Welcome to Neo-Feudalism

Feudalism Then Now - Via The Amendment Gazette

You probably know the idea of “creative destruction.” Basically, it means that smart people come into a poorly performing company. They get rid of the dead wood—they fire people. Then the company’s prices go down so that consumers have money they can spend on other things, increasing demand elsewhere. Then the fired people and even more can be better employed doing something else. The idea is that it may be disruptive, but in the long run, everyone is better off.

I have always had a problem with this idea. The reason is that prices do not reflect costs. Let’s suppose that I manufacture chairs and they cost me $5 each to make. I’m not going to sell them for $10 because that’s a reasonable markup. If I can get people to pay $100 for them, I’ll sell them for that price. On the other hand, if people will only pay $2 for the chairs, I will sell my existing inventory at that price and discontinue the line. So the only way that costs matters to me is if I’m not making enough. Otherwise, if people want to pay a million bucks for my $5 chair, that’s just fine.

Those of you who know a little economics will say, “Yeah, but you aren’t the only person who makes chairs!” And this is right. In the perfect markets of Chicago School models, other producers will come in and beat down my price. We will go back and forth until we get a price that is some reflection of the cost of bring the product to market. But such truly free markets are almost nonexistent. Let’s look at the way things normally work.

There are a bunch of little drug stores and they employ a whole bunch of people. A Walmart comes into town and puts them all out of business for both good (Walmart really has perfected the supply chain) and bad (Walmart illegally suppresses unions and can provide lost leaders) reasons. So there is lots of disruption but consumers really do get better prices. But the extra savings in the community is not equal to the loss wages. So creative destruction creates profits for the already rich and destroys the incomes of the community.

I was thinking about this after reading a great interview at Truthout between Jason Hickel and Alnoor Ladha, Are Economic Growth and Social Justice Incompatible? I recommend reading the whole thing, because it discusses the way the economy actually works and not the myths that we are constantly told. Take this frightening bit of information from Hickel:

We can see this level of corporate power being advanced even further by the new free trade agreements that are in the pipeline. Take the Trans-Pacific Partnership (TPP), for example, which is set to become a global version of NAFTA. It includes what are called “investor-state dispute mechanisms” that allow corporations to sue sovereign governments for passing laws that reduce corporate profits. Corporate lawyers will judge these cases in secret tribunals that operate above the laws of any nation.

So let’s say politicians in Malaysia pass a law that increases the national minimum wage. This means that sweatshop owners will lose some marginal part of their profits, which gives them the right to sue the government of Malaysia for lost future earnings. What’s amazing about this is that it essentially gives corporations the power to regulate democratic states, rather than states regulating corporations. So it’s a total inversion of our existing regulatory logic.

That’s right boys and girls. In the mind of my father’s generation, “capitalism” was the same as “democracy” and “freedom.” But the oligarchs want to create a new kind of system. Feudalism became capitalism, but it seems very much like we are headed to what I call neo-feudalism.

What’s most upsetting about all this is that it has always been a farce. There have never been “free” markets. The system has always been geared to maintain the status quo. On the whole, the rich are not rich because they are smarter or more knowledgeable or harder working. They are rich because they are rich. They are rich because their parents were rich or simply because they were lucky. Being brilliant brings many rewards, but great wealth is not usually one of them. Richard Stallman and Linus Torvalds truly revolutionized computing, but it was the subgeniuses Bill Gates and Steve Jobs who became billionaires.

So unless we stand up and do something about it, we will end up not only serfs, but serfs who are beholden to mediocrities. Kind of like we are now, but worse.


Image taken from The Amendment Gazette, Feudalism Then and Now.

15 replies on “Welcome to Neo-Feudalism”

  1. Colin Keesee says:

    First, I have to point out that these characters are not Medieval, they are Early Modern (King Henry VIII and Thomas Cromwell did come of age during the very late Middle Ages). Most of these guys are from the 16th and 17th Centuries and they are English. England had a brutal and rigid class structure at that time but the classic feudal structure had long since broken down in England.

    Speaking of Classical Feudalism (the sort practiced in England from 1066 to around 1400), it was indeed a libertarian paradise in many ways. The grossly unequal and brutal system of kings, land barons, knights and commoners, did not see itself as any sort of government. It was all based on great land owners (Earls, Counts, Barons, Dukes and Marquises), who leased it out to lesser land owners (Knights) and who choose a first among equals to settle disputes and coordinate their private armies (the king).

    The church and the towns of Northwestern Europe, did not see themselves as governments either, merely land and property owners, who operated through contracts. Burning heretics; executing those, who would organize for their rights as workers and killing peasants, who refused to accept below market wages, were simply the prerogatives of the landed church, the city council and the and the landed classes, respectively.

    To be fair, there was plenty of brutality and inequality before and after the High Middle Ages. The Roman Empire, Charlemagne, King Louis XIV, the Nazis and the Communists did call themselves keepers of a full fledged government. What is important is that without democratic accountability, every system seems to end up with lots of poor people and a very rich and powerful few. Removing the State, did not create a utopia in the High Middle Ages, it gave us a couple of rich guys who took it upon themselves to rule everyone else.

  2. admin says:

    @Colin Keesee – Well, they used Monty Python for the serfs, so I don’t think we should take it too seriously regarding that. What can I say? I needed an image.

    Yeah, the point is that no system is perfect. But I really don’t think that our system can work if there is a high level of economic inequality. And the truth is that our nation has so bought into the idea of meritocracy that it is destroying us. I keep coming back to [i]Agrarian Justice[/i] where Paine argues that we all have a birthright of the resources of the earth. Thus, if we are going to have property rights, we must even things out to some extent. This is distinct from what Ayn Rand pushed, which was the idea that property belonged to whoever could best use it. (This is, of course, just a nice way of saying "might makes right.")

  3. Colin Keesee says:

    The claims of meritocracy combined with the backing of the nation-state make our economic present and our economic future look positively 19th Century in nature.

    To basically piggyback off of Piketty, it does seem as if Modern History is defined by not only a very few getting rich but that very few staying rich, getting bail outs, getting control of the police and military and all the while claiming that it was their superior work ethic or thrift or manliness or whatever that get them to be so rich. The only things that disturbs that pattern seems to be serious political action and the instant that we roll back our collective egalitarian spirit is the when the Oligarchs come right back to prominence.

  4. mike shupp says:

    I’m nitpicking here, not really quibbling about the post itself.

    It’s true Stallman and Torvalds have not become fabulously rich from their programming efforts, but that was the whole point of open source software after all — people could achieve reputational success but not financial income ("rents") from their effort. That said, it’s an interesting question as to whether OSS would have succeeded as it did without those two. Arguably Stallman was an inspirational leader; Linus turned out to be both a hotshot programmer AND an extraordinary manager. Also, arguabkly the ideas of OSS were in the air at the time — Stallman seems to have been "socialized" at that point in time when thousands of programmers got together twice a year at DECUS conferences, magnetic tapes beneath their arms, and exchanged software with each other as avidly as modern kiddies email off selfies. As for Linus, plenty of people played around with near clones of UNIX at one point, including Andrew Tannenbaum, whose "minimal UNIX" XINU was Linus’s original inspiration, but it’s hard to imagine them building the sort of software empire that LINUX became. So, a couple of extraordinary men, but it’s conceivable less gifted people could have taken their places.

    As for Gates… I give him more credit than you do. The modern programming world, as it developed from the late 1970s up to the 2000s, with a separate self-contained computer on the desk of each user, was very much Bill Gates’ creation (remember Ken Olsen at DEC and the people at IBM who couldn’t imagine any individual owning his own computer?). I’ll give Gates credit for the graphical user interface desktop as well — granted, the Xerox PARC people got there first, and MIT go X-Windows working in the mid 1980’s, and Apple had the Lisa, and all that was very nice. But there was something just so mind blowing about looking at a terminal of a PC running Win 95 and seeing a PICTURE, and looking icons rather than file names and moving things about with a mouse … Gates made computers POPULAR and it’s hard to imagine anyone else doing so. 20 years later, and people who market computers are still peddling their wares by tinkering with the GUI. So that’s all Gates. Selling the operating system dirt cheap to PC manufacturers was apparently another Gates innovation (and then selling businesses a zillion copies of office software aimed at that OS).

    Three other points: (1) Back about 1995 Gates was convinced the internet was a flashin in the pan, and a bunch of his employees cornered him and argued him into seeing the internet as a Big (and Permanent) Thing. Anyone got stories about Steve Jobs ever changing his mind? (2) At some point in the 1990’s, MS decided it should be a Very Serious Business-Oriented Enterprise and get rid of selling games. Gates insisted that MS should keep improving and selling Flight Simulator, pretty much a unique thing at the time, to the eventual betterment and pleasure of millions of computer gamers. (3) Virtually alone (okay, there’s Steve Wozniak) Gates had the essential sense or sort of mental balance that allowed him to give up running his company until he dropped dead at it. And to deliberately make himself over as a philanthropist.

    I can imagine alternative worlds where other people took Bill Gates’s place. We were fortunate to get the man we did.

  5. admin says:

    @Colin Keesee – I agree, but technological advances, especially in terms of distribution and the enforcement of rents, make it exponentially worse.

  6. admin says:

    @mike shupp – I don’t think you are giving Stallman enough credit as a programmer. The gnu project only really got going because of a critical mass of software. And that critical mass was emacs and gcc, both of which Stallman coded. I consider him far more important than Torvalds. But he works as a symbol. There were a lot of people who were and are still important.

    You are right that the issue was rents. But the idea of the gnu project the FSF was never that technology workers should be paupers. Just the same, I think Stallman has exactly the life that he wants. He’s not interested in being a billionaire. In fact, he is a good example of what I think our society needs far more of: people valuing different things–different kinds of lives. I understand that there’s a need for social cohesion too. But there are ways to affect that without all of us thinking the best thing is to be rich and watch [i]Dancing with the Stars[/i].

    You are a smart guy and I value your comments. You are totally wrong about Gates. To begin with, what made the PC was not Gates and his basic interpreter and CP/M clone. It was Mitch Kapor’s 1-2-3 spreadsheet. As for GUI: almost everyone got there before Gates. As for Windows 95 (I worked for Microsoft right before the 98 launch), OS/2 did that years earlier, far better. It wasn’t until Win 98 that the system was even stable. Microsoft [i]slowed[/i] progress on the PC for [i]years[/i]. Windows 1 and 2 were a total joke. Gates is a good example of how other people can make you rich. The only reason that DOS was standard until 1990 (!) was that so many programmers had created great applications that ran on DOS. I’m flip when I say a lot of things, but when it comes to Gates, I know what I’m talking about. I lived through it. I worked for him (which was wonderful, btw). It was not until NT that Microsoft invested in hiring some real software talent. And it wasn’t until Windows 5 (2000) that they made a world class OS. Then, they broke in in 6. Win 7 works pretty well. And I have no idea what they think they’re doing with 8. But I will grant you this: from 1990 onward, they were not actively harming the computer industry.

    You seem to be under the mistaken impression that I like Steve Jobs. I hate Steve Jobs and I especially hate the way he’s been turned into some kind of demigod. His early work on the Apple was good and he put together a decent computer. It’s kind of a miracle, when you consider he was competing with I-Freaking-B-M. But all the stuff people know him for now is just packaging of other people’s stuff. Meanwhile, his company goes around (and has been for almost 3 decades) suing people who do anything at all. Apple has been a pox on the computer (and now phone) industry.

    As for us being fortunate for have Bill Gates. This is so easy. IBM was putting out a PC. Gates, through what appears to be simply having balls the size of Pluto, got the contract to create the OS for it. Gates [i]bought[/i] a CP/M clone and that is what DOS was. The fact that IBM was bringing out a personal computer caused a huge number of programmers to create great software for it. And that’s what made Bill Gates a billionaire. There is nothing special about him. He wrote a basic compiler is assembly language, I believe. I have not done that. I have, however, written my own text editor in 8088 assembly language, which I don’t think is any less complicated. Writing a basic interpreter is really pretty easy. But I will give him this: he was a good businessman. But I do not see any way that IBM could have chosen a worse person to provide their OS. When I got started programming, almost everything had to be done [i]outside[/i] the OS. System calls were notoriously slow. And much couldn’t be done at all. And yet we got version 2, 3, 4, 5, 6, and 7. And not one of them was a substantial improvement on the last.

    I must give you credit. I did not think I could get this animated about computers. How old are you? Did you actually live through this nightmare and see it differently than I did?

    (I’m being hyperbolic. I actually had great fun programming around DOS. And it was the 8086 that really taught me how computers worked. But if Microsoft had been properly managed from a technological standpoint, we would have made far more progress.)

  7. mike shupp says:

    "You are a smart guy and I value your comments. You are totally wrong about Gates."

    Chuckle! That’s the first comment about my comments that made me laugh this year. Or for several years, some to think about it.

    The importance of Mitch Kapor and 1-2-3. Y’know (okay, you don’t know yet), I have to think about that. There’s a really good argument in favor of that, and I should have thought about it before spouting off. Not totally convinced, but it bears thought. Thanks for the idea.

    As for Bill Gates … I didn’t try to assess his programming skills, but the evidence is he was better than Jobs, and probably better than the people who made big bucks setting up Sun Computer, Apollo, DEC, Gateway, Dell, AMD, Nvidia, and a whole batch of other places. This said, it’s not his programming skills that make me think him worthy of honor — it’s his management and marketing. We take it for granted today, but MS’s rise to success was far from pre-ordained. CP/M was still in existence when IBM signed up for MS-DOS, DEC was peddling PCs in competition with IBM, ditto for AT&T. And what survived? Microsoft.

    Are there problems with MS? Well, I’m still using Wordperfect Office and XyWrite 20 or 30 years after MS Office came out, so I can’t say I’m completely sold. And I prefer Sid Meier’s CIVILIZATION to MS’s AGE OF EMPIRES. And having to reboot Windows at the drop of a hat after updating is a pain, and I never could convince myself that the Registry made much sense. And I have the awful feeling that MS’s GUI is aimed at idiots rather than knowledgeable computer users.

    So I’m not a total fan of MS. Other hand, I don’t think I could sell and operating system to several billion people. And Bill Gates did, and that made the world different. Apple fans can claim Steve Jobs made the world better; Gates made it DIFFERENT.

    That said. installing Debian Linux 7.5 is high on my list of priorities.

    Oh, I’m 67. I never worked for MS, but I did fill out a job application about 20 years ago. Didn’t get called in for an interview, so I can’t claim anything close to your expertise. (I’ve got software test experience on IBM and DEC hardware, nothing that rally screams PC expertise.)

  8. admin says:

    @mike shupp – I’m kind of a fan of Mitch Kapor. I think he’s a good guy. He got out of Lotus at the right time. And I loved 1-2-3 V 1 and 2. At 3, I don’t think they were ready for the 3-D spreadsheet. And when it went graphical, MS did it better. It’s as simple as that. (In their defense, Lotus was trying to make 1-2-3 available on all platforms and I remember running a very nice version on a Sun SPARCstation in 1992.)

    I think you are throwing together a lot of disparate things. Sun was above all a hardware company. And as I recall, the AT&T PCs were running DOS as well. I think most companies were following IBM’s lead in that. It was IBM who made the architecture open (unlike Apple) that allowed the competition. That had nothing to do with MS, but it was a decision that greatly helped MS.

    I’m not a partisan in this. Give me any computer and I will get my work done. I have a Mac in the kitchen, I have two Win 7 machines in my work room (Ah the joys of KVMs!): one for most of my day to day work and one for making videos. And then I have various linux machines on everything from Raspberry PIs to quadcores. (The joys of ssh!) That’s the exciting stuff. If only my partner and I can get someone to fund the work. (I think we’re close.)

    Ah, DEC! My early days on computers are a jumble. I probably did my first c programming on a DEC running VMS, which is totally bizarre, right? Soon after that, I got my first Sun Workstation (Sun OS4 I think) and it was unix from then on. Then Sun switched to Solaris (System 5), which I hated. I figured, if their going to start having different versions of unix, what was the point. Oh, and IBM’s AIX. What a mess! As a user, it was all fine. But I was usually stuck as the administrator and suddenly I don’t have termcap files, I have terminfo, which might be better in an absolute sense, but to me what is best is what I already know.

    Oh, interestingly, now whenever I have to work on a Mac, I go into its unix base and I’m able to do everything without trying to figure out where the GUI is now putting whatever. So that’s definitely better.

    As for Gates and Jobs: you are comparing them. I hate them both for different reasons. Gates sold so many OSs because they came with computers that people wanted. And the applications aspect of this is HUGE. Don’t forget that there were 7 different versions of DOS with almost no changes! I will grant Gates one thing: Windows users haven’t turned him into some kind of a hero the way Mac users have with Jobs. As Steve Wozniak said, "The Mac isn’t a computer, it’s a lifestyle." And I can think of no greater indictment of Apple.

    But as one (not quite as) old man to another: give me any computer, but [i]please[/i] include a keyboard!

    Also, you may find this funny: I use vi for editing on every computer I use. I still think it is the best text editor ever created, but that’s probably because I don’t have to think about it. When I use it, it is like Spock doing a mind-meld: I am vi. I also still use TeX for typesetting anything long. So I don’t really work that much differently than I did 20-25 years ago. One major improvement: Open Office. Oh, and gimp! It’s nice to be able to [i]not[/i] have to change. Interesting that computers, which are all about change, are the one thing in society that most allow that.

  9. […] long argued that we are moving in the direction of feudalism. The nature of unfettered capitalism is that the winners of the economic system will have more […]

  10. Horseless Headsman says:

    Same as it ever was. It seems to me that the basic issue isn’t being faced – concentrations of power in a society. Human nature being what it is, sociopaths will always be attracted to any position that allows them to wield power over others, be that through religion, military, police, economics, or politics, or some other area. That would be why democracies have a span of about 200 years, I expect.
    My personal belief is that most of the systems of government that we’ve invented would work if the sociopaths could be kept away from the power centers, but lacking that, none will be a permanent establishment. The founding fathers made a good attempt to create a lasting system that would support the common good, but it couldn’t withstand the constant assaults of those determined to wield the power. As Jefferson said

    The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants

    http://www.azquotes.com

    • Frank Moraes says:

      I agree with the first stuff you said. But one doesn’t have to be a sociopath. Power, in whatever form, warps a person. At one point in my life, I had a little bit of fame, and it went to my head. Politics is worse because we don’t have necessary laws. Lobbyists start working people on the school board level. By the time they make it to city council they don’t even know what corruption is. And by the time they reach the state legislature, they think corruption is good. Not all, but the vast majority. I don’t think Mitch McConnell believes in anything other than that he should have ever more power (which of course includes more tens of millions of dollars).

      I believe we can have a better economic system than capitalism. Everyone just assumes it is the one true way. But they thought the same thing about feudalism and every other system that came before. There is a decided lack of open-mindedness and creativity in Americans. Every time I mention that we can develop a better economic system than capitalism, people demand that I tell them what it is. Why is that? When the ultraviolet catastrophe was discovered, did physicists demand we not talk about it unless we had the solution? Of course not. But people are so tied to capitalism. And it’s all because of propaganda. I was no fan of the Soviet Union. But the truth is that Russians did much better under the communists than they did under the Tsar. The fact that the US did so well after WWII had more to do with the fact that our country was almost untouched by the war. We still had all our factories. We didn’t lose 20 million men. But to most Americans, we are the powerhouse we now are (although our empire is on its way down) because of the marvels of capitalism. It’s nonsense. There are good parts of capitalism, but if we had a true capitalism, we’d be a banana republic by now. And given the way policy is going and the ever increasing income (power) inequality, we’ll get there soon enough.

      You know you are quoting a vicious slave owner (Look at his will alone!) who was a total bigot. Also remember that the southern colonies might have talked liberty, but their main reason for joining the revolution was that they feared Britain would outlaw slavery in the colonies, which they did in 1833 (although they might have made an exception for the American colonies to keep that cheap cotton flowing). Regardless, I don’t generally believe that violence helps. It normally just gets a bunch of people killed so that one despot can be replaced with a different despot — usually helped by the US since WWII.

  11. paintedjaguar says:

    This is the sort of post that needs to be pounded into American heads daily until they get it. I once asked my right wing sister if it would be okay to have one person own all the land in the nation. She refused to even consider such an outlandish concept (she’s always afraid that I’m going to somehow “trick her” into losing an argument). Of course she has no inkling that such an arrangement represents historical fact, being way too busy with prayer meetings and Fox News to think about anything else.

    If Walmart has perfected the supply chain how come when I stopped by for a few groceries this weekend, half the things I needed were out of stock – nothing but empty shelves? And if they only get rid of “dead wood” how come with so many customers in the store that I found it difficult to walk, only half the registers were manned (I asked as my ice cream and frozen food slowly melted).

    Both Bill Gates and Steve Jobs found themselves in a position to act as a middleman (“entrepreneur” means “in between taker”). Neither of them created either the products that made them rich or the concepts and markets that made it all possible. There’s a place for people like them, but it shouldn’t be lording it over everyone else. And if memory serves, Gates got that crucial meeting with IBM through his mom’s connections, not his big balls. IBM was already shopping for an OS to package with their desktop machines and lucky for Gates, IBM thought they were a hardware company and didn’t care about selling software.

    • Frank Moraes says:

      Jobs didn’t even do technology. He was always just a salesman. And Mac fanatics disgust me. There was a time when Apple put out really good hardware, but competition from Windows and even Linux systems has caused their hardware standards to go to crap. So now people buy these more expensive computers based on the fact that Apple used to make good hardware. (And when I used to work on Macs, I would do everything from the Linux command line; doing real work with the GUI is ridiculously inefficient, and often impossible.) As for Gates, he just lucked into getting a contract with IBM (and went on to treat it like shit). The only thing he ever coded was half a BASIC interpreter — something beneath real coders even at that time.

      Walmart is going to shit because the old man died. I know he was a bastard, but he was good at his job. Now some of the richest people in the world are his kids who have never had a job and have never done anything for their money but to be born out of the right vagina. Although when people say Walmart perfected the supply chain, what they are talking about is getting rid of warehouses. Product was always moving. That’s common now, but it was revolutionarya few decades ago. It wasn’t on the scale of container ships, but it was still important.

      • paintedjaguar says:

        I understand the idea of a “just in time” inventory system – it was adopted in order to be more “efficient”, aka to squeeze out more profit. The trouble is that like many other recent corporate decisions, it degrades quality of life by replacing a robust system with an inherently fragile one and by promoting product obsolescence.

        • James Fillmore says:

          Right. These things work by being more convenient than the competition — the big-box hardware store has that item in stock, whereas the little corner store can order it for you. So eventually the little corner stores get squeezed out. All well and good for the consumer (putting aside how the big store pays less and the ripple effects that has on a local economy). Until the big store is all you have, and suddenly they’re not so convenient anymore. Stuff is out of stock, stuff is garbage that breaks immediately, the employees hate their jobs and have no interest in knowing the difference between a flathead & phillips, much less answering customer questions about which sealant works best for their basement windows.

          What’s odd is that I’ve met conservatives who are fully aware big companies kill little ones, aware big companies have crappy service, and yet approve of them anyway — precisely because those companies kill competitors and pay for shit. As if bad consumer experience is a worthy price to pay for the higher American ideal of supporting power & dominance in every form.

          This is a strong undercurrent in right-wing thought; it’s sadism, essentially. Such people would not go to a farmers’ market if it were across the street and cheaper than the grocery store. They want the bullies to win. It’s why “immigration” is a huge issue even in places that have no immigrants, and why some people will gleefully defend even the most shockingly unjust murders by cops. Whenever someone mentions “snowflakes” or “everyone gets a trophy” or “politically correct,” you can be sure they’re of this ilk. They like cruelty for its own sake, even if it bites them in the ass.

          I’m not sure why this is. I used to think it had something to do with upbringing (authoritarian parents), but there are many families where one sibling is like this and the other is not. I guess I’ll have to wait for Dr. Phil to explain it to me…

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