Feudalism Index
Under feudalism, a few barons own about a fourth of the country, and the sum of all royalty, barons, lesser lords and nobles--representing maybe 5% of the population--own most of the country [1].
In such an "ownership-by-the-few" system, most people are paupers and serfs and must work hard for meager wages. Due to the rigidity of hierarchy which is built into a feudalist system, the corresponding lack of competition and of innovation prevents wages from rising.
In such a system however, capital gains (a surplus from selling assets at prices higher than you paid) represent over a fifth of all wages paid out--total wages aren't even as much as quintiple the capital gains made each year.
The explanation for this perverse ratio of wages to capital gains is that wages stay low for the reasons just mentioned above (hampering of competition, mitigation of innovation), but the asset prices rise when there is essentially no local competition--ie, when being The Guy who owns That One Machine in town, or That One Farm in town, etc., means pretty much "everything" with regard to personal wealth.
The primary asset in the conventionally feudalist systems of history (which were agrarian in nature) was land. And land prices rose steeply--making it more and more important to be "The Guy" who owns it.
A research paper on the topic (Scott M. Eddie, U of Toronto) shows why asset prices rise really fast under a Prussian system which was more feudalist (under a landed gentry system) [2]:
Regression analysis (using a dummy variable for size) on the pilot riding for this project, however, showed a premium of nearly 20% paid for properties larger than 100 hectares (Eddie 1997). Since knightly properties (Rittergüter), which entitled their owner to a seat in the local or provincial assembly, were typically large, this variable could have simply been a proxy for the price paid for political influence.
... and ...
In addition to the premium of about 100 marks per hectare which a property in excess of 100 hectares commanded, the prospective purchasers also paid about 22,000 marks more if it were designated a knightly estate, which entitled its owner to a seat in the local or provincial legislature.
As you can see, owning land meant having a vote over the lives of others. There was even a perverted, crony relationship where much graft (non-market income) was obtained:
Some price data can also be gleaned from the Prussian government's purchases of land to parcel out to German small farmers, as part of its anti-Polish demographic policy (SC 1887-1918). Most works on this issue aver that the government overpaid (Belgard 1907, Tonnies1923, Landau and Tomaszewski 1986); even the very agency that did the buying thought that was the case (SC 1907).
This rigid (unfree) system led to predictable increases in the price of assets such as land:
Goldsmith (1976, p. 155) shows a near sextupling of the value of land in Germany between 1850 and 1913, and an increase of 2.3 times between 1895 and 1913 alone.
A 6-fold increase in the price of land over 63 years is not actually a very high rate of increase--it comes out to just under 3% a year on average (US home prices [3] rose over twice as fast as that from 2000-2006). However, because labor productivity and wages didn't grow anywhere near 3% a year, it created artificial disparity in the ratio of capital gains to wages.
The 18 years from 1895-1913--where land prices rose 4.7% a year--merely added insult to injury, exacerbating an already-exponential (already deranged) trend.
A key consequence of the "capital gains" rising artificially under feudalism--in relation to wages--shows up in income inequality, where the income share of the top 5% was 21% in 1854, but it had become more than double that (when including capital gains) by 1913-1917.**
It is not "natural" for the top 5% to earn over 40% of national income--ie, to average more than 8 times the national average income--but feudalism artificially creates this much income inequality.
It is natural for the top 1% to earn over 8 times the average income, however, because it is physically possible for 1% of us to be over 8 times more productive than the average. Someone like Henry Ford could even "individually" be over 20 times as productive as an average person, but Ford was only one man.
The top 1% of us would be over 3 million of us, and there are not 3 million Fords: so the share of national income to the top 1% should not exceed 20% (because the top 1% is not over 20 times as productive with their time, even if isolated individuals like Ford are).
If the top 1% earn over 20% of all income, it indicates earnings were not market-directed, but were manipulated artificially via unfree exchange.
In contrast, under free market (unregulated) capitalism, competition in production forces labor productivity gains, and competition in the labor market forces the productivity gains to be allocated mostly (more than 50%) toward wages--so that capital gains don't ever represent anywhere near a fifth of all wages paid.
A "healthy" ratio of capital gains to wages is for capital gains to represent 1-3% of wages. Here is a chart made from the wages and capital gains reported to the IRS [4] indicating that, for decades in the middle of the 1900s, the US economy was relatively healthy and free:
**Eddie caps the top 5% income share at 30% by 1913, but it is not clear (from just this report) if he included capital gains.
Image Attribution
Page URL: https://www.loc.gov/resource/ppmsca.52875/
Attribution: Library of Congress "Free to Use and Reuse" Sets
Reference
[1] Emma Marriot. (2015). A History of the World in Numbers. New York, NY: Metro Books. p 63-64 (Domesday Book census of 1085)
[2] Scott M. Eddie. Estimating the value of land from Prussian wealth tax data. University of Toronto: http://piketty.pse.ens.fr/files/capitalisback/CountryData/Germany/Other/Pre1950Series/RefsHistoricalGermanAccounts/Eddie99.pdf
[Additional Note: "In 1907 there existed 13 knightly estates in the riding of Angerburg, where properties of 100 hectares or more covered 45,896 hectares, or just over half the land in the riding."]
[3] U.S. Census Bureau and U.S. Department of Housing and Urban Development, Median Sales Price for New Houses Sold in the United States [MSPNHSUS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MSPNHSUS
[4] IRS. SOI Tax Stats - Individual Time Series Statistical Tables. [scroll down the page for reports of relevant years] https://www.irs.gov/statistics/soi-tax-stats-individual-time-series-statistical-tables