If you weren't able to make it to our October forum, here is the text Bill Dawson wrote for his talk. Enjoy!
Financial Feudalism and Collapsing Democracy Part I
By William S. Dawson
The current Great Recession is beginning to expose a process that has been in the works for over 30 years— the evolution of our economic system into a feudal system based on finance. Largely unregulated private financiers and large corporations driven solely by financial considerations now dominate society to such an extent that the rest of us have become financial serfs and peasants. Our debt patterns and job possibilities are at the mercy of casino capitalism created by finance lords whose exclusive goal is MORE. In the process, the lords have co-opted the government through the expedients of election financing and lobbying power, facilitated by a Supreme Court that states large corporations are legally constituted “persons.” Money has become equivalent to free speech. Has this feudal system eclipsed true democracy?
Somewhere in his vast writings St Augustine likens human awareness to that of an ant walking across the vast mosaic floor of a great cathedral, eyes down and attentive only to the immediate steps in front of it, oblivious to the spectacular and awesome design of the mosaic. As Jesus said, “seeing they don’t see, and hearing they don’t hear.” The following presumes to be a token exercise in “seeing” or what the 60s and 70s called “consciousness raising”.
THE FEUDAL MODEL
Vivid but vague conceptions of the medieval world, drawn from history classes, movies or video games float around in our brains. Aside from chivalric fantasies about knights and damsels in distress, most of us have a hazy but unmistakable feeling that we don’t want to go BACK THERE, that life was relatively brutish, unfair and, well, feudal. These feelings in their broad outlines are no doubt legitimate.
One percent of the population, nobles (lords) and wealthy bishops, owned and ran things. Another few percent--- courtiers, knights, mayors, lawyers --- serviced the nobles as well-paid hired guns. The rest were peasants and serfs (worker bees and cannon fodder for the lords) . This feudal system was based on the owning and expropriation of land, the key to power and wealth. If you controlled large swaths of land you were a Noble, and everyone else on your land worked to further enrich you by 1) growing crops or raising livestock, and 2) fighting to take more land from other nobles or defending your land. In return you would promise to protect your peasants from attack and let them eat some crops and cattle they tended. You hired knights and clever lawyers to increase your stake in land by force or guile.
The one percent noble families, while encouraging unwavering and patriotic peasant loyalty to lord and king, waged a never ending international competition among themselves for land and power, using force, legal and religious manipulations, and marriage alliances. While peasants often cared deeply about being English or French or Castilian, ethnic or national identities were unimportant or irrelevant to nobles, who played an international power game among themselves across the European continent. Famously King Richard the Lionhearted lived no more than a couple of his adult years in his native England, favoring the plundering life on the continent after making his reputation in the Third Crusade. In a retrospectively comical game of musical chairs, Spanish princesses became English queens, English churchmen became French bishops, Danish nobles claimed the English throne, English kings claimed the French throne, Italian princes obtained German kingdoms, and German nobles became Russian royalty.
Outside of fantasy fiction and RPGs, where our love for medieval motifs knows no bounds, we are grateful to have relegated the medieval system to the mists of history. Throwing off the yoke of nobles once and for all in the American Revolution we never looked back, creating a democracy that is the envy of the world. Feudalism is a distant memory, thank God…. Or is it?
EVOLUTION OF FINANCIAL FEUDALISM
You might recall how a frog will sit in a pan of water slowly heated-up until he boils to death. For the past 30 years we have been, like the frog in the pan, largely unaware of our economic system’s increasingly feudal aspects, based NOT on estates of land but on massive piles of private money. Beginning in the late 70s, American society began to undergo a series of deep shifts in reaction to novel international competition, OPEC oil embargoes, and 60s social changes. In the name of “freedom” and in reaction to critiques of what President Eisenhower had called the military-industrial complex, corporate and financial leaders promoted the “liberation of business” from perceived anti-competitive regulations as the way to get America “back on top” and restore her wounded pride. Aggressive “free-market” policies advocated by the Milton Friedman led Chicago school of neoclassical economic theory resulted in accelerating corporate deregulation, the end of antitrust enforcement, a shareholder revolution claiming “investors” to be the only legitimate stakeholders in businesses and corporations, complete deregulation of global capital flows (movement of private money) and aggressive promotion of finance as the key American industry. These policies, enhanced by accelerating technological changes, resulted in relentless industry and financial concentration reminiscent of the social Darwinism of the “robber baron” age.
Money, unlike land, is an idea and it has no place. We have decided in our infinite wisdom that the movement of large amounts of it through cyber-space should NOT be regulated. Consequently, the global reach of international finance is now beyond the control of national governments, a global game NOT of THRONES, but of the endless pursuit of MORE MONEY through financial and market manipulation. Of the 150 largest economies in the world over 60% are multi-national corporations that, unlike nations, have no responsibility to provide for, or protect their citizens. In our current system financial corporations (i.e. big banks, hedge funds, etc.) dictate priorities for all other multi-national corporations.
The focus being money, money inevitably played an increasingly larger and more corrupting role in politics. Money is the blood of our economy’s circulatory system. It must circulate and be well distributed in order for the economic body to be healthy. As our system redirected more and more money to the wealthy, the rest of the American body started to feel the ill health effects. The result: though we were the “richest country” in the world, we fell behind other industrial nations in education, infrastructure, and the performance of our real economy industries, which were starved for funding as capital followed the “hot money” into Wall Street in order to maximize short term profits. The US marketed its “free-market” financial scheme around the world (the so-called “Washington Consensus”), leading the drive toward economic globalization and forcing other countries in the global economy to enact the same policies favoring finance and multi-national corporate shareholders over all other stakeholders in the economy. The scheme sought to “financialize” real economy assets through Wall Street’s conversion of existing and potential cash flows from worldwide economic activity into raw material for the manufacture of new financial “products” which drove Wall Street’s rise to economic dominance.
These often fiendishly complex financial products are called “derivatives” because their economic value is “derived from” real assets like mortgages and car loans. The purpose of derivatives, besides creating huge fees for Wall Street, is to feed the growing demand for ever more profitable short term “investments” and trading opportunities for the large piles of money (trillions of dollars) floating around the globe relentlessly seeking higher “returns” (think large pension and mutual funds, private equity funds, and corporate and government sovereign wealth funds). The result has been catastrophic: increasingly severe economic boom and bust cycles driven by Wall Street “pump and dump” strategies, where everybody BUT the winners in the financial casino suffer; stunning increases in economic inequality; and the degeneration of our democracy into a de facto plutocracy (rule by the rich).
As modern finance solidifies its vice-like grip on the real economy we have become the servants of financial lords; what these lords do in their financial competitions with each other directly impacts our peasant lives, from our debt load, to whether our modest lifetime savings will survive or be wiped out, to whether small businesses can be financed, to whether there are enough living wage jobs to go around, to whether we can obtain reasonable health care. As Wall Street co-opted Main Street, the middle-class has been gutted, the working poor grow disproportionately, and we all become the debt-serfs of international banks and hedge funds. Meanwhile the US Supreme Court solidifies the power of finance and leads us into the final phase of democracy’s degeneration into plutocracy by ruling in 2010 that Wall Street and multi-national Corporations are legal “persons” who have a constitutional “right” to steer unlimited amounts of money to politicians and political causes.
THESE NUMBERS DON’T LIE: THE EXTREME WEALTH GAP
Let’s look at some basic stats to get a feel for where we are. In 2010 the average income of the Top Ten Hedge Fund managers was $1.75 BILLION, which comes to about $840,000 AN HOUR. At a $45,800 annual income the average American family would need to work 18 ½ years to make what the Hedge Fund manager made in an hour. The Hedge Fund manager produces nothing of real value, but moves large piles of money making massive market bets in the financial casino run by the modern lords of finance.
According to Forbes magazine, in 1970 the ratio of the top 100 US CEO salaries to average worker annual earnings was 45 to 1. (That’s CEO SALARIES mind you, not including stock options where the real money is). By 1980 the ratio had more than doubled. By 1990 the ratio was 321 to 1. By 2006 it was an astounding 1,723 to 1. If we take the average salaries of ALL US CEOs in 2012 (over $12 million per CEO) compared to the average employee salary of $34,645 the ratio is 354 to 1, more than triple the ratio in all other industrialized countries in the world. (Is that Europe I hear snickering over self-righteous democratic America creating the new global nobility?) In the same time frame executive pay sky-rocketed (1980 to the present) employee real income stagnated then turned downward, even as employee productivity accelerated and steadily rose. From 1947 to 1980 employee wages and productivity tracked upward together. Then came the great divergence beginning around 1980 as productivity continued rising while incomes went nowhere. In the exact same manner and time frame, compensation in the economy’s financial sector and nonfinancial sectors tracked upward together from 1947 to around 1980, then diverged steadily from 1980 to the present. In 2010 US financial sector yearly compensation more than DOUBLED aggregate non-financial sector compensation. Not surprisingly, the ratio of household debt to income more than doubled during this same time period (from 56% in 1975 to 127% by 2006) as the middle class tried to hang on to their accustomed lifestyle through credit cards and mortgage re-financings.
These statistics about income do not even include wealth, of which income is only a percentage. But they do indicate why we currently have the largest and most extreme wealth gap in our history. Charts of US income distribution in the last hundred years are shaped like the letter “U”. In the heyday of the “free-market” globalization binge of the 1920s the top 1% took home a 24% share of income. The Great Depression and responses to it slowly lowered this percentage during the 30s. With the Depression still in mind, post-war America established a regulated financial system that stabilized income distribution at reasonable levels while avoiding any boom and bust market cycles, and from 1949 to 1982 the top one percent took home between 9 and 11 % of US income. Then financial deregulation seriously kicked in and by 2007 the top one percent was back up to 24% with no signs of changing to date. From 1947 to 1980 the various family income levels in the US, whether 95th percentile, 50th percentile or 20th percentile grew together, tracking at the same relative growth rates. Again, after 1980 comes the great divergence. The higher the percentile the greater the divergence. By 2007 the top tenth percent got % of income and controlled % percent of all wealth. The top 1% got 23% of income and owned 35% of wealth. The next 9% got 26% of income and owned 39% of all wealth. The bottom 90% got 51% of income and owned 27% of all wealth.
PILLARS OF FINANCIAL FEUDALISM
Like Islam, our financial feudalism is based on five pillars: “free-market” or laissez-faire ideology, corporate institutions, financialization, plutocracy, and sociopathic incentives. These give the financial lords the tools to redirect circulating money from the real economy into the global financial casino, from where it ends up in the pockets of the winning lords. The casino is funded on the backs of streams of peasant debt from credit cards, mortgages, student loans, car loans, loan loans etc. (Like medieval peasants, we are working most of our hours to pay-off the lords. In an updated version of the old company store-company town concept, no matter how hard or how much we work, the system assures the cost to meet our needs will exceed our income purchasing power.)
The financial casino extracts money for the lords by a mechanism Wall Street calls “pump and dump”: the lords strenuously pump up bubbles of overpriced assets profiting on the way up, then bet against the assets anticipating the bubble’s inevitable collapse, profiting on the way down. This game is driven by the system’s single, solitary goal—maximization of short term profits. It is impossible to MAXIMIZE short term profit without pumping up bubbles which inevitably burst. Savvy-- and lucky-- lords, like “the house” at the casino, win big while the vast majority of outside investors and peasants lose much or even all of their savings and investments through this process. Massive peasant job losses ensue in the real economy as the lords left holding the money severely restrict its circulation until they are sure the cycle can begin again.
This system is so concentrated and incestuous that complete collapse of the financial system is often threatened when the lords temporarily horde their huge gains and seize up monetary circulation. The finance lords threaten government and taxpayers with Armageddon, capitulation is inevitable, and the peasants refinance the Financial Lord’s casino games. The pump and dump cycle begins again with the next hot asset. With each turn of the cycle, the peasants become more indebted, the lords more enriched, as the wealth gap between the few lords and the many peasants widens.
PILLAR ONE—FREE MARKET IDEOLOGY, OFFICIALLY CALLED NEOCLASSICAL ECONOMIC THEORY
The modern free-market ideology is a comprehensive way of thinking about the world. For decades now economists have been insisting that the best way to ensure prosperity is to substantially reduce or eliminate government involvement in the economy and let private sector “competition” take over. By late in the Carter administration, the original oil crisis, monetary inflation, foreign competition and reaction to the sixties revolution conspired to catapult this ideology into power. The victory of the ideology was secured by the Reagan election.
As with any popular ideology, there are elements of truth wrapped up inside the free-market myth. Properly functioning markets CAN reward hard work, innovation, and the provision of well-made, affordable products; they can punish firms and workers who supply overpriced or shoddy goods. This carrot-and-stick mechanism can direct resources to productive uses, and can create efficiencies in a dynamic economy. But unregulated or badly regulated markets do not have the necessary discipline and boundaries that permit markets to function properly, because inherent in the free market ideology are glaring contradictions which make self-destruction inevitable absent such boundaries and disciplines. The most obvious contradiction is that between two fundamental system requirements; competition and maximization of profits. To keep prices reasonable the system relies on continuous competition. But the only way businesses can maximize profits is to AVOID competition; either by destroying, or entering into anti-competitive arrangements with, competitors. As Adam Smith wrote in Wealth of Nations “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” The very creation of our modern consolidated industries and multi-national companies was predicated on destroying competition. (Incidentally, unlike neoclassical theory which simply ignores the contradiction, Smith attempted to solve it in his nascent version of the free-market, by eliminating the requirement for profit maximization. In fact he insisted on low profits so that workers could be paid higher wages. Smith said this was in society’s interest because the vast majority of people are workers. This part of his theory is heretical today and rarely cited.)
Furthermore, while the two system requirements of competition and profit maximization attempt to address the needs of businesses and customers, the system completely fails to address the needs of everyone else; that is those who are not directly involved in the business transaction-- the community and the larger society. The theory is built on the Robinson Crusoe view of the world; that we are all isolated individuals or businesses who ONLY affect one another when we have a direct business exchange or monetary transaction, a patently absurd and unreal notion, yet one that dominates all economic analysis and decision making. There is no complete cost accounting or accountability in the system. For example if BIC Corporation decides it can increase profits by manufacturing and marketing disposable plastic shavers, and consumers decide (or are convinced by BIC’s marketing) that they will pay less by buying disposable shavers, the system analysis is complete and the shavers will be made and sold. The social and environmental costs involved in disposal of so much plastic and in the cultivation of a “throw away” material culture are born by society and completely unaccounted for in modern business accounting methods. This narrow Robinson Crusoe theory quietly justifies the prevailing strategy of all big business today: socialize costs and privatize profits.
The crash of 2008 resulted from Wall Street banks deciding they could maximize profits by manufacturing and marketing derivatives made out of mortgage backed securities, and customers like pension and mutual funds thinking they could get something for nothing (i.e. higher than normal interest rates on AAA rated bonds). There was neither incentive nor any mechanism for the system to account for the real social and economic costs of risk to both banks and customers inherent in the scheme, nor the inevitable costs of the bubble bursting and threatening the entire financial system as well as destroying millions of jobs, retirement and savings accounts. “Too big to fail” banks automatically socialize these costs (trillions and trillions of dollars), pushing them onto the taxpayer and society, while the winning banks in the casino walk away with the privatized profits.
PILLAR TWO—THE CORPORATE INSTITUTION
The modern corporate structure was the product of western governments who wanted to pool private capital and direct it to very specific public ends. Early America was wary of the corporate idea, having experienced the monopoly power of the British East India Company which forced the colonies to pay a tea tax that caused the first anti-corporate act in America, the Boston Tea Party. (The modern “tea party” is an ironic parody of the original since it was founded and is funded by Koch Industries, the 16th largest US based multinational company, and second largest privately held US company with 2013 revenue of $113 Billion. It is 84% owned by two Koch brothers who are ideological right wing activists. Tea party politicians spearheaded the recent government shut-down. But I digress.)
Thomas Jefferson said in 1816 “I hope that we crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government to a trial of strength, and bid defiance to the laws of our country.” In the early 1800s state governments chartered only a few corporations for limited time periods and specific public purposes, like the Erie Canal and early turnpikes and railroads. The corporate charters specified the duration of the corporation and exactly what business it could legally enter. Early corporations could not own other corporations and had only the explicit rights granted in their government charter—any desired changes had to be approved by the government. They could not lobby, donate money to political campaigns or claim any constitutional rights. They justified by their orientation toward serving the society first and shareholders secondarily.
With the advent of early modern corporations during and after the Civil War things began to change. Shortly before his assassination Abraham Lincoln wrote to Col William Elkins “I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of our country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war.” As states began to compete for large corporations they loosened corporate laws to the point where anyone could start a corporation with no restrictions and for unlimited duration so long as they filled out the paperwork and paid the fees. State courts bent over backwards to support corporate business. Corporations could own other corporations in any combinations corporate and tax lawyers dreamed up to avoid taxes and regulations and increase the shareholder take. Corporations became a legal vehicle for accumulating wealth and avoiding risk and responsibility. Perversely utilizing the 14th Amendment (freeing the slaves) business lawyers got the Supreme Court to pronounce that corporations would be considered “natural persons” before the law. (Sadly, of the 307 14th Amendment cases brought before the Supreme Court between 1890 and 1910, 19 were brought on behalf of African Americans while 288 were brought by corporations seeking rights.)
The social problems caused by the first huge corporations in oil and steel led to attempts to curb corporate power in the early 20th century, but none were really successful until the Great Depression came along. This great tragedy instilled the political willpower to regulate corporations and banks in ways necessary to prevent the huge boom and bust cycles and put boundaries on corporate power. In an uneasy truce with the government, corporations had to look after multiple stakeholders in making their decisions, including employees, the local community where they worked, and society at large, as well as shareholders. Large corporations and corporate finance continued to be regulated into the post-war years, and there were no major boom-and-bust occurrences through the 1970s.
Beginning in the late 70s the neoclassical economic doctrines of deregulation and shareholder value kicked in and reversed the post-war regulatory truce; and corporate power grew exponentially. The shareholder value doctrine turned corporations themselves into commodities, to be bought and sold, stripped of assets, reassembled, taken public, privatized in leveraged buy-outs again, all for the sole purpose of extracting short term financial gain by continually selling assets or pumping up stock price.
By the 80s corporations had gained through the courts all the legal rights of “natural persons”. Most egregiously courts held that corporate advertising was protected “free speech” and subsequently that giving money to political parties and candidates was also protected “free speech”. The final nail in the coffin of legitimate democracy came in the 2010 Supreme Court case called Citizens United , a 5-4 decision that not only upheld the legal fiction of corporate personhood but explicitly barred regulation of corporate political donations as an unconstitutional violation of corporations’ free speech rights. The private money power of large corporations is now fully leveraged by the “rights” of corporate persons, and elections can no longer be won without corporate money; a long way from the days when corporations were forbidden from financing or getting involved in politics.
The keystone pillar of Financial Feudalization is the financialization of the economy. Financialization is the process by which finance, traditionally a servant of the real world economy, becomes instead the master of the real world economy. Financialization is a tail wagging the dog story. Instead of Wall Street serving Main Street, Main Street ends up serving Wall Street. In the 70s the finance industry represented less than 10% of US Gross Domestic Product (GDP). By the 2000s finance was over 40% of US GDP, and growing. Our best and brightest were steered from engineering and entrepreneurship in the real economy to Wall Street finance firms, where income was twice that of the real economy. For example top physics PhDs were hired by Wall Street to create sophisticated algorithms for pricing complex derivatives and making billion dollar bets on everything from corn futures to currency plays. Financial Feudalism is ultimately built on casino style finance.
In medieval feudalism the lords competed against each other for territory through violence and legal maneuvering. Lord’s would wage war and consolidate land holdings and power through noble marriage mergers. Their ability to expand and consolidate power was based on how much land they could control. Their power and control was built on the backs of peasants, who provided the military manpower and the real economy labor that made their land actually productive and valuable. The peasants were tied to the land by law and the political power of the lords. The lords were “rentiers”, making their wealth by controlling the value created by peasant labor. They leveraged peasant productivity on the land to finance the acquisition of more land, and so on.
Modern financial feudal lords compete against each other for money through financial product trading and manipulation of financial markets. Financial lords wage financial trading and corporate control wars, and consolidate power through corporate mergers. Their ability to expand and consolidate power is based on how many dollars and markets they control. Their power and control is built on the backs of middle and working class peasants, who create the real economy assets from which the lords’ financial products (called “derivatives”) derive their value and upon which the lords conjure more debt to wage bigger financial battles. The middle and working class peasants are tied to the debt economy by law and the political power of the lords. Like their medieval counterparts, these lords are rentiers, making their wealth by controlling and trading on the value created by middle and working peasant labor. They leverage peasant productivity and debt (i.e. mortgages, student loans, car loans etc.) to finance trading and corporate acquisitions to control yet more money, and so on.
The financial lords can leverage assets to a far greater extent than medieval lords ever could because it is far easier to leverage assets in a sophisticated monetized economy than a land based economy. In the financial casino that is modern “free-market” finance, financial lords routinely leverage their assets at ratios of 30 to 1 and more (30 dollars of other people’s money to one dollar of their own) in seeking huge short term profits while risking relatively little of their own assets. The derivatives financial casino is now TWENTY TIMES LARGER than the real economy itself. In 2012 the dollar amount of financial derivative transactions was twenty times the GLOBAL Gross Domestic Product. In other words there are $20 of financial bets placed on everything from mortgage backed securities (like the notorious CDOs of Great Recession fame) to oil futures in the financial casino for every SINGLE dollar of actual real economy activity. Imagine the real economy is the NFL, and the finance industry is Fantasy Football. Fantasy Football piggy-backs on the NFL, since without the real football league games there can be no Fantasy Football. Now imagine that the Fantasy Leagues keep making more and more money compared to the real NFL, until Fantasy Football makes 20 times the money that the NFL makes. The parasite takes over the host, sucking more and more money out of the NFL into the Fantasy Leagues, until the NFL is dependent on the Fantasy Leagues to finance them. If the Fantasy Leagues crash, many of the real football players are out of work and the NFL severely suffers. If this inversion continues for long enough, the weakened NFL will eventually collapse, along with the Fantasy Leagues built on top of it. Because the only incentive in the whole system is short term profit, making a quick killing trumps any consideration of the long term health of football—or the economy. That is the insanity of modern fantasy finance in a nutshell.
Plutocracy simply means government by the wealthy; basically an oligarchy of the rich. That is the effective state of the Government of the United States at the moment. Some analysts reckon it a Corpocracy because so much of the wealth is held by corporate vehicles, which as legal persons have the advantage over real people in that they can’t be put in jail and they are eternal—they never die. Obviously as the economic might of the financial lords grew vis-a-vis the peasants so did their political muscle. The feedback loop between money, politics, and ideas is both cause and consequence of the rise of financial feudalism. Plutocrats rarely govern directly. Financial lords prefer financing front men of both parties rather than actually holding office, since their only governmental interest is to protect and enhance their profit making. They care little about most day to day governing activities, and well paid lobbyists take care of any loose ends that could affect their profits. What the lords DO care about is the general atmosphere of government, and the appropriate responses to occasional critical legislation.
Since the 90s the power of the lords has insulated bankers and financiers not only from effective regulation but also from criminal legal repercussions. Like their medieval counterparts, the lords are above the law; or rather they ARE the de facto law. This does NOT mean some lesser lords are not occasionally “thrown under the bus” as scapegoats to protect the plutocracy, since such token sacrifices give the illusory impression of cleansing the system, thus diverting attention from the deeper need for serious systemic change.
PILLAR FIVE—SOCIOPATHIC INCENTIVES
According to the American Psychological Association, the key traits of sociopathic behavior, along with the ability to charm and manipulate people, are self-absorption, an overly elevated sense of self-worth, and an almost complete disregard for the well-being of others. These traits also define the nature of the incentive structure of financial feudalism: single-minded focus on the holy grail of maximum short-term profit which creates an elevated sense of self or institutional worth, and a complete disregard of third parties unless such disregard threatens maximization of short-term profit.
Financial feudalism assumes that those institutions and individuals who participate in the economic system are as single-minded in their pursuit of maximum short-term personal profit as the system itself, so the system links the pursuit of personal profit to the system pursuit of maximum profit. The more and faster you can directly increase the bottom line of your corporate entity, the more your personal bottom line will increase. This applies to all personnel, not just sales and marketing. The human resources, legal, accounting and other “support” functions are NOT recognized as having legitimate goals other than profit making, and are disincentivized by low pay and long hours (and ideally outsourced or done away with if at all possible) UNLESS they can contribute DIRECTLY to the bottom line by manipulating laws and accounting rules to increase and protect profit. The system also assumes that its individual and corporate participants, like the system itself, are voracious in their desire for more. IT IS NEVER OK TO BE SATISFIED. No one ever has enough, and therefore no one can take their eye off the ball of profits to consider other goals. To the system such an attitude is treasonous since it dares to challenge the monotheistic goal of profit with other considerations. Hence such an attitude is dealt with severely through the avenues of pay disincentives or out-right job losses.
These five pillars hold up financial feudalism. Until they are knocked down financial feudalism will reign. The real challenge is figuring out how we as a society can rest control of our future from our new feudal lords and restore our once prosperous, relatively fair, and well-educated nation. If we do not, the increasing concentration of wealth and power of the lords will worsen and we will face not only the end of any semblance of democracy but also correspondingly the increasing bondage of peasantry.
HOW DO WE RESPOND TO FINANCIAL FEUDALISM?
Admittedly, the above diagnosis is not cheerful, unless you are one of the feudal lords. However we should take heart because this is a time of opportunity as well as peril, an exciting time of transition. Because it doesn’t correspond to reality, financial feudalism cannot be sustained over time: even if we are irresponsible in our reaction to it, it will implode in on itself. The continuing Great Recession and its fallout have driven many people to start rethinking what they assumed: about economics, about what is life for, about society. This is very encouraging. Additionally, there are even some feudal lords who are unhappy with the system, challenging it in word, if not in deed. The first step in change is awareness, in seeing when we see and hearing when we hear. In Part II of Financial Feudalism and Collapsing Democracy, we will look at ways to positively respond to financial feudalism. Stay tuned.