Feudalism (for those of us who weren’t around to experience it) describes a set of reciprocal legal and military obligations among the warrior nobility of medieval Europe. These obligations revolving around the three key concepts of lords, vassals and fiefs. A lord was in broad terms a noble who held land, a vassal was a person who was granted possession of the land by the lord, and the land was known as a fief.
The lords, or landed nobility, owned the land, either because their ancestors were strong enough to subject rivals, or because they received these land holdings in return for swearing fealty to a royal monarch, someone who was usually the titular head of the strongest family clan. The vassals were the mercenary knights who swore fealty to the lord to defend the manor and were often rewarded with small land holdings for their service. Two more classes made up the feudal system: the clergy that managed the estates of the Church and the peasantry, or serfs, that worked the land as tenants.
The defining feature of the feudal system was not the knights, the lords and ladies, or their castles, but the ownership and control of land as the most fundamental economic resource. Economic dependence on land as the primary food source and military dependence on the lord to protect vassals and serfs from marauders bound the feudal classes together into these fiefs that often formed around a walled fort or castle. There was no real concept of freedom in the feudal world, as individual freedom unconstrained by sworn obligations would be to expose oneself to mortal danger.
Let’s fast forward half a millennium to our new social order of free-market capitalism and participatory democracy. No more nobility or landed aristocracy, right? No more knights. Freedom? Well, perhaps, for some. But we have also embraced new forms of serfdom for the masses. We can draw out the analogy.
The defining feature of democratic capitalist society is the ownership and control of capital. Financial capital is mostly concentrated in the elites–you know, the 1%–and their vassals making up roughly the next 20%. The serfs? Well, that would be those of us who get taxed on our meager savings and then make no return on what we do manage to save. (Be happy with your 401k and Treasury bonds!) Mobile capital flies overseas to combine with cheaper labor, yielding higher profits and returns. (Ah, it’s good to be a lord.) So how do we all participate in this new international trading system? I hate to say it, but not by focusing on jobs at home.
The winner-take-all nature of mass communications and information systems has also created a new kind of capital that perhaps Madonna first exploited, but has now been glommed onto by the likes of Kim Kardasian and Lady Gaga. I’d call this celebrity capital, but it’s known among marketing types as brand capital. Branding is now the way to leverage celebrity to dominate world markets. We used to just have movie stars and tycoons, but now we have rich celebrity hair dressers, haute couture designers, chefs, real estate agents, talk show hosts, CEOs, politicians, etc., etc. This is the New Economy and it’s all about ME! (A few excess profits go towards PR to save the whales.)
Now, I believe we can tolerate these celebrities who have hit the jackpot of winner-take-all markets. They are too few to really have an effect beyond white noise in our media. (Fodder for Livestyles of the Rich and Famous, if you go for that sort of entertainment.) The more serious economic challenge for our free society has been caused by globalization, technology, and the tide of history. These developments have increased the returns to capital relative to land and labor and concentrated power within a shrinking class of elites with ownership and control over this capital.
These are the new Lords of Finance and everyone else is quickly becoming a serf. The frustrating thing is that most of our public policies and government programs are accelerating this trend. The knee-jerk reaction is to confiscate the wealth of the financial nobility and redistribute it through public programs. This tax strategy is meant to fund government stimulus spending on jobs, usually public sector jobs. The problem is that these policies are not really viable within the constraints of the globalized economy and will have the perverse effect of forcing us into serfdom even faster. Capital is mobile and fungible, which means if you tax it it will disappear and pop up elsewhere and domestic inputs, such as labor, will be poorer for it. We can tax wealth, such as large estates, but that only means we will have less property wealth created. Labor incomes cannot be artificially propped up by government or union organization. Labor must be combined with capital in order to increase labor productivity, so chasing capital away with higher taxes will merely make workers poorer in the long-run. Instead, we must respond to the new economic reality, which is that if a person does not possess productive capital in a world capitalist system, they are out of luck (and will soon be joining the peasantry, begging for noblesse oblige). That’s not a promising fate for freedom.
To avoid such a fate we need to open up access to capital for all, which means advocating for policies that encourage the “have-nots” to accumulate private capital that can provide for new investment to combine with their labor, or savings to manage the risks of uncertainty. This means we also need to sever the symbiotic ties of political cronyism. Federal Reserve policy to save the bankers and the banking system is doing the exact opposite by reinflating the asset holdings of the 1%, while leaving the real economy gasping. If our government keeps pursuing counter-productive policies and allowing the financial sector to corner the ownership and control of capital, we can be sure of our fates.* Only a clear understanding and concerted political revolution can change this course.
So, I wonder, are we headed for feudal capitalism? I wonder what Lady Gaga thinks.
(Can you fill out the cast of characters in the modern feudal capitalist system? Answers below.)
The King is the Federal Reserve banking system that controls the supply of capital. The Nobles are the Lords of Finance: the bankers and financiers such as Goldman Sachs and J.P. Morgan, who get a generous 2-3% cut of all credit. The Towns are the city and state political machines who dole out preferences funded by public debt. The Soldiers are the politicians, bureaucrats, corporate and media elites who serve the Powers That Be. You already know who the Peasants are. (You’ll notice the POTUS is a mere bit player. Perhaps a Captain among the soldiers.)
*Historical Note: Feudalism did not have a happy ending. Nor will Feudal Capitalism.