I am forced to paraphrase this question from memory because the piece of paper is on my desk at church and I'm snowed in at home. The question, 'if the Bible is authoritative how do we handle the passages in the OT that permit slavery', is one I wish I had a whole semester to think about before answering (I have this wonderful 500 pg. book on my shelf by Christopher Wright, Old Testament Ethics for the People of God. Unfortunately I only got it a week or two ago and haven't read it yet. I am drawing heavily on several sections though). This will be a long post, but stick with it.
To begin, when thinking of slavery in ancient Israel we must put all images of modern slavery or of slavery in the US prior to the 1860's out of our mind. In fact, we must put all images of slavery in the ancient world out of our mind. Slavery in OT was utterly different, unique and stands in stark contrast. There were no slave markets, slave ships, neck irons, sugar plantations, etc. Slaves worked alongside owners and the owners children in the fields and home - they didn't instead of their owners but with them. Wright says that the experience of a slave was little different than the experience of a paid worker. Most slaves were debtors working off their debts as bonded servants. An owner could not sell his slaves. They were not kidnapped from another place and forced into slavery. Consider Deuteronomy 24:7, "If a man is found stealing one of his brothers of the people of Israel, and if he treats him as a slave or sells him, then that thief shall die. So you shall purge the evil from your midst."
This leads Wright to argue that slave isn't even a good word because of all that baggage we carry - 'bonded servant' is the phrase he prefers). Wright comments, "slaves enjoyed more legal rights and protection than in any contemporary society. Indeed, slaves enjoyed more explicit legal and economic security thatn the technically free, but landless, hired labourers and craftsmen". I'm not sure I'd use the word 'enjoyed' but the point is made nonetheless. Slavery as we see it in ancient Israel is categorically different that what we usually associate with the word slave.
Moreover, Wright points out "slaver in the Old Testament was not simply tolerated with a 'rubber stamp' of uncritical approval. Aspects of Old Testament thought and practice in this area virtually 'neutralized' slavery as an institution and sowed the seeds of its radical rejection in much later Christian thining." How so? Wright makes three points:
1) Israel had herself been delivered from slavery to Egypt by God. The command "You shall remember that you were a slave in the land of Egypt, and the Lord your God redeemed you" (Deut. 15:15) shows up at least six times, variously worded, in the books of Exodus and Deuteronomy. Their slavery was harsh and long - 400 years. As a nation, they began as a rabble who had been freed from bondage. Thus, Israel's whole understanding of slavery was formed against the backdrop of her own suffering under her Egyptian masters.
2) As mentioned above, the laws regulating slavery in Israel were more favorable to slaves than the laws of any of the surrounding nations. For example, slaves were included in the religious life of Israel, including Sabbath rests. In addition, there are many laws for Israel that govern how a master could treat his slaves. Wright points out that in and of itself that is unique. In other nations there were laws regulating what you could do to someone elses slave but no laws restricting what you could do to your own slave. If a slave was permanently injured by his master, he was to be set free. According to Exodus 21:20, if a master beat his slave so that he died immediately, the slave was to be 'avenged'(meaning the master was liable to death at the hands of the dead slaves family). Full disclosure here, the next verse is harder. It says if the slave is beat and survives a day or two his death is not to be avenged (apparently, that he survived a couple of days was seen as evidence that the master did not mean to kill the slave). All this talk of beating is tough, but remember, children and wives were beat too! Ouch. I'll come back to this at the end.
Maybe most importantly, a slave was to be set free after six years of service. Since many didn't own land and would find survival difficult they would choose to remain as slaves. This is evidence that for many, slavery was less oppressive and more secure than abject poverty.
Deuteronomy 23:15-16 takes the prize as the best anitslavery law: "You shall not give up to his master a slave who has escaped from his master to you. He shall dwell with you, in your midst, in the place that he shall choose within one of your towns, wherever it suits him. You shall not wrong him." If a master was harsh, his slaves could flee without reprucussion. It was their prerogative. Some have argued that this must have applied to foregin slaves that fled to Israel for refuge. Even if that's true, and I don't see anything in the text that supports that interpretation, it would be a radical departure from other nations slave laws. This, in effect, undermines the whole institution of slavery.
3) The attitude towards slavery in the Israel is different in that it assumes the equality of all mankind. All are created in the image of God. All bear an inherit dignity (see Job 31:15). Slavey is not natural; slaves are not something less than owners. In Wright's words, "Slavery here is sen as something unnatural, fallen and accursed".
This brings me to my second to last point. The OT legal codes were designed to restrain evil. For example, the laws regulating divorce do not mean God approves of divorce. It is contrary to his design and purpose. God, however, understands fallen man and fallen societies. Jesus' comments regarding divorce are informative (see Mark 10:1-9). Moreover, what we are looking at here are laws. Ethics are different than laws. Simply obeying the laws does not make one ethical. Rightouesness goes beyond simple law keeping. Laws are designed to restrain evil, not necessarily establish righteousness. So, though slavery was legal (as was wife beating and child beating, within limits), it does not follow that Scripture teaches it was a righteous thing.
Now, finally, my last point. I don't want to leave anyone with the impression that I believe slavery is ethical. Not for a minute. I believe slavery is evil, even the kind tolerated under the Israel's law. However, one might look at how modern societies have dealt with the same underlying problem, namely poverty and debt, and wonder if our solutions are any less evil. Those who are down and out can declare bankruptcy (and the creditors get nothing, which certainly isnt' just) or sometimes the debtors are imprisoned (which helps no one). The gravely impoverished live sometimes without the necessities of life - food, clothing, shelter, etc. In a fallen world sin affects everything. It creates problems for which the best solutions are sometimes undesirable - like going to war to prevent atrocities. As shown above, many Israelites considered becoming a slave a better option than living in abject poverty, landless/homeless, etc. Wright comments, "considered simply as a legal penalty [for defaulting on debt], it is arguable that time limited slavery for debt on Israelite terms was more humane than imprisonment on ours. The slave still lived at home. he worked with human company in the 'normal world. he walked on God's earth under God's sky. Imprisonment denies these things, and it is interesting (to say the least) that imprisonment is never prescribed as a penalty anywhere in the Torah (though it was practiced in the later monarchy)." Am I advocating a return to indendured servitude to solve these problems today. No, of course not. But a sympathetic reader of the OT can't miss the compassion inherint in Israels slave laws. Hope that helps.