Monday, October 28, 2013

More on the coming Neofeudalism

I've seen an uptick in the term "Neofeudalism" recently, which means it's probably time for another blog post on the topic. I started to write a more comprehensive analysis of the topic, but before I do that, I think I'd like to present some primary sources I've encountered as background. While some may say that the term is meaningless, or just an emotionally-charged synonym for "stuff I don't like," I believe that it is a good term to help us understand the emerging economic order (or 'mode of production' to use the Marxist term). In fact, I would go so far as to say that while Marx saw capitalism breaking down and being replaced by some form of communism/socialism, what we are actually seeing in the real world is Neofeudalism as the new emerging economic order. Thus it's important that we try and understand it.

We'll start with this post from Crooked Timber entitled, Neo-Liberalism as Feudalism:
Otherwise put, it’s a good example of Crouch’s critique of neo-liberal efforts to ‘shrink’ government – that in practice it is less about free markets than the handing over of government functions to well connected businesses.

    Outsourcing is … justified on the grounds that private firms bring new expertise, but an examination of the expertise base of the main private contractors shows that the same firms keep appearing in different sectors … The expertise of these corporations, their core business, lies in knowing how to win government contracts, not in the substantive knowledge of the services they provide. … This explains how and why they extend across such a sprawl of activities, the only link among which is the goernment contract-winning process. Typically, these firms will have former politicians and senior civil servants on their boards of directors, and will often be generous funders of political parties. This, too is part of their core business. It is very difficult to see how ultimate service users gain anything from this kind of managed competition.

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.
Next, here is a post from Naked Capitalism, which uses the term upfront in its opening paragraph describing the debt bondage that young people are now forced into to get an education for the remaining jobs that pay enough to live on:
Readers have often been using the term “neofeudalism” to describe the outlines of the new economic order, in which the uber wealthy and a thin cadre of their advisors, managers, and other elite professionals do well, with a network of less lofty managers helping oversee and orchestrate the provision of services to the broad base of the public, and they struggle to eke out a meager existence.

Debt appears to be the “one ring that rules them all” of this emerging order. And if that is the case, it’s likely to be much more like the old sharecropper system of the post Civil War era, where poor whites and blacks were kept on a debt treadmill that turned them into slaves in all but name.

Even though readers of this blog recognize the individual pieces of the hardships facing young people, I’m not certain older people can readily grasp the totality. For instance, going to college is seen as being for people who grew up with college educated parents as a basic requirement; it’s a marker of accomplishment, a necessary but no longer sufficient condition for entry into the middle class, and at least in some circles, still seen as desirable in and of itself (as in an opportunity to gain knowledge and culture, as quaint as those ideas may be). High school kids face a decision they are not well equipped to make. Most people suffer from optimism bias, and teenagers may feel not going to college is an admission of failure. And it’s not as if they have great prospects if they go into the job market with only a high school degree.

This is a slow road to penury for young adults, save for those who manage to get on the really big ticket career paths or have parents who can pay for college and buy them a house. We can’t pretend to address the problems of the economy unless we include the increasing debt enslavement of the young along with the pauperization of the old. Otherwise, the Petersons and the Druckenmillers of the world will play them off against each other and keep them both under their boot.
Next up, here are excerpts from the most recent Extraenvironmentalist podcast with economist Michael Hudson, who has been one of the most frequent users and definers of the term:
Justin Ritchie: “Let’s say Quantitative Easing 3.0 ends and this wave of privatization goes through. What will life be like on the ground for people in this privatized, debt-deflation stricken America in, say, five or ten years? How will their lives change? What can you really see for individual families?  How will their lives be different?”

Michael Hudson: “Well, try reading books about how England was in the thirteenth century. We’re moving, essentially, [to] Neofeudalism to make a long story short. People are going to find that instead of free government services as before, now they have to pay for them. And if they pay for these essential services--and most public services are essential, that’s why they’re in the public sector to begin with; to keep them out of the hands of monopolies—now all of the sudden the public services that were provided on a subsidized basis or freely are going to be privatized without any price regulation for it, and all of the sudden people are going to have to pay market prices that include interest charges, Wall Street underwriting charges, the cost of dividends, exorbitant management fees, bonuses for management, political contributions, buying off judges, buying off the courts, buying off the politicians to make sure that the people are not able to stop your gouging them. That’s how the system is developing.”

“And it’s not democracy anymore. We’re seeing a transformation from democracy into financial oligarchy. And essentially the word that used to be used for these people were rentiers. People living off their rents. Landlords, and now the monopolists.”

“So we’re seeing what used to be profits or public tax revenues turned into monopoly rents. And that’s going to be the word that’s going to be used more and more to describe the coming decade. Everything is going to be monopolized and people are going to have to pay through the nose for essential services, and many people can’t afford it. There’s not going to be much discretionary income and choice left.”

“So people are going to essentially not have much choice as to what they can use their spare income for, because all their income is having to go to pay for the deficit they’ve taken out, the interest on the credit cards, the taxes, the wage withholding, health insurance, medical costs, transportation, electricity; everything that has been monopolized they’re going to have to pay for, and we’re seeing the end of consumerism and the end of consumer choice.”

JR: “So your new book is called The Bubble and Beyond. What really happens as the financial system fails? We’ve been talking about the feudal dynamic. Does the end of our current global economic system as we know it mean the end of our civilization as we know it? How do you see that shaping up?”

MH: “Well, civilization goes on. The Roman Empire collapsed and brought on a Dark Age for almost a thousand years. Civilization went on, but it became an oligarchy and poorer and poorer and poorer. Ecologists have talked about reaching a limit of global warming and of carbon dioxide and of water levels, but you can think of debt as debt pollution, as somehow polluting the economy, and when all of the economic surplus is going to pay the creditors in the form of interest and amortization and penalty fees, then all of the sudden there’s no money for goods and services anymore, and there’s simply a slow crash. And that’s what we’re in.”

“In order to buy a home, you have to go into a lifetime of debt during your working life to work off the mortgage. In order to get an education you have to pay so much student debt that you’re not able to get married and move out of your parents’ house and start a family, so the result that your finding in –Latvia’s a wonderful example, or Greece or Ireland today-- you’re finding for one thing population rates decline sharply. President Putin said that privatization and Neoliberalism in Russia has killed more Russians than all of World War Two.”

“Financial war is very much like a military war. The population will decline, people will stop having children, stop getting married, and usually there’s emigration. In Latvia in the last ten years, ten percent of the population, mainly of working age, have had to emigrate. For America, there would have to be thirty million people emigrating in order to keep up with the Irish or the Lativan or the Greek rates of emigration, but they’re not teaching enough Chinese in the schools to enable them to move anywhere.”
Finally, we need to define feudalism in order to understand what exactly is similar between it and Neofeudalism. Feudalism is an enormous topic that some scholars have spent their entire careers studying. Despite this, it is a very slippery topic, difficult to define or pin down. Some of the classic works on it are Marc Bloch, Feudal Society, Volumes 1 and 2,  and Fran├žois-Louis Ganshof's What is Feudalism?. In fact, Wikipedia goes so far as to quote one scholar as saying, "there has been ongoing inconclusive discussion among medieval historians as to whether feudalism is a useful construct for understanding medieval society."  Despite these difficulties, I believe Neofeudalism is still a useful term. To this end, Cullen Murphy, in his book Are We Rome (which I can't recommend highly enough), sketches out a brief description of Europe's transformation to feudalism from Classical civilization, with some eerie parallels to today:
In the end, Rome was heading toward something the Romans did not, by definition, have a term for. But we do: it's the Middle Ages. 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.
This isn't the place for an extended excursion across a thousand years of Western history. In brief, for many centuries power was wielded in Europe by monarchs and vassals as if it were a from of private property. The levying of taxes, the raising of armies, the meting out of justice -- these things were done in the name of the ruler, and the fruits of his administration were enjoyed by those who acknowledged the ruler's personal lordship. The eventual path away from the Middle Ages was marked by the halting emergence of governments defined by communal interest rather than private prerogative. Power was no longer justified as simply a form of property. Social services and protections, and your rights as a person, became consequences of citizenship, not of a deal between a magnate and his underlings, or between a private entity and his clients.
America came into being toward the tail end of this process; the Mayflower Compact straddles old and new, beginning with a pious nod to the king but then going on to set up a "civill Body Ploitick" effectively without one, which America as a whole would emphatically do a century and a half later. To most modern eyes, the general tendency described here -- away from power as a private property and toward power as a public authority -- has been seen in a positive light: evolution's arrow was pointing the way it should.
But sometime in the late twentieth century the arrow began pointing the opposite direction. It began indicating a deflection of power back into private hands. Privatization today sometimes makes itself felt in ways that would have turned no heads in ancient Rome. It of course still includes influence peddling and bribery and the buying and selling of public office...And as in Rome, privatization still includes turning over government departments to incompetent cronies, empowering private individuals at the expense of public intentions.
But the dominant form of privatization today is something relatively new, at least in its dimensions. Government on its stupendous modern scale -- regulating every industry; redistributing treasure from one sector of society to another; forecasting the weather and engineering the genome; reaching bureaucratically into every intimate cranny of life -- simply did not exist in ancient Rome. Because the extent of government is larger, privatization has more scope. Its most pervasive from is perfectly legal: the hiring of profit-making companies by the thousands to do government jobs, and sometimes the wholesale reflagging of government agencies into private and semiprivate companies. The ostensible motives may be pure, but the effect in every case is to insert an independent agent, with its own interests to consider and protect, into the space between public will and public outcome -- a dynamic that represents a potential "diverting of government force" far more systemic and insidious than outright venality.
Privatization along these lines has occurred most decisively in America and Britain. In 1976 a book was published in the United States called The Shadow Government; its subtitle spoke ominously of "the government's multi-billion-dollar giveaway" of decision-making authority. In tone the book comes across today like a print version of old newsreel footage: a portentous voiceover signals urgency as jackbooted stormtroopers occupy the Ruhr. Government agencies, the authors warned, were farming out various functions to high-priced consultants, secretive think tanks, and corporate vested interests -- accountable to no one! And "outsourcing" was not the only issue. Some parts of the government, they went on, might even be sold off completely -- turned into private businesses! The process was "cloaked in contractual and other formal approvals by the various executive departments," but make no mistake: it amounted to nothing less than a "drive to merge the Government and business power to the advantage of the latter."
A little more than a decade later, the shadow government was out of the shadow. There is a plausible rationale  for privatization -- one that often makes sense in the short run and for specific tasks. Private contractors may be able to operate more efficiently than government agencies do. Marketplace signals may prove to be more direct and powerful than bureaucratic ones. And why shouldn't government hire outside specialists for help with certain chores, the way any household or business does? In the 1980s Ronald Reagan created a presidential commission on privatization to study not how the boundary between public and private might be bolstered but how it could be pushed out of the way even further, to give private interests more opportunity to move in. The same idea surfaces in the "reinventing government" movement taken up by the Clinton administration: "We would do well," one expert advised, "to glory in the blurring of public and private and not keep trying to draw a disappearing line in the water." Since then privatization has affected every aspect of American public life. It has also moved beyond narrowly defined tasks to embrace broad government functions.
Sociologists have a term for what is occurring: they call it the "externalization of state functions." Water and sewage systems are being privatized, and public hospitals and public health programs. Voucher programs and charter schools are a way of shifting education toward the private sector. The protection of nuclear waste is also in private hands. Meat inspection is largely done by the meatpacking companies themselves. Americans were up in arms when they learned that Dubai Ports World, a company in the United Arab Emirates, would soon be in control of the terminals at half a dozen major U.S. seaports -- only to discover that terminal operations at virtually all American ports had long ago been privatized, and that 80 percent of them were already operated by foreign companies, the largest of which is Chinese. Serious proposals to privatize portions of Social Security have been on the table, and they will doubtless appear there again. One effect that privatizing Social Security would surely have is to encourage the affluent  to opt out into private accounts to the greatest degree possible, eroding the communal sense of solidarity (as FDR understood) that has been the program's mainstay. Meanwhile, the new Medicare prescription drug plan effectively puts an enormous government program into the hands of private insurance and drug companies. Those inclined toward dystopian fantasy should consider Bruce Sterling's futuristic novel Holy Fire. It conjures a society in which people are so beholden to private employers for medical benefits that bring increasingly potent health care that they will do anything to avoid losing a job and therefore losing coverage -- leading to a gradual emergence of slavery in fact if not in name.
To Murphy's point above, the massive carceral state that exists under modern governments like the United States is something that has no analogy in Ancient Rome or Medieval times, since these societies did not have the surplus resources or manpower to divert to incarcerating large amounts of the population in prisons. Neither did they have the ability to constantly watch and surveil large parts of the population at all times and in all locations. The turning over of these powers to private for-profit companies is one of the scariest and most insidious things about the coming Neofeudalist order. If jailing people and surveillance is profitable, you can be sure you will get more of it.

Finally, I include a snippet from this Disinfocast interview with Congressional Dish's Jennifer Briney, who reads every single bill coming out of the United States Congress:
Matt Staggs: "So, what about something else? What else have you learned recently that kind of put you on edge; made you worry about our future a little bit?"

Jen Briney: "Um, well, they're trying to privatize our government in every way. I think we need to have a serious conversation in this country about what can be and should be done for a profit and what should not. And it's's across the board. So there was an education bill. You hear a lot about charter schools and school choice. But when you look in the bill itself it's about taking public funds that are going to public schools and shifting them to these charter schools that are managed for a profit. And that doesn't mean that all charter schools are bad or worse than public schools, but it is a diversion of funds to privatize education. And you see it in war, you know, you have these mercenaries, Blackwater, they're making --one of my best friends is a veteran, he was making, I don't know, $50-60,000 a year--then you've got Blackwater guys who are making $120,000. It's all coming from taxpayer funds, but one is going to a profitable industry and one is going to our actual soldiers. And it's every subject, every subject."

I think the Romans, too would have something to say about turning the army over to mercenaries.

Previously:  Foundations of Neofeudalism

1 comment:

  1. Thank God Americans in general have a good knowledge of history, and can therefore turn this thing around... Oh... uh oh. I forgot, that was 100 years ago, when students read history instead of "social studies." Shoot. We're screwed.


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