the neo-feudalism thesis

A little knowledge is a dangerous thing. I’ve superficially encountered the terms “neo-feudalism” and “refeudalization” and read a few relevant works, e.g., Jodi Dean’s “Neofeudalism: The End of Capitalism?” in the May 12 edition of the LA Review of Books and Robert Kuttner’s “The Rise of Neo-Feudalism” in the March/April American Prospect. I know my Habermas (who proposed a thesis about neo-feudalism in 1962 that still attracts attention). Years ago, I made a somewhat serious study of actual feudalism as I tried to understand and assess Karl Polanyi’s The Great Transformation. But I have missed everything else in this debate–so caveat emptor.

The basic idea is that capitalism has not continued as such, nor has it transformed into socialism, as the Marxian left predicted. Instead, it has morphed into a new system that resembles feudalism in important respects. If this is true, it means that the left should stop opposing neoliberalism or late capitalism, because those are not the reigning systems of the day. And the center-right should stop defending capitalism, because it’s gone.

Definitions would be helpful. I start with these:

A market is any venue in which individuals choose whether or not to exchange goods or services that they own for things that other people own. Markets seems almost ubiquitous–for example, they are found in communist states, inside bureaucracies, and in a huge range of cultures. Market choices are never without constraint and necessity. Nevertheless, it is a mistake to doubt the genuine experience of choosing whether or not to exchange what you own for something you want.

Feudalism–at least in its European medieval version–was a political/economic system in which land represented the vast majority of wealth and was not actually understood as marketable. Although people sometimes traded land for land or land for goods, such exchanges were frowned upon and made difficult. Most people were born with an inalienable link to a specific place. Whether you were a peasant, a lord of a manor, a higher lord, or a sovereign, you had both obligations and rights with respect to particular acres. Your name even incorporated that place: you were from it if you were a commoner, and of it if you were gentry. The gentry did not own demesnes as they owned carpets and tables; they held their places as their “seats.”

Rights and obligations were massively unequal; feudalism was hierarchical. However, a peasant had inalienable rights (e.g., to take firewood from the manor’s commons); and even the king had many feudal obligations. Status came in shades and degrees.

Meanwhile, government in the Weberian sense–the legitimate use of violence–was profoundly decentralized. The lord of the manor was a landlord but also the law. The king was a higher law but had very little capacity for governing anyone outside the royal court itself, unless assisted by feudal vassals who had interests of their own. Parliaments emerged as places where sovereigns bargained with local leaders (lords, bishops, and towns) because they could not govern on their own.

Capitalism is a system in which the most important assets are heavily “capitalized”: subject to investments that make them highly productive. Although farms can be capitalized, the classic example is a factory or manufacturing plant. Thanks to concentrated physical, intellectual, human, and social capital, a factory produces an impressive flow of goods. Because it is complex, it requires a bureaucracy to operate. Therefore, a capitalist economy requires firms, not just individuals coming to market with things they privately own.

As a matter of definition, capitalism involves investment in these productive assets. Some people can live from the proceeds of such investments. Other people are paid to work in a capitalized industry. That distinction produces two classes (at least in Marxian theory–in reality, lines may blur).

Capitalism is incompatible with feudalism because feudalism’s refusal to allow a market for land and agricultural labor prevents investment. Also, capitalism cannot operate efficiently when governance is decentralized in the way we see under feudalism, with many independent rulers wielding legitimate force and making discretionary decisions in their various domains.

Capitalism is, however, compatible with a range of political institutions. The US republic, the Austro-Hungarian Empire, and today’s one-party People’s Republic of China have all been capitalistic. Capitalism can certainly co-exist with political systems that involve equal legal rights, democratic elected governments, and even social welfare systems. In fact, some people think that the most robust and sustainable capitalist systems (for better or for worse) are also democratic, liberal, and at least mildly socialistic.

It would appear that a world dominated by Google, Facebook, Apple, Airbnb, Uber, and the like is still capitalistic. It certainly isn’t feudal in the classical sense, with barriers preventing people from exchanging the most important goods and with inherited status prevailing over contracts. But it might have certain features that make it different from high capitalism and might dimly resemble feudalism.

First, the capitalism that Marx and Engels observed involved great masses of people working in the most productive firms. These workers constituted the proletariat. Today, the most powerful companies in the world don’t employ many people. Google has 118,000 employees and about $1 trillion in market capitalization (measured before the current downturn). That approaches $10 million in capital per employee.

Imagine that Manchester, England, had become the powerhouse of the British Empire with cotton mills that employed … a few hundred workers in total. Engels would have needed a different theory.

To put it a different way, in 1850 it seemed as if most people were being recruited into the “armies” of workers who labored for the most important firms in the world. In 2020, a minuscule proportion of the world’s labor force is employed by the biggest companies.

Second, we are “governed” (in the full sense of that word) by a whole set of overlapping and decentralized rule-makers. Nation-states make rules, but so do companies. They establish and enforce elaborate terms that regulate their employees, contractors, and customers. Kuttner provides examples:

Gated residential communities, such as Disney’s Celebration, are privately controlled municipalities that make and enforce their own laws. Private mercenary armies, such as Blackwater (now rebranded as Academi), are hired by the Pentagon so that their “soldiers” will be less accountable for what might otherwise be war crimes. Eminent domain, the inherent public prerogative to claim private property for a public purpose, has been commandeered by private developers. And courts—the ultimate embodiment of law in a democracy—have been privatized by the vast expansion of compulsory arbitration.

Speaking for myself: I am OK with polycentrism, with layers and overlapping Venn diagrams of power. I believe very strongly in pluralism or a mixed economy, in the sense of a society that incorporates different kinds of institutions, with different logics and incentives. I am not a statist socialist, because I observe that systems in which the nation-state monopolizes power simply enrich the rulers and their families; they do not deliver the equity they promise. It is no coincidence that the sons of Chinese revolutionaries are now capitalist princelings.

Therefore, the very fact that centers of governance have proliferated doesn’t bother me. But one question is whether centers of governance have actually consolidated instead of ramifying. Whereas millions of firms previously established law-like rules within their own domains, now Google makes rules for billions of people. From a global perspective, the fact that most of the world’s most powerful organizations have headquarters on the coast of the USA between San Jose and Seattle is also a worrying sign of concentration. These firms may compete, but their cultural capital, norms, and social networks overlap.

Another question is whether we have preserved robust forums in which to debate whether power has been allocated appropriately. (Surely not.)

A world with consolidating centers of power and a weak public sphere doesn’t sound to me like feudalism, but like something new and bad.

See also: the oscillation between dictatorship and parliamentary institutions (a game theory model); why is oligarchy everywhere? and why is oligarchy everywhere? (part 2); Thomas Jefferson and Thomas Picketty; the gentry as caste and class; when chivalry died; China teaches the value of political pluralism; and how a mixed economy shapes our mentalities