On feudal exploitation

“We have abolished capitalism in Poland. Now we must abolish feudalism.” So said Michal Kalecki in the 60s. I suspect that western economies today face a similar task, as feudalism is still rife.

By this, I don’t mean merely that we have the high inequality and low social mobility that characterised feudalism, nor that immigration controls are a form of feudalism in that they ensure that one’s life chances are determined at birth.

Instead, I’m thinking of modes of exploitation.

We must distinguish between capitalist exploitation as Marx understood it and feudal exploitation. The former is an economic phenomenon, arising from capital’s greater economic power over labour. The labour market, thought Marx, was “a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham.” Such apparent liberal equality facilitated and disguised exploitation and oppression.

Feudal exploitation, by contrast, is more obvious. Markets play no role in it. Instead, as Ellen Meiksins Wood wrote:

When surplus labour has been appropriated by exploiters, it has been done by what Marx called “extra-economic” means- that is, by means of direct coercion, exercised by landlords or states employing their superior force, their privileged access to military, political and judicial power. (The Origin of Capitalism, p95-96)

Exploitation of this form is still widespread – perhaps increasingly so.

Why, for example, was Dido Harding put in charge of Test and Trace? It’s not because market competition showed her to be the most competent, but because she has achieved the modern equivalent of winning the favour of the king. She’s exploiting political not economic power. As indeed, might be many other outsourcers.

Another form of feudal exploitation is simply buying political favour, as when property developers gave money to the Tory party just before Robert Jenrick changed planning regulations to their advantage.

Yet another expression of privileged access to political and judicial power is what Robert Kuttner and Katherine Stone call “a one-way seizure of private power and law by elites”. As Martin Wolf says:

The activities of companies, as lobbyists, funders of research and donors, play a decisive role in creating the rules of the political game…Corporations are not players of the game, playing according to rules set by others. They play the game according to rules they largely set themselves.

Pharmaceutical companies, for example, have in effect legalized opiate trading; banks have ensured they operate on low capital requirements, thus profiting themselves at the expense of greater risk for the rest of us. And firms generally use restrictive patent law to increase their profits.

And then there has been the use of the state to directly strengthen capital to the detriment of labour, by weakening trades unions or pursuing austerity policies. As Lance Taylor says of wage repression, “something other than the market is at work here – like power relations.”

Indeed, we can think of neoliberalism not as a simple assertion of free markets but rather as the use of the state to increase the power of bosses.

Marx famously said that “the executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie.” He failed to add that this management would often be done not in a way unique to liberal democratic capitalism but in a manner which pre-capitalist monarchs might recognise.

On top of all this, there are hybrid forms of exploitation, wherein power derived from the market is exercised in quasi-political ways – as we see in the rise of guard labour, in the use of technologies such as  CCTV to control labour, or in surveillance capitalism.

But there’s something else. Another distinction between capitalist and feudal exploitation is that the former drives up productivity as capitals compete to intensify their use of labour whereas the latter occurs without much change in technical efficiency.

The stagnant labour productivity we’ve seen in the last decade is, in this sense, a feature of feudal exploitation, not capitalist.

The relation between modern feudalism and stagnation is perhaps both cause and effect. On the one hand, incumbents’ use of political power has suppressed competition and dynamism – a process described by Brink Lindsey and Steven Teles in The Captured Economy and Thomas Philippon in The Great Reversal. Also, feudal-type power relations in the workplace demotivate workers and detract from productivity. On the other hand, though, feudal exploitation can be the result of stagnation. If it’s so hard to raise productivity, why bother? Why not simply seek wealth extraction rather than wealth creation?

All this, however, brings us to a problem. In the UK (and indeed in many western economies other than the US) wage and profit shares of GDP haven’t changed much for decades. Before Q2’s Covid-induced rise, labour’s share was much the same as it was in the early 80s. And the profit share was the same as in the early 60s*. This means that if – as is likely - feudal exploitation has increased since the 1970s, it is at the expense of capitalist exploitation.

Which leads us to some nice paradoxes. From this point of view post-war social democratic economies with their institutions of countervailing power were more capitalist than are today’s economies, insofar as they delivered capitalist rather than feudal exploitation. And Thatcher was (in effect if not in intention) not so much a capitalist revolutionary as a feudalist counter-revolutionary. And it means that it is perhaps social democrats who want to restrain corporate political power who are more capitalist than are those who defend our current inequalities.

* The numbers in my chart don’t sum to 100 as I’ve excluded other incomes such as those of the self-employed, rents and taxes.

Comments

[Phil]

If you take Marx seriously, capitalism at its fullest development is a level societies have to complete before the classless society can be established. Feudalism and plutocracy aren't the fullest development of capitalism - far from it. This, I think, is why so much of the 2017 and 2019 manifestoes were entirely functional to capitalism, and why there's that odd - and in some eyes suspicious - meeting of minds between fringe socialists and fringe (libertarian) capitalists on such issues as UBI and LVT. As a great socialist once said, we can't go round it, we can't go over it, we can't go under it - we've got to go through it.

[Blissex]

I guess this post suffers from a small conflation of two related things: rent extraction and feudalism. Most of the post is about rent extraction more than feudalism.
They should be kept somewhat distinct though because:

* The distinguishing, important, characteristic of feudalism is that it is based on personal relationships and personal status, rather than impersonal ones. That is its political aspect.

* While feudalism enables rent extraction, which is its economic aspect, rent extraction can also happen outside feudalism. An aside: feudalism is nothing more than the protection racket as a political system; a "duke" is just the boss of a regional protection racket, and the "king" is the boss of bosses, and a "knight" is a heavy that beats up non-payers and fights turf wars with other regional rackets.

For example K Marx argued that already in the 19th century rent extraction had lost its feudal characteristic and acquired capitalistic ones, as the rent extraction for example of peasants of a village was no longer based on the usual person-to-person "this is my turf, me and my knights will burn your village down if you don't give me half of your harvest for your protection", but through impersonal relationships via institutions like the courts, bailiffs, etc., property deeds, predatory loans.

So I would think that rather than a return to proper feudalism there is an expansion of rent extraction (what venture capitalists euphemistically call "passive income") and a shrinking of the role of profit from production within our current capitalist political systems.

[Blissex]

«As a great socialist once said, we can't go round it, we can't go over it, we can't go under it - we've got to go through it.»

Deng Xiaoping and his colleagues largely came to the same conclusion. He was still committed to the socialist endpoint though, I am not sure that the current technocrats still are (except for Chairman Xi).

https://en.wikipedia.org/wiki/Primary_stage_of_socialism#Formulating_the_theory_of_a_primary_stage_of_socialism

[ltr]

Wonderful essay and responses. China this very year is completing a program that will have allowed and assisted tens of millions to escape poverty. Aspects of the program are continually presented and discussed. Now to me, I take the Chinese poverty program as an example of "socialism with Chinese characteristics."

There seem to me to be many such examples. Am I mistaken? The Chinese leadership believes in socialism with Chinese characteristics and are implementing such socialism. I have no argument.

[Jim]

Perhaps the UK's problems stem from the fact that our democracy is differently structured from our neighbours. We went from monarchy to monarchy-lite. The Prime Minister and government being in effect monarch and courtiers with actors and actresses living in the old palaces. Furthermore we never changed the old landowning aristocracy or a structure that creates a perpetuating elite.

Socialism is essentially an artifact of C19th industrialisation. The old UK elite never really took to industry and socialism was a particular threat to our monarch-lite system. We now have an essentially Ruritanian system that is up against a professional and legalistic system, and losing.

Socialism must live in the same petri dish as capitalism. But the UK (and American) versions of capitalism are particularly virulent and generally overwhelm socialism or weaken it to ineffectiveness. In continental Europe the two strains seem more equally balanced.

We could apply the revolutionary approach, apply a dose of bleach and clear out the dish. Probably no need now, between them Brexit and Covid will achieve the same ends. Both represent a disastrous Tory failure highly visible to the young. Starmer has only to sit and wait and exploit the coming disaster - whilst keeping his own idiots in control. Meanwhile our royalty can join the rest of the performing arts in the dole queue.

[UserFriendly]

Bingo! Really makes you want to scream every time someone mentions "The Road to Serfdom" doesn't it?

[ltr]

Really makes you want to scream every time someone mentions "The Road to Serfdom" doesn't it?

[ Yes. ]

[Hewer of Wood Drawer of Water]

This post is about the the feudal mechanisms and feudal power structures that underly rent extraction.

[Sirr]

Interesting as usual. I'd merely add that it's a pity that Zuboff gets the reference on Surveillance Capitalism, when Monthly Review was certainly writing about the topic before the Harvard professor.

https://monthlyreview.org/2014/07/01/surveillance-capitalism/

[Sirr]

"We were therefore pleased to discover that the concept of “surveillance capitalism” has now entered the mainstream and is drawing considerable attention, through the work of Shoshana Zuboff, emeritus professor at the Harvard Business School. Zuboff first took up the issue in a 2015 article in the Journal of Information Technology, entitled “Big Other: Surveillance Capitalism and the Prospects of an Information Civilization,” where she pointed to “the new logic of accumulation of what I call surveillance capitalism.” She failed, however, to mention the prior treatment of “surveillance capitalism” in Monthly Review, despite the fact that her analysis was written in November 2014—judging by her accessing of numerous articles on the Internet on that date—four months after the MR issue was published and posted online. In a March 27, 2016, article in the Frankfurter Allgemeine, entitled “The Secrets of Surveillance Capitalism,” Zuboff again writes of “what I call ‘surveillance capitalism,'” while still neglecting to give even bare mention to MR‘s previous, more developed treatment of this same concept nearly two years before."

https://monthlyreview.org/2016/05/01/mr-068-01-2016-05_0/