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The Spectrum of Feudalism to Free Enterprise

UrukaginaAug 6, 2019, 2:25:56 AM


In 1066, a descendent of Viking barbarians--i.e., William, Duke of Normandy--invaded and took over all of England, a country of 1.5 million, by leading an army of about 5000 troops. [1]

The number of troops was soon doubled to 10,000 and that ratio (1 soldier per 150 civilians) was found to be sufficient to subjugate 1.5 million people living under their "new" king: King William I of England.

In 1085, the King ordered that a census be taken of all people and all property. It was called the Domesday Book. You had to either serve militarily or pay cash tribute to the King, otherwise you may be tortured and/or killed.

The census helped the King find out who wasn't paying "enough" to remain free of torture or death. Here is a paraphrase of (approximately) what the census found:

The King and his family personally owned 17% of all land

Twelve barons collectively owned 25% of all land

178 lesser lords and nobles (not quite "barons") collectively owned 29% of all land

Bishops and other clergy collectively owned 26% of all land

Just over a million free peasants and "villeins" (indentured servants working part time for their local lord) collectively owned 3% of all land

The 150,000 remaining unfree peasants, the "serfs" who were completely tied to working their lord's land (the bottom 10% of society), owned nothing

The system which England was under back then is called feudalism, and it is a system of privilege and discontent. Privilege for the "insiders" (barons, etc)--who agree to back up the king's decisions and to enforce his rules on others, even harshly, if that is needed--and then discontent for everyone else.

Wages were a small fraction of overall income--the oligarchy took most of the proceeds of the hard work performed by workers--and a large portion of society had no net worth, whatsoever.

Annual labor productivity growth back then was approximately zero (< 0.5%), so that all increases in output were due to increases in the labor supply.

This meant that wages, and standard of living, could never rise for workers--though barons and lesser lords and nobles could increase personal income by slave-driving more workers.

Free Enterprise

At the opposite side of the spectrum is the system of free enterprise, where there is no steep slant of power asymmetry; where everyone is "the king" of his own castle, or house, and there is complete freedom of contract and association--i.e., unregulated economic behavior.

You can tell if a nation is closer to feudalism or closer to free enterprise, as well as in which direction it is (or has been) moving over time.

For instance, under free enterprise, wages represent over 45% of all national income--like in the US during the 1950s. Under more feudalist systems, such as the US in 2016, wages are less than 40% of all national income [2 & 3].

Under free enterprise, such as the US in 1962, up to about 8% of households have negative net worth. Under more feudalist systems, such as the US in 2014, over 16% of households have negative net worth [4 & 5].

Under free enterprise, such as the US from 1960-1966, annual labor productivity growth was 3.5% a year (so that wages could rise by a lot). Under more feudalist systems, such as the US from 2012-2018, annual labor productivity growth was 0.9% a year (so that wages could not rise by much) [6].

It is better to live under free enterprise than under feudalism and, if you are in the middle somewhere, it is better to move toward free enterprise than away from it.

For at least the last 5 decades, the US has been moving away from free enterprise. This is how you can have current politicians seriously entertaining how they are going to spend $90 trillion of our tax dollars on a "problem" which they've determined needs addressing in a top-down, bureaucratic manner.

To be able to spend $90 trillion of "other people's money" is a cardinal example of authoritarian power asymmetry. Even feudal kings would be jealous of that kind of power concentration and central planning.

Image Attribution

Page URL: https://commons.wikimedia.org/wiki/File:Dunvegan_Castle_in_the_mist01editcrop_2007-08-22.jpg

Attribution: Klaus with K [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)]


[1] Marriot, E. (2015). A History of the World in Numbers. New York, NY: Metro Books. Page 63-64.

[2] SOI Tax Stats - Individual Time Series Statistical Tables. Selected Income and Tax Items for Selected Years (in Current and Constant Dollars). Published as: Individual Complete Report (Publication 1304), Table A. Tax Years: 1990-2016 [click below, then scroll down and click the link to the relevant Excel file] https://www.irs.gov/statistics/soi-tax-stats-individual-time-series-statistical-tables

[3] U.S. Bureau of Economic Analysis, Gross Domestic Product [GDPA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/GDPA

[4] Federal Reserve Bulletin. (March 1964). Survey of Financial Characteristics of Consumers. https://www.federalreserve.gov/econres/files/6263_bull0364.pdf

[5] United States Census Bureau. Wealth, Asset Ownership, & Debt of Households Detailed Tables: 2014. https://www.census.gov/data/tables/2014/demo/wealth/wealth-asset-ownership.html

[6] U.S. Bureau of Labor Statistics, Nonfarm Business Sector: Real Output Per Hour of All Persons [OPHNFB], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/OPHNFB