament, made up an unshakable majority of the U.S. Congress, and generally were in positions of authority and influence in every country with slavery, this argument could only take them so far. Fundamentally, the owners of enslaved people saw those people as an investment, an asset, a form of capital. In Britain, as the anti-slavery movement gathered momentum in the 1820s, the pro-slavery lobby leaned into compensation as the only way they could accept the idea of emancipation. Maybe slavery presented a moral problem for them, but without compensation, they argued, why would they vote to erase the value of what they saw as their property?

This was the logic of compensated emancipation: Buy the assets (enslaved people), and enable the former owners of this now defunct asset-category (slavery) to invest in something new. And they did. Compensation was paid out to slaveholders based in Britain, France, Senegal, South Africa, Madagascar, Réunion Island, throughout the French and British Caribbean, and across South America in an administrative and financial feat that was and remains remarkable.

Compensated emancipation in Washington was enacted by then-U.S. President Abraham Lincoln in 1862, ending slavery there and paying up to $300 per enslaved person owned. Although this was less than the average price paid for an enslaved person in the United States at that time – which was around $800 – in other countries, compensation was awarded through a more complicated formula based on a discounted average value of enslaved workers with different occupational, gender, and age categories.

Records of the compensation claims process document the scale of the payouts. In the French empire, 126 million francs were paid to more than 16,000 claimants; Haiti’s government was also compelled to pay compensation of 150 million francs (later reduced to 90 million francs—around $21 billion in today’s money) to the 27,000 owners of enslaved people it had dispossessed during its revolution against the French. It may, in fact, have been the protracted negotiations between Haiti and France in 1823 and 1824 that introduced the idea of compensation to the British. In the British empire, more than 30,000 claims on £20 million in government compensation—40 percent of annual tax receipts—were processed by eight members of the newly established Slave Compensation Commission and paid out by the British Treasury in cash or government bonds. The commissioners included a former Jamaican assemblyperson, a prominent abolitionist, members of the Colonial Office, and several lawyers. The commission processed claims, which were entered by individuals, firms, and their lawyers.

Who were all of these recipients? Many of them were resident slaveowners on plantations, but, just as with fossil fuels today, by the 1830s and 1840s, slavery was so deeply embedded in the economic system that a significant number of the claimants were pensioners and widows on annuities, banks that held mortgages in enslaved people or plantations, institutional benefactors and executors, and merchant businesses with investments in slavery. Because of the variety of types of claims, including annuitants and mortgage holders, more than 3,000 claims were subject to counterclaims. The commission was responsible for negotiating some settlements; others were handled in the courts.

The Centre for the Study of the Legacies of British Slavery tracks the distribution of compensated money into the funding of schools, universities, railroads, trading firms, banks, insurance companies, factories, and more. Compensation money freed up money invested in the plantation production of sugar to fuel the 19th century’s industrial and infrastructural boom in Britain.

Now we find ourselves in a crisis that is both moral and existential as a result of that same industrial boom. Climate change is caused by human behavior, specifically a kind that has become associated with greed, overconsumption, and a variety of excesses that have led campaigners to target everything from fossil fuel emissions to overfishing to plastic straws. Like anti-slavery activists, climate change campaigners have turned this into a moral crusade. In some ways, this has been incredibly effective, transforming global dialogues in a matter of years. Publication of the U.N. climate report, which unequivocally lays out the dangers of continued inaction, makes it clear there is little room for debate about whether climate change is real.

But just as it became increasingly clear to the wider population that anti-slavery campaigners had a point, we are at an inflection point in the climate crisis where a clear, practical solution is needed. Although many climate activists might prefer to see a future lived more sustainably, in which greed and overconsumption are relegated to the dark days of the turn of the century, I argue what is needed is a solution we know works: compensation.

Pay people cash to take their cars off the road. Pay people (and pension funds) in cash or government bonds for their shares in polluting industries. Buy the polluting assets—no matter how frustrating it is to pay off a coal-mining conglomerate or a petroleum company or a plastic straw manufacturer—and shut them down for good. Appoint a Climate Compensation Commission, paid for, this time, by a retrospective tax on international space flight. Although compensation would be a solution that operated at a national level, the 19th century precedent for the rapid spread of this approach and its transnational feasibility suggests many countries would quickly follow a leader.

Both anti-slavery and climate activists have come back again and again to questions of consumer power and demand. Both thought tax policy might incentivize more ethical forms of consumption. The reality in a global system then and now is that consumers are price sensitive and off-shore competition from those still using enslaved labor in the 19^th century or non-green energy in the 21^st did and would undermine national tax policies.

Anti-slavery campaigners argued if people boycotted products made with enslaved labor, then slaveholders would be incentivized to switch to paid labor. Green business has focused on sustainable products and low-waste production practices, green consumer energy, low-carbon forms of transportation, and other initiatives that emphasize the ways consumers can use their purchases to shift industry incentives. Divestment campaigns pressuring pensions and endowments to remove their funds from fossil fuel investments apply a different kind of consumer pressure. But without a government-backed buyout, which would allow companies and individuals to invest significantly in those green technologies while also banning the offending, older technologies, consumer-driven demand isn’t—and wasn’t ever—enough. Only climate compensation addresses the ways that reliance on fossil fuels has permeated society.

Is compensation a perfect solution? Evidence from Washington and from French and British emancipation compensation claims suggests it is not. Some people received less than the purchase value of the enslaved people they were being forced to free. In Senegal, the French government’s handling of compensation claims took so long that many people sold their claims to a third party for less than the value they would ultimately have received. And cash didn’t always function the same way the underlying asset had and wasn’t immediately convertible into equivalently productive investments, as researchers at Stellenbosch University in South Africa recently discovered. It also cost a lot of money—taxpayer money—something that is currently less than ideal at a time when governments are hard hit by the costs of the pandemic. Morally, of course, it was far from perfect, as the case of Haiti—permanently economically devastated by the size of its payout—illustrates. The people who profited from creating the climate crisis would not be punished with financial ruin; its victims could be punished instead if the process is not handled well.

But compensation is a practical solution, with a historical record for policymakers to turn to and learn lessons from, and one that will enable us to use the existing infrastructure of our global economy to pivot quickly away from the cliff’s edge.