Last time I was in a rush in what I was saying because I was leaving. It's unlikely that their is going to be some residual form of slavery taking place in Hlaalu and Dres territories. It is not believable that these two houses would fight over the transition to a less economically feasible system. That means that they have found a new, more profitable system of labour. I would say that they would have agricultural reforms akin to those of Western Europe. These reforms switched some of the top slavers, like the UK, into the fiercest opponants of the system in what can be called overnight in this type of time frame. It represented the rise of the merchant and the middle-class, a trend that was visible even in the game Morrowind. And since both Dres and Hlaalu are merchant Houses, it is feasible that they have gotten to the point where free labour is more profitable than slavery.
Indoril and Redoran on the other hand fiercely opposed abolition, making them more like the American South. It was thrust upon them by a more urban, advanced society. They resented it, so they found another way of slavery, sharecropping. This system also kept them backwards for many years, because the system is inherently flawed, morality withstanding. But they were not ready to accept the free labour system that Europe, the American North and by this time, Japan had accepted.
But no fiscally intellegent person, which Hlaalu and Dres are almost entirely comprised, would abondon, much less fight a war, to switch from slavery to a half-assed alternative that does the same thing.
Indoril and Redoran on the other hand fiercely opposed abolition, making them more like the American South. It was thrust upon them by a more urban, advanced society. They resented it, so they found another way of slavery, sharecropping. This system also kept them backwards for many years, because the system is inherently flawed, morality withstanding. But they were not ready to accept the free labour system that Europe, the American North and by this time, Japan had accepted.
But no fiscally intellegent person, which Hlaalu and Dres are almost entirely comprised, would abondon, much less fight a war, to switch from slavery to a half-assed alternative that does the same thing.
Well, I'm gonna go over this once more, with the example of Sweden (once more). Slavery was "abolished" (as in, people stoped using slaves) in Sweden somewhere around 1000-1300 or so (varying depending on region and such). Basically during the time the Swedes went from "vikings" to christians. However, as they stepped into the medieval ages, the Swedes did not, unlike almost every other European country, embrace serfdom. I can't really tell why, but instead, Sweden gained a powerful "farming class", made out of indipendant (rich) farmers. These has many times proved to be a powerful political force during Sweden's history.
Anyway, back to the point. In the 18th, 19th century or so, Sweden also underwent the same agricultural reforms as the rest of Europe did. However, this did not make the farmers more free - in stead it bound the poorer farmers to a greater one, and because of him only leasing their farm to them, they had to work both at his farm as well as their own (which probably wasn't much anyway, as most of their land was "stolen").
In the end, this led to the "statare system", which was basically the same as slavery. This system went on far into the 20th century, much to the shame of modern Swedes.
I'm no expert, but from what I learned in my history lessons, the same, or variants of it, happened all over Europe too. There was a "rise of the merchant and middle-class", but those classes weren't really that big. One cannot compare modern middle-class to 19th century middle-class. For example, there were very few people who actually belonged to it, and they were often extremely rich, leading to a big gap between the lower- and middle-classes.
This also brings me to another important point - the lower class. The middle class back then was immensely dependant on a lower, working class to "keep them floating". And they abused the hell out of that class, too. Working 12 hours a day, unhealthy environments, hardly any pay. There always has to be those who carry the weight and to the hard work. They might be slaves, working class, or any other given title, they're basically the same anyway. If all the slaves in Morrowind were released, there would just be a great rise in the lowest of lower classes - the propertyless, those without neither house nor work, who have no money to pay for food or beds. If they don't take what work that's offered them, they will starve to death.
And don't talk nonsense about them "living of the land" or "swimming back to Argonia". Such things are just silly to begin with - Morrowind is neither Argonia or Elsweyr, and you need hunting experience if you're actually thinking of catching anything. A pack of Nix-hounds would easily surround and hunt down a stray ex-slave.
No, slavery will remain in Morrowind, because a economical system built on free or low-payed labour will not change just because a king decides it should be so. There would still be a need of workers to toil in the fields. Racism would still be common practice. Beastfolk would still be shipped in and sold on the black market. It's just the same.