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.
Thank you very much for taking the time to compile this information and write it up. I had been curious about this for a long time. Encore!
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Back in 2015, Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., benefited from an estimated $4.9 billion in government funding.
The question is, since Mr. Musk’s companies, shareholders and stock holders are going to realize profits based on this government investment, shouldn’t the tax payers who provided those $4.9 billion also receive dividends in the form of, say – basic income dividend returns?
Consider that the US government has been doing the same thing with your tax dollars for decades – funding private companies in various sectors such as transportation, energy and even healthcare. Now imagine if all those profits from products and services we all buy, which were all realized from government funding, were returned to the citizens as basic income dividend returns. Suddenly, basic income doesn’t seem quite so “progressive” – at least not in a negative way.
The minute government gives corporations money to make or develop products using tax payer money, why should those companies think they have the right to keep all the profits and not return a share to private citizens who funded them in the first place?
You hit the heart of the matter there. A social compact of sorts in this country says that if you want to participate, buy shares in the companies. Now Congress knows ahead of time which company is going to get the next big check, and the Congressmen are allowed to front run (buy ahead of time) the shares. Legal for them, illegal for everyone else, if they know inside information about who the next big check is going to.
@ Dutch – Consider that the parts of the smart phone that make it smart (e.g. GPS, touch screens, the Internet) were all advanced by the Defense Department. Tesla’s battery technologies and solar panels came out of a grant from the U.S. Department of Energy. Google’s search engine algorithm was boosted by a National Science Foundation innovation and many innovative new drugs have come out of NIH research.
Now imagine those companies who benefitted from using these devices, had to pay a dividend back to the government from their future profits in the form of a basic income dividend.
It puts a very different light on the concept of how to provide a basic income as the robot future continues to eliminate jobs and job opportunities.
I see your point. The argument that is made is that we all benefit from the research and development, even if we must pay for our phones and Internet service. This is one of those tough questions that may not have a “good” answer. If the gov’t does not fund the R&D and the new developments don’t happen, are we better off?
The basic problem with the dividend back to the government is that the people won’t see most of it. The government “skim” of the proceeds and the deep state bureaucracy that grows around that skim will take almost all of the dividend. There is a huge government structure and bureaucracy wrapped around the telecom, gas & electric utility, and transportation industries. The taxes and fees (the dividend to the government) is enormous in these fields. What part of that dividend finds its way into anything other than feeding the bureaucracy? Not much, I would argue. What tangible benefits does the public see from this bureaucracy? Hard to tell.
The State is far better at funding politically connected losers than winners.
I would be happy if they just made all the companies that use these advances paid for by the taxpayer ONLY produce them in the US. They shouldn’t be allowed to produce them overseas.
A good article. I read something similar by Hoppe years ago where he framed it as the public ownership of slaves as opposed to the private version I was taught extensively about when younger.
A better answer to Distributism is Ordoliberalism and the Social Market Economy.
I take an even dimmer view than that posed in this post. I don’t think the people in charge are bracing for a negative income tax/subsistence bribe for those whose lives are destroyed by automation and immigration. I think the purpose of the flow of immigrants from Central America, Sub-Saharan Africa, and the Middle East is designed to turn the USA (outside of some small enclaves) into a mixture of Calcutta slums and Sao Paulo favelas. As Jared Taylor put it, there will be a large teeming brown mass outside of the gates of some small communities in California, New York, and New England, and the people in charge will probably travel from walled enclave to walled enclave mostly by helicopter in order to avoid the rabble who are willing to kill just to scrounge up enough to eat for the day.
There are still some wealthy and powerful people who prefer to be able to ride in a limo rather than flying from point A to point B. That’s Trump’s cardinal sin: that he doesn’t despise America or the American people and would prefer at least to keep the social contract between rulers and ruled durable enough for him to occasionally hang out in a casino or a steakhouse as opposed to living like Zuckerberg or Poe’s Prince Prospero in “Masque of the Red Death” behind castle walls.
The elites in India and China are their model. They want to emulate the situations over there. India has no middle class, and the middle class in China is emasculated, existing solely at the whim of the elites. Tiananmen Square was the breaking point, and the elite prevailed.
I would not be convinced our elites are mostly Jewish or that is the main issue with their rotten-ness. Jews are over-represented in the media, Hollywood, and the law; but are being purged certainly in Hollywood (BLM is essentially staging a slow-motion intafada against Jewish men in Hollywood). Also in Academia. Jews are nearly totally absent in the US Military, a serious power center. Also in science particularly R&D, physics, etc. where they used to dominate.
Rather, they are as noted by others non-owners, but controllers, of assets. Rockefeller, Carnegie, Frick, Vanderbilt, all were enthusiastic importers of impoverished Eastern European labor for ever cheaper wages and ever greater profits. Even they quailed at importing half of China because they recognized having half of China would not only raise racial strife by White working men against them; but cause the majority Chinese to simply seized the Gwailo’s ill-gotten assets. Having thieved their way to ownership, they had no intention of letting more numerous thieves take it from them.
Gates, Zuck, Bezos, etc. all feel they “earned” their wealth and power, and those below them or associated with them often control assets rather than owning them — the Clintons don’t have factories and pipelines and railroads and wells as their source of wealth; but control of a political machine whose power and influence eclipses even Gates and Zuck and Bezo’s reach. Ditto for Obama and his machine, including Jarrett and the like. If half of Africa moves to America tomorrow, they have nothing they see at risk — the same machine is theirs to control. Even better, it destroys rival machines like that of Cuck Ryan’s or Sing a Long with Mitch McConnell’s.
If most elites had property at risk from hostile immavaders and that was their main source of power and wealth; it would stop right away. The difference is that elites went from barons to Viziers, essentially, and that made them enemies of their peoples.
https://pbs.twimg.com/media/DDwkYXrW0AEH6Nz.jpg
You may see that as ethnically nepotistic hiring practices, goyim, but you’re really just anti-Semitic for noticing.
Spider-Man: Homecoming was awesome. Yay Capitalism.
You’re overthinking it. The problem is not capitalism but rent-seeking. Without government, of course, rent-seeking is not possible.
Rent-seeking behaviour is as old as government itself. The ROI on lobbying is four or even five orders of magnitude higher than the ROI on capital investment / R&D. It has always been this way. Money seeks the monopoly on the use of force. Different types of government are always characterized by the same rent-seeking behaviour. Those who call for a new form of government only want a chance to rearrange the chairs and grab one for themselves.
People who become very wealthy ALWAYS get involved in government or lobbying in some form or another. It’s about cementing their position, power, fame, genetic future, whatever. Name one who hasn’t?
It’s not any more complicated than that. This is also why libertarians are fond of stating that the act of seeking political power disqualifies the seeker from holding it.
Bottom-up rent seeking can be slapped down. Top-down rent seeking has no powerful antidote.
“Name one who hasn’t” Bill Gates avoided politics early on, until the anti-trust folks hung him up like “the worlds wealthiest piñata” and began beating money out of Microsoft until he capitulated and began crossing their outstretched palms.
Agree
What often goes unnoticed is the stunning degree of reverse leverage.
The political filth are happy to do billions of economic damage for twenty grands worth of bribes.
Excellent piece! Great food for thought.
You need to go one level deeper with this topic. Our species evolves at the individual level, not at the level of societies. If we eliminate competition at the individual level, we eliminate the driver for natural selection. And at that point, the entire species devolves and become less robust over time. UBI will accelerate this decline at hyperspeed. This will likely lead to a future of genetically engineered cloud people and an underclass of morlocks. It’s not science fiction any more.
Or the Cloud People tire of the underclass morlocks and the problems they bring and sterilizes them and or euthanizes them.
Ultimately it has to come back down to local scale entities solving local scale problems the best way for themselves.
That has been the perennial prediction of the decentralists, but it only ever pans out by happenstance and for a short while before someone become regionally dominant.
Technologically speaking, it might be possible at some point in the not-too-distant future to have small autarkic solutions to what were traditionally considered massive public works problems (eg. power generation, efficient transportation, etc.), but they would still have to compete on the meta-level with more expansive and bellicose neighbors.
In my opinion, scaling down problems is not a solution per se (it can be in some cases). Having the power and will to address problems regardless of their implication is the only way forward. eg. It would do little good for South Chicago to become an independent state with none of the how or why it collapsed being addressed, but acknowledging the behavior of the Africans in that area is not congruent with Euro-Colonial systems of government would get you on the right track which might include a decentralist solution such as secession.
“That has been the perennial prediction of the decentralists, but it only ever pans out by happenstance and for a short while before someone become regionally dominant.”
And maybe this is just because human nature will always assert itself and someone will become dominant, no matter what scale you talk about. I’m sure you’ve heard the cliche, “Big fish in a little pond”? I think most people on this site will understand that equality only really exists in a mathematical sense. We understand that equality between races and equality between cultures is a fiction. Maybe it is time we need to truly except that there is no equality within a race or culture or country and it might be best if we embraced that and tried to produce a moral, ethical, and educated people instead of trying to believe everyone has the natural gifts to be a leader. If we do this and have a judicial system that enforces equality before the “law” we may arrive at a hierarchical system where we are best suited. I believe these systems have existed in the past. Periclean Athens. America in the 18th and early 19th century. England in the 19th century. I hate to use the phrase “know your place”, but when people do, there is less friction.
“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.
By the time Belloc was writing, it was clear that pure capitalism would inevitably result in the concentration of wealth.”
I know that this is just a matter of semantics, but power equals wealth. To say that there is somehow a difference in those that have political power and those that have wealth is a surface illusion. Underneath, they will both be the same thing.
Politicians and bureaucrats do not gain wealth directly, but they control power so they will become rich. There was a time in America when someone could become a Senator, serve for several years, and then retire, with no more wealth than when they started. This is nearly unheard of these days. Look at the Clintons or the gay mulatto. In the Soviet Union, the top apparatchiks lived like royalty. They shopped at stores the proletariat was not allowed in. They lived in the best housing, had chauffer driven Western cars, and belonged to a decedent upper class that was not subject to the rules their lessers were forced to abide by. On paper, they were not wealthy. In reality they had a power that controlled property, i.e., wealth.
We are told that men like Bill Gates or Zuckerberg are the richest men in America. They aren’t. If you have measurable wealth, you will have measurable taxes. The truly wealthy do not directly own things. They control them. This allows them to consolidate a power that far exceeds a Gates. If you personally own a gold mine, you will be taxed for all of the income associated with the gold that is mined. If the mine is not in your name but you control it, you have every advantage the owner does, as well as corporate advantages, inside trader knowledge, and plausible deniability. The truly rich control the political players, which determine the outcome of everything else. They are not placed before your eyes daily like the poster boys for wealth. If you can be seen, you can be eliminated.
Both socialism and capitalism arrive at the same end. Everything is controlled by a small percentage of the population. The only difference is the mobility of the middle class, at least until the middle class is eliminated. However, there has never been a “pure” capitalistic system in all of history. Many if the abuses in a capitalistic system are because of the insidious practice of an interest bearing currency system, as demonstrated by fiat currency and central banks. It is not the accumulation of capital in the capitalists’ hands that is the problem. It is accumulation of capital in those that lend money at interest. You can argue that financiers are the ultimate in capitalists. I feel that the difference is that capitalists provide a service or a product for trade. Financiers make money out of thin air, and provide money/currency to the masses that the Treasury could do even more easily, without the need to make profit on boom and bust cycles.
Warren Buffet has engineered control with ownership, but without the responsibilities and liabilities that ownership accrues to the owners. Berkshire Hathaway is the perfect vehicle for such a thing.
What passed the notice of 20th century luminaries like Belloc, was the truism that all large scale social systems (like nation-state governments) ultimately rest upon oligarchies. This was understood at common knowledge from the time of the ancient Greeks up to the late medieval period, when such arrangements were perfectly obvious, but unfortunately fell by the historical wayside as more latter-day political thinkers let their minds drift into the platonic ether surrounding concepts like absolute monarchy, republicanism, etc.
This observable law of nature seems to render both theories on socialism and capitalism as moot points. Distributism and other third-way concepts get closer to the aforementioned European Norm because they aren’t reliant on impossible norms like perfect competition or perfect altruism. Yet, arriving at such a third-position based on concepts like the competition between a governing demos and a propertied class yields erroneous results. Garbage in, garbage out. The state isn’t run by the demos and the propertied are the primary beneficiaries of its function.
I would argue that the neoliberal system is neither economically nor culturally stable and I would suggest that this is a function of two things: First, the elite are unsatisfied with their station. They have longed for unipolar dominion over the planet since the Soviet collapse and thus-far it has eluded them. This means they have greatly over-extended themselves in order to grasp at that final goal. Nearly goading Russia into a world war being the result. China’s nearly predictable eclipse of the West being another. Their elites were content with regional dominion and have slowly inherited the world through the western elites’ mistakes.
Secondly, the elites have fostered a truly delusional zeitgeist among themselves and their managerial functionaries such that they could attain the aforementioned prize without prompting moral indignation from the conquered. This is perhaps more pernicious than the overreach itself. A good many elites have bankrupted their regions attempting to expand their influence, but few before have made it their raison d’etre to swamp their own seat of power in exchange for such a change.
So the goal of anyone seeking to optimize for both freedom and material distribution, in my estimation, would be to convince the elites of their mistakes or prepare to submit to the next elites who emerge from the inevitable usurpation of the inept. I tend to think the former is beyond the capacity of most these days. Our ruling elite are predominantly Jewish and, as I have said before, both fail to identity with and, consequently, have no willingness to sacrifice on behalf of their base of power (the middle and laboring classes of white westerners who built the civilization they gained control over in the 20th century).
Incidentally, I am not convinced that Christianity has any meaningful role to play in all this. It is no longer an elite religion anywhere in the west and it could easily be swept aside under new elite management. The most important factor will simply be who has the power and initiative to take control of the western regions. I’d suggest passing familiarity with Confucian or Vedic literature.
I see Belloc’s servile state most strongly in medicine, where large hospital and university systems take over regional medical markets and physicians are faced with the choice of working within the system or having to move away. This is felt strongly by subspecialists who rely on referrals, but they have found ways to convince the primary care physician that he cannot make do without them, too. Like Wal-Mart, they can flood a local market with other competing physicians and pay them at a loss to lure patients away from their PCP and in the end take over his practice entirely when he gives in and hires on. They then present the doc with performance figures that show them always losing money on him while the system as a whole profits from testing and care provided at other levels. It ends with the docs and the patients all working for the company and buying at the company store like in the old coal mining communities.
The people running these conglomerates don’t care that this is an unsustainable situation. When they have taken over and things begin to go south, as they inevitably will, they will request and get government assistance as they are “too big to fail”.
The situation we are now in was set up with the assistance of government licensing and regulation and it will end in a partnership of giant corporation and government just as Belloc described.
The solution I have advocated is elimination of occupational licensing as a means of cutting the disease out by its roots. If anyone can come up with a more conservative way of walking things back I would be more than happy to hear about it, but having thought about this problem for decades I have not been able to come up with anything that has any chance of accomplishing this goal. Abolition of licensing will cause some chaos, but not having licensing does not make competent people disappear from the face of the earth. The situation we are in, however drives them out of health care into retirement or other fields and you end up having a nurse practitioner for a PCP and an African you can’t understand to save your life for a hospitalist.
No, you are right, there is no better way. Credentialism is the lifeblood of bureaucratic rule. Eliminate it or wear it. It has never been so simple to check upon the quality of a product you are looking to use and to sort among the options.
The inevitable result will of course be the collapse of these conglomerates. It is happening near here, (Louisville, KY) , with the old Jewish/Catholic merged system. What will fill the gap is anyone’s guess
The people in charge of medicine don’t care about the long run because they are making millions a year in the short run, and will be long gone when the reckoning comes.
@ teapartydoc – I would argue that I would not want an unlicensed physician practicing medicine any more than I would want an unlicensed civil engineer building bridges. Bureaucracy or not, there must be a governing body to control such things to ensure public safety. Do we really want to revert back to the days of barbers pulling teeth? I think not.
It sounds like your profession is suffering from the same managerial shift we in industry have encountered. In Germany, it was at one time the Kraftfahrzeug-mechaniker-meister (the most highly skilled machinist) who decided who worked on the shop floor and became an apprentice, not management.
However that decision shifted completely to management after WW2 partly due to the influence of American management practices and simply due to a lack of skilled manpower. However I am happy to comment that a reversal of this practice has already begun in many German companies.
Perhaps the answer you’re looking for, with regards to the problem of licensing, exists in requiring and maintaining higher standards of education and thereby eliminating those who don’t measure up academically. It’s why in Germany we differentiate between a college and a university education even for engineers.
In the area of your profession, perhaps the time has come for physicians to take the hospitals back from the administrators.
It is a losing strategy to fight a bureaucratic state or system by joining it. It is the reformer who is changed if not consumed, not the bureaucracy. A medical system (or more exactly, systems) that rejects state credentialism is in greater need of credentials. Health professionals, hospitals, and consumers would choose between them. People are not as stupid as we think when they have to think, and they are stupider than we think when they don’t.
You get a medical license by taking a test just like the ones you got in school. The test is determined by the profession. There are fewer than 1-2% of grads who don’t pass. It’s only purpose is to control the number of practitioners. To maintain the monopoly. I took mine so many years ago it has nothing to do with how I practice. I can’t think of anything more meaningless to competency.
Perhaps the resistance of some to understand this idea is because their paychecks depend on them demonstrating this resistance.
>What Belloc argued is that socialism is inevitably the state dictating to property holders how they can dispose of their property.
Best as I can figure out, in practice (not theory) socialism is a small elite of property holders using the state to destroy the majority of property holders, the middle class.
This takes many forms:
1) regulations which the elite property holders write and retain legions of lawyers (some of them ex-regulators) to interpret, but which are impossible for normal property holders to comply with
2) mandatory public “education” for the middle class, which makes it impossible for most of their children to either become truly educated (because they spend their most educable years getting zombified) or pick up a trade before adulthood
3) weaponizing the underclasses (workers and peasants and minorities and so on)
4) alienating the middle classes, in every way possible
5) using economies of scale to destroy middle class small business-good luck running that corner store when Walmart comes to town and Amazon eats Walmart
The government is not the enemy of the really rich, it’s their faithful servant in their quest to crush the middle class, which forms their potential competition.
Of course, trees don’t grow to the sky and any truly potential strategy becomes self-defeating in the long run. I think we’re getting there sooner rather than later.
This kind of “socialism” is what some have called “crony capitalism.” It’s just Tammany Hall style power consolidation on a global rather than city scale (Obama saw how it worked in Chicago and did his best to turn America into one giant Second City). Capital accrues heavily to those close to the (deep) state so that no bargain between state and capital is necessary as Belloc posited: state and capital are under the control of the same people (who have a literal power to print money). America isn’t Chile, so if you balk or cross these people, you don’t get thrown from a helicopter, but you might lose your job and have unfavorable and damaging rumors and stories printed about you in the state’s organs (like The Washington Post, the New York Times, and CNN).
The current situation has little to do with the concept of capitalism or libertarianism (I define this as extremely limited government as opposed to open borders and other such nonsense). We don’t really have capitalism but thousands of rent seeking corporations and private large businesses in bed with the federal and other government. Part of this rent seeking is limiting hours and low pay and little in the way of insurance or benefits. Even the public sector has gotten in on the BS ‘privatization’ scam.
We have no free market in money. Thousands of regulations and laws that prevent you from doing much or keeping your own money as its devalued.
Well done. I better understand where we are any why that is so. Ultimately, we are as bad or as good as our ruling class, and that class has grown as wretched as it is embedded like the parasite it is.
The dangerous liaison of human and artificial intelligence has produced robots that are replacing immigrant fruit and vegetable pickers and reducing the need for H-1 B visas. Bill Gates is already demanding we tax robots who take other people’s jobs, even though a robot would beat him if he ran for president against one.