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Neo-Feudal America

Travis Cunha

Aug 28, 2023

Who is the Enemy?

Expressing doubts about "capitalism" in the present era lacks the potency it once held, and critics of this economic system are no longer widely viewed as a threat to governmental authority. Rather than resorting to further purges of alleged "leftists," society now embraces actions like Alexandria Ocasio-Cortez confidently donning a dress displaying the message "Tax the Rich," and Bernie Sanders openly discussing the idea of socialized healthcare without encountering suppression. Even the stance against war has diminished in popularity among “leftist” circles, as the majority of political factions support providing assistance to Ukraine in its struggle against “imperialist” Russia.

One must understand that when such dialogues are permitted and even promoted, they cease to jeopardize the power of those in charge, especially given that contemporary figures like AOC and Sanders wield influence themselves. If advocating for progressive taxation and social welfare programs aligns with the objectives of those in authoritative positions, then what should advocates for the working class prioritize? Those who genuinely position themselves as challengers to state oppression should channel their efforts into precisely that—questioning the state and its intricate associations with institutions that genuinely exert control over our daily lives. The undeniable reality in today's American context is that the financialization of the economy has ensnared the working class in various forms of rent and subsequent debts.

The Finance, Insurance, and Real Estate (FIRE) sector has emerged as a powerful economic force, shaping the global economic landscape. However, in an era where digital connectivity allows widespread critiques of capitalism, the FIRE sector remains noticeably absent from substantial discussions within academic circles and leftist political groups. A notable exception to this prevailing oversight is found in the extensive collection of books, articles, and speeches by Michael Hudson. Despite his significant following in China and other Eastern nations, the fact that Hudson's works have largely escaped the attention of Western academics and Marxists stands as a glaring neglect on their part. With a career forged on Wall Street and a portfolio of works tracing the origins of debt back to ancient Sumer, Hudson's unparalleled prominence in the discourse on debt offers invaluable insights into grasping the contemporary landscape of political economy.

A thorough analysis of the intricacies within the FIRE sector reveals a complex tapestry woven with contradictions and inequalities that are intrinsic not only to our economic well-being but also our culture. This perspective argues that the apparently benign mechanisms of finance, insurance, and real estate are far from neutral in their societal impact. Instead, they function as the gears of an intricate machine that perpetuates exploitation, widens class divisions, and distorts the true essence of human progress. This article highlights structural shortcomings ingrained within the FIRE sector, intricately interwoven with the socio-economic landscape. This perspective challenges us to scrutinize the very foundations upon which this sector rests and emphasizes the need for it to be taken more seriously by those seeking to challenge the status quo.

The Age of Neo-Feudalism

This article will examine just the real estate sector, as its impact is pervasive across our society unless one lives completely off the grid. Hudson elucidates how the financialization of the American economy, a consequence of deindustrialization and the prioritization of the service sector after World War Two, triggered debt deflation with extensive adverse effects on the working class. This shift essentially granted the rentier class a risk-free advantage.

Coined by Irving Fisher in the aftermath of the stock market crash and the Great Depression, debt deflation, or debt-induced deflation, illustrates an economic phenomenon wherein an augmented debt burden results in a cycle of plummeting prices and dwindling economic activity. According to Hudson, this burden ultimately lands on the shoulders of the consumer, who is left with no recourse but to accumulate debt to secure basic housing. In his work titled “Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism,” Hudson asserts, “In contrast to the literal European serfdom that bound individuals to their birthplaces, people today enjoy the liberty to relocate wherever they wish. Nevertheless, wherever they choose to reside, they find themselves obligated to incur debt and pay mortgage interest, or alternatively, pay rent to a landlord who channels it as interest for the credit indispensable to property acquisition.”

The United States is grappling with an escalating debt situation that seems to have spiraled beyond containment, and the government offers little reassurance for a solution. According to a recent report, the average debt burden per American has surged to an alarming $90,000, a crisis that can no longer be overlooked. This pertains to various types of debt—ranging from medical expenses and student loans to credit card dues. Astonishingly, the study reveals that an astounding 10% of individuals' monthly earnings are channeled into servicing their debt obligations. As gas prices and grocery costs remain inflated without any visible relief, the specter of debt casts a long shadow, amplifying the struggles of the vulnerable populace, all while creditors benefit at their expense.

The United States finds itself entangled in an escalating debt crisis that appears to have spun beyond manageable confines, and the government's offerings provide little solace in terms of a solution. A recent report reveals a disconcerting figure: the average debt burden per American has surged to a staggering $90,000, a situation that demands urgent attention. This encompasses a variety of debt types, spanning from medical bills and student loans to outstanding credit card balances. Perhaps even more startling, the study underscores that an astonishing 10% of individuals' monthly earnings are absorbed by their debt obligations. With fuel prices and grocery expenses sustaining their elevated levels without discernible relief, the ominous specter of debt stretches far, intensifying the challenges faced by the vulnerable segments of society, all the while creditors reap benefits at their expense.

Entrepreneurship often centers around the aspiration of owning one's own business, a fundamental component of the American Dream that, although fleeting, materialized for certain individuals within the nation. However, the current landscape has shifted, giving rise to a populace burdened with debt, striving to cover their rent payments and hoping some semblance of disposable income remains after meeting their own expenses. Even those who seem to possess a degree of "ownership" find themselves entrapped by the ever-expanding realm of real estate rental. This phenomenon is evident in the prevalent "Franchise" restaurant model in the United States.

At first glance, the franchisee seems to exert control and, by adhering to the company's regulations, stands to reap rewards by investing their own capital. Yet, in reality, they transform into yet another tenant, with Ronald McDonald becoming their de facto landlord. McDonald's, a prime example, has transformed into a real estate company within the business domain. The corporation leases more than 38,000 of its restaurants to franchisees, amassing a substantial real estate portfolio valued at approximately $30 billion. The company actively identifies and procures sizable plots of land, subsequently entering into lease agreements with franchisees, contingent upon their commitment to upholding McDonald's rigorous standards. Essentially, McDonald's assumes minimal operational risk, as the franchisee provides the initial capital investment for launching the establishment. The lease terms invariably include provisions enabling McDonald's to dissolve the arrangement and locate a replacement if rental payments falter.

In "The Poverty of Philosophy," Marx writes, “Rent is property in land in its bourgeois state; that is, feudal property which has become subject to the conditions of bourgeois production.” Contrary to Hudson's suggestion of either state taxation or integration into overall expenses, rent has evolved into an additional channel through which the privileged class enhances their extraction from the toiling masses. The shift of the American economy towards financial pursuits has marginalized genuine production, relegating it to a secondary role. Speculation and rent, despite generating no tangible value, are erroneously upheld as productive contributors. Presently, the GDP no longer accurately represents the productive output of the United States; instead, it closely correlates with the magnitude of rent drawn from the working class.

A New Form of Mercenary Practice

“The business plan behind its rhetoric of free markets is to impose neo-feudal debt peonage and dependency by creating markets “free” from public regulation, sponsoring rentier monopolies that impose tollbooth charges for access to most basic needs, from housing to education and health care.”

The above statement underscores something that's familiar to us living in America—everything comes with a cost, and many are sliding into debt just to navigate their daily lives. The last remnant of our agency is the ability to sell our labor, yet even that isn't assured in the rent-dominant US economy. It's not just housing and healthcare that Americans are accumulating debt for; the rentier class is increasingly liberated from any obligation to their employees. What's even more concerning is the emergence of a scenario where debt is required to attain employment.

Take Uber's Vehicle Solution Program, for instance, offering prospective drivers the chance to lease a car from Uber for their driving pursuits. This arrangement traps the driver in a 3-5 year lease with Uber, ultimately enabling the company to earn more from each ride provided by the newly indebted worker. The pandemic was a catalyst, propelling many into the gig economy, where individuals serve as “freelance” workers for driving and food delivery platforms. While independent craftsmen and writers have traditionally comprised freelancers, a new category called “labor providers” has emerged due to the pandemic.

Whether it's delivering on DoorDash or hiring someone for a task on TaskRabbit, under monopoly capitalism and imperialism, we can expect a growing trend of industries opting for independent contractors over stable hours and income.

(Special Thanks to Author Logo Daedalus and Chris Morlock for being one of the few voices speaking on this topic, along with Michael Hudson)

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