The End of the Road to Serfdom
For most of the modern era, most people in the rich world have been poor, just like their parents and their children. Social mobility was more dream than reality. Most people were born to serve, as were their children.
The ruling minority liked to imagine that the human oxen laboring in their fields and the women who cleaned their homes and cooked their meals were happy with their lot, and professed shock and horror whenever these hereditary servers sought out ways to improve their station — whether that was by joining the industrial revolution or striking out for a colonized land and the promise of stolen estates and downtrodden servants of their own.
Though the ruling minorities were small in absolute numbers, they claimed the vast majority of their nations’ wealth, and they wielded that wealth in the form of political power. That power allowed elites to turn every chance at social mobility into a mirage: factory owners and colonizers could form cartels that suppressed wages and then command militarized police armies to smash unions.
It took the two World Wars —a generation-long orgy of wealth-destruction — to weaken the power of the ruling class to such a low ebb that it could no longer drown the centuries-long dream of mobility and egalitarianism.
After the wars, the rich countries of the world were remade.
Rich countries instituted ambitious social safety networks: universal secondary education, increased access to tertiary education, home ownership subsidies (in the US) and public housing (most other rich nations), free healthcare for elderly and poor people (in the US) or for everyone (other rich nations).
Unions became common, and as productivity improved, wages rose. Struggles for gender justice expanded beyond a campaign for votes for wealthy white women and into universal sufferage. Civil rights struggles on racial, gender and sexual orientation lines came to the fore, and formed alliances with one another, and with anti-colonial movements in the global south.
The world changed. These were the trente glorieuses — the thirty glorious years where you could dream of a better life for your children. My father, a refugee born to refugees, went on to earn a doctorate and a comfortable middle-class living with a solid union pension. My mother, child of a working class eldest son of 10 who quit school at 12 to support his family, became the first person in her family to complete university, also earned a doctorate, and went on to a comfortable middle-class living, too. Today, they are both healthy, vigorous, and active in their mid-seventies: debt-free, owners of their home, with the guarantee of free medical care and a comfortable dotage.
Historically speaking, their lives were exceptional. They came from peasant farmers and impoverished, pogrom-haunted refugees. Historically speaking, their lot should have been largely indistinguishable from their parents, and my lot indistinguishable from theirs.
The thirty glorious years were abnormal. The normal course of modern history was stasis. Primogeniture —the practice of confining inheritances to the eldest son — ensured that the number of wealthy families remained relatively static and that great fortunes remained intact over centuries.
It ensured, in other words, that people worked for them. That we worked for them.
The thirty glorious years upended all that. Working people made claims on the wealth of their societies, and demanded the same economic freedoms that their social “betters” had enjoyed for as long as anyone could remember.
For those experiencing upward social mobility, these were indeed glorious years. The benefits of the welfare state weren’t evenly distributed; many key drivers of mobility were racially segregated, but nearly everyone living in a rich country could make some claim on post-war prosperity.
But for the people who had once commanded armies of servile workers and domestics, those years were a misery. They emerged from 30 years of war to discover that their servants were never coming back to wash their clothes and scrub their floors (“it’s so hard to find good help these days”).
Worse, those oiks and plebs expected to access the quiet, exclusive places that their social betters had once claimed as their exclusive territory. This was an enormous affront, so much so that it gave rise to the “cozy catastrophe” science-fiction subgenre, these being tales in which some terrible catastrophe strikes our world and wipes out the majority of the proles, leaving the aristocracy to retreat to farmhouse-fortresses and nurture the flame of civilization.
As Jo Walton writes in her analysis of cozy catastrophes:
Nevil Shute complains in Slide Rule that his mother couldn’t go to the South of France in the winters, even though it was good for her chest, and you’ve probably read things yourself where the characters are complaining they can’t get the servants any more. Asimov had a lovely answer to that one, if we’d lived in the days when it was easy to get servants, we would have been the servants. Shute’s mother couldn’t afford France but she and the people who waited on her in shops all had access to free health care and good free education to university level and beyond, and enough to live on if they lost their jobs. The social contract had been rewritten, and the richer really did suffer a little. I want to say “poor dears,” but I really do feel for them. Britain used to be a country with sharp class differences — how you spoke and your parents’ jobs affected your healthcare, your education, your employment opportunities. It had an empire it exploited to support its own standard of living. The situation of the thirties was horribly unfair and couldn’t have been allowed to go on, and democracy defeated it, but it wasn’t the fault of individuals. Britain was becoming a fairer society, with equal opportunities for everyone, and some people did suffer for it. They couldn’t have their foreign holidays and servants and way of life, because their way of life exploited other people. They had never given the working classes the respect due to human beings, and now they had to, and it really was hard for them. You can’t really blame them for wishing all those inconvenient people would…all be swallowed up by a volcano, or stung to death by triffids.
Shute’s name might not be instantly recognizable to some readers, but millions of people read his novel On the Beach and/or watched its film adaptation. It’s a tremendous novel in which a nuclear war has killed nearly everyone on Earth, save for small pockets south of the equator, who are being slowly murdered by the radioactive fallout that is gradually carried overhead by the trade winds. Shute’s terrifying, melancholic novel shows us a world that is nearly nearly entirely purged of sharp-elbowed working-class upstarts, told through the eyes of an aristocratic naval officer with the stiffest of upper lips who is waiting nobly and calmly for his own death.
In his landmark Capital in the Twenty-First Century, Thomas Piketty and his grad students trace the world’s capital flow for 300 years, showing (among other things) that when the wealth of the richest 10 percent of us crosses a threshold, this capital class gains the ability to command political outcomes: they can turn their wealth into pro-wealth policies, which make them wealthier, and gives them more control over our policies.
Once that inequality tipping-point is reached, society grows inexorably more unequal and more unfair, as our rules change not merely to favor the rich, but to disfavor the poor (think of how, after the 2008 financial crisis, deep-pocketed banks got full bailouts and paid millions in bonuses the executives that had brought them to the brink of ruin, and then embarked upon a corporate crime-spree of fraudulent foreclosures that saw them stealing houses from working people with impunity).
This unfairness is destabilizing. It’s easy to find people who’ll fight to overturn systems that are grossly, persistently, obviously unfair. This is sometimes demonized as “populism,” but why should people line up to defend a system that obviously doesn’t give a damn about them?
According to Piketty, capitalism always leads to rich people running the show, and that always leads to the follies of the wealthy few taking precedence over the material needs of the majority, which eventually leads to some kind of collapse, wherein wealth is destroyed and a space opens for a new society.
The thirty glorious years came to a halt at the end of the 1970s, when the wealth of the few had recovered to the point where the richest 10 percent could begin to nudge policy to their favor and everyone else’s detriment. When the OPEC oil crisis hit, the wealthy spent their carefully rebuilt fortunes to blame unions and leftists and “women’s lib” for the decision of oil-rich Arab states to cut off the supply of oil to the rich world.
This is obvious nonsense. OPEC wasn’t motivated by anti-trade-union ideology, and the inflation that followed from soaring oil prices wasn’t caused by working people enjoying a decent wage — it was caused by an oil shortage. That oil shortage would have caused inflation whether or not workers had the right not to be maimed on the job and whether or not their kids were entitled to a free high-school education.
But though blaming inflation on “generous” social policies was nonsense, it was attractive nonsense. Margaret Thatcher, Ronald Reagan, Brian Mulroney and other neoliberal politicians swept into office on the back of a campaign to blame social mobility for oil shocks.
Once these plutocrat-friendly politicians captured politics, they set about refashioning it, striking hard against labor rights and public institutions. They unleashed monopolies and deregulated industries.
Most of all, they opened trade.
After WWII, every person in the rich world aspired to owning a dishwasher, a house, a TV, a car, and other major appliances and material goods. This gigantic demand meant that there were plenty of profits to go around: even though the factory workers who produced these items reduced their bosses’ profits because they were unionized and earned a decent wage and demanded decent benefits, the sheer volume of items sold to the burgeoning middle class of America meant that those bosses could still get very, very rich.
But by the Reagan era, the party was over. People had all the stuff they needed. They’d replace it from time to time, and maybe they’d invest in something new like a personal computer or a VCR, but the post-war big bang of consumer demand had run its course.
That could have ushered in an era of steady state: decent wages for the workers who made novelties and new stuff to replace things as they wore out, small but steady profits for their bosses.
That was the future Reagan and the neoliberals set out to prevent. If America was fully cooked, it was time to time to redivide the pie.
That’s where “free trade” came in. The point of the trade deals that Reagan and his successors — both Republican and Democratic — pursued was to reduce the wage bill for manufactured goods.
If cars or TVs or computers could be made in low-waged territories in Central America or the Pacific Rim where workers were banned from unionizing and not entitled to any labor rights, including basic workplace safety or pollution controls, then the same goods could be made far more cheaply than they were onshore.
Then, these cheaply made goods could be sold at a discount to workers in the rich world; workers who could buy these goods with dollars, euros and pounds sterling. Even though these goods were sold at a discount, they still earned bigger profits than onshore manufacturing could yield — the discount on prices was dwarfed by the discount on costs.
There’s a problem with this plan, though: how could workers in the rich world buy cheap goods if their jobs were disappearing?
That’s where financial deregulation comes in. Financial deregulation is free trade’s twin brother. At the same time as rich countries were opening their doors to cheaply made foreign goods, they were also loosening the rules on debt.
It got easier and easier for “consumers” (formerly: “workers”) to borrow money, thanks to a series of new financial maneuvers that had been banned before the Reagan years. Each of these maneuvers produced a crisis that led to a bailout, which transferred more wealth to the rich, which enabled to demand even riskier measures that produced even greater crises and even bigger bailouts: the S&L crisis, the junk bond crisis, the dotcom crash, the Enron crash, the 2008 crisis — each larger than the last.
Today, almost all the gains from the thirty glorious years have been transferred back to aristocrats: our public schools and hospitals are now “public-private partnerships” run by elite hedge funds. Our defined benefit pensions have been replaced with sagging 401(k)s that put us at the mercy of a market controlled by our bosses. Our houses have been stolen during the financial crisis, or burdened with unsustainable mortgages, and whatever wealth they represent is spoken for several times over, to pay for our old age, our kids’ student loans, and our medical debt.
Free trade really hit its stride in 2001, when China was admitted to the World Trade Organization. Once China was in the WTO, rich countries could no longer assess tariffs on its exports, which meant that bosses in rich countries could fire their workers and shift production to China, where wages were low and workplace protections were both scarce and indifferently enforced.
The vision of China as the rich world’s factory wasn’t just about “trade” (that is, removing tariffs), it also envisioned China paying rent to the rich world…forever.
When China signed up to the WTO, it also bound itself over to the terms of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS): an expansive copyright, trademark and patent treaty whose members promised to pay rent to each other for using ideas and inventions.
That’s a pretty radical idea. Poor countries that eventually became rich countries did so by merrily plundering the copyrights and other “IP” of wealthy nations.
Revolutionary America was the world’s most enthusiastic pirate of foreign inventions and literary works until it became a net exporter of patents and books, whereupon it signed up to international treaties and offered exclusive rights to foreign inventors and authors in exchange for the same protections for its own intellectual exports.
The WTO plan for China was for it to make everything that we in the rich world needed, but always at the direction of our own corporate executives. The phones, computers, appliances and other goods that China exported to our shores would be “made” by rich-world companies, even if they were manufactured in China. Whatever riches the fruits of Chinese factories generated, a share would always go to the wealthiest people in the rich world.
That was the deal: Chinese sweatshop workers would toil away every hour that God sent for a pittance. We plebs would buy cheap goods with debt. Our bosses would get rents from Chinese factories.
China had other ideas.
China wasn’t ever going to abide by the TRIPS. I mean, it’s pretty naive to think that it ever would.
Making China the rich world’s factory meant making China structurally important to the rich world. Once we eliminated our own critical onshore manufacturing capacity and could not afford to cut off Chinese goods because we couldn’t make our own replacements or buy them from anyone else, we lost the ability to meaningfully punish China for violating the TRIPS.
Which is why, year after year, decade after decade, there has been a rising chorus of bewildered howls from wealthy people in the rich world: China stole our IP!
Duh. Of course they did. They did exactly what colonial America did. They knew that you couldn’t afford to make them pay rent, so they stopped paying rent. As the right is forever reminding us, incentives matter.
The realpolitik of the WTO is that it will only ever be enforced to the extent that it can be enforced. When Trump illegally slapped tariffs on Chinese goods, China didn’t stop shipping container-loads of consumer goods to America, because it couldn’t afford to. Likewise, when Chinese manufacturers cloned (and often improved) goods from the rich world, the borders stayed open, because otherwise we’d have lost access to everything.
The WTO was never about giving poor countries an equal footing with rich ones. If it was, poor countries would have been able to manufacture their own covid vaccines without permission from rich-world pharma companies, as they had been promised when they signed the TRIPS.
We’re coming to the end of the line, here. There’s nothing left for working people in the rich world to sell off or promise away. The Republicans are about to win a decisive election and abolish Social Security.
To the extent that this moment was foreseen by our social betters, they relished it. Once the wealth transfers and labor protections of the thirty glorious years were reversed, we’d once again learn our places.
We’d go back belowstairs, we’d learn to tug our forelocks again. We’d stop competing with their inbred darlings for spots at top universities and they’d be able to enjoy their white-sand beaches and rugged woodlands without our uncultured accents spoiling the moment.
But now China is a net exporter of inventions and ideas, and if it actually starts enforcing WTO provisions, it will only be in the hopes of preventing American companies from ripping off Chinese ones. The rents are going to dry up.
As Piketty warned us, letting rich people decide how we’ll live our lives always precipitates a crisis. Debts can’t substitute for wages. Cheap goods and rent-extraction were never a substitute for developing and nurturing domestic capacity.
Rich people have a persistent, gigantic blind-spot: they imagine that those who serve them are happy with the status quo. They‘re LARPing Plato’s Republic, with them as Philosopher Kings, with gold in their blood. The rest of us have bronze in our veins and we’re meant to feel lucky to have such great and wise leaders running the show and taking care of us.
From the feudal lords who fantasized that the peasants were happy to work the soil; to the American enslavers who deluded themselves that the Africans they kidnapped and terrorized into working for them embraced plantation life; to the toffs who kidded themselves that coal miners loved the “honest work” underground, rich people have always inhabited a fantasyland where guillotines are unimaginable…until they become inevitable.
The wealthy imagined that Chinese people would happily pay rent on the ideas that corporations extracted from educated workers in the rich world. They imagined that when debt-fuelled consumption ran out of collateral to stake, that we would make good on our debts by marching into willing indenture, or, failing that, that we’d dig our own graves, crawl inside them and pull the dirt down on top of us, smiling all the way.
Cory Doctorow (craphound.com) is a science fiction author, activist, and blogger. He has a podcast, a newsletter, a Twitter feed, a Mastodon feed, and a Tumblr feed. He was born in Canada, became a British citizen and now lives in Burbank, California. His latest nonfiction book is Chokepoint Capitalism (with Rebecca Giblin), a book about artistic labor market and excessive buyer power. His latest novel for adults is Attack Surface. His latest short story collection is Radicalized. His latest picture book is Poesy the Monster Slayer. His latest YA novel is Pirate Cinema. His latest graphic novel is In Real Life. His forthcoming books include Red Team Blues, a noir thriller about cryptocurrency, corruption and money-laundering (Tor, 2023); and The Lost Cause, a utopian post-GND novel about truth and reconciliation with white nationalist militias (Tor, 2023).