A century ago, Hilaire Belloc wrote in the The Servile State¹ that attempts to reform capitalism will lead to an economy in which the state dictates that certain people will work for others, who likewise must take care of them. Belloc called this the servile state. This is different from early arrangements in which slaves and serfs were the backbone of the economy. In those arrangements, the owner has a choice to not own slaves. It is also different from capitalism, in which everyone is politically free by law.
Belloc was a man of his age so he viewed economics through the goggles of socialism and the newly emergent industrial capitalism. In The Servile State, he was searching for an alternative to the destruction of liberty necessary with socialism and the instability inherent to capitalism. The former results in an inequality of political power, while the latter results in an inequality of material wealth. Eventually, a small number of people rule over the masses, who begin to resent their rulers, seeing them as tyrants.
What Belloc argued is that socialism is inevitably the state dictating to property holders how they can dispose of their property. The state does this either through direct ownership, or through legal requirements for the ownership and use of property. Political freedom is determined by the degree of freedom one has with regards his labor and the results of his labor.. Therefore, socialism must restrict the political liberty of citizens to the same degree that it controls property and labor of the citizens.
Capitalism puts ownership and control of property in the hands of the people. In pure capitalism or what we now call libertarianism, individuals not only control their labor and the results of their labor, they are politically free. In theory, men either labor for their own use or agree to labor for others. The state’s only purpose is to enforce contracts as all of the dealings between citizens is consensual and formalized in a contract. The appeal of capitalism, pure capitalism, is the allure of pure political freedom.
By the time Belloc was writing, it was clear that pure capitalism would inevitably result in the concentration of wealth. A small class of property owners would come to posses the bulk of the nation’s wealth. That means a class of people who were free and a class of people who were not free, because they could not own and control their own labor. This led to social instability and eventually violence. Belloc argued that attempts to reform capitalism through state action would result in something he called the Servile State.
Reforms to capitalism are always through the law. The state places limits on how the owners of property may use their property. This then leads to a negotiation between the state, which has the monopoly of force, and the property class, which has a monopoly of capital. The result is a system in which the state seeks to protect those without property by placing requirement in the capital owners. In return, the state require the masses to labor for the property class, under conditions set by the state.
The result is that the business is forced to hire people it may not wish to hire, but the state also dictates to labor how and when they can sell their labor. Put another way, the poor are forced to serve the rich, but the rich are forced to be generous to the poor, looking out for their welfare. It is a social contract enforced at the barrel of a gun. It has the inequality of capitalism and the lack of political liberty inherent in socialism. The Servile State is the worst elements of both economic systems.
Belloc could not see what was coming in the post-war era and he certainly had no idea what was coming with the technological revolution and the explosion of neo-liberal globalism. He was prescient, however, with regards to how English economic systems would evolve over time. Look around at the modern world and you see the world he described as the inevitable result of “reformed capitalism.” Today, employers hire whole teams of people who makes sure the rich and powerful follow the rules.
What’s been missing in the technological age is the other half of the equation. As the West de-industrialized, the enforcement of labor laws have fallen away. Masses of helot labor brought over from Asia into Silicon Valley, for example, worked under agreements they struck with the business owners. Tech companies love open borders as it gives them a loophole to avoid some of the constraints of the Servile State. The same is true at the unskilled end, where companies rely upon masses of labor from Latin America.
This is an untenable situation in its own right, but the coming automation of the American economy will result in an evolution of the Servile State. The Universal Basic Income is nothing more than a modern implementation of the sort of infringements on political liberty Belloc described a century ago. Property holders will be forced to care for the dispossessed and, inevitably, the state will put behavior rules on the dispossessed. The UBI will come with rules requiring the recipients to act a certain way.
You get a glimpse of this in the efforts to control political speech on-line. Social media companies get exceptions to anti-trust laws, permitting them to run monopolies. In exchange, they are tasked with policing dissent on behalf of the state. The users get “free access” to platforms like Faceberg and Twitter, just as long as they agree to the terms of service and accept discipline when they post subversive things. Imagine this system applied to the universal basic income or to access to your self-driving car.
Belloc’s alternative was something he and Chesterton called distributism. Some have argued that their economic ideas were proto-fascism, but that’s debatable. What Belloc argued for was the inverse of the Servile State. Instead of a strong central state, political authority would be distributed and diffused throughout society, while wealth concentration would be constrained locally though ad hoc arrangements and cultural institutions. The goal is to maximize liberty, while minimizing inequality.
Whether or not this is possible in the modern age is debatable. Belloc and Chesterton argued that this was the natural arrangement of Europe. They also argued that it required a strong and energetic Christian tradition. That ship has sailed in the West, but maybe it does not matter. There’s no getting around the fact that neo-liberalism may be economically stable, but it is wildly unstable culturally. The experience of Europe thus far suggests it is suicidal. How to address it may lie with globalism’s last critics.