Recommended reading: Marc Levinson's "An Extraordinary Time - The End of the Postwar Boom and the Return of the Ordinary Economy" or my title: Why leaders try variations of the same thing and wonder why it fails every time. Link to Barnes and Nobel book store.

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Modern Feudalism

Modern feudalism is not your 20x grandfather's feudalism: The wealth is not in the land anymore.

Nevertheless, wealth and power together can create the same feudal environment producing the same effect of wealth - no intent to make the entire economic society wealthier. 

In the bad oldye days the feudal lords fought the government and the townspeople. The kings found it hard to tax (for the military and infrastructure) the landed gentry as the estates were not cash flow based. The townspeople utilized toll taxes when the estates brought their wares to town. For more visual representation just Google feudalism.

Today's feudalism is more about the wealthy taking charge of the government rather than fighting taxation. And the bottom 80% of the population are basically peons relegated to trying to fight out a living and feeling they have no say in their society. 

The question is: can capitalism survive when the average person has limited consumer ability? Feudalism is not capitalism and capitalism is not feudalism. The misconception crossing the two channels is what allows feudalism to be dominate before a financial collapse. Nothing changes for the better without a crisis and a clear plan how to make capitalism the norm. Sometimes this is called "populism".

Or, in the most concise overview: feudalism kills capital (the wealthy are very bad investors) and capitalism makes good use of economic wealth to increase wealth. 

Or, feudalism is against Adam Smith who understood capitalism is the best and final environment if we are lucky.