Roughly a half century ago, rising energy prices devastated Western economies, helping make the autocrats of the Middle East insanely rich while propping up the slowly disintegrating Soviet empire. Today the world is again reeling from soaring energy prices; but this time the wound is self-inflicted — a product of misguided policies meant to accelerate the transition to green energy.
The labouring masses are restless, as evidenced by the Canadian trucker strike, union drives in Amazon warehouses in the US and in demonstrations throughout the developing world. More revealing still may be the turmoil in the labour markets, where workers are changing jobs, creating their own and, overall, refusing to return to the structures of the pre-pandemic order.
In 1930, John Dos Passos wrote that America is many things: it is a “slice of a continent”, “the world’s greatest river valley”, and “a set of bigmouthed officials with too many bank accounts”. “But mostly,” he wrote in The 42nd Parallel, America “is the speech of the people”.
We bemoan autocracies in Latin America, the Middle East, Africa, Russia and China but largely ignore the more subtle authoritarian trend in the West. Don’t expect a crudely effective dictatorship out of Orwell’s Nineteen Eighty-Four: we may remain, as we are now, nominally democratic, but be ruled by a technocratic class empowered by greater powers of surveillance than those enjoyed by even the nosiest of dictatorships.
The new autocracy rises from a relentless economic concentration which has engendered a new and fabulously wealthy elite. Five years ago, around four hundred billionaires owned as much as half of the world’s assets. Today, only one hundred billionaires own that share, and Oxfam reduces that number to a mere twenty-six. In avowedly socialist China, the top one percent of the population holds about one-third of the country’s wealth, up from 20 percent two decades ago. Since 1978, China’s Gini coefficient, which measures inequality of wealth distribution, has tripled.
An OECD report issued before the Covid pandemic finds that almost everywhere, the non-rich share of national wealth has declined. These trends can be seen even in social democracies like Sweden and Germany. In the United States, as the conservative economist John Michaelson put it succinctly in 2018, the economic legacy of the last decade is “excessive corporate consolidation, a massive transfer of wealth to the top 1 percent from the middle class.”
This process has developed both in the tangible and digital economies. In Great Britain, where land prices have risen dramatically over the past decade, less than one percent of the population owns half of all the land. On the European continent overall, farmland has fallen increasingly into the hands of a small cadre of corporate owners and the mega-wealthy. In America, the largest farmland holder is Bill Gates, with over 200,000 acres, while Ted Turner and John Malone preside over lordly estates of over two million acres each — larger than several American states.
As property has concentrated, small-holders have come under increased pressure. Australia historically has enjoyed high rates of homeownership, but the rate among twenty-five to thirty-four year-olds dropped from more than 60 percent in 1981 to only 45 percent in 2016. The proportion of owner-occupied housing in once-egalitarian Australia has dropped by 10 percent in the last twenty-five years. Morgan Stanley predicts that the US will soon become primarily a “rentership society” where Wall Street firms seek to turn homes, furniture and other necessities into rental products.
The digital economy is similarly dominated by a small group of giant firms. These overlords together exercise control of up to 90 percent of critical markets such as basic computer operating systems, social media, online search advertising and book sales. No longer satisfied with controlling the pipelines, the tech oligarchy increasing buys up old news outlets and “curates” the news to its tastes. It increasingly dominates mainstream entertainment too: the pending sale of MGM to Amazon is just the most recent example of its conquest and consolidation of the means of communication.
Like the barbarian princes who shaped the Middle Ages, the new oligarchs have been able to seize their fiefdoms with little resistance from weak central governments. The pandemic accelerated this process; its lockdowns and restraints on mobility proved a bonanza for tech companies like Google, whose profits doubled during the period. In this highly regulated environment, the tech-rich have simply gotten richer: seven of the ten richest Americans come from the tech sector. Apple, by some calculations, is now worth more than the entire oil and gas industry. The already obscenely rich have become richer still. Jeff Bezos alone saw his net worth jump by an estimated $34.6 billion in the first two months of the pandemic, while his company has enjoyed continued revenue and profit growth.
As executive compensation reached the stratosphere in Big Tech and finance, small businesses face what the Harvard Business Review calls “an existential threat.” Experts now warn that one third of small businesses, which comprise the majority of US companies and employ nearly half of all workers, could ultimately shut down for good. Hundreds of thousands have already disappeared, including nearly half of all black-owned businesses. Particularly damaged have been the small merchants along Main Street and those working for them, such as restaurant and hospitality workers.
Read the rest of this piece at The Spectator World.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Homepage photo: Chris Devers, via Flickr under CC 2.0 License.
Over the past several decades, the progressive Left has successfully fulfilled Antonio Gramsci’s famed admonition of a “long march through the institutions”. In almost every Western country, its adherents now dominate the education system, media, cultural institutions, and financial behemoths.
But what do they have to show for it? Not as much as they might have expected. Rather than a Bolshevik-style assumption of power, there’s every chance this institutional triumph will not produce an enduring political victory, let alone substantially change public opinion.
Demographic transitions present political opportunities, but do not protect politicians from their own folly. The shift in most Western countries to a more racially and ethnically diverse demographic has been widely seen by left-wingers as an opportunity to cement their ascendancy.
There is a hypocrisy at the heart of the West’s attitude to China: although we’re constantly warned about the threat from Beijing, our political and corporate elites seem intent on making this century a Chinese one. Unlike in the Thirties, this appeasement isn’t driven by fear and ignorance; it is motivated largely by greed.
And that greed could prove fatal. China’s “civilisation state”, deeply rooted in thousands of years of history, represents the most profound philosophical challenge to liberal values since the end of the Cold War. But our oligarchs choose to ignore this, preferring instead to genuflect to Beijing for financial gain.
America has only a limited feudal past, the plantation aristocracy of the antebellum South and the enormous class chasms of the Gilded Age being pretty much our only examples. Yet today—after decades of social mobility, a digital revolution that was supposed to empower individuals everywhere, and the construction of a vigorous anti-discrimination apparatus that putatively ensures equal rights and status—a rigid new social order with feudal elements has come into view.
This emerging class structure reprises, albeit with far less starvation, the patterns of the Middle Ages, with each class performing distinct social functions and defined economic roles. In this new order, there are two ascendant classes: the oligarchs and the clerisy. And there are two classes struggling to serve the ascendant classes, and to maintain for themselves a decent standard of living: the yeomanry and the new serfs.
The old feudal order evolved gradually, as the last structures of Roman republicanism first weakened, then totally collapsed due to the barbarian invasions. The seizure of Europe by the barbarian hordes upended an entire civilization, including its class structures. The collapse was due as much to the weakness of Roman institutions as to the ruthlessness of barbarian leaders. The feudalism that ensued would simplify society under the rule of two classes, the military aristocracy and the clerical class, while most people lived essentially in bondage to one or the other.
This historical precedent can help us make sense of the socioeconomic trends of America’s last half-century. Since the 1970s, the wealth differential between middle-income and upper-income households in the United States has grown. Data from the Census Bureau show that the share of national income going to the middle 60 percent of households has fallen to a record low. Wealth gains in recent decades have been made overwhelmingly by the top 1 percent of households, especially the top 0.5 percent. In 1945–73, the top 1 percent in America captured just 4.9 percent of total U.S. income growth; in the following two decades, this super-rich cohort gobbled up the majority of it. The combined wealth of the richest four hundred Americans now exceeds the total wealth of 185 million of their fellow citizens. Over the past three decades, the share of household wealth owned by the top 0.1 percent has increased from 7 percent to 22 percent.
This pattern has been accelerated by the pandemic. The number of millionaires around the world jumped to 56.1 million in 2021, with 5.2 million joining the group last year, according to the 2021 Credit Suisse Global Wealth Report. The number of ultra-high net worth individuals—those with a net worth above $50 million—grew by 24 percent, to 215,030. Last year, Amazon tripled its profits and Jeff Bezos made $70 billion; billionaires overall have earned more than $1 trillion since March. Alphabet, Amazon, Apple, Facebook, and Microsoft now make up 20 percent of the American stock market’s total value. As one Silicon Valley wag put it, America increasingly resembles “feudalism with better marketing.”
The similarities are not just material. In the Middle Ages, the aristocracy shared common views. Kings and chieftains fought over land and gold, but rarely (until the Reformation) ideas and truths. The ideals of a pluralistic society wouldn’t have meant anything to them, nor would John Stuart Mill’s marketplace of ideas. Now, after two centuries of an Enlightenment-influenced public square hot with dissent and debate, we observe the emergence of a singular mindset among the academy and the media—today’s clerisy—and the oligarchic elite. In the past, political views, religious beliefs, and special interests divided the elite and forced different factions to persuade and cajole and convince the masses of their respective sanctions. Every major city had multiple newspapers with distinct lines on current events, serving as organs for rival powers. Pro-slavery versus anti-slavery, labor versus management, Wall Street versus the farmers, interventionists versus isolationists: It’s a history of ideological conflict.
No such broad conflict exists among today’s nobility. They are unified in their progressive outlook on all things social and cultural. In the Middle Ages, the aristocracy often found allies among the Catholic clergy, who were willing to back the great landowners’ laws and swords with doctrines and rationales. There is a twenty-first-century clerisy, though it is rarely religious and operates in a secular consumer society. Its members aren’t priests. They are journalists, entertainers, credentialed professionals, and teachers. They provide the images, narratives, arguments, and artworks that reinforce the binding outlook, and they police dissenters as vigilantly as did the Inquisitors of old (though fortunately, so far, less lethally).
As society becomes more regulated and more dependent on expertise, the clerisy grows. Michael Lind estimates that this “overclass” constitutes some 15 percent of the American workforce, a far larger portion than the membership of the old First Estate (closer to 1 percent of the French population). Charles Murray describes them more narrowly as the top echelons in law, government, university, and media—roughly 2.4 million people in a country of more than 320 million.
Until the last four decades, the yeoman class—James Madison’s small proprietors—were America’s ascendant socioeconomic group. A study covering the United Kingdom, the Netherlands, and the United States shows that all three saw a rapid decline in the concentration of wealth from the 1820s through the 1970s. Never before had so much prosperity and relative security been so widely enjoyed.
Now, the numbers and influence of the yeomanry are declining. They still represent close to 50 percent of the population, notes Pew—a drop from 61 percent in 1971. Globalization has savaged many middle-class jobs, whether in factories or in services, transferring employment to China, India, and other developing countries. In many countries, immigration, much of it from poor countries, has undermined wage rates, particularly for lower-skilled workers, but now for professionals as well. Much of the global middle class is heavily in debt, mainly because of high housing costs.
In the United States, long known as the land of opportunity, the chance of middle-class earners’ moving to the top rungs of the earnings ladder has dropped by approximately 20 percent since the early 1980s. The pandemic has been particularly hard on this class. Though large chains have reported record sales during the lockdowns, more than 160,000 small businesses have closed. A survey by the advocacy group Main Street America predicts that as many as 7.5 million small businesses will go out of business by the time the crisis is over. By some estimates, upwards of one-third of small businesses will close down permanently.
The fall of the yeomanry poses a major threat to representative democracy. Once again, history provides a precedent. In Imperial Rome, small farmers and artisans were steadily displaced by slaves imported from the far ends of the expanding empire. Increasingly, occupations and social status came to be determined by heredity. By the end of the Republic, more than 75 percent of all property was owned by roughly 3 percent of the population, while more than four-fifths owned no property at all. Inequality paved the way for the feudal future.
The great social achievement of the mid- to late twentieth century lay in the movement of working-class, propertyless people, including minorities, into the ranks of business owners and homeowners. Today the flow runs in the opposite direction, as prospects for joining the middle class have declined and opportunities for advancement have dried up for everyone outside the professional and elite capitalist classes.
Working-class people, of whatever race, suffer the worst health-related impacts and have paid the most in lives during the pandemic. The same holds economically. In the U.S., roughly half of all job losses last April were in such low-paying fields as restaurants, hotels, and amusement parks; information and finance jobs were barely touched. Almost 40 percent of Americans making less than $40,000 a year lost their jobs in the pandemic, as the wage gains made during the first two years of the Trump Administration have largely evaporated.
Read the rest of this piece at First Things.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Homepage photo: ILO Asia-Pacific Flickr under CC 3.0 License.
Throughout the long and drawn-out negotiations over Joe Biden’s ambitious Build Back Better Act, two senators have emerged as punching bags for Democrats anxious to get the bill passed: Joe Manchin of West Virginia and Kyrsten Sinema of Arizona. The two moderates have been clear about their refusal to support the more ambitious items in the bill, and it’s brought them in for censure and even some online abuse from fellow Democrats, who believe that their cratering poll numbers need Build Back Better to help them survive the midterms.
When we think of oppressive regimes, we immediately think of the Stalinist model portrayed in Orwell’s Nineteen Eighty-Four, the heavy-handed thought control associated with Hitler’s Reich or Mao’s China. But where the old propaganda was loud, crude and often lethal, the contemporary style of thought control takes the form of a gentle nudging towards orthodoxy – a gentle push that gradually closes off one’s critical faculties and leads one to comply with gently given directives. Governments around the world, including in the UK, notes the Guardian, have been embracing this approach with growing enthusiasm.
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Gage Skidmore, used here under CC 2.0 License