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theodore M I R A L D I mpa ... editor, publisher, writer
Thursday, December 26, 2019
How America is REVERTING Back to the FEUDAL Age
Shutterstock Joel Kotkin
America’s birth represented a dramatic break from the past. Save for a few vestiges of the old European feudal order, mostly in the plantation economy of the Deep South, there was no hereditary nobility, no national church and, thanks to George Washington’s modesty, no royal authority.
At least among whites, there was also far less poverty in America, compared to Europe’s intense, intractable, multigenerational poverty. In contrast, as Jefferson noted in 1814, America had fewer “paupers,” and the bulk of the population was “fed abundantly, clothed above mere decency, to labor moderately and raise their families.”
Yet in recent decades this country has begun to show signs of growing feudalization. This trend has been most pronounced in the economy, where income growth has skewed dramatically towards the ultra-rich, creating a ruling financial and now tech oligarchy. This is a global phenomenon: Starting in the 1970s, upward mobility for middle and working classes across all advanced economies began to stall, while the prospects for the upper classes rose dramatically.
The fading prospects for the new generation are all too obvious. Once upon a time, when the boomers entered adulthood, they entered an ascendant middle class. According to a recent study by the St. Louis Federal Reserve, their successors, the millennials, are in danger of becoming a “lost generation” in terms of wealth accumulation.
This generational shift will shape our future economic, political and social order. About 90 percent of those born in 1940 grew up to experience higher incomes than their parents did, according to researchers at the Equality of Opportunity Project. This proportion was only 50 percent among those born in the 1980s, and the chances of middle-class earners moving up to the top rungs of the earnings ladder has declined by approximately 20 percent since the early 1980s.
Corporate CEOs used to boast of starting out in the mailroom. There will not be many of those stories in the future.
In feudal society, two classes primarily exercised power — what the French referred to as the First Estate, the clergy, and the Second Estate, comprised of the warrior-aristocratic elite. Everyone else, even successful merchants, resided in the Third Estate, and most were peasants living at subsistence levels. This was a society, noted historian Pierre Riché, composed of “those who prayed, those who fought, and those who labored.”
Contemporary society may have little place for orthodox religion, and our military, however impressive, hardly constitutes an effective ruling class. But we are beginning to see the elevation of two very powerful classes — one dominant economically, the other culturally. Meanwhile, the power of today’s Third Estate inexorably weakens.
The ultra-rich represent an emergent global aristocracy — or rather, a new oligarchy. Fewer than 100 billionaires now own as much as 50 percent of the world’s assets, the same amount that around 400 billionaires owned a little more than five years ago.
In the United States, the richest 400 US citizens now have more wealth than 185 million of their fellow Americans combined. The shift has been dramatic: The top 1 percent in America captured just 4.9 percent of total US income growth from 1945 to 1973, but in the following two decades, the country’s richest classes gobbled up the majority of US income growth.
Patterns of property ownership reflect the very same trends that anchored both the medieval aristocratic and ecclesiastical classes. The proportion of land owned by the nation’s hundred largest private landowners grew by nearly 50 percent between 2007 and 2017. In 2007, according to the Land Report, this group owned a combined 27 million acres of land, equivalent to the area of Maine and New Hampshire combined. A decade later, the 100 largest landowners had holdings of more than 40 million acres. Their holdings are now larger than the entirety of New England. Even in the vast American West, where much of the land remains in public hands, billionaires have created expansive estates that many fear will make the rest of the local population land-poor.
In the past, the oligarchy tended to be associated with either Wall Street or industrial corporate executives. But today the predominant and most influential group consists of those atop a handful of mega-technology firms. Six firms — Amazon, Apple, Facebook, Google, Microsoft and Netflix — have achieved a combined net worth equal to one-quarter of the NASDAQ, more than the next 282 firms combined and equal to the gross domestic product of France.
Seven of the world’s 10 most valuable companies come from this industry. Tech giants have produced eight of the 20 wealthiest people on the planet. Among the nation’s billionaires, all those under 40 live in the state of California, with 12 in San Francisco. In 2017, the tech industry produced 11 new billionaires, mostly in California. Only China, home to nine of the world’s top-20 tech firms, presents any kind of challenge to their domination.
Initially many Americans, even on the left, saw the rise of the tech oligarchy as both transformative and positive. Observing the rise of the technology industry, the futurist Alvin Toffler prophesied “the dawn of a new civilization,” with vast opportunities for societal and human growth. But today we confront a reality more reminiscent of the feudal past, with ever greater concentrations of wealth, along with less social mobility and material progress.
Rather than Toffler’s tech paradise, we increasingly confront what the Japanese futurist Taichi Sakaiya, writing three decades ago, saw as the dawn of “a high-tech middle ages.” Rather than epitomizing American ingenuity and competition, the tech oligarchy increasingly resembles the feudal lords of the Middle Ages. With the alacrity of the barbarian warriors who took control of territory after the fall of the Roman Empire, they have seized the strategic digital territory, and they ruthlessly defend their stake.
Such concentrations of wealth naturally seek to concentrate power. In the Middle Ages, this involved the control of land and the instruments of violence. In our time, the ascendant tech oligarchy has exploited the “natural monopolies” of Web-based business. Their “super-platforms” depress competition, squeeze suppliers and reduce opportunities for potential rivals, much as the monopolists of the late 19th century did. Firms like Google, Facebook and Microsoft control 80 to 90 percent of their key markets and have served to further widen class divides not only in the United States but around the world.
Once exemplars of entrepreneurial risk-taking, today’s tech elites are now entrenched monopolists. Increasingly, these firms reflect the worst of American capitalism — squashing competitors, using indentured servants from abroad for upwards of 40 percent of their Silicon Valley workforce, fixing wages and avoiding taxes — while creating ever more social anomie and alienation.
The tech oligarchs are forging a post-democratic future, where opportunity is restricted only to themselves and their chosen few. As technology investor Peter Thiel has suggested, democracy — based on the fundamental principles of individual responsibility and agency — doesn’t fit comfortably with a technocratic mindset that believes superior software can address and modulate every problem.
This emerging world is far removed from the democratic capitalism that dominated the era after World War II. Rather than encouraging and accommodating families, today’s oligarchs promote a largely childless college campus environment, where they even pay female workers to freeze their eggs. Traditionally companies liked employees with families. Not so much in the brave new tech world, which demands long hours and little time off for such things as raising children.
As for the rest of the population, the prospects are even bleaker. In the tech hub of San Francisco, the middle-class family is almost extinct. The city has lost 31,000 home-owning families over the past decade. It leads the state in economic inequality. The evidence of massive inequality, pervasive homelessness and social dysfunction fills the streets.
Silicon Valley, located in the suburbs south of the city, has also become profoundly less egalitarian. It is increasingly divided between an entrenched ultra-wealthy class and a dependent poor class, working largely in the service industries. By 2015, some 76,000 millionaires and billionaires called Santa Clara and San Mateo counties home, while many in the area struggle to feed their families and pay their bills each month. Nearly 30 percent of Silicon Valley’s residents rely on public or private assistance.
Wired magazine’s Antonio García Martínez describes the contemporary Valley as “feudalism with better marketing.” In Martínez’s view, a plutocratic elite of venture capitalists and company founders sits above the still-affluent cadre of skilled professionals — well paid, but living only ordinary middle-class lives, given taxes and high prices. Below them lies a vast population of gig workers, whom Martínez compares with sharecroppers in the South. And at the very bottom lies an untouchable class of homeless, those addicted to drugs and criminals.
Martínez describes a society that, as in the Middle Ages, is “highly stratified, with little social mobility.” High prices make it all but impossible for anyone except the very affluent to own their homes. Workers in the gig economy, much less the “untouchables,” have little chance to improve their lot but struggle to barely pay their rent or are forced to sleep in their cars, on friend’s couches, or commute long distances from the outlying periphery.
This new feudal order rests on a new clerisy, which has now taken the cultural and intellectual role exercised by the old First Estate. Although largely secular, these worthies take on the role of ecclesiastical authorities from medieval times, seeing themselves as anointed to direct human society, a modern version of the feudal “oligarchy of priests and monks whose task it was to propitiate heaven.”
Far larger and broader than the oligarchy, the clerisy spans an ever‑growing section of the workforce that largely works outside material capitalist enterprise — as teachers, consultants, lawyers, government workers and even doctors, more of whom now work as employees or contractors than owners. These professions have only grown, while those of the traditional middle class — small business owners, workers in basic industries and construction — have seen their share of the job market shrink.
Estimates of the size of the clerisy vary. Michael Lind estimates what he calls the “overclass” at some 15 percent of the American workforce, far larger than the membership of the old First Estate, which was closer to 1 percent of the French population. Charles Murray, on the other hand, offers a narrower estimate including only those at the top echelon in law, government and universities — roughly 2.4 million people out of a country of more than 320 million.
At its apex, the clerisy today is dominated by what Daniel Bell would define as the “knowledge class.” Made up largely of the well-educated offspring of the affluent, this class has become increasingly hereditary in part because well-educated people marry each other. Between 1960 and 2005, the share of men with university degrees who married women with university degrees nearly doubled, from 25 to 48 percent. “After one generation,” as Bell noted, “a meritocracy simply becomes an enclaved class.”
The new clerisy is crucially important to the new oligarchs, who need allies in the government, media and academia to maintain their supremacy. In many cases the tech elite now control the clerisy’s own industries. Consider the media, with Jeff Bezos’ takeover of The Washington Post, and the entertainment industry, with the rise of Netflix, Apple and Amazon in Hollywood.
The political rise of this cultural overclass has been building for more than 50 years. As early as the 1960s, presidential historian Theodore White spoke of the “the new priesthood . . . of action intellectuals” that shaped the John F. Kennedy administration. This mingling of intelligentsia and power reached a pinnacle during the presidency of Barack Obama, whose administration was staffed almost exclusively with products of the nation’s elite universities. More than 60 administration officials, roughly a fourth of Obama’s overall appointments, had attended just one school — Harvard. Remarkably, more top administration officials had degrees from Oxford University than from any American public university.
Like the old First Estate, the clerisy — what the French socialist writer Christophe Guilluy calls “the privileged stratum” — operate from an assumption of “moral superiority” that justifies their right to rule. They represent the apotheosis of H. G. Wells’s notion of an “emergent class of capable men,” who could take upon itself the task of “controlling and restricting . . . the non-functional masses.” This new elite, Wells predicted, would replace democracy with “a higher organism,” what he called “the New Republic.”
Whereas the old First Estate justified its control based on spiritual dogma, the modern clerisy bases much of its power on its reading of “science.” Its members claim that, rather than mere factionalism, they represent an “objective” perspective above personal considerations. “When scientists say they want to live up to their social responsibilities, what they usually say is that they want more power than they have,” once observed Irving Kristol. “It means they want to run things, to take charge. It’s always nicer to run things than to be run by them.”
A shared belief in meritocratic superiority binds the oligarchs and the clerisy. This has led, as in medieval times, to a remarkable sharing and dissemination of orthodoxy. Even professions such as journalism, once at least somewhat diverse philosophically, have become, with few exceptions, boosters of the “progressive” party line. By 2018, barely 7 percent of US reporters stated they were Republicans; some 97 percent of all journalist political donations go to Democrats.
Similar patterns can be seen in other media as well. Once divided between conservatives and liberals, Hollywood and its imitators elsewhere now tilt heavily to the Left. Liberal columnist Jonathan Chait, reviewing the offerings of major studios and networks, described what he called “a pervasive, if not total, liberalism.” In 2018, over 99 percent of all major entertainment executives’ donations went to Democrats.
But the ultimate engine of the clerisy’s power, and the prime incubator of its orthodoxy, lie in the universities. Academe has expanded its influence and scope enormously in the last half century. The total number of people enrolled in college in the United States grew from five million in 1964 to nearly eight million in 1970 and to some 20 million today.
Yet even as the universities have expanded, it’s the elite tier that serves as the ultimate gatekeepers for the upper classes. In his book “Superclass: The Global Power Elite and the World They Are Making,” David Rothkopf compiled a list of more than 6,000 members of the “superclass” around the world — including leaders of corporations, banks and investment firms, governments, the military, the media and religious groups. After drawing a “globally and sectorally representative sample” of 300 members from the list, Rothkopf and his colleagues found that close to 3 in 10 attended one of 20 elite universities, with Stanford, Harvard and the University of Chicago most highly represented.
As elite universities have become more expensive and more critical to success, they have become, if anything, more socially exclusive, widening the gap between themselves and smaller, less well-positioned institutions. A National Journal survey of 250 top American public decision-makers — a critical part of the upper clerisy —found that 40 percent of them were Ivy League graduates. Only a quarter had earned graduate degrees from a public university. The days of rising up from a minor college to a position of influence and high status increasingly belong to the past.
Equally troubling, the clerisy, again like its medieval counterparts, has adopted a role as an enforcer not of free thought but of “progressive” orthodoxy. These trends are particularly acute in fields that most impact public policy and opinion. Well under 10 percent of faculty at leading law schools, such as Harvard, Yale, Stanford, Columbia and Berkeley, describe themselves as conservative.
Before we cede such power to the clerisy, we may want to consider the old Latin phrase quis custodiet ipsos custodes — who watches the watchers? In the rise of the clerisy, we see a powerful force for hierarchy, social stagnation and thought control that could rival the role played by its predecessors in medieval times.
As the oligarchy and clerisy have waxed, the prospects for the American third estate have either stagnated or gotten worse. In the United States, a country built on aspiration, the fading prospects for the new generation are now painfully obvious. Three-quarters of American adults today won’t grow up to be better off than their parents. According to Pew, a majority of parents think their children will be financially worse off than they are.
Unlike their parents, most of whom joined the middle-class yeomanry, many young people face a future as propertyless serfs. By 2030, according to a Deloitte study of US trends, millennials will account for barely 16 percent of the nation’s wealth. GenXers will hold 31 percent, but even in 2030, when they will be entering their 80s and 90s, boomers will still control a remarkable 45 percent of the nation’s wealth.
This erosion of the “American dream” centers largely on property. Since the end of feudalism, the rise of market-oriented democracy has accompanied the rapid dispersion of property ownership. This factor, critical in the earliest development of self-government in ancient Athens and Rome, was critical to the American Founders’ conception of a republic. During the middle of the 20th century, rates of homeownership in the United States expanded from 44 percent in 1940 to 63 percent thirty years later. Yet in the new generation, this prospect is fading.
In the United States, homeownership among the post-college cohort (ages 25–34) dropped to 37 percent in 2016, down from 45.4 percent in 2000, according to Census Bureau data.
Some pundits suggest the decline of homeownership stems from changing preferences among younger people. Planners, social pundits and urban intellectuals within the clerisy repeatedly make this assertion — one echoed by investors who seek to create a “rentership” society where people remain renters for life, enjoying their video games or houseplants. Yet virtually all surveys show that the vast majority of younger people would like to own a single-family home, and most want to raise children. The reason for not doing so lies with high housing costs.
In the emerging neo-feudal world, property ownership is increasingly restricted to older generations, who benefit from expanding home values and rental income, as well as wealthy institutional investors. In this new order, inheritance, notes French economist Thomas Piketty, seems destined to “make a comeback.” In the next generation, inheritance may play a role unseen since the 19th century. In America, a nation with a mythology disdainful of inherited wealth, millennials are counting on inheritance for their retirement at a rate three times that of the boomers. Among the youngest cohort, those 18 to 22, more than 60 percent see inheritance as their primary source of wealth as they age.
These changes in the patterns of ownership and class will likely reshape liberal democracy, creating “new forms of government,” predicts Stratfor’s Eric Schnurer, with “economics and social organization as different from today’s as our world is from the Middle Ages.” The shrinking of the yeoman class of small businesspeople and property owners certainly undermines the ballast of democratic community life and could well accelerate the already ongoing radicalization of American politics.
This radicalization is clearest among millennials, those faced with limited prospects for upward mobility. Some 40 percent of millennials, notes Pew, favor limiting speech deemed offensive, well above the 27 percent of GenXers, 24 percent of boomers and 12 percent of the oldest, many of whom recall the censorship imposed by Fascist and Communist regimes of the past. Millennials are also more likely to be dismissive about basic constitutional civil rights and are even more accepting of a military coup than previous generations.
This new radical bent extends to both right and left. In November 2016, more white American millennials voted for Donald Trump than did for Hillary Clinton. But the new radicalism is, for now, most pronounced on the left. During the 2016 primaries, socialist Bernie Sanders outpolled Clinton and Trump combined. A 2016 poll by the Victims of Communism Memorial Foundation found that 44 percent of American millennials favored socialism, while another 14 percent chose Fascism or Communism. By 2024, these millennials will be by far the country’s biggest voting bloc.
Drawing little hope from the private economy, many millennials endorse policies that favor handing control of American economic life to Washington. Some of this tendency rests on environmental concerns, but economic inequality drives much of the thinking. As one of the architects of the Green New Deal recently said, “Do you guys think of [the Green New Deal] as a climate thing? Because we really think of it as a how-do-you-change-the-entire-economy thing.”
Ultimately millennials’ shift to the left could lead to a conflict between the oligarchs and the clerisy over the appropriation of wealth. The way things look now, the battle will be over who pays for an ever-expanding welfare state, not how to expand the middle class. This is likely to shift our politics increasingly in an authoritarian direction. As the great historian Barrington Moore noted, “no bourgeois, no democracy.” In a country where the middle ranks are shrinking, the elites more powerful, and ideological polarization is on the rise, the prospects for democracy, even in its greatest homeland, could be grim indeed.
In the world envisioned by the oligarchs and the clerisy, the poor and much of the middle class are destined to become more dependent on the state. This dependency could be accelerated as their labor is devalued both by policy hostile to the industrial economy and by the greater implementation of automation and artificial intelligence.
Opposing these forces will be very difficult, particularly given the orientation of our media, academia and the nonprofit world, as well as the massive wealth accumulated by the oligarchs. A system that grants favors and entertainment to its citizens but denies them property expects little in return. This kind of state, Tocqueville suggested, can be used to keep its members in “perpetual childhood”; it “would degrade men rather than tormenting them.”
Reversing our path away from a new feudalism will require, among other things, a rediscovery of belief in our basic values and what it means to be an American. Nearly 40 percent of young Americans, for example, think the country lacks “a history to be proud of.” Fewer young people than previous generations place an emphasis on family, religion or patriotism. Rather than look at what binds a democratic society together, the focus on both right and left has been on narrow identities incapable of sustaining a democratic and pluralistic society. The new generation has become cut off from the traditions and values of our past. If one does not even know of the legacies underpinning our democracy, one is not likely to notice when they are lost. Recovering a sense of pride and identification with America’s achievements is an essential component of any attempt to recover the drive, ambition and self-confidence that propelled the United States to the space age. If we want to rescue the future from a new and pernicious form of feudalism, we will have to recover this ground.
To reverse neo-feudalism, the Third Estate — the class most threatened by the ascendency of the oligarchs and the clerisy — needs to reinvigorate its political will, just as it did during the American Revolution and in the various struggles that followed. “Happy the nation whose people has not forgotten to how to rebel,” noted the British historian R.H. Tawney. Whether we can understand and defy the new feudalism will determine the kind of world our children will inherit.
Joel Kotkin is the presidential fellow in urban futures at Chapman University and executive director of the Center for Opportunity Urbanism. His next book, “The Coming of Neo-Feudalism: A Warning to the Global Middle Class,” will be published in 2020. This essay was adapted from American Affairs magazine.