The common wisdom is that capitalism has replaced feudalism as a distinct institutional regime that integrates the economy, society, and political power into a coherent societal order. However, I will argue that we still live within a form of feudalism, specifically in the transformed status of modern serfdom: The relationship between employer and employee. This perspective stands in stark contrast to Hayek’s famous theme of the “road to serfdom.” Hayek and other defenders of what is known in the U.S. as the “free enterprise system” believed that socialism poses a threat to the regime of free markets and a free society that overcame feudalism, thereby liberating individuals from the constraints of the feudal comprehensive order of life. Although I believe that real-world socialism can be seen as a form of serfdom, I argue that this characteristic is also present in capitalism. David Ellerman has defended this perspective in various writings, advocating for worker-owned firms. Neither socialism nor capitalism have overcome fundamental features of a feudal order of society, of which serfdom is a pillar.
Feudalism is a system where the property regime in the economy is intertwined with the system of political rule, assigning rights to govern to a landowning military elite. This elite remains fragmented into various competing groups, though they are connected to a political center through relationships of loyalty. With the transition to modern states, this fragmentation was addressed through the establishment of a state monopoly on violence. In this sense, modern states transformed the political aspects of feudalism. However, what changes occurred in the property regime and in its role in connecting political domination to economic structures?
The modern understanding of the rule of law as an abstract system that grants individuals autonomy and protects their free economic and social interactions with others is deeply misleading and serves as an ideological veil. At the heart of the modern liberal economic order lies a paradox highlighted by various thinkers: although democratic liberal politics promotes individual autonomy, this autonomy is undermined by iron forms of domination within economic processes, particularly within companies, which serve as the basic units. The prevailing theory suggests that this doesn’t compromise the entire liberal framework because workers can “vote with their feet” in the free labour market. However, this notion is a far cry from reality, especially when it comes to individual choices shaped by market conditions (such as unemployment) and, more significantly, on a systemic level. Unless one is wealthy and a rentier, individuals are compelled to enter some form of employment relationship. This is exactly where capitalism and socialism converge: no bread without salaried work. Universal basic income is anathema to both capitalists and socialists.
The consequence is that most people are forced into subordination within the companies where they earn their living. Elisabeth Anderson has referred to this system as “private government.” There is an illustrious precedent for this idea: Max Weber. Weber argued that property in capitalism is a form of rule (Herrschaftsverhältnis), rather than a distinct form of economic organisation. This form of rule is stabilised by the fact that workers do not own the means of production, which means they cannot survive without entering into an employment relationship. As a result, when using these means in the workplace, they are compelled to obey the commands of their employers who own these means. Weber writes: “ (…) rigorous capitalist calculation is linked socially to “factory discipline” and the appropriation of material means of production, and thus to the existence of a relation of rule.” (Economy and Society, Chapter II, 13, new translation by Kenneth Tribe).
Considering the previous reference to Hayek, it is interesting to note that Weber followed Austrian economics in his analysis of the economy and capitalism, rather than Marxist thought. His focus was on the conditions of economic calculation, and he also anticipated the debate about the feasibility of economic calculation in a socialist planned economy. In other words, his economic ideas converged with those of Hayek in many respects. However, he also provided a clear analysis of the political and social context which Hayek blanked out.
Although individuals may choose among employers, they are collectively forced into a status similar to serfs within the system, lifelong, with no alternative, and the penalty of ostracism and abject poverty. This is the key point of my argument: capitalism remains a system in which rule, property, and the subjugation of individuals to a ruling elite are merged into a single institutional complex. This represents a modern variant of feudalism, though with a state monopoly of violence. Some economists concur with this analysis, albeit without using the term, including Luigi Zingales, a prominent Chicago financial economist who has developed a “political theory of the firm.”
The established economic approach to property treats this institution as a mere “social technology” and an institutional tool for organising the economic process in a rational and efficient manner. Max Weber agrees, but also emphasises that the condition for this is that property operates as a system of rule and domination. This combination retains a defining feature of feudalism. Overcoming feudalism eventually requires addressing the institutional form of wage labour, which is akin to a modern form of serfdom tied to the system rather than to specific individuals. The key levers of transformation include the introduction of Universal Basic Income and a fundamental reform of the corporation towards a structure that respects the autonomy of its members as citizens in a democratic and liberal society.
The technosphere, our agency, our planet 