Where We Are Headed: Corporate Feudalism

In my last posting, I wrote about the indefensible theory of supply side economics.  Today I posit where this theory is heading.  Whether or not it is the goal of supply side proponents, the result will be corporate feudalism.  Let me explain.

Feudalism is defined as “the dominant social system in medieval Europe, in which the nobility held lands from the Crown in exchange for military service, and vassals were in turn tenants of the nobles, while the peasants  were obliged to live on their lord’s land and give him homage, labor, and a share of the produce, notionally in exchange for military protection.”  From a historical perspective, I’m sure this definition is as accurate as one can get while being brief.  I am not a historian (I welcome relevant input from those who are).  I will be looking at feudalism from the viewpoint of an economist, and my focus is on the factors of production.

A better definition of feudalism from an economic standpoint is a system of government based on the tenure of land, or the system of land tenure and of government in which the landholders are the governors.  These governors were the nobility, and were part of a structure that will be described later.  The term tenure means the right to hold property, however it does not mean the right to own that property.  The person is allowed to live on the land in exchange for his services.  If a lord was displeased with a tenant, he was allowed to remove that tenant from the land and give the right to live there to someone else.  No compensation was involved.

The feudal hierarchy was like a pyramid.  At the very top was the pope, and initially, the emperor.   Technically, the king was at the top, but he could be unseated by the pope if the pope became displeased.  Below the king were nobles – lords and ladies, sometimes counts and countesses, etc., who were granted land (hence the term counties) in exchange for an oath of fealty, or loyalty.  The nobles were expected to support the king in both offensive and defensive wars.  In turn, the nobles granted land to knights in exchange for their services.  According to one source, knights were expected to provide two months per year of service in peace times, and whatever time was necessary during war.  Below these were tradesmen, who did not have land per se, but did have housing in exchange for their trade. At the bottom were peasants, who were allowed to stay on the land in exchange for farming and herding.  Ownership of the crops and herds appears to have varied from place to place. In some locations, the land was mined for various ores, and those who worked the mines were granted housing near those mines.  Many of the forests were retained by the king, and in England, hunting in the King’s forests was subject to execution.

In economic terms, the pope and the kings controlled all the factors of production.  Factors of production are defined as follows:

Resources required for generation of goods or services, generally classified into four major groups:

Land (including all natural resources),
Labor (including all human resources),
Capital (including all man-made resources), and
Enterprise (which brings all the previous resources together for production).

These factors are classified also as management, machines, materials, and money (this, the 4 Ms), or other such nomenclature. More recently, knowledge has come to be recognized as distinct from labor, and as a factor of production in its own right.

Source: http://www.businessdictionary.com/definition/factors-of-production.html

The nobility controlled all the land, the capital and determined the enterprise.  They controlled trade routes crossing their land or ports. The only thing technically not controlled by the nobility was labor.  However, in a practical sense, the nobility also controlled the labor, because an individual peasant could not provide for his own livelihood without land or work.  Since the peasant could easily be replaced, he was in a position of having to work for the lords, or leave.

Today, the factors of production are the same, but they have a different flavor.  In place of kings, we have large corporations.  In place of the nobles and knights, we have the companies that are part of the large corporations supply chain.  In place of the peasants, we have the workers.  And, in the place of the pope, we now have a president who appears to be prepared to bestow rights and assets to corporations or withhold them at his whim.

Corporations largely control the factors of production today.  They own the rights to much of the land (i.e. corporate farms, mining, drilling, etc.)  They are pressuring congress to give them the rights to critical infrastructure that the taxpayers have built and the people own.  They have convinced the Supreme Court to grant them rights of persons when it is to their advantage, but not the obligations of persons.  They are rapidly rounding up the resources and means of distribution.  They do not yet control labor, but they are reaching a point where their control of jobs means that labor must submit to their rule.

One element of feudalism that allowed it to continue was the control of education.  Knowledge was controlled by the church.  We all know the price Copernicus and Galileo paid for presenting science that was not approved by the church.  We do not know how many other scientists were silenced.  For the most part, only male nobility could learn to read and write or do basic arithmetic, and while there are instances of women and lower class persons doing so, they are the exception. Books were primarily in monasteries and lords’ castles.  Lords would hire a monk or priest to educate their sons. The education provided to the peasants was of a religious nature, and a fearful type to keep them in line.

As with feudal times, those currently in power are trying to disrupt public education.  They would put in its place private and religious schools.  Already we see many recommending watering down education to those things a person needs to ply his or her trade.

The similarity between the feudal system in what we call the Dark Ages and the direction we are heading with the corporate world is startling.  The speed with which we are moving in that direction is breathtaking.  If we continue on our current trajectory, we will be soon entering a corporate Dark Ages.

Eventually feudalism was pretty much broken.  I will discuss the key to breaking corporate feudalism in my next installment, The Antidote to Corporate Feudalism.


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