When Did Our Elites Become Self-Serving Parasites?

When did our financial and political elites become self-serving parasites? Some will answer that elites have always been self-serving parasites; as tempting as it may be to offer a blanket denunciation of elites, this overlooks the eras in which elites rose to meet existential crises.

Following in Ancient Rome’s Footsteps: Moral Decay, Rising Wealth Inequality(September 30, 2015)

As historian Peter Turchin explained in his book War and Peace and War: The Rise and Fall of Empires, the value of sacrifice was a core characteristic of the early Republic’s elite:

“Unlike the selfish elites of the later periods, the aristocracy of the early Republic did not spare its blood or treasure in the service of the common interest. When 50,000 Romans, a staggering one fifth of Rome’s total manpower, perished in the battle of Cannae, as mentioned previously, the senate lost almost one third of its membership. This suggests that the senatorial aristocracy was more likely to be killed in wars than the average citizen….

The wealthy classes were also the first to volunteer extra taxes when they were needed… A graduated scale was used in which the senators paid the most, followed by the knights, and then other citizens. In addition, officers and centurions (but not common soldiers!) served without pay, saving the state 20 percent of the legion’s payroll.

The richest 1 percent of the Romans during the early Republic was only 10 to 20 times as wealthy as an average Roman citizen.”

Now compare that to the situation in Late Antiquity Rome when

“an average Roman noble of senatorial class had property valued in the neighborhood of 20,000 Roman pounds of gold. There was no “middle class” comparable to the small landholders of the third century B.C.; the huge majority of the population was made up of landless peasants working land that belonged to nobles. These peasants had hardly any property at all, but if we estimate it (very generously) at one tenth of a pound of gold, the wealth differential would be 200,000! Inequality grew both as a result of the rich getting richer (late imperial senators were 100 times wealthier than their Republican predecessors) and those of the middling wealth becoming poor.”

Do you see any similarities with the present-day realities depicted in these charts?

Correspondent Jim B. summarized historian Arnold Toynbee’s study of the rise and fall of civilizations: “Civilizations fail when their elites change from an admired dynamic creative class to a despised Establishment of corrupt rentiers, an entrenched governing class unfit to govern.”

I would trace the slide into self-serving parasites to three dynamics: financialization, neoliberalism and moral bankruptcy. While definitions of financialization vary, mine is:

Financialization is the mass commodification of debt and debt-based financial instruments collaterized by previously low-risk assets, a pyramiding of risk and speculative gains that is only possible in a massive expansion of low-cost credit and leverage.

Another way to describe the same dynamics is: financialization results when leverage and information asymmetry replace innovation and productive investment as the source of wealth creation.

Neoliberalism is the belief that the social order is defined and created by markets: if markets are free, participants, society and the political order are also free.

This conceptual framework is the perfect enabler for the dominance of credit-based, leveraged capital, i.e. Neofeudalism. In a “free market,” those with access to nearly-free money can outbid everyone who must rely on savings from earned income to finance borrowing. In a “free market” where those with access to leverage and unlimited credit are more equal than everyone else, the ability of wage earners to acquire rentier assets such as rental housing, farmland and timberland is intrinsically limited by the financial system that makes credit and leverage scarce for the many and abundant for the few.

The moral bankruptcy of our financial and political elites is self-evident. Combine financialization, neoliberalism and moral bankruptcy, and you end up with self-serving parasitic elites.

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  • tom

    “Neoliberalism is the belief that the social order is defined and created by markets: if markets are free, participants, society and the political order are also free”.

    A delightful pipe dream – if you care for fantasy. In reality, no market can exist for a moment without a forest of regulations, which in turn cannot be enforced without the power of a state and its armed forces.

    In a really “free” market, the typical transaction would involve a group of armed men on horseback taking what they wanted from everyone else, with no question of payment – at least, not on the part of anyone with ambitions to go on living. “Seven Samurai” or “The Magnificent Seven” (before the advent of the rescuers) gives the general picture.

    • cstahnke

      I’ve been saying this for years to libertarians despite my sympathy for them. None of them is ever able to deal with the point you make here–usually they, like nearly all people who have a set of rigid beliefs, just ignore the point and change the subject.

    • wunsacon
    • wunsacon

      >> In reality, no market can exist for a moment without a
      >> forest of regulations, which in turn cannot be enforced
      >> without the power of a state and its armed forces.

      Wait…you’re putting words in their mouths. Allow me to attempt to explain their basic position to you (before I put other words in their mouths). 😉

      Propertarians *want* laws — not “lawlessness” like you describe it. But, they don’t want “too many” regulations and regulators empowered to introduce or modify lower-level rules, because they fear interference by and corruption of the regulators will reduce the value we successfully extract from markets.

      However, what you might argue they underappreciate is: That doesn’t really reduce the problem! Without “regulators”, then the state criminal and civil prosecutors become first in line. And, judging by the behavior of the legion of corporate tools holding those positions, eliminating the regulators and relying on the AG’s/DA’s doesn’t do much to reduce the problem. It seems like they don’t understand that “the tire rubber has to meet the road, *somewhere*” and, in turn, the classic problem of “agency” will continue to vex us.

      Further, I believe propertarians fail to appreciate what’s taught in macro 101: that markets are efficient only under certain conditions, like “perfect information” and “no individual buyer or seller can control the market”. What we should strive for are “competitive” markets — not “free” markets. It’s why antitrust law — no longer meaningfully enforced — was so important.

      Nevertheless, I do believe our regulatory frameworks have grown too large and ineffective in some areas while far too small in others. But, talking about the problem “generally” doesn’t help…it just leads to impractical religious debates.

  • Jim

    “Combine financialization, neoliberalism and moral bankruptcy, and you end up with self-serving parasitic elites.”

    I would suggest it’s far simpler. Concentrated minority control in and of itself not only breeds parasitism, it IS parasitism. This has been going on for the entire 5,000 year history of civilization and is most certainly not new. Perhaps inequality in the early Roman republic was a bit lower than the historical norm (still 10 to 20 x the median per the author), but that was an aberration that quickly and predictably ended.

    The problem isn’t financialization, neoliberalism, or moral bankruptcy, it’s inequality.

    Jim
    https://commentsongpe.wordpress.com

    • David S

      It is also rooted in the misguided belief among nearly all people that some people deserve the right to rule over others simply because of their more powerful position, their education, their wealth, or even their successful outcome in an election. Of course nothing could be further from the truth. But once one willingly accepts that government is ok, the power that government inherently possesses simply becomes a tool of the elite and a justification for the violation of rights, property, life, etc.

  • wunsacon

    Elites have always been self-serving parasites. It’s nature. The tough question is: How and when will we change anything to distinguish ourselves from most of nature — rather than remain savages in perpetuity?

  • wunsacon

    >> Do you see any similarities with the present-day realities depicted in these charts?

    Yes. I see a similarity to the inverse of progressive income tax rates. More specifically, dropping rates in 1981 reversed the gains of the prior 40 years in expanding the size of the middle class.

    Also, I know all about “the seen and the unseen”. When you tax yacht-buyers or yacht-makers, the yacht-makers lay off workers. But, there’s more to the “unseen” than the oligarch propagandists ever want to mention: The workers laid off by makers of luxury goods become available for employment at lower cost by businesses that produce non-luxury goods consumed by the masses. The net result is higher profitability for makers of non-luxury goods and more production of non-luxury goods. The whole economy shifts in favor of the middle class.

  • diogenes

    To answer the question in the title, elites are by definition “self-serving parasites.” The ones who have usurped control over America’s constitutional democracy and fucked it like a rag doll for over a century arose during and in the decades following the Civil War. See my essay, The Distribution of Wealth in America, posted elsewhere on this site, for a discussion of their history and methods. And of methods for shedding them.