In The Wealth of Nations, Adam Smith famously argued that free labor is cheaper than slave labor, and ever since the intersection of slavery and capitalism has been fertile ground for debate. While slavery in the Arab world was distinctive, British abolitionism in the Gulf was still permeated by capitalist conceptions of labor exchange. So British officials repeatedly found their paradigm inadequate to the realities of the Gulf, and their abolitionist zeal progressively degenerated into something far more self-serving. First, imperial officials were persuaded that the conditions of slavery in the Gulf were not particularly onerous, so their efforts were directed at the perverse market forces that fostered war in Africa to feed a spurious demand for labor in Arabia. Naval patrols were ordered to search for barracoons, slaving ships, and slave markets: the infrastructure of a trade in commoditized humanity. But slaves were shipped to the Gulf in small numbers, along with a variety of other cargo and were often consigned to a buyer well before their arrival. These slave traders operated through personalized forms of violence along particular social networks which easily circumvented efforts to stop a traffic in commoditized human beings. However, the partial successes of abolition had created a population of free laborers and the potential for a free market in labor. This potential was never realized, though, as liberated slaves were coerced by poverty and alienation from local social networks, into dependence on British administrators. Rather less motivated to develop a labor market than they were to punish the beneficiaries of the slave market, these administrators merely sent former slaves to sugar and clove plantations, or to Bombay to compete with Indians for jobs as servants or crewmen on British steamships. For British businesses, free labor was cheaper than slave labor, just not for the reasons that Adam Smith had envisioned. My thesis is that even as capitalist conceptions of labor exchange were central to the failings of the abolitionism in the Gulf, the development of an efficient labor market in the region was ultimately sacrificed to provide cheap labor for British businesses. This paper's methodology is historical analysis of archival records, and my sources are the Persian Gulf Residency files in the British Library (R/15) the Foreign Office and Admiralty files in the National Archives, Kew (ADM 127 and FO 84) and the Marine and Political Department records in the Maharashtra (Bombay) Archives.