The Failed Revolution

How Feudalism Ended...And Its Imminent Return

This essay is part of a series comparing the twilights of (1) Rome's slave-based economic system and (2) the Middle Ages' feudal system to (3) today's capitalist economic system. In addition to the broad life cycles of these economic systems, we'll note similarities between infectious diseases and changes in communication technology common to all three eras. Finally, we'll see how belief systems rise and fall in tandem with these broad economic systems. When these systems seize up and stop functioning, people begin questioning authority. And that, in turn, leads to collapses of bedrock conceptions of reality itself.

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Introduction

Feudalism came out of the crisis that was the Fall of Rome. The Roman oligarchy sacrificed the sustainability of their own society so they could hoard most of the wealth of Rome for themselves. The descendants of that oligarchy went on to become the crowned heads of Europe. That is, until the Black Death began a popular revolt that ultimately replaced feudalism with capitalism. Now we find ourselves at the same crossroads as the Romans once did. Our own oligarchy has hoarded enough wealth to threaten the sustainability of our entire society. Will we respond with another popular revolt? Or lapse into another Dark Age?

The Rise of Feudalism

Feudalism in Europe arose from the smoldering embers of the Roman Empire. Though the last emperor in Rome was deposed in AD 476, Europe continued to be ruled from that city for a thousand years; the Roman Catholic Church stepped in to fill the power vacuum left by the Emperors' departure.

A major cause of the Fall of Rome was the fact that her oligarchy financially ruined her farmers. By importing millions of captured slaves and putting them to work on massive farms called latifundia, the oligarchy pushed the price of grain down below the minimum needed to pay free laborers. Desperate farmers bought time by borrowing money from the oligarchy; they put up their ancestral farms as collateral to do it. But when those debts turned out to be unpayable, the oligarchy foreclosed and converted the collateralized farms into even more latifundia. Rome systematically concentrated wealth into fewer and fewer hands until the rest lost all incentive to defend her from her enemies.

As the Empire crumbled, the oligarchic families of Rome retreated onto fortified homes at the centers of their vast farming estates. The people who worked on those estates became attached to the land as serfs or peasants. That’s how the economy of the Middle Ages was shaped by the Fall of Rome.

The Fall of Feudalism

For a thousand years, the feudal economy of the Middle Ages persisted in Europe. But then, in 1347, the Black Death wiped out a third of the population and caused an acute labor shortage. With so many fields lying untilled, the peasantry realized they could play one feudal lord against another in bidding wars for their services. Rather than swearing fealty to any single lord, they began instead to sell their labor to the highest bidder. There was no going back after that. Employers and employees slowly replaced the older production roles of lord and serf.

Work as employers and employees eventually gave rise to the Industrial Revolution. As it took shape, economists and philosophers like Adam Smith, David Ricardo, and John Stuart Mill established an intellectual framework with which to understand the Revolution blossoming before their eyes. The new, seemingly miraculous way of organizing production came to be called “capitalism”.

These economists played a major role in combatting feudalism. Plenty of feudal land holdings still existed in the early days of the Industrial Revolution. The landlords who owned them helped themselves to the profits of nearby capitalist business owners by jacking up the rent on their employees. Employers had no choice but to pay these increased rents with increased wages.

The economists of the early Industrial Revolution declared this rent extraction “unearned income”, along with monopoly prices and loan interest. On the other hand, they considered “earned income” to be any provision of goods or services at actual market prices. They aspired to create a vibrant, dynamic economy by taxing unearned income out of existence.

But, of course, Western civilization never realized this utopian vision. The Revolution was betrayed by the field of economics…

Betraying the Revolution

In the late 1800s, a major change took place in the field of economics. A new generation of economists, like John Bates Clark, helped demolish the distinction between earned and unearned income that became prevalent during the Industrial Revolution. They replaced it with a new “Subjective Theory of Value”.

Their idea was simple: prices are completely subjective. If you’re dying of thirst, there is no price you wouldn’t pay for a glass of water. But no one, no matter how thirsty, values a 10th glass of water as much as the first. Therefore, goods and services have different values depending on the subjective preferences of each buyer and seller in a given market. This theory sounds clever enough until one realizes that it’s impossible to rip anybody off under this theory. No matter how inflated a price someone pays for a good or a service, the Subjective Theory of Value says their purchase must, by definition, have been worth it.

Perhaps your cable company charges you a higher price than they could’ve if they weren’t a monopoly and actually had some competition. Maybe your landlord used prevailing conditions in the housing market to increase your rent, despite no cost increases on their end. Subjective Value Theory removes the ability of the public to recognize these abuses as anything other than legitimate.

In 2016, the World Economic Forum released a promotional video that promised, “You’ll own nothing. And you’ll be happy.” Their vision for the future is uncompromisingly feudalistic. The economy of the Middle Ages was a reflection of the economic conditions in the late Roman Empire; it was structured such that common people didn’t own the farmland they worked on. Instead, they surrendered half their produce to the feudal lord who did. Clearly, our modern oligarchy finds that arrangement so attractive that they’re seeking a return to it.

We now find ourselves at the same crossroads as the late Roman Empire. Like them, our sustainability as a society is jeopardized by mounting wealth inequality. This time around, we have the opportunity to unwind our unhealthy wealth disparity through sound economic policy. The alternative is another turbulent collapse and descent into a Dark Age.

Conclusion

Feudalism arose like a phoenix from the ashes of the economic structures that collapsed during the Fall of Rome. Feudal lords and peasants came to define Europe during the Middle Ages. In the wake of the Black Death, a popular revolt against the inherent unfairness of feudalism ended it. But now investment banks, corporate landlords, and monopolies are trying to create a similar reality in which a tiny minority own everything and the rest of us are their subjects. Wealth disparity is again spiraling out of control, as it did in Rome during her twilight. The transition from feudalism to capitalism required a series of popular uprisings—like the Protestant Reformation, and the American and French Revolutions. We must come together once again to reject junk economics like the Subjective Theory of Value. It’s the only alternative to another catastrophe like the Fall of Rome.

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Further Materials

As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the licence to gather them, and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land, and in the price of the greater part of commodities, makes a third.
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776, Book I, Chapter 6

Landlords grow rich in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.
John Stuart Mill, Political Economy, 1848, Book V, Chapter 2