One of the factors that makes it difficult to think through
the economic consequences of the end of the industrial age is that we’ve all
grown up in a world where every form of economic activity has been channeled
through certain familiar forms for so long that very few people remember that
things could be any other way. Another of the factors that make the same effort
of thinking difficult is that the conventional economic thought of our time has
invested immense effort and oceans of verbiage into obscuring the fact that
things could be any other way.
Those are formidable obstacles. We’re going to have to
confront them, though, because one of the core features of the decline and fall
of civilizations is that most of the habits of everyday life that are standard
practice when civilizations are at zenith get chucked promptly into the recycle
bin as decline picks up speed. That’s true across the whole spectrum of
cultural phenomena, and it’s especially true of economics, for a reason
discussed in last
week’s post: the economic institutions and habits of a civilization
in full flower are too complex for the same civilization to support once it’s
gone to seed.
The institutions and habits that contemporary industrial
civilization uses to structure its economic life comprise that tangled realm of
supposedly voluntary exchanges we call “the market.” Back when the United
States was still contending with the Soviet Union for global hegemony, that
almost always got rephrased as “the free market;” the adjective still gets some
use among ideologues, but by and large it’s dropped out of use elsewhere. This
is a good thing, at least from the perspective of honest speaking, because the
“free” market is of course nothing of the kind. It’s unfree in at least two
crucial senses: first, in that it’s compulsory; second, in that it’s expensive.
“The law in its majestic equality,” Anatole France once
noted drolly, “forbids rich and poor alike to urinate in public, sleep under
bridges, or beg for bread.” In much the same sense, no one is actually forced
to participate in the market economy in the modern industrial world. Those who
want to abstain are perfectly free to go looking for some other way to keep
themselves fed, clothed, housed, and supplied with the other necessities of
life, and the fact that every option outside of the market has been hedged
around with impenetrable legal prohibitions if it hasn’t simply been
annihilated by legal fiat or brute force is just one of those minor details
that make life so interesting.
Historically speaking, there are a vast number of ways to
handle exchanges of goods and services between people. In modern industrial
societies, on the other hand, outside of the occasional vestige of an older
tradition here and there, there’s only one. Exchanging some form of labor for
money, on whatever terms an employer chooses to offer, and then exchanging
money for goods and services, on whatever terms the seller chooses to offer, is
the only game in town. There’s nothing free about either exchange, other than
the aforesaid freedom to starve in the gutter. The further up you go in the
social hierarchy, to be sure, the less burdensome the conditions on the
exchanges generally turn out to be—here as elsewhere, privilege has its
advantages—but unless you happen to have inherited wealth or can find some
other way to parasitize the market economy without having to sell your own
labor, you’re going to participate if you like to eat.
Your participation in the market, furthermore, doesn’t come
cheap. Every exchange you make, whether it’s selling your labor or buying goods
and services with the proceeds, takes place within a system that has been
subjected to the process of intermediation discussed in last week’s post. Thus,
in most cases, you can’t simply sell your labor directly to individuals who
want to buy it or its products; instead, you are expected to sell your labor to
an employer, who then sells it or its product to others, gives you part of the
proceeds, and pockets the rest. Plenty of other people are lined up for their
share of the value of your labor: bankers, landlords, government officials, and
the list goes on. When you go to exchange money for goods and services, the
same principle applies; how much of the value of your labor you get to keep for
your own purposes varies from case to case, but it’s always less than the whole
sum, and sometimes a great deal less.
Karl Marx performed a valuable service to political economy
by pointing out these facts and giving them the stress they deserve, in the
teeth of savage opposition from the cheerleaders of the status quo who, then as
now, dominated economic thought. His proposed solution to the pervasive
problems of the (un)free market was another matter. Like most of his generation of European
intellectuals, Marx was dazzled by the swamp-gas luminescence of Hegelian philosophy,
and followed Hegel’s verbose and vaporous trail into a morass of circular
reasoning and false prophecy from which few of his remaining followers have yet
managed to extract themselves.
It’s from Hegel that Marx got the enticing but mistaken
notion that history consists of a sequence of stages that move in a
predetermined direction toward some as-perfect-as-possible state: the same
idea, please note, that Francis Fukuyama used to justify his risible vision of
the first Bush administration as the glorious fulfillment of human history. (To
borrow a bit of old-fashioned European political jargon, there are
right-Hegelians and left-Hegelians; Fukuyama was an example of the former, Marx
of the latter.) I’ll leave such claims and the theories founded on them to the
true believers, alongside such equally plausible claims as the Singularity, the
Rapture, and the lemonade oceans of Charles Fourier; what history itself shows
is something rather different.
What history shows, as already noted, is that the complex
systems that emerge during the heyday of a civilization are inevitably scrapped
on the way back down. Market economies are among those complex systems. Not all
civilizations have market economies—some develop other ways to handle the
complicated process of allocating goods and services in a society with many
different social classes and occupational specialties—but those that do set up
market economies inevitably load them with as many intermediaries as the
overall complexity of their economies can support.
It’s when decline sets in and maintaining the existing level
of complexity becomes a problem that the trouble begins. Under some conditions,
intermediation can benefit the productive economy, but in a complex economy,
more and more of the intermediation over time amounts to finding ways to game
the system, profiting off economic activity without actually providing any
benefit to anyone else. A complex
society at or after its zenith thus typically ends up with a huge burden of
unproductive economic activity supported by an increasingly fragile foundation
of productive activity.
All the intermediaries, the parasitic as well as the
productive, expect to be maintained in the style to which they’re accustomed,
and since they typically have more wealth and influence than the producers and
consumers who support them, they can usually stop moves to block their access
to the feed trough. Economic contraction, however, makes it hard to support
business as usual on the shrinking supply of real wealth. The intermediaries
thus end up competing with the actual producers and consumers of goods and
services, and since the intermediaries typically have the support of
governments and institutional forms, more often than not it’s the
intermediaries who win that competition.
It’s not at all hard to see that process at work; all it
takes is a stroll down the main street of the old red brick mill town where I
live, or any of thousands of other towns and cities in today’s America. Here in
Cumberland, there are empty storefronts all through downtown, and empty
buildings well suited to any other kind of economic activity you care to name
there and elsewhere in town. There are plenty of people who want to work, wage
and benefit expectations are modest, and there are plenty of goods and services
that people would buy if they had the chance. Yet the storefronts stay empty,
the workers stay unemployed, the goods and services remain unavailable. Why?
The reason is intermediation. Start a business in this town,
or anywhere else in America, and the intermediaries all come running to line up
in front of you with their hands out. Local, state, and federal bureaucrats all
want their cut; so do the bankers, the landlords, the construction firms, and
so on down the long list of businesses that feed on other businesses, and can’t
be dispensed with because this or that law or regulation requires them to be
paid their share. The resulting burden is far too large for most businesses to
meet. Thus businesses don’t get started, and those that do start up generally
go under in short order. It’s the same problem faced by every parasite that
becomes too successful: it kills the host on which its own survival depends.
That’s the usual outcome when a heavily intermediated market
economy slams face first into the hard realities of decline. Theoretically, it
would be possible to respond to the resulting crisis by forcing disintermediation, and thus salvaging the
market economy. Practically, that’s usually not an option, because the
disintermediation requires dragging a great many influential economic and
political sectors away from their accustomed feeding trough. Far more often
than not, declining societies with heavily intermediated market economies
respond to the crisis just described by trying to force the buyers and sellers
of goods and services to participate in the market even at the cost of their
own economic survival, so that some semblance of business as usual can proceed.
That’s why the late Roman Empire, for example, passed laws
requiring that each male Roman citizen take up the same profession as his
father, whether he could survive that way or not. That’s also why, as noted last week, so many
American jurisdictions are cracking down on people who try to buy and sell
food, medical care, and the like outside the corporate economy. In the Roman
case, the attempt to keep the market economy fully intermediated ended up
killing the market economy altogether, and in most of the post-Roman
world—interestingly, this was as true across much of the Byzantine empire as it
was in the barbarian west—the complex money-mediated market economy of the old
Roman world went away, and centuries passed before anything of the kind
reappeared.
What replaced it is what always replaces the complex
economic systems of fallen civilizations: a system that systematically chucks
the intermediaries out of economic activity and replaces them with personal
commitments set up to block any attempt to game the system: that is to say,
feudalism.
There’s enough confusion around that last word these days
that a concrete example is probably needed here. I’ll borrow a minor character
from a favorite book of my childhood, therefore, and introduce you to Higg son
of Snell. His name could just as well be Michio, Chung-Wan, Devadatta, Hafiz,
Diocles, Bel-Nasir-Apal, or Mentu-hetep, because the feudalisms that evolve in
the wake of societal collapse are remarkably similar around the world and
throughout time, but we’ll stick with Higg for now. On the off chance that the
name hasn’t clued you in, Higg is a peasant—a free peasant, he’ll tell you with
some pride, and not a mere serf; his father died a little
while back of what people call “elf-stroke” in his time and we’ve shortened to
“stroke” in ours, and he’s come in the best of his two woolen tunics to the
court of the local baron to take part in the ceremony at the heart of the
feudal system.
It’s a verbal contract performed in the presence of
witnesses: in this case, the baron, the village priest, a couple of elderly
knights who serve the baron as advisers, and a gaggle of village elders who
remember every detail of the local customary law with the verbal exactness
common to learned people among the illiterate. Higg places his hands between
the baron’s and repeats the traditional pledge of loyalty, coached as needed by
the priest; the baron replies in equally formal words, and the two of them are
bound for life in the relationship of liegeman to liege lord.
What this means in practice is anything but vague. As the baron’s man, Higg has the lifelong
right to dwell in his father’s house and make use of the garden and pigpen; to
farm a certain specified portion of the village farmland; to pasture one milch
cow and its calf, one ox, and twelve sheep on the village commons; to gather,
on fourteen specified saint’s days, as much wood as he can carry on his back in
a single trip from the forest north of the village, but only limbwood and
fallen wood; to catch two dozen adult rabbits from the warren on the near side
of the stream, being strictly forbidden to catch any from the warren on the far
side of the millpond; and, as a reward for a service his great-grandfather once
performed for the baron’s great-grandfather during a boar hunt, to take
anything that washes up on the weir across the stream between the first sound of the matin bell and the last of the
vespers bell on the day of St. Ethelfrith each year.
In exchange for these benefits, Higg is bound to an equally
specific set of duties. He will labor in the baron’s fields, as well as his own
and his neighbors, at seedtime and harvest; his son will help tend the baron’s
cattle and sheep along with the rest of the village herd; he will give a tenth
of his crop at harvest each year for the support of the village church; he will
provide the baron with unpaid labor in the fields or on the great stone keep
rising next to the old manorial hall for three weeks each year; if the baron
goes to war, whether he’s staging a raid on the next barony over or answering
the summons of that half-mythical being, the king, in the distant town of
London, Higg will put on a leather jerkin and an old iron helmet, take a stout
knife and the billhook he normally uses to harvest wood on those fourteen
saint’s days, and follow the baron in the field for up to forty days. None of
these benefits and duties are negotiable; all Higg’s paternal ancestors have
held their land on these terms since time out of mind; each of his neighbors
holds some equivalent set of feudal rights from the baron for some similar set
of duties.
Higg has heard of markets. One is held annually every St.
Audrey’s day at the king’s town of Norbury, twenty-seven miles away, but he’s
never been there and may well never travel that far from home in his life. He
also knows about money, and has even seen a silver penny once, but he will live
out his entire life without ever buying or selling something for money, or
engaging in any economic transaction governed by the law of supply and demand.
Not until centuries later, when the feudal economy begins to break down and
intermediaries once again begin to insert themselves between producer and
consumer, will that change—and that’s precisely the point, because feudal
economics is what emerges in a society that has learned about the dangers of
intermediation the hard way and sets out to build an economy where that doesn’t
happen.
There are good reasons, in other words, why medieval
European economic theory focused on the concept of the just price, which is not
set by supply and demand, and why medieval European economic practice included
a galaxy of carefully designed measures meant to prevent supply and demand from
influencing prices, wages, or anything else. There are equally good reasons why
lending money at interest was considered a sufficiently heinous sin in the
Middle Ages that Dante, in The Inferno, put lenders at the
bottom of the seventh circle of hell, below mass murderers, heretics, and
fallen angels. The only sinners who go further down than lenders were the
practitioners of fraud, in the eighth circle, and traitors, in the ninth: here
again, this was a straightforward literary reflection of everyday reality in a
society that depended on the sanctity of verbal contracts and the mutual
personal obligations that structure feudal relationships.
(It’s probably necessary at this point to note that yes, I’m
quite aware that European feudalism had its downsides—that it was rigidly
caste-bound, brutally violent, and generally unjust. So is the system under
which you live, dear reader, and it’s worth noting that the average medieval
peasant worked fewer hours and had more days off than you do. Medieval
societies also valued stability or, as today’s economists like to call it,
stagnation, rather than economic growth and technological progress; whether
that’s a good thing or not probably ought to be left to be decided in the far
future, when the long-term consequences of our system can be judged against the
long-term consequences of Higg’s.)
A fully developed feudal system takes several centuries to
emerge. The first stirrings of one, however, begin to take shape as soon as
people in a declining civilization start to realize that the economic system
under which they live is stacked against them, and benefits, at their expense,
whatever class of parasitic intermediaries their society happens to have
spawned. That’s when people begin looking for ways to meet their own economic
needs outside the existing system, and certain things reliably follow. The
replacement of temporary economic transactions with enduring personal
relationships is one of these; so is the primacy of farmland and other
productive property to the economic system—this is why land and the like are
still referred to legally as “real property,” as though all other forms of
property are somehow unreal; in a feudal economy, that’s more or less the case.
A third consequence of the shift of economic activity away from the institutions and forms of a failing civilization has already been mentioned: the abandonment of money as an abstract intermediary in economic activity. That’s a crucial element of the process, and it has even more crucial implications, but those are sweeping enough that the end of money will require a post of its own. We’ll discuss that next week.
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Finally, here's a note from the volunteer moderator of the Facebook page for my latest book, Twilight's Last Gleaming. By all means check it out.
"The Facebook Page for Twilight’'s Last Gleaming can be found at https://www.facebook.com/TwilightsLastGleaming. You are not required to have a Facebook account if you simply want to view the Page. To promote the book, the plan is for the Page to run a series of posts which will briefly describe interesting events in American history. Three posts (A.K.A. Status Updates) have already added, two on the Civil War and its aftermath and one about our earliest involvement with Russian Communists. The readership of this blog is invited to submit entries for these Status Updates. The entries should be less than 500 words, describe a specific event in American history that should have some relevance to the book, however tenuous, and end with a variant of the following tag line “And to find out what happened XXX years later read Twilight’s Last Gleaming.” The events described should hopefully crisscross all over the political and social spectrum and be written in a way that engages the reader.
"To submit an entry via Facebook, please use the Message button at the lower right of the Cover Photo on the Facebook Page. You can also add a photograph or picture file that has a horizontal orientation to the message. That will be become the new Cover Photo while your post is new. Please only send pictures or photos are not covered via copyright and can be considered in the public domain. If you want to submit an entry but do not have a Facebook Account, then send it as a comment to this blog with the header “Twilight’s Last Gleaming Post”. We look forward to seeing your entries!
"The Facebook Page also accepts Posts To Page, which should deal with any other thoughts or issues relating to Twilight’s Last Gleaming. Posts To Page entries will be moderated with guidelines similar to what JMG uses for comments to this blog.
"We would be delighted if Facebook users Liked the Page so they can get the Status Update posts. If you read one that you like, please Share it with your Facebook Friends, or even your non-Facebook friends. Enjoy the book!"
