Our feudal economy

As a Marxist, I'm supposed to support the overthrow of capitalism. There is, though, an overlooked problem with this: to a large extent, our economy is not capitalist, but feudal. I mean six (largely unrelated) things:
1. Wealth transfers. One of the big stories in the global economy recently has been the rising wealth of oil exporting countries. Brad Setser estimates that a $50 rise in the oil price, if sustained for a year, gives $250bn to just four or five families. They get this not on account of their ownership of capital, but because of their inherited land. That's feudal.
2. Expropriation by force. To Marxists, a mode of production is defined by the question: how is surplus labour extracted? In capitalism, it is extracted by a confidence trick; capitalists con workers into working longer than necessary. In feudalism, corvee is extracted by the threat of state-sanctioned force.
But here's the problem. The average worker expends more surplus labour working for the state than he does for capitalists; tax takes in advanced economies are around 40% - much higher than profit shares. Feudal-type exploitation is therefore greater than capitalist exploitation.
3. Legitimation by faith. Feudalism was legitimated by faith in God. Our existing order is also legitimated by faith in a fiction - the fiction that experts and managers can control society. MacIntyre was explicit on the parallel:

"Managerial effectiveness functions much as Carnap and Ayer supposed "God" to function, It is the name of a fictitious, but believed-in reality, appeal to which disguises certain other realities. (After Virtue, p76).

4. Bosses as heroes. Joseph Schumpeter feared that capitalism would be unable to win popular support because capitalists lacked the "mystic glamour" of feudal rulers. The bourgeois, he said

can only use rationalist and unheroic means to defend his position or to bend a nation to his will. He can impress by what people may expect from his economic performance, he can argue his case, he can promise to pay out money or threaten to withhold it, he can hire the treacherous services of a condottiere or politician or journalist. But that is all and all of it is greatly over-rated as to its political value. (Capitalism, Socialism and Democracy, p137-8).

But actual capitalists do more than this. Particularly in the US, bosses and entrepreneurs are imbued with the glamour of feudal lords; they are seen not only as possessors of a mystical managerial skills, but are heroic swashbuckling adventurers. Googling "legendary Jack Welch" gives 59,200 results. 
5. Presenteeism. The classic feature of feudal forced labour is that the serf had to turn up to work on the lord's land. Our modern economy retains this presenteeism. Many workers have to show their faces in the office/demesne as their lords/bosses won't allow them to work at home even if this is more technically efficient.
6. The absence of calculating rationality. To Schumpeter, the defining feature of the capitalist was his unheroic, rationalist, calculating mind:

The capitalist process rationalizes behaviour and ideas and by doing so chases from our minds, along with metaphysical belief, mystic and romantic ideas of all sorts...Not sharing or even disliking the warrior ideology that conflicts with its "rational" utlitatarianism, the industrial and commercial bourgeoisie is fundamentally pacifist and inclined to insist upon the application of the moral precepts of private life to international relations. (Capitalism, Socialism and Democracy, p127-8)

But this was precisely false of the Iraq war. That was motivated not by utilitarian motives - there was no cost-benefit analysis behind it - but by feudal-style faith that barbarians could be civilized.
All I'm saying here is that feudalism is still with us - which merely makes it more remarkable just how rich we are.   

Comments

[Matthew]

"The average worker expends more surplus labour working for the state than he does for capitalists; tax takes in advanced economies are around 40% - much higher than profit shares. Feudal-type exploitation is therefore greater than capitalist exploitation."

But surely the money taken by the State is returned to the average worker (whether through nukes or policeman or redistribution) for doing nothing, whereas profits aren't?

[reason]

Matthew...
you beat me to it, there is a slight of hand there. You could of course argue that some of the profit margin is returned to workers via their pension funds as well.

But then historically, Marxist revolutions have occurred almost exclusively in Feudal States, so what is he complaining about?

[chris]

Actually chaps, it's not at all obvious whether workers get more quid pro quo from state exploitation than capitalist exploitation. The latter (profits) are used for investment spending, which increases demand for labour and productivity and hence real wages over the long run. A lot of state spending is wasted.

[Aaron Heath]

Excellent article.

Iraq was about profit too, remember. Huge engineering contracts funded by natural resources - is the last 50-years of US foreign policy in a nutshell.

[Will Davies]

Interesting, but I'd quibble on 2. and 6.

2. Is there any reason why exprorpriation by force is not compatible with capitalism, indeed whether it is not in fact a necessary feature of capitalism? What you're describing sounds like (what Marx called) primitive accumulation to me. For Marxist state theorists such as Bob Jessop (and originally Poulantzas), there are endless varieties of capitalism and endless potential roles for the state in it. Capitalist societies are never entirely capitalist, but draw on non-capitalist resources (bureaucracies, traditions, norms) to survive. 'Pure' capitalism would collapse under its own contradictions, and it is therefore a necessary role of the state to set limits around surplus value extraction, for its own benefit. One might think of the New Deal as a classic example of this. Getting away from the notion that the state is simply an arm of the bourgeoisie (and therefore gives it exactly what it demands) is an important contribution of Poulantazian state theory.

6. The calculating rationality of post-industrial capitalism may not be nakedly neo-classical or Benthamite, but lingers beneath the surface. There is indeed a particularly acute contradiction in the 'creative economy', where non-quantitative perspectives (all the fluffy stuff) have to be integrated into business models. This is a challenge, but in an argument between the accounts department and the human resources department, the former still wins. The calculating rationality is no absent, but merely submerged

[Matthew]

"The latter (profits) are used for investment spending"

On that, do you know what proportion of profits are paid out in dividends and what is retained?

"A lot of state spending is wasted."

Well you have to be careful here. A lot of investment spending is wasted too, and in any case 'wasted' in the literature with regards to state spending seems often to mean 'has gone to things I don't like'.

[chris]

Matthew - in the first nine months of 2007, firms paid out 21.4% of their profits and rent in dividends and another 20% in interest. Capital spending was equivalent to 34.2% of their profits.Undoubtedly, some of this spending will have been wasted, but partly because it was spent on paying people too much.
Tables K1 and K2 of this pdf give the numbers:
http://www.statistics.gov.uk/pdfdir/qna1207.pdf

[Luis Enrique]

I don't understand 2. What's the confidence trick? I've never really understood the distinction between extracting labour surplus and profit, nor how Marxists supposed they'd run an economy without something that amounts to profit (needed to cross-subsidise loss-making production, which is bound to exist, fund investment, and pay for all those economic planners etc.). If you're going to call the extraction of surplus by the state Feudal, then what distinguishes a Marxist economy from a Feudal one?

[TheophileEscargot]

But this isn't corvee labour. The taxes are resources commandeered by the state and redistributed by a centralized bureaucracy in the name of the people.

Surely this is a Marx-Leninist economy?

[Peter Risdon]

You're using feudalism incorrectly, and even linking to resources that demonstrate this (divine right was a post-feudal idea, as your link shows, for example).

[Bruce Wilder]

There was no cost-benefit analysis behind the Iraq War?

Are you sure?

It seems to me that the Iraq War was fought to head off the resumption of full-scale Iraqi oil production, which would have followed the end of sanctions. In that endeavor, the Iraq War was economically successful, sending up the price of oil, and saving Saudi ass. It was very good for Exxon/Mobil, the Saudi Royal family, Halliburton and the Carlyle Group.

That the Chinese were willing to lend the U.S. the money to finance the Iraq War was just a bonus; in any case, those benefitting most from delaying Iraqi oil production were able to externalize the cost.

[Meh]

Of course, the major faith is not in managers but in the experts known as economists, who Marxists rely on as much as anyone.