Monday, July 7, 2014

The 'N' Word

No, not that N-word! We're talking about Neofeudalism.

I was fortunate to be the guest on the 100th episode of the C-Realm Vault this weekend. In that interview, we talked about some of the connections between the ideas behind Neoliberalism and how they relate to an emerging order that many have termed Neofeudalism because of some similarities between it and the feudal order. I'm not the only one. For example, in the article by Nick Hanauer, The Pitchforks Are Coming… For Us Plutocrats, which has been getting some attention, he says:


And that ties in in a way you might not expect to the recent Hobby Lobby ruling. What that ruling says, in effect, is that health insurance is not a human right, but a gift provided by the feudal lord a.k.a. the business owner. That's the point of this article by Brad DeLong.

DeLong discusses the history of post-war capitalism. In Europe, the state guaranteed certain rights to people (Social Democracy). In the U.S., it was argued that instead of this system, there was enough wealth that social benefits could be provided by employers rather than the state. In the halcyon days of full employment and U.S. economic dominance, this probably sounded like a good idea at the time:
Socialism imposed heavy taxes and used the resulting revenue to provide for social welfare. In so doing it incurred all the efficiency losses of bureaucracy. It added to those the losses from coalition-building political logrolling. It added on to those the efficiency losses that ensued from decisions made by politicians responsible to voters who were by and large not the entrepreneurial job creators. More important, in his view, the redistributive part of the social insurance state was simply not necessary. The efficiencies of scale of modern mass production would guarantee that even an unequal society would be a society of general abundance and prosperity.

And most important... the “state” part of the social insurance state was unnecessary. The large corporations that employed the industrial working class and that were the future of America could do all the risk-pooling that was desirable and all the purchase-pooling that was necessary. Businesses could act as risk-spreading and purchasing agents for their workers and their social insurance benefits. In so doing, Edward Filene thought, they would avoid the efficiency losses from excessive bureaucracy, from logrolling and coalition-building, and from putting politicians rather than managers in charge. And they would harness the benefits of competition as well. “Welfare capitalism” would thus be more efficient and effective than “socialism”. Firms would no more seek to be inefficient as social-insurance purchasing agents for the principals that were their workers than firms would seek to be inefficient at production.
But now that dependence relationship is evolving into something akin to feudalism, dependence upon a stronger party by a weaker party, and a need to rely on their benevolence rather than the law:
...In their role as producers, firm owners and managers would employ workers, and owners and managers would be the principals: they would take the risks and reap the profits of entrepreneurship and enterprise. In their role as benefit purchase agents, firm owners and managers would work for their workers and their families, and would be the agents of the workers.

One of the most interesting thing about Burwell vs. Hobby Lobby is that there are now five justices on the Supreme Court whose understanding of the employer-employee relationships is not “welfare capitalist” but is, I must say, positively medieval. The pooling provided by firms in benefits provision is no longer seen as the firm’s acting as a benefits-purchasing agent for the workers. The nexus of contracts that is the firm is no longer seen, in this role, as the agent of the workers–and thus as an instrumentality the workers use to exercise their right to pursue happiness as they choose. Instead, the firm’s provision of benefits is seen as a free gift from the owners and managers to the workers. Thus the liberty interests that are worth preserving are not workers’ interest in being provided with a benefits package that fits their situation and their values, but rather bosses’ liberty interest in specifying the terms of the free gift of benefits that they give their workers.

Thus, in the eyes of Sam Alito and his four Horsemen, we are really not talking “welfare capitalism” any more: we are–literally–talking industrial neo-feudalism.
Burwell vs. Hobby Lobby and the Decay of Welfare Capitalism (WCEG Equitablog) Similarly, this article, although it does not use the term, makes a similar point:
The ruling raises the question of why, uniquely in the industrialized world, Americans have for so long favored an arrangement in health insurance that endows their employers with the quasi-parental power to choose the options that employees may be granted in the market for health insurance. For many smaller firms, that choice is narrowed to one or two alternatives – not much more choice than that afforded citizens under a single-payer health insurance system.

Furthermore, the arrangement induces employers to intervene in many other ways in their employees’ personal life – for example, in wellness programs that can range from the benign to annoyingly intrusive, depending upon the employers’ wishes.

And what kind of health “insurance” have Americans gotten under this strange arrangement? Once again, uniquely in the industrialized world, it has been ephemeral coverage that is lost with the job or changed at the employer’s whim. Citizens in any other industrialized country have permanent, portable insurance not tied to a particular job in a particular country.

Nor has this coverage been cheap by international standards. American employers can be said to have played a major role in driving up health spending per capita in the United States measured in internationally comparable purchasing power parity dollars, to roughly twice the level found in other industrialized populations. As a recent article in the health policy journal Health Affairs reported, a decade of health care cost growth wiped out real income gains for the average American family during the period from 1999 to 2009.
The Illogic of Employer-Sponsored Health Insurance (The Upshot, New York Times)

When you have a tenured economics professor at UC Berkley using terms like medieval and neofeudal, you ought to pay attention!

Thus, the Hobby Lobby case is important in a way that is not getting much attention. It is a fundamental redefining of the social contract! It also ties in with the redefinition of the rich as "job creators." Such terminology would be anathema decades ago. There was not a separate class of "job creators," rather, anyone could be a job creator if they saw some sort of need in the economy and filled it. Jobs were created by necessity if there was a task that needed doing; they weren't gifts from above to be showered upon the filthy, unwashed masses. Workers did not see themselves as helpless agents dependent upon these "lords" for their subsistence, but the source of their own wealth. No more. The yeomen have now been reduced to serfs dependent upon the generosity of those above them who own the economy.

And see this: We Already Tried Libertarianism - It was Called Feudalism (Next New Deal):
Feudalism, for Freeman, means “the elements of political authority are powers that are held personally by individuals, not by enduring political institutions... subjects’ political obligations and allegiances are voluntary and personal: They arise out of private contractual obligations and are owed to particular persons.”

What is the libertarian government? For [Robert] Nozick, the minimal state is basically a protection racket (“protection services”) with a certain kind of returns to scale over an area and, after some mental cartwheels, a justification in forcing holdouts in their area to follow their rules.

As such, it is a network of private contracts, arising solely from protection and arbitration services, where political power also remains in private hands and privately exercised. The protection of rights is based on people’s ability to pay, bound through private authority and bilateral, individual contracts. “Protection and enforcement of people’s rights is treated as an economic good to be provided by the market,” (ASU 26) with governments as a for-profit corporate entities.

What doesn’t this have? There is no impartial, public power. There’s no legislative capacity that is answerable to the people in a non-market form. There’s no democracy and universal franchise with equal rights of participation. Political power isn’t to be acted on in a representative capacity toward public benefit, but instead toward private ends. Which is to say, it takes the features we associate with public, liberal government power and replaces them with feudal, private governance.
And here's another blast from the past: Neo-Liberalism as Feudalism (Crooked Timber)
As Crouch suggests in an aside, we’ve been here before. The cosy relationship between corporations like CGI Federal and Booz Allen and the government bears a strong resemblance to feudalism (which, stripped of the pageantry, was a complex web of relations and privileges between a small and privileged elite of nobles and the state). It bears an even stronger resemblance to Old Corruption, the strangling web of sinecures and emoluments that radicals like William Cobbett inveighed against in the early nineteenth century. Government – even at the best of times – has many clunky and inefficient features (the American version particularly so – many of the worst inflexibilities of the US government have their origins in people’s distrust of it). Yet the replacement of large swathes of government with a plethora of impenetrable subcontracting relationships is arguably even worse – it has neither the efficiencies (sometimes) achieved by markets, nor the accountability (sometimes) achieved by democratic oversight.
 Recall Cullen Murphy's definition of Feudalism: "The precise definition of "feudalism" is one of those things on which medievalists can't quite agree -- the field is divided into warring fiefdoms -- but the historian F.L. Ganshof discerned in feudal society one basic quality: "a dispersal of political authority amongst a hierarchy of persons who exercise in their own interest powers normally attributed to the state." In other words, the public interest had become private."

It's frightening the number of ways we seem to be devolving socially, even as our technology becomes more potent. College has become a from of indentured servitude. Debtors' prisons are making a backdoor comeback. Police are being militarized. The drug war is used as an excuse for asset seizures by the state which are then auctioned off to raise money. Police are getting more violent and thuggish. Excess workers are channeled to prisons where slavery is totally legal under the Thirteenth Amendment. Creationist museums and megachurches populate the forgotten and economically backward interior of the country. Many Detroit residents now no longer have access to water, and have appealed to the U.N. People walk around with guns and pass "open carry" and "castle doctrine" laws (there's a nice medieval-sounding name). Laws are being passed to restrict voting from certain groups. Even culture is becoming coarser and more vapid. People are behaving in a deranged fashion. What is happening to this country? How can anyone continue to believe in "progress" given what we're seeing?

One major difference that I wish I had raised was that in the past, feudal systems were associated with decentralization and local control. There was a technological reason for this - offensive technology (mounted knights) were no match for defensive technology (the castle), and sieges were difficult. Here's historian Carroll Quigley:
The real difficulties on the political and military levels that made the Carolingian effort fail were in respect to three phenomena: (1) poor transportation, (2) poor communications, and (3) the superiority of defensive weapons.

The recreation of a universal Carolingian Empire would have needed a system of land transportation able to bind Europe into a unified whole. No such system existed or could exist in the year 800. Roads were almost totally lacking, and could not be supported in any adequate fashion by the limited output of the economic system...Closely related to the lack of transportation was the inadequacy of communications, including that basic item the level of literacy. Literacy has been associated historically with the existence either of a priestly group seeking to keep records or of a commercial group seeking to communicate over a distance as well as to keep records. The transportation inadequacy that led to self-sufficient manors and the political disorder that gave a low level of personal security combined to make commerce almost impossible in the early medieval period. Without a commercial group, literacy thus was a monopoly of the clergy, but even here poverty and disorder led to a high degree of localism and a decrease in communications and literacy. Without these things no centralized government could possibly function, and the Carolingian effort to establish one proved abortive.

The third factor in the disappearance of centralized government was the superiority of defensive weapons. For any government to function, it must be able to know what is happening at a distance, to communicate its orders, and to enforce obedience to these. The enforcement of obedience to orders cannot go further than the limit of the superiority of offensive power over defensive power. In the year 900, there was no such superiority. On the contrary, the defense was superior over the offensive to a degree that has never been exceeded in the historic period, even during its nearest analogy--the Mediterranean world about 1000 B.C.

The military system of Europe about A.D. 1000 is of extraordinary interest because it was built about two "supreme weapons," neither of which could defeat the other. These were the mounted knight and the castle. Quite obviously, a castle could not defeat a knight. And, almost equally obviously, a knight could not defeat a castle. The only way that a group of knights could defeat a castle was by siege, but this was extremely difficult during the Middle Ages because of the technical difficulty of supplying a besieging force at a distance so that it could starve out the defenders before it starved itself from exhaustion of supplies. Any besieging force had to be stronger than the besieged or it would be driven from the area and the siege broken. But to maintain a superior besieging force placed an almost impossible burden on the available transport...Politically this means that anyone who had a castle could say "no" to any order and could not be forced to submit. This means that every such castle became a nucleus of political independence and, since there were thousands of such castles in Europe about 1000, it meant that Europe was divided into thousands of independent political units and that centralized power over any extended area was impossible.
The Evolution of Civilizations, pp.223-225

Compare that to the digital panopticon, security cameras, centralized money, armored vehicles and drones used by today's military. The Pentagon already conduct "wargames" to deal with revolution and control large societies. Of course, some have predicted that things like renewable energy, open source, and 3-D manufacturing will lead to radical decentralization. Still others point to the increasing scarcity of fossil fuels, although fracking has so far continued to supply centralized power with the energy it requires to function. It's too early to tell. The economic and political importance of cities combined with their reformist and progressive ideals (e.g. DiBlasio in NYC; Seattle's $15.00 minimum wage, etc.) also has a parallel with the city-states that flourished as bastions of relative culture and stability throughout the chaotic medieval period. For a discussion of these possibilities, see: Mass surveillance, political dissent, and the coming open source revolution (The Cutting Edge)

This is the article by Peter Turchin I also reference in the interview - Return of the oppressed. I've featured it before, but it's worth a reread because it's even more relevant than ever.

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