Feudalism vs Capitalism
Thursday, May 24th, 2007This is a rather random concept that I actually just thought up today. It is a reference in part to the common socialist obsession with the evils of big business, rich people, and capitalism in general. A few months ago I read some article in the paper where some person was ranting against how evil large corporations (like Walmart) are, and how workers must form unions to fight against their oppressors. Conveniently, this author forgot that large businesses produce the jobs that allow the workers to be employed at all, and that riches (capital in general) are needed to grow businesses and increase productivity. Unions should not fight against corporations as if they are an enemy, but simply work with them to improve working conditions etc.
Of course, these concepts shouldn’t come as a surprise to most people, but I simply needed to put some background in place before I explained the rest.
As far as I can tell, the socialist attack on capitalism is actually caused by a misplace hatred of feudalism. After all, much of the socialist/communist movement could be tied to the overthrow of the aristocracy in countries such as France and Russia. The working classes were sick of the tyranny of the ruling class, who also happened to be rich, and henceforth socialists have associated being “rich” with being part of the “aristocracy”.
However, this ruling class consisting entirely of the rich and powerful – what I call “feudalism” for lack of a better term – is diametrically opposed to capitalism. While feudalism could be referred to as a government enforced monopoly of the rich, which destroys the free market, commerce, and the middle class, capitalism is the exact opposite. Although certain individuals and corporations inevitably rise to the top due to superior management, situation, or available resources, their superiority is not guaranteed, and they must continually work to maintain a competitive edge. This reveals the fundamental difference between these two competing ideologies. Under feudalism, the rich are permanently ensconced in positions of power, while under capitalism they are free to rise and fall with their own fortunes.
Unfortunately, the socialist misconception that capitalism is the same as feudalism produces a chain of very undesirable side-effects. The series proceeds something like this:
- Socialists mistake the temporary capitalist rich for permanent feudal lords
- Socialists attempt to destroy this ruling class by regulating capitalist enterprise into government-controlled services, such as socialized medicine, communications, utilities, transportation, etc.
- Because of regulations, competition becomes impossible, and permanent monopolies form
- Back to feudalism again!
Essentially, socialist attempts to destroy the rich capitalists – the “aristocracy” – actually creates a new and even more entrenched ruling class. Those that learn to control government policy in order to give all the business to certain corporations and crush others are actually furthering feudalism under the guise of destroying it! In actuality, capitalism actually does a far better job of preventing ingrown, despotic governments than socialism does, because the free-market and competition constantly rotate out the wealthy and inhibit any attempts to permanently seize economic superiority.
Well, that’s it for my first attempt at an economics related blog post. Hope you like it!
Also, if anyone can think up better terms than “feudalism” and “socialism”, I’d be glad to use them instead. I can’t help but think I’m using them wrong…
I think the big question is whether or not capitalism can weed out large, abusing “rulers”. When new company arises and displaces an old one, you will still have the same situation, only with different abusing company. So really, in how it relates to individual freedom, capitalism is no better than socialism.
Plus, without government intervention in private sector, it might be very difficult for small businesses to rise up and actually displace existing ones. The existing large company can use their money and large area to compete unfairly with the new small company, thus preventing the new company from rising up at all. This is why the government specifically gets involved in the free market to allow more fair competition.
So basically capitalism is really no better off than socialism, in terms of treating the individual man better. Also, a purely capitalistic economy would not be really any better than a socialistic economy. Rather we need a capitalistic economy with government intervention, when needed to promote competition, as this preserves the good of capitalism.
I think I would have to disagree with you there Mark, I can’t really think of a way that a company with no government power behind it can be abusive. Its not as if it can force anyone to buy its products…
I suppose you are right about the need for some government intervention in capitalism, although I think it should be kept to an absolute minimum (such as preventing extortion or price-fixing). In general, I think the ability of most companies to create unfair competition actually stems from government intervention, such as the telecom monopolies. “Fair” competition doesn’t necessarily mean “equal” competition, and making it so would require handicapping successful business owners to give others a chance, which obviously isn’t fair.
Its only when competition is hindered in some way that businesses are able to compete unfairly. Even if a company is extremely well established, if it begins to become corrupt and treat its customers badly, another smaller company can still compete with it. “Competition” isn’t always needed, even under capitalism. Its only required when a business tries to increase its prices too high or act unethically.
Good post, Connor, but I’m not sure I agree with your four points. Here’s my answer:
I was referring to companies abuse of their employees in my comment, not abuse of customers. Sure a company might have a great product, but is it abuses its employees in the process, it’s not good at all. Pure capitalism without intervention does nothing to stop this abuse, and so we need the intervention so we can have justice, as Matthew said.
Matthew,
Thanks! I’m glad you liked the post. Hopefully I’m not too far off in my responses…
Mark,
I haven’t entirely made up my mind, but I think that except in extreme cases (such as actually physically harming their workers, (IE: maiming or killing them), most abuses of workers can be handled by unions. This isn’t to say that some regulations – such as requiring that workers be payed with hard currency rather than company script – are always needed, but most regulations are unnecessary. However, once again, in order for this to work the government must not favor the companies over the workers, such as by not prosecuting them when they massacre their workers for going on strike. The state must also not be allowed to give precedence to workers over companies, especially through laws such as “union only shops”, which allow the workers to extort ridiculous benefits from companies, oftentimes driving them out of business.
Regulations such as child labor laws are particularly problematic, as the problems they attempted to combat would have been better handled by simply prosecuting factories when they blinded or killed their workers. Now that dangers like these are mostly eliminated, the child labor laws remain, preventing minors who are fully capable of working from doing so (just as Sprint did to you).
I think I have taken this discussion far off topic, and I’m beginning to think I’m way off base to begin with, so I shall hereby kill this discussion.
I need to learn more about economics before I try to make up any more theories
I tend to be far too much of an idealist, and unfortunately the world doesn’t work in ideals. After all “If men were angels, no government would be necessary.” – James Madison
capitalism no longer exists in its intended form with small companies supporting each other by providing goods and serivices not only to their customers but to each other. corporpatism is I believe a more proper term. small companies may still operate under what was the ideal idea for capitalism, but large corporations are no longer working in a capatilistic way. they are trying many ways not to support other companies. this is more akin to feudalism. And I am not a socialist.