The Pandemic Road to Serfdom Joel Kotkin Essay 05.01.2020

The Pandemic Road to Serfdom

Joel Kotkin

Essay

05.01.2020

Our Covid-era oligarchs are fitting us for feudalism.

Even before the outbreak of the Covid-19 pandemic, America, like most higher-income countries, was already heading toward a neo-feudal future: massive inequality, ever-greater concentrations of power, and increasingly widespread embrace of a uniform (albeit secular) religion. The pandemic, all too reminiscent of the great plagues of the Middle Ages, seems destined to accelerate this process.
This can be seen by looking at something that many Americans, particularly conservatives, often long to ignore: class. In contrast to the post-World War II order, which engendered growing opportunity for the middle and working classes, the last few decades have seen the rapid concentration of wealth in virtually every major country in Europe and Asia.
The oligarchic class now owns as much as 50% of world’s assets. Just five companies—Alphabet, Amazon, Apple, Facebook, and Microsoft—account for over 20% of the market capitalization of the entire S&P 500 index.
Today’s new oligarchs constitute a modern-day equivalent of the Medieval aristocracy. Like the barbarians who seized control of land during the demise of Rome, they seem well-positioned to benefit from the emerging social distance-driven recession. The dislocation caused by the pandemic has greatly expanded the financial assets of the country’s increasingly hegemonic giant banks. But the biggest long-term winners are the big tech firms that dominate digital pathways at a time when the analog world, already failing, now faces inexorable obliteration.
Today’s other ascendant class is what I call the clerisy, who today fulfill the role played by the clergy in the Middle Ages. Known as the First Estate in pre-revolutionary France, the clerisy today is largely secular but consists of the key influencers in the media, academia, the upper bureaucracy and the ever-expanding “non-profit” sector. This new middle class enjoys something of a symbiosis with the oligarchic elites who mainly finance non-governmental organizations and the universities, and tends to a share a similarly progressive world view.
The people losing out most in the pandemic are the remnants of what was once dubbed the Third Estate: the commoners, long the bastion of democracy and liberal ideas. Millions of owners of small businesses have been devastated by the lockdowns, their lifetime investments allowed to turn to dust because the clerisy has declared them “non-essential” and hopes to keep them in lockdown well into the summer.
Worse still, as the promise of becoming business owners and homeowners has faded—particularly for the young—many increasingly fall into the insecure “precariat” of gig and part-time workers. These modern-day serfs are suffering the most from the pandemic. Millions of low-wage workers in hospitality, retail, and restaurants have lost their jobs and possess only meager prospects of getting them back in the near- or even medium-term future. Many others, largely low-wage service workers in “essential” jobs, are still working, but at high risk to themselves, often without adequate health and other protections.

How the Pandemic Drives Oligarchic Power

The new regime of social distancing, likely to remain influential for years to come, works most directly for the interests of the technologized oligarchy. The long-term decline of travel, convention, and traditional entertainment may mean disaster for millions of workers and many businesses, but it represents an enormous opportunity for those who can deliver food, goods, diversions, and experiences over the relative safety of digital networks.
But as jobs are destroyed on Main Street, others, like those at well-positioned Amazon, are created by the hundreds of thousands. It is also a rosy new dawn for online collaboration applications like Zoom, Google Hangouts, Facebook Rooms, Microsoft Teams, and Slack, the fastest-growing business app on record. Also greatly enhanced will be those who provide the infrastructure for the conquering digital economy, including chipmakers like Intel and cloud-computing behemoths like (yet again) Amazon and Microsoft.
The pandemic seems likely to further consolidate the tech industry shift from its garage-based startup past, with firms like Google, Facebook, Microsoft, and Amazon increasingly resembling Japan’s long-dominant keiretsu. The pandemic may have squashed many new companies that are now short on capital. In contrast, the oligarchic firms, which control upwards of 80% of such key markets as search, social media, cloud computing, and computer operating systems, now enjoy an even greater edge in garnering ever more of the nation’s technical talent.
Ultimately the pandemic will provide the new elite with opportunities to gain control of a whole set of coveted industries, from entertainment and media to finance and space travel. Perhaps most concerning will be their ability to control all aspects of information as the last vestiges of local and small-town journalism face Covid-driven “extinction level” events. What is now left of the “legacy” media—the Atlantic, Time, the Washington Post, and the Los Angeles Times—has fallen increasingly under their control. Nine of the 13 richest people under age 40 are in the tech industry: the odds are favorable that the new elite will maintain their control over information for generations.

The Secular Priesthood

The barbarians who seized Roman lands took advantage of chaos to fuel their ascendancy in what became the Middle Ages. Pestilence-driven depopulation and weakened political institutions enabled them to establish their hegemony over shrinking economies. Yet to assure their power, the Medieval aristocracies needed more than just swords and armor: they needed a belief system that would allow them to control the lower classes effectively.
Today this role is played by a far-reaching “expert class” teeming with highly-credentialed functionaries. The power of the “expert” professions—education, consulting, law, policymaking, and health and medicine, to name a few—has waxed in recent decades. To a large extent, the gradual demise of the analog economy is hastened by medical experts—at least those largely favored by the media—who call for lockdowns and restrictions that could easily extend to summer and even, according to Ezekiel Emanuel, lead medical advisor to Joe Biden, as long as eighteen months.
Like their Medieval counterparts in the old First Estate, members of today’s clerisy see their intrusions motivated not by self-interest but rather the good of society. They constitute “the privileged stratum,” as the French leftist Christophe Guilluy argues in his recent book Twilight of the Elites, operating from an assumption of “moral superiority” that justifies their right to instruct others.
From the pandemic to the climate, many of the expert class’s marquee predictions have been exaggerated or even plain wrong. (In the 1970s, hysteria among educated elites was mostly directed toward dire predictions that our natural resources, including energy and food, were about to run out, leading to imminent mass starvation.) Like the Medieval clergy, the clerisy, especially in the dominant media and academia, rarely takes itself to task. Instead, it makes deference to “the science” into a form of quasi-religious zealotry. For some, the pandemic is being hailed as “test run” for the true green agenda of less material progress and, ultimately, “de-growth.”
The parallels with the Middle Ages are profound. The lockdowns and economic depression associated with the pandemic will help, as Psychology Today suggests, cure “the human beast,” a phraseology not too distinct from early Christian assessments of humanity’s capacity for sin. This “eco-medievalist” view sees the pandemic as the latest punishment meted out by an increasingly angry and wounded Mother Nature. Conservatives, some of whom predict the pandemic will undermine support for climate extremism, fail to understand the mass appeal of a media-powered movement largely couched in quasi-religious terms.

The Coming Crisis of the Third Estate

In contrast, the pandemic has proven an utter disaster for much of the Third Estate. The most evident damage can be seen at the malls, or on Main Street, where millions of small firms have been forced to close and, at least in some locations, may be forced to stay locked down for many more months—even as some states and, in some parts of Europe, whole countries, are opening up.
In the aftermath of the lockdowns, small independent firms will be harder-pressed to compete against larger competitors with better access to capital and better positioning to wait out the pandemic. In the coming months, we might see many of our favorite local gyms and bars, or taco stands and family-owned Chinese restaurants, replaced by either online options or larger chains.
Well-financed large restaurant chains moved to the front of the line to secure their place atop the food chain, but the National Restaurant Association estimates that more than 8 million restaurant employees have been laid off or furloughed since the beginning of the coronavirus outbreak in March. This represents more than two-thirds of the 12 million employees that were working at the nation’s eating and drinking establishments in February.
Sadly these workers, and local business, can’t expect much help from Washington’s current stimulus plans. Even the Wall Street Journal admits the stimulus plan is “putting Wall Street ahead” of competing Main Street businesses. Republicans may talk a good game about smaller firms, arguably Trump’s strongest base, but at the end of the day they tend to take direction from large, globalized corporations and well-connected financial interests. Democrats, for their part, have little interest in smaller business as these tend to be owned by conservatives and are not amenable to unionization.
The generation of workers clipped by the Great Recession is now suffering the largest share of the job losses. Even those still working are stuck in the precariat, with little ability to control working conditions, terms of employment, or guarantees for health coverage. Such workers may try to use their leverage as “essential” to boost wages and improve conditions. We already see labor strife at Amazon, Instacart, Perdue, and McDonald’s. If nothing else, as Michael Lind suggests, the pandemic could “alter the balance of power among workers and employers.”
With the yeomanry thundering mostly from the Right, the protests of “essential” blue-collar workers could help boost the socialist cause. Roughly half of American households have no emergency savings and face an uncertain future as jobs disappear. A new class of ex-workers now finds the dole a more amenable or viable option than hard and dangerous work for relatively low pay. Bernie Sanders may have lost the nomination, but the message he ran on is amplified at a time when soup kitchens, as during the Depression, are now serving New York artists, writers, and musicians. The pandemic will likely increase the strong socialist tendency among both millennials and the successor Z generation.
More dangerous still may be the potential return to anarchy, particularly in the barrios and ghettos of the nation. In New York, the working-class transit-dependent communities of the outer boroughs can’t flee to second homes, work at home, walk to work, or take cabs like the Manhattan rich. As occurred in the wake of the great aerospace depression in Southern California in the early ’90s, diminished prospects can help light the flames of violent anarchy from the home on up. Family violence is already increasing in many countries.
Add to this toxic stew the fact that some jurisdictions, citing infection fears, have released dangerous criminals onto the streets. Crime has predictably spiked from New York to San Francisco. Even before the pandemic set in, the big American cities—unable to curb large homeless populations spreading filth and Medieval disease—took on the hazardous cast of ancient Rome, Victorian London, New York’s Five Points, or the favelas and ghettos of Third-World cities like Sao Paulo, Mexico City, or Manila. The rising number of people unable to pay rent—now one in three—could provide fodder for a new round of urban disorder.
Ultimately such disorder threatens the power of both the oligarchs and the clerisy. Their likely response may be embracing what I call “oligarchal socialism,” where the very notion of work disappears in favor of a regime of cash allotments. This notion of providing what Marx called “proletarian alms,” widely supported in Silicon Valley, could prove a lasting legacy of the pandemic. This is how Rome, as slaves replaced the middle orders, kept its citizenry in line, and how the Medieval order in times of economic stress relied on the charitable efforts of the Church.
The virus that now dominates our daily lives may soon begin to slowly fade, but it will have a deep, protracted impact on our society and class structure. Covid-19 will likely leave us with conditions that more resemble feudalism than anyone could have imagined just a few years ago.

Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University and executive director of the Urban Reform Institute. His forthcoming book, The Coming of Neo-Feudalism, is out from Encounter later this spring.

@joelkotkin

Thoroughly Modern Marx, By Leo Panitch May/June 2009

http://www.foreignpolicy.com

Lights. Camera. Action. Das Kapital. Now.

The economic crisis has spawned a resurgence of interest in Karl Marx. Worldwide sales of Das Kapital have shot up (one lone German publisher sold thousands of copies in 2008, compared with 100 the year before), a measure of a crisis so broad in scope and devastation that it has global capitalism—and its high priests—in an ideological tailspin.

Yet even as faith in neoliberal orthodoxies has imploded, why resurrect Marx? To start, Marx was far ahead of his time in predicting the successful capitalist globalization of recent decades. He accurately foresaw many of the fateful factors that would give rise to today’s global economic crisis: what he called the “contradictions” inherent in a world comprised of competitive markets, commodity production, and financial speculation.

Penning his most famous works in an era when the French and American revolutions were less than a hundred years old, Marx had premonitions of AIG and Bear Stearns trembling a century and a half later. He was singularly cognizant of what he called the “most revolutionary part” played in human history by the bourgeoisie—those forerunners of today’s Wall Street bankers and corporate executives. As Marx put it in The Communist Manifesto, “The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby relations of production, and with them the whole relations of society. . . . In one word, it creates a world after its own image.”

But Marx was no booster of capitalist globalization in his time or ours. Instead, he understood that “the need for a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe,” foreseeing that the development of capitalism would inevitably be “paving the way for more extensive and exhaustive crises.” Marx identified how disastrous speculation could trigger and exacerbate crises in the whole economy. And he saw through the political illusions of those who would argue that such crises could be permanently prevented through incremental reform.

Like every revolutionary, Marx wanted to see the old order overthrown in his lifetime. But capitalism had plenty of life left in it, and he could only glimpse, however perceptively, the mistakes and wrong turns that future generations would commit. Those of us now cracking open Marx will find he had much to say that is relevant today, at least for those looking to “recover the spirit of the revolution,” not merely to “set its ghost walking again.”

If he were observing the current downturn, Marx would certainly relish pointing out how flaws inherent in capitalism led to the current crisis. He would see how modern developments in finance, such as securitization and derivatives, have allowed markets to spread the risks of global economic integration. Without these innovations, capital accumulation over the previous decades would have been significantly lower. And so would it have been if finance had not penetrated more and more deeply into society. The result has been that consumer demand (and hence, prosperity) in recent years has depended more and more on credit cards and mortgage debt at the same time that the weakened power of trade unions and cutbacks in social welfare have made people more vulnerable to market shocks.

This leveraged, volatile global financial system contributed to overall economic growth in recent decades. But it also produced a series of inevitable financial bubbles, the most dangerous of which emerged in the U.S. housing sector. That bubble’s subsequent bursting had such a profound impact around the globe precisely because of its centrality to sustaining both U.S. consumer demand and international financial markets. Marx would no doubt point to this crisis as a perfect instance of when capitalism looks like “the sorcerer who is no longer able to control the powers of the netherworld whom he has called up by his spells.”

Despite the depth of our current predicament, Marx would have no illusions that economic catastrophe would itself bring about change. He knew very well that capitalism, by its nature, breeds and fosters social isolation. Such a system, he wrote, “leaves no other nexus between man and man than naked self-interest, than callous ‘cash payment.’” Indeed, capitalism leaves societies mired “in the icy water of egotistical calculation.” The resulting social isolation creates passivity in the face of personal crises, from factory layoffs to home foreclosures. So, too, does this isolation impede communities of active, informed citizens from coming together to take up radical alternatives to capitalism.

Marx would ask first and foremost how to overcome this all-consuming social passivity. He thought that unions and workers’ parties developing in his time were a step forward. Thus in Das Kapital he wrote that the “immediate aim” was “the organization of the proletarians into a class” whose “first task” would be “to win the battle for democracy.” Today, he would encourage the formation of new collective identities, associations, and institutions within which people could resist the capitalist status quo and begin deciding how to better fulfill their needs.

No such ambitious vision for enacting change has arisen from the crisis so far, and it is this void that Marx would find most troubling of all. In the United States, some recent attention-getting proposals have been derided as “socialist,” but only appear to be radical because they go beyond what the left of the Democratic Party is now prepared to advocate. Dean Baker, codirector of the Center for Economic and Policy Research, for example, has called for a $2 million cap on certain Wall Street salaries and the enactment of a financial transactions tax, which would impose an incremental fee on the sale or transfer of stocks, bonds, and other financial assets. Marx would view this proposal as a perfect case of thinking inside the box, because it explicitly endorses (even while limiting) the very thing that is now popularly identified as the problem: a culture of risk disassociated from consequence. Marx would be no less derisive toward those who think that bank nationalizations—such as those that took place in Sweden and Japan during their financial crises in the 1990s—would amount to real change.

Ironically, one of the most radical proposals making the rounds today has come from an economist at the London School of Economics, Willem Buiter, a former member of the Bank of England’s Monetary Policy Committee and certainly no Marxist. Buiter has proposed that the whole financial sector be turned into a public utility. Because banks in the contemporary world cannot exist without public deposit insurance and public central banks that act as lenders of last resort, there is no case, he argues, for their continuing existence as privately owned, profit-seeking institutions. Instead they should be publicly owned and run as public services. This proposal echoes the demand for “centralization of credit in the banks of the state” that Marx himself made in the Manifesto. To him, a financial-system overhaul would reinforce the importance of the working classes’ winning “the battle of democracy” to radically change the state from an organ imposed upon society to one that responds to it.

“From financialisation of the economy to the socialisation of finance,” Buiter wrote, is “a small step for the lawyers, a huge step for mankind.” Clearly, you don’t need to be a Marxist to have radical aspirations. You do, however, have to be some sort of Marxist to recognize that even at a time like the present, when the capitalist class is on its heels, demoralized and confused, radical change is not likely to start in the form of “a small step for the lawyers” (presumably after getting all the “stakeholders” to sit down together in a room to sign a document or two). Marx would tell you that, without the development of popular forces through radical new movements and parties, the socialization of finance will fall on infertile ground. Notably, during the economic crisis of the 1970s, radical forces inside many of Europe’s social democratic parties put forward similar suggestions, but they were unable to get the leaders of those parties to go along with proposals they derided as old-fashioned.

Attempts to talk seriously about the need to democratize our economies in such radical ways were largely shunted aside by parties of all stripes for the next several decades, and we are still paying the price for marginalizing those ideas. The irrationality built into the basic logic of capitalist markets—and so deftly analyzed by Marx—is once again evident. Trying just to stay afloat, each factory and firm lays off workers and tries to pay less to those kept on. Undermining job security has the effect of undercutting demand throughout the economy. As Marx knew, microrational behavior has the worst macroeconomic outcomes. We now can see where ignoring Marx while trusting in Adam Smith’s “invisible hand” gets you.

The financial crisis today also exposes irrationalities in realms beyond finance. One example is U.S. President Barack Obama’s call for trading in carbon credits as a solution to the climate crisis. In that supposedly progressive proposal, corporations that meet emissions standards sell credits to others that fail to meet their own targets. The Kyoto Protocol called for a similar system swapped across states. Fatefully however, both plans depend on the same volatile derivatives markets that are inherently open to manipulation and credit crashes. Marx would insist that, to find solutions to global problems such as climate change, we need to break with the logic of capitalist markets rather than use state institutions to reinforce them. Likewise, he would call for international economic solidarity rather than competition among states. As he put it in the Manifesto, “United action, of the leading . . . countries, at least, is the first condition for the emancipation of the proletariat.”

Yet the work of building new institutions and movements for change must begin at home. Although he made the call “Workers of the world, unite!” Marx still insisted that workers in each country “first of all settle things with their own bourgeoisie.” The measures required to transform existing economic, political, and legal institutions would “of course be different in different countries.” But in every case, Marx would insist that the way to bring about radical change is first to get people to think ambitiously again.

How likely is that to happen? Even at a moment when the financial crisis is bleeding dry a vast swath of the world’s people, when collective anxiety shakes every age, religious, and racial group, and when, as always, the deprivations and burdens are falling most heavily on ordinary working people, the prognosis is uncertain. If he were alive today, Marx would not look to pinpoint exactly when or how the current crisis would end. Rather, he would perhaps note that such crises are part and parcel of capitalism’s continued dynamic existence. Reformist politicians who think they can do away with the inherent class inequalities and recurrent crises of capitalist society are the real romantics of our day, themselves clinging to a naive utopian vision of what the world might be. If the current crisis has demonstrated one thing, it is that Marx was the greater realist.


Leo Panitch is Canada research chair in comparative political economy and distinguished research professor of political science at York University in Toronto, and coeditor of the annual Socialist Register.

Support building for the Japanese Communist Party Communist party surges as Japan's economy withers By ERIC TALMADGE Associated Press

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/04/18/international/i222808D25.DTL&feed=rss.business

TOKYO (AP) — Under a big red flag, the headquarters of the Communist Party of Japan are the center of the most vibrant grass-roots movement in the country. The party's ranks are swelling, it has 24,000 branch offices and more than a million people read its newspaper. Only one party — the one that runs the country — beats it at fundraising.

As Japan's economy withers, communism is coming to life.

Dormant in the boom years and marginalized even as Japan more recently clawed its way out of recession, the party's litany of capitalist evils is now resonating deeply with many Japanese — especially the young — who are feeling the pain of an economic downturn that some say has reached depression dimensions.

While the Communist Party — which is the fourth-largest party in parliament, but has only 16 of the total 722 seats — is not likely to take over anytime soon, it is making itself felt.

On college campuses, in particular, Karl Marx is popular again.

"I have never voted before, but I intend to vote communist in the next elections," said Suguru Yagi, a Tokyo college student.

Yagi, 22, said he had considered joining the party because he agrees with many of its policies and sees it as the defender of the working class. As a student about to graduate, he is concerned about the shrinking work force, and the difficulties he may find in getting a good job.

Leading Japan's communist renaissance is Kazuo Shii, the round-faced party chief, who has become one of Japan's most recognizable politicians and something of a media star, grilling the country's conservative leaders from his perch in parliament and unfailingly appearing before the cameras with what boils down to: "I told you so."

Financial meltdowns worldwide. Banks and manufacturers going belly up, or begging for bailouts. Unemployment and unrest on the rise.

Capitalism, Shii concludes, is doomed.

"It is inevitable," he said in a recent interview with The Associated Press. "When the persimmon is ripe, it will fall from the tree."

Shii, and the party, believe that time is fast approaching. And, in Asia's most dedicated bastion of capitalism, more people are beginning to agree.

According to the party, about 1,000 new members are joining its ranks every month — a sharp contrast to the massive exodus that has plagued the ruling Liberal Democrats, who have dropped from about 5 million members in their heyday to about 1 million members now.

The Japan Communist Party was founded as an illegal movement in 1922, but legalized after Japan's World War II defeat in 1945. It then struggled through polarizing splits with the Soviets and Communist Chinese in an effort to maintain its independence. It also has distanced itself from the radical left, which gained popularity in the 1960s and '70s, but has since died down.

Shii attributed the renewed interest in the party to voter disillusionment with future prospects in an increasingly difficult job market. People who have lost their jobs or their pensions are turning to the party. There is increasing distrust of the centrist Liberal Democrats and their main rivals, the Democratic Party of Japan, who are also conservative and are, in fact, led by a former Liberal Democrat.

The communist revival has also been spurred on by the pop media.

Marx's Das Kapital is now available in cartoon form, and a surprise best-seller of the year has been a revival version of "Kanikosen," a 1929 novel about exploited workers on a crab boat. That novel, too, is out in manga form, and is being made into a movie.

In Japan, the Communist Party has swelled to about 415,000 members at latest count and boasts a newspaper, Red Flag, with a readership of 1.6 million. It has also started a channel on YouTube featuring video of Shii addressing parliament and other tidbits for those who want to keep up with party goings-on.

Shii said his party is willing to work within Japan's system — he said it does not advocate immediate or violent revolution.

"We want to fix social inequities within the framework of capitalism," Shii said. "It will take time for people to make adjustments and be ready. We aren't advocating a sudden change to communism."

Political analysts are split on where the communists are headed.

Tomoaki Iwai, a Nihon University political science professor, said the party's recent popularity could be a fad.

"I don't see a bright future for the communist party, despite the current expansion," he said. "They are not going to gain decision-making status in Japanese politics."

But Koichi Nakano, a political science professor at Sophia University in Tokyo, said the party serves as an important check-and-balance.

"They are a perennial opposition party, but that is a significant role," he said. "Their ideological stance stands out in a political scene dominated by the conservatives, and it's good to have diversity. Despite their marginal presence in parliament, the communists' views are often considered commonsense among the public."

Outside of parliament is where the Communist Party has been making its biggest strides.

Though weak at the national level, the communists boast more elected officials than any other party because of their strong presence in local and prefectural assemblies, where they have more than 3,000 seats.

Party members are free to devote as much, or little, of their time as they choose — from simply voting communist when elections come around to helping run social activities and youth programs.

Because of the devotion of its members, the party's campaign machine is formidable.

And, while not expected to win big, the communists are looking at modest gains when the next parliamentary elections are held — sometime before October — because of the growing unpopularity of Prime Minister Taro Aso and his ruling Liberal Democratic Party, which is widely seen as being in disarray and unable to lead Japan out of its deepening economic recession.

The Democrats are dogged by scandals of their own. But Shii complained that the focus of the media on the potential emergence of a two-party system has created an even darker shadow from which his party must emerge.

Even so, with younger voters, the communists are doing well.

"The communists offer hope," said Yagi, the college student. "I don't know if I would want them to take over power, but I think they should be big enough to influence what the ruling party can do."

He said he stopped short of actually joining up because the name of the party put him off.

"I like what the party is doing," he said. "But 'communism' still carries with it a stigma, like 'radical' or 'terrorist.' I don't want that kind of communism. I'm not a radical."