{"id":185446,"date":"2021-05-24T12:00:30","date_gmt":"2021-05-24T11:00:30","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=185446"},"modified":"2025-01-10T15:06:14","modified_gmt":"2025-01-10T15:06:14","slug":"how-america-went-from-mom-and-pop-capitalism-to-techno-feudalism","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2021\/05\/how-america-went-from-mom-and-pop-capitalism-to-techno-feudalism\/","title":{"rendered":"How America Went from Mom-and-Pop Capitalism to Techno-Feudalism"},"content":{"rendered":"

19 May 2021 – The crisis of 2020 has created the greatest wealth gap in history. The middle class, capitalism and democracy are all under threat. What went wrong and what can be done?<\/em><\/p><\/blockquote>\n

In a matter of decades, the United States has gone from a largely benign form of capitalism to a neo-feudal form that has created an ever-widening gap in wealth and power. In his 2013 bestseller\u00a0Capital in the 21st\u00a0Century<\/em>, French economist Thomas Piketty declared that \u201cthe level of inequality in the US is probably higher than in any other society at any time in the past anywhere in the world.\u201d In a 2014 podcast about the book,\u00a0Bill Moyers commented<\/a>:<\/p>\n

Here\u2019s one of its extraordinary insights: We are now really all headed into a future dominated by inherited wealth, as capital is concentrated in fewer and fewer hands, giving the very rich ever greater power over politics, government and society.\u00a0Patrimonial capitalism\u00a0is the name for it, and it has potentially terrifying consequences for democracy.<\/p><\/blockquote>\n

Paul Krugman maintained in the same podcast that the United States is becoming an oligarchy, a society of inherited wealth, \u201cthe very system our founders revolted against.\u201d While things have only gotten worse since then thanks to the economic crisis of 2020, it\u2019s worth retracing the history that brought us to this volatile moment.<\/p>\n

Not the Vision of Our Founders<\/strong><\/p>\n

The sort of capitalism on which the United States was originally built has been called\u00a0mom-and-pop capitalism<\/a>. Families owned their own farms and small shops and competed with each other on a more or less level playing field. It was a form of capitalism that broke free of the feudalistic model and reflected the groundbreaking values set forth in the Declaration of Independence and Bill of Rights: that all men are created equal and are endowed by their Creator with certain inalienable rights, including the rights to free speech, a free press, to worship and assemble; and the right not to be deprived of life, liberty or property without due process.<\/p>\n

It was good in theory, but there were glaring, inhumane exceptions to this idealized template, including the confiscation of the lands of indigenous populations and the slavery that then prevailed. The slaves were emancipated by the US Civil War; but while they were freed in their persons, they were not economically free. They remained entrapped in economic serfdom. Although Black and Indigenous communities have been disproportionately oppressed, poor people were all trapped in \u201cindentured servitude\u201d of sorts \u2014 the obligation to serve in order to pay off debts, e.g. the debts of Irish workers to pay for passage to the United States, and the debts of \u201csharecroppers<\/a>\u201d (two-thirds of whom were white), who had to borrow from landlords at interest for land and equipment. Today\u2019s U.S. prison system has also been called a form of slavery, in which free or cheap labor is extracted from poor people of color.<\/p>\n

To the creditors, economic captivity actually had certain advantages over \u201cchattel\u201d slavery (ownership of humans as a property right). According to an infamous document called\u00a0the\u00a0Hazard\u00a0Circular, circulated by British banking interests\u00a0<\/a>among\u00a0their American\u00a0banking\u00a0counterparts during the American Civil War:<\/p>\n

Slavery\u00a0is\u00a0likely\u00a0to\u00a0be\u00a0abolished\u00a0by\u00a0the\u00a0war\u00a0power\u00a0and\u00a0chattel slavery destroyed. This, I and my European\u00a0friends\u00a0are\u00a0glad\u00a0of, for slavery is but the owning of labor and carries with it the care of the laborers, while the European plan, led by England, is that capital shall control labor by controlling wages.<\/p><\/blockquote>\n

Slaves had to be housed, fed and cared for. \u201cFree\u201d men housed and fed themselves.\u00a0 Free men could be kept enslaved by debt by paying them wages that were insufficient to meet their costs of living.<\/p>\n

From \u2018Industrial Capitalism\u2019 to \u2018Finance Capitalism<\/strong>\u2018<\/h4>\n

The economy crashed in the Great Depression, when Franklin D. Roosevelt\u2019s government revived it and rebuilt the country through a public financial institution called the Reconstruction Finance Corporation. After World War II, the US middle class thrived. Small businesses competed on a relatively level playing field similar to the mom-and-pop capitalism of the early pioneers. MMeanwhile, larger corporations engaged in \u201cindustrial capitalism,\u201d in which the goal was to produce real goods and services.<\/p>\n

But the middle class, considered the backbone of the economy, has been progressively eroded since the 1970s. The one-two punch of the Great Recession and what\u00a0the IMF has called<\/a>\u00a0the \u201cGreat Lockdown\u201d has again reduced much of the population to indentured servitude; while industrial capitalism has largely been displaced by \u201cfinance capitalism,\u201d in which money makes money for those who have it, \u201cin their sleep.\u201d As economist\u00a0Michael Hudson explains<\/a>, unearned income, not productivity, is the goal. Corporations take out cheap 1% loans, not to invest in machinery and production, but to buy their own stock earning 8% or 9%; or to buy out smaller corporations, eliminating competition and creating monopolies. Former Greek Finance Minister\u00a0Yanis Varoufakis explains<\/a>\u00a0that \u201ccapital\u201d has been decoupled from productivity: businesses can make money without making profits on their products.\u00a0 As Kevin Cahill described the plight of people today in a book titled\u00a0Who Owns the World?<\/em><\/a>:<\/p>\n

These latter day pharaohs, the planet owners, the richest 5% \u2013 allow the rest of us to pay day after day for the right to live on their planet. And as we make them richer, they buy yet more of the planet for themselves, and use their wealth and power to fight amongst themselves over what each possesses \u2013 though of course it\u2019s actually us who have to fight and die in their wars.<\/p><\/blockquote>\n

The 2020 Knockout Punch\u00a0<\/strong><\/h4>\n

The final blow to the middle class came in 2020. Nick Hudson, co-founder of a data analytics firm called PANDA (Pandemics, Data and Analysis),\u00a0\u00a0argued in an interview<\/a>\u00a0following his keynote address at a March 2021 investment conference:<\/p>\n

Lockdowns are the most regressive strategy that has ever been invented. The wealthy have become much wealthier. Trillions of dollars of wealth have been transferred to wealthy people.\u00a0\u2026 Not a single country did a cost\/benefit analysis before imposing these measures.<\/p><\/blockquote>\n

Policymakers followed the recommendations of the World Health Organization, based on predictive modeling by the Imperial College London that subsequently proved to be\u00a0wildly inaccurate<\/a>. Later studies have now been done, at least some of which have concluded that lockdowns have\u00a0no significant effects<\/a>\u00a0on case numbers and that the costs of lockdowns\u00a0substantially outweigh the benefits<\/a>, in terms not just of economic costs\u00a0but of lives<\/a>.<\/p>\n

On the economic front,\u00a0 global lockdowns eliminated competition from small and medium-sized businesses, allowing monopolies and oligopolies to grow. \u201cThe biggest loser from all this is the middle class,\u201d wrote\u00a0Logan Kane on Seeking Alpha<\/a>. By May 2020, about one in four Americans had filed for unemployment, with\u00a0over 40 million Americans<\/a>\u00a0filing jobless claims; and\u00a0200,000 more businesses closed<\/a>\u00a0in 2020 than the historical annual average. Meanwhile, US billionaires collectively\u00a0increased their total net worth<\/a>\u00a0by $1.1 trillion during the last 10 months of 2020; and\u00a046 people joined<\/a>\u00a0the billionaire class.<\/p>\n

The number of \u201ccenti-billionaires\u201d\u2013 individuals with a net worth of $100 billion or more \u2013 also grew. In the US\u00a0they included<\/a>:<\/p>\n