It is my contention that the last 300 years or so are best understood as a period of transition from the old feudal/monarchal order to the new feudal/oligarchic order. The industrial revolution was much more than an explosion of technological progress, rather, it involved a complete remaking of the entire political economy to facilitate social control through the application of money power, the divine right of capital. Much social progress during this period was made possible by the relative freedom produced by these countervailing forces vying for power during this transition rather than some sort of linear phenomenon moving inexorably toward social betterment. The solidification of oligarchic control does not bode well for humankind.
This is a difficult topic to discuss without getting bogged down in excessive detail and my own ignorance. Fortunately, the overarching pattern appears recognizable. Where to start? My first observation is that prior to the industrial revolution technological change occurred slowly and had limited impact on the political economy and the structure of power. Power was based upon military force using primitive weaponry, justified by religious ideology. Societies were organized hierarchically, the larger and more complex the society the greater the hierarchy. Also, the greater the specialization. Democracy was sufficiently rare and narrowly defined as to be a relatively insignificant factor other than as a limited precedent.
Starting slowly, the industrial revolution began to alter the power dynamics. Technological advancement greatly enhanced military capabilities. The industrial application of gunpowder marked the beginning of the end for the old order as primitive weaponry proved no match for machine guns and tanks. Economic development became increasingly important to power projection and social control. Consequently, the economic elites became an increasingly important component of national and imperial power. So too, the acquisition of the raw materials of industrialism, frequently obtained by the force of arms made possible by the industrial process. The industrial revolution encouraged the militarism which it made possible in order to secure the resources it required.
The industrial process greatly accelerated the rate of technological development which, in turn, rapidly altered the means of communication and social control. The proliferation of the press and literacy along with the increased emphasis on scientific knowledge and scientific advancement tended to reduce the role of religion and the priesthood as a source of social mythology. The introduction of democratic forms along with the separation of church and state brought about a rapid decline in the power of the nobility, along with increased power for the economic elites and capitalist business organizations which continued to expand their power and social control.
An immensely significant aspect of this whole process is the degree to which more and more human activity occurred within the context of the market economy based upon monetary transactions, hence, subject to money power. Prior to this change, much of the social product was produced by individuals for themselves, their families and some larger cooperative social groupings, with somewhat limited market activities to obtain the balance. Societies were largely agrarian with limited capacity for supporting literate professionals, along with a ruling nobility, supported by taxes payable in kind. Isolated, sophisticated metropoles arose, usually supported by trade or imperial plunder, however, this trading and plunder did little to increase overall global productivity, mostly transferring wealth from a subjected periphery to the metropolitan center.
An essential part of the initial process of industrialization was the enclosure of the commons. This deprived large segments of the rural population of their traditional source of livelihood, essentially forcing them to perform factory work for wages in order to obtain their sustenance via the market. As industrialism preceded, the market continually expanded so that more social activity was monetized and more people worked for wages to acquire goods and services in a market economy upon which most became utterly dependent. Industrial productivity and mechanized agriculture freed up large groups of people seeking employment. This greatly expanded the types of goods and services available while simultaneously expanding the scope of the market economy and of the ability of money power to define and control social policy and actions.
As the market and market power expanded, the role of the nobility decreased. The introduction of nominal representative democracy further accelerated the process. No longer would the government be led by royal appointees, now the government would be led by professionals primarily representing the interests of businessmen in the name of the people, justified by economic ideology. The new priesthood. With the advent of modern corporations and the development of the mass media, the power to manufacture consent tilted social power even farther towards those who controlled concentrated economic power. Those who direct the financial flows essentially control society at the macro level, both directly and indirectly. The hereditary nobility is long gone, and our nominally democratic representatives effectively manage society in accordance with business goals and objectives. Even those opposed to business-as-usual are severely constrained by the reality of our money-driven society.
Capitalist global domination was briefly slowed by Soviet communism, an alternative system based upon centralized bureaucratic control of the political economy. A comparison of the two systems is beyond the scope of this paper, and would be difficult in any event in view of communism’s late start and capitalism’s ability to ruthlessly exploit the Third World for profit. Suffice it to say that the Soviet Union no longer exists and there is currently no countervailing power to resist capitalism’s global control.
As a result of capitalism’s overwhelming success in establishing monetary social control, society and the human species is facing a profound existential crisis. The success of capitalism depended crucially upon the expansion of the market which, in turn, required a corresponding growth in the money supply controlled via the financial system. Our financial system is essentially privately controlled and utilizes debt money (bank credit) which is loaned into existence, and must be repaid with interest. While there are debtors and creditors, overall the supply of money in circulation represents net debt owed to the banks and bond holders. No debt, no money, no monetary transaction economy. It doesn’t have to be this way, but this is the way it is, thanks primarily to the long and tireless efforts of the private bankers to impose this system on society.
The use of bank and bond credit to finance capital projects spurred growth well beyond what would otherwise occur. Money empowers action. Additionally, the need for systemic growth based upon new loans which provided the money for the repayment of old loans plus interest. Compound interest required a growing economy and expanding markets to avoid massive default. Of course, some defaults did occur, booms led to busts during which debts were written down so that the cycle could resume. The reason it could resume was that the real economy, if funded, was capable of additional real growth, and the market, if funded, was capable of responding to that growth and capable of further expansion, further monetizing the economy. Now we are talking about a global monetary transaction economy administered by the privately controlled global financial system.
In order to deal with the localized disruptions of the 19th century boom and bust cycles, governments were persuaded to create private central banks which combined governmental authority with private direction and control. Public central banks and a public banking system were options which were not pursued. A public banking system would not be in the best interests of the private bankers who create money and loan it out at interest. The creation of credit money by private banks also gives them considerable influence over the political economy insofar as these private institutions decide what gets funded and what does not. This is true on a global basis where projects are funded based upon profit and power objectives, frequently irrespective of the social consequences.
The creation of national, private central banks served to globalize national financial problems. The great depression resulted in the adoption of Keynesian use of counter-cyclical fiscal policy to offset financial cyclical tendencies. This morphed into Western military Keynesianism which utilized massive, ongoing military spending and corresponding government debt to provide a consistent, growing monetary base to grow the monetary transaction economy and prevent massive private debt default leading to depression. It also concentrated wealth and made some elites and corporations fabulously wealthy and powerful.
The situation we are currently facing is that the real economy, now mostly monetized, has reached the limits of growth. This means that that the real economy and market expansion can no longer underpin the creation of exponentially increasing amounts of credit money to satisfy the obligation to repay outstanding loans plus compounding interest payments. The private financiers have monetized the planet and are sucking it dry. With a financial system using sovereign money, public banking, and progressive taxation on income and assets, this problem wouldn’t exist. However, our private banking system and debt money were never intended to serve the public good, rather, it was a means to concentrate wealth and power into a relatively few private hands and the corporations they control. Now, it is virtually inconceivable that the capitalist financiers will voluntarily change the system in a socially constructive manner, having devoted their lives to immiserating most of the world’s population for profit and power.
What can we expect? In the short run, the elites appear to favor global structural adjustment. All or most government functions and assets will be privatized, and the bulk of the population will be forced into de facto debt servitude. Media propaganda will continue, however, popular resistance is anticipated and will be dealt with harshly, in an openly fascistic manner. Surveillance will be ubiquitous. At some point however, the elites will need to somehow deal with the problem of debt money and unsustainable compound interest or face global financial collapse. By that time global society will resemble a form of financial feudalism, one based not on territory but on functional and market dominance, with the corporations as the Lords of the Realm, the rest of us existing at their pleasure, serving them as people once served Kings and other noblemen.