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The refeudalization of modern capitalism

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DOI: 10.1177/1440783319857904

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DOI: 10.1177/1440783319857904
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Sighard Neckel
University of Hamburg, Germany

Abstract
Jürgen Habermas once investigated the structural transformation of the modern public using the
term ‘refeudalization’. He reconstructed how, in the course of the development of economic
monopolies, pre-bourgeois forms of power again penetrated the public sphere. It is not only the
fact that the social sciences today speak again of a crisis of the public sphere, however, that gives
Habermas’ concept of ‘refeudalization’ new relevance. On the contrary, a social change is taking
place in numerous areas of present-day society which, in the course of a neoliberal modernization
of the economy, is once again re-creating pre-modern social forms, hierarchies and power
structures. This does not take place as a relapse into past social forms, but as a paradoxical result of
social transformations that generate the old as the new and thereby produce ‘neo-feudal’ patterns
in the distribution of wealth, recognition and power. In this paper ‘refeudalization’ is presented as
a key concept for understanding the development of modern capitalist societies today. It will be
shown that the dichotomy of ‘progressive’ and ‘regressive’ forms of transformation of capitalism
must be complemented by more complex models of paradoxical social change.

Keywords
capitalism, Habermas, inequality, media, public sphere, refeudalization

In several Western societies a social transformation is currently under way, installing

‘neo-feudal’ privilege for the upper classes while precarious social groups experience
impoverishment and exclusion. In explaining these new forms of polarization, recent
research speaks of the emergence of an estates-based consolidation of social inequality,
contrary to all modern promises of status competition and social mobility (Dorling
2014; Piketty 2013; Sayer 2015). The rise of a financial-market capitalism that has sub-
stantially transformed economic, political, and social institutions has apparently also
brought back social patterns of distributing wealth, income, and power characteristic of

Corresponding author:
Sighard Neckel, University of Hamburg, 20146 Hamburg, Germany.
Email: sighard.neckel@uni-hamburg.de
2 Journal of Sociology 00(0)

the pre-modern era, albeit in an updated form. Referring to an analytical concept origi-
nally introduced by Jürgen Habermas in his famous study, the Structural Transformation
of the Public Sphere, this article examines the current transformations of social inequal-
ity and the economic sphere as a ‘refeudalization’ of modern capitalism. The analytical
concept of ‘refeudalization’ describes a paradoxical social dynamic of the present in
which modernization takes place as a break in the continuity of the modern social order.
By generalizing ‘refeudalization’ for the sociological investigation of modern capital-
ism as a whole, a paradoxical mode of social change will be described that leads to
pre-modern societal patterns as a result of modernization.
My argument will proceed as follows: in order to indicate the topicality of Habermas’
concept of refeudalization in its original field of research, I will first discuss some recent
findings about the current crisis of the public sphere. Second, I will explain how to use
refeudalization as an analytical term in sociology, not only for an inquiry into the public
sphere, but further for several societal developments in present-day capitalism. As the
empirical field of my research, I will refer to the transformations of social inequality
today which lead to pre-modern types of social stratification at the bottom of the social
structure as well as at the very top of the social hierarchy. At the end of the article some
sociological conclusions will be discussed concerning the modes of social change in
modern capitalism in general.

The current crisis of the public sphere

In sociological research today there is a new interest in the current developments of the
public sphere. The background to this sociological interest is constituted by the upheavals
to which the public sphere, and in particular media communication, are exposed in the age
of neoliberalism and the internet. Scholars such as the Swiss sociologist Kurt Imhof
(2011, 2014) in his research on ‘new crises of the public sphere’, or Colin Crouch in his
investigations on the deterioration of political communication in post-democracy (2004:
19 ff., 2015: 49 ff.), show how large media companies have been primarily oriented since
the 1980s to the commercial success of their increasingly undemanding and simplifying
target-group communication. The ongoing dominance of online portals and the ‘growing
simplicity’ of media ‘outrage management’ have led to a downward spiral in the spread of
‘lower quality media offers’ (Imhof, 2011: 147 ff.). The public function of the media in
thematizing the issues of concern to all citizens between society and the state has been
undermined by a form of media populism in which episodic and particular issues, moral-
izing and emotional representations, and easily consumable features increasingly take the
place of journalistic standards of research, information and debate (see also Thompson,
2011). According to these studies, the political citizen is replaced by the media consumer
who actively participates in their own elimination as a citoyen through the ‘like’-economy
of social networks and the affect-laden communication of the internet.
These developments are detrimental to the political functions of the media on which
democracies depend. Today, the media are neither able to perform the function of provid-
ing public communication with new problem descriptions, nor do they exercise effective
control over the tendencies of the state to empower itself (Imhof, 2014: 318). As a result,
the media are becoming one of the key pillars of post-democracy in which matters of
Neckel 3

public concern are disappearing from media space in the same way that political deci-
sions are de facto shifting from politically legitimized bodies to the circles of economi-
cally powerful private interests increasingly able to impose themselves (Crouch, 2004,
2015: 49 ff.). And it is precisely through this economically effected privatization of
media communication that a ‘new structural transformation of the public sphere’ (Imhof,
2014: 326) has occurred.
With this finding of a renewed ‘structural transformation of the public sphere’, these
studies clearly take their lead from Habermas’ The Structural Transformation of the Public
Sphere, originally published in 1962. Habermas regards the public sphere as a social and
political space which mediates between the state and society, and which allows for equal
participation by all citizens in the public debate over matters of general concern and politi-
cal rule. Here state authority is the adversary of the public sphere and not part of it. This
contrasts with the feudal system in which ‘public’ referred to the visible representation of
rule, and public authority was not separated from the private sphere of the court, just as the
state budget was not separated from the private possessions of territorial rulers.
The public sphere thus originally emerged as a realm that placed limits on the personal
power of monarchs. According to Habermas, however, the use of the public sphere for
private interests based on economic calculation had already begun in the 19th century
with the rise of the business press (Habermas, 1991 [1962]: 222 ff.). In the course of this
process, ‘the public’ becomes transformed into an integral part of a commercial consumer
culture. The public representation of personal power then returns as the public relations of
economically powerful private persons who represent their particular interests as general
ones. As a result, a modern form of state representation develops that Habermas calls a
‘kind of refeudalization of the public sphere’ (Habermas, 1991 [1962]: 403).
Introducing the term ‘refeudalization’ and taking the public sphere as an example,
Habermas shows how a backwards-directed transformation of formerly bourgeois forms
of communication occurs through a radical transformation of their underlying institu-
tions. His analysis is focused on the privatization of areas of society that increasingly
come under pressure from economic commercialization and the need to establish politi-
cal legitimacy. The structural change in question essentially involves a degeneration of
bourgeois publicness, which becomes an instrument of economic interest groups and of
influential political media. Consequently, the separation of spheres that is constitutive of
bourgeois society – a separation between public affairs and private interests – is abro-
gated in a manner that is just as permanent as that described by Crouch (2004) decades
later with reference to modern business elites, who have successful adapted the political
realm and state institutions to the model of profit-oriented companies.
Such processes give rise to a modern form of monarchical representation – a shift
towards a theatrical display of political power (van Krieken, 2019: 141) – which
Habermas describes as ‘refeudalization’ due to the degeneration of publicness in terms
of its role as a principle ensuring the formation of an independent sphere for self-deter-
mined debates on the politics of the community. The critical function of this guiding idea
of publicness grows increasingly weak. The result is the triumph of the ‘conflict of
organized interests’ (Habermas, 1991 [1962]: 145) – a conflict over the claim to a separa-
tion of spheres between general matters and the private pursuit of power and profit. And
it is precisely here that the analyses of Habermas and Crouch converge: in the finding
4 Journal of Sociology 00(0)

that politics and the public sphere are once again being privatized in a way that recalls
pre-bourgeois eras.
Habermas thus reached similar conclusions to those of media studies researchers
some fifty years later, even though the signature of the media industry was still a very
different one in the 1960s. However, Habermas also accorded central importance to the
process of ‘privatization’ of the public sphere that is at the heart of today’s sociological
diagnosis of a crisis in the current media system. Therefore, we can follow Habermas in
speaking of ‘refeudalization’ in the media landscape wherever the economic power of
individuals translates seamlessly into domination of the public sphere, so that private
interests determine how matters of general concern are negotiated. As a result, the dis-
tinction between state and society evaporates, and the public sphere regresses to a form
that displays similar features to those typical of pre-modern social orders.
In Habermas, it is the formation of economic monopolies that allows older pre-bour-
geois modalities of power to force their way back into the public arena, taking on new
forms with the privatizing transformation of the online media, which establish new com-
mercial ‘attention landscapes’ (Imhof, 2014: 327) on the internet, beyond the reach of
public discourses about general concerns. Although the term ‘refeudalization’ may not
seem to fit the modernity of online communication, nevertheless Google, Apple,
Facebook, Microsoft, Samsung, and other regents of big data are telling examples of how
the originally ‘modern’ dispersed network structure of the internet has been absorbed
into the private empires of digital media power. Facebook, for example, is used by 1.4
billion people across the world but is controlled by one single individual (Lanier, 2015;
Nachtwey and Staab, 2015).

Refeudalization as an analytical term for current sociology

However, the present state of the public sphere is not only of interest for media theory. The
ways in which the public sphere is changing also represent a general symptom of social
change. Habermas himself once described the condition of the public sphere at any given
time as a ‘political indicator’. Nowhere are the problems of contemporary democracies
and the decline of modern social structures more readily apparent than in the public sphere
of the media (Habermas, 2004). Hence, the contemporary crises of the public sphere are
also significant as a warning sign of current problems of social development as a whole.
My central thesis is that the renewed topicality of Habermas’ concept of ‘refeudaliza-
tion’ is not just a function of the fact that it has again become commonplace in social
science to speak of a ‘crisis of the public sphere’. Instead, I want to show that numerous
sectors of society are undergoing a transformation that, in the course of a neoliberal
modernization of economy and society, is reviving pre-modern social forms, hierarchies,
and power structures. This is not a matter of a relapse into earlier times. Instead, it is the
paradoxical result of social transformations that generate the ‘old’ as something ‘new’,
and thereby produce ‘neo-feudal’ patterns in the distribution of wealth, recognition, and
power (Neckel, 2010, 2013, 2014, 2015, 2017).
In the analytical model of ‘refeudalization’, sociological timeframes become inter-
twined. The ‘new’ is not simply the result of linear processes of modernization. Instead
it arises in the context of a process of social transformation that allows the old to emerge
Neckel 5

as the new, by ensuring that present-day organizational forms in the economy and society
reinvent traditional patterns of social order in highly modern forms. Habermas’ analysis
of the structural transformation of the public sphere provides the exemplary case study
for this analytic model. Habermas describes the public sphere of the media as a market
of opinions that enables the old feudal structure of the public as mere representation of
personal power to rise again in commercial form.
Viewed as the form assumed by social change, therefore, refeudalization is a much
more complex procedure than a return to the past. Observed as a mode of social transfor-
mation, refeudalization is also much more complex than the one Habermas himself later
presented under the title of the ‘colonization of the lifeworld’ in his Theory of
Communicative Action (Habermas, 1985). Here the mode of social transformation is
linear: the rationalization of the lifeworld ultimately takes on a magnitude in which a
growing number of social relations are monetized or bureaucratized and transformed into
goods or objects of administration. Compared to the transformational mode of ‘refeu-
dalization’, the colonization thesis represents a kind of unstoppable rationalization,
which ultimately turns pathological – a progressive modernization without a counter-
movement that replaces existing social relations with the functionality of modern sys-
temic media such as money, the market, law and bureaucracy, and that leads to a social
crisis affecting meaning and integration.
By contrast, the analytical model of refeudalization is characterized by the fact that it
does not need to claim a linear increase in these crisis phenomena, and it is not forced to
trace them back to the pathologies of modern purposive rationalities – even when, for exam-
ple, it is not the anonymous systemic imperatives of modern markets that produce social
crisis phenomena, but the power opportunities of leading economic groups that possess
estates-based privileges. Habermas’ exemplary analysis of the refeudalization of the public
sphere points instead to the fact that the structural transformation criticized is the result of a
paradoxical process of modernization1 involving the re-establishment of social structures
whose historical origins can be traced back to pre-bourgeois epochs of social history.
However, the dominant models of social change in social theory up to the present day
oppose the assumptions of ‘progressive’ change – for example, in the theory of moderni-
zation (Parsons, 1966) – with evidence of ‘regressive’ processes of social decline – for
example, in the older Frankfurt School Critical Theory.2 By contrast, I want to show that
the dichotomy between ‘progressive’ and ‘regressive’ changes in capitalism needs to be
replaced with more complex models of paradoxical social change. I understand ‘refeu-
dalization’ in this context as an example of social change involving a paradoxical form
of modernization at the heart of modern capitalism. It does not simply lead back to the
past. Instead, it refers to a social dynamic of the present in which modernization takes the
form of a rejection of the maxims of a bourgeois social order.

The ‘Vertigo effect’: paradoxical counter-movements

in social change
Hence, capitalist modernization as refeudalization involves a process of counter-movement
– like a transmission in reverse gear that carries an object forward by moving backwards. In
cinema, such counter-movement is familiar as a ‘dolly zoom’ or the ‘Vertigo effect,’ because
6 Journal of Sociology 00(0)

this effect was first used by Alfred Hitchcock in his 1950 film Vertigo (Neckel, 2013: 47f.).
The ‘Vertigo effect’ is produced by physically moving the camera towards an object while
simultaneously zooming back from it and holding the image frame constant. This gives rise
to a powerful visual pull effect, as though the viewer were being drawn into the frame,
which Hitchcock used as a cinematic expression of the fear of heights of his main actor
James Stewart.
It is this ‘Vertigo effect’ of social change that interests me here. Accordingly, I will
suggest that ‘refeudalization’ is a key sociological concept for understanding the devel-
opmental dynamic of modern capitalist societies in the present. The analytical perspec-
tive of ‘refeudalization’ of capitalist modernity is instructive for the study of social
change as a whole, whether this involves the erosion of the public sphere through the
privatization of media power or the inherently contrary transformation processes in other
functional domains of present-day capitalism.
Processes of refeudalization can be seen as occurring in several dimensions of the
current social order – ranging from the organization of economic processes and the status
enjoyed by the economic leadership groups on the financial markets, which do not oper-
ate as businessmen but as rentiers, to the refeudalization of the welfare state, which is
reprivatizing public social policy as charitable foundations and is transforming claims to
social welfare into dependence on private charity (Neckel, 2013: 49 ff.). Most important
are the transformations in social inequality during the last twenty years, which have
involved the polarization of incommensurable social positions and segmentation of
social statuses. Over the past two decades numerous capitalist countries have experi-
enced developments in social inequality which exhibit clear signs of refeudalization.
Characteristic features of this development are the extremely one-sided preferential
treatment of those at the pinnacle of society. These social elites enjoy historically unprec-
edented levels of wealth, while the lower strata are not only pauperized, but are increas-
ingly exposed to relations of work that no longer satisfy the elementary standards of
modern contractual relationships.

Social inequality at the bottom: the return of unfree labour

Present-day forms of organization of work are often decoupled from the norms of ‘equal-
ity before the law’ on a global scale. This is a transnational mass phenomenon, for exam-
ple, in the household work services sector. Thus, a debate has developed in the research
on the global streams of migration of mostly female workers employed as domestic
servants in the world’s large cities over whether the housework performed by migrant
maids and nannies involves a return to an earlier society of domestic servants and the
refeudalization of domestic working conditions (Ehrenreich and Hochschild, 2003; Lutz,
2008). In this scenario, the young women seeking employment on the global markets for
domestic workers are trapped in dependent relationships that are invalidating the modern
bourgeois separation between public and private spheres, between the workplace and the
home, and between the payment of a salary and the bestowal of a personal gratuity.
Associated with this are relations of work and exploitation in which no contractual equal-
ity can develop and which are especially prone to violence and sexual coercion, with
minimal social protections. At the same time, their rights of residence are extremely
Neckel 7

limited, assuming, that is, that the women concerned are not already living illegally in
the respective countries of work. Therefore, their work is often performed invisibly in the
private domain of their employers, in whose households the women live without control
over their freedom of movement. In the huge global labour segment of so-called ‘global
care chains’, in particular, in which women leave their poorer countries of origin to per-
form care and domestic work in the richer countries, employer–employee relationships
have become transformed into personal relations of dependency that regress behind all
of the historical advances of modern society in the allocation of rights and force women
into neo-feudal relations of domination and dependency.
Similarly, drastic forms of unfree labour are familiar from the vast army of indus-
trial migrant workers, especially from Asia, Africa, and some Latin American coun-
tries. In China, migrant workers are building the new megacities; in the Arab Emirates
they toil on the construction sites as workers without passports; in Uzbekistan they
perform state-organized forced labour on the cotton fields for the enrichment of oli-
garchs; and in India they are among the estimated 20 million people who live in per-
sonal debt bondage (Bales, 2012). It is true that these present-day forms of work
slavery are based on old racist power structures, such as, for example, ethnic slavery in
African countries like Sudan and Mauritania (Bales et al., 2009: 91 ff.). Nevertheless,
experts from human rights organizations such as the Walk Free Foundation (2014) and
the International Labour Organization (ILO) agree that work slavery is flourishing
once again and is assuming previously unheard of dimensions in the modern era of
globalization. While research in social science estimates that today between 30 and 35
million people (including approx. 1 million people in Europe) are living under lawless
conditions based on violence that resemble slavery (Bales, 2012; Bales and Soodalter,
2009; Walk Free Foundation, 2014), in 2014 the ILO estimated that 21 million people
throughout the world are victims of forced labour – though it suspects that the actual
number is much higher – generating annual profits of around $150 billion (Datta and
Bales, 2013b; ILO, 2014).
According to these estimates, there are more forced labourers in the world in the 21st
century than at any time in human history (Bales et al., 2009: 7). One of the underlying
causes, in addition to globalization, is population growth, which has led to a historically
unique reduction in the cost of unfree labour. Moreover, the worldwide migration flows
are being exploited economically. These flows are often occurring under conditions of
illegality, which is why the immigrants are largely unprotected. For this reason, the
exploitation of workers as mere material and the ruthless abuse of bodily capital are by
no means unknown even in the centres of globalization. Forced labour and human traf-
ficking, extreme forms of labour exploitation, but also modern forms of debt bondage
such as ‘self-pledging’ as a worker, also exist today in Western countries (Bales and
Soodalter, 2009; Datta and Bales, 2013a, 2014). In the meat industry, coal mines, the
construction industry, home-based care, low-skilled services, and the agricultural sector
forms of lawlessness and personal control have become established in labour relations
under the aegis of Western firms and subcontractors that run counter to all modern stand-
ards of legal freedom in entering the labour market.
Especially in the globally expanding low-skilled service sector the existing service
proletariat has developed into an underclass. This has become a new dumping ground of
8 Journal of Sociology 00(0)

the modern working society in which earnings no longer provide a living wage, personal
instead of contractual relations of dependence exist, and employees hire themselves out
without any possibility of social security or of gaining qualifications, and with no pros-
pect of professional advancement, features that otherwise belong to the standards of
modern employment relationships. Contemporary working relations are marked instead
by what the relevant research calls ‘market-related status fatalism’ (Bahl, 2014) to
describe the complete hopelessness of these extremely precarious working lives. Viewed
in historical terms, a fatalistic attitude towards one’s apparently unalterable social posi-
tion is the hallmark of a social order of corporative poverty. Where this status fatalism is
encountered in a modern market society, it is a sure sign of a refeudalization of working
life. After all, it is the modern trends towards the transnational commodification of work
that are driving workers back into the forms of existence of low-status social strata famil-
iar from the pre-industrial era. In this sense, unfree labour should not be perceived as
‘feudal relics’ but ‘as indications of capitalism’s expansion’ (Corrigan, 1977: 441).

Social inequality at the top: the new oligarchies

of the super-rich
The return of unfree labour and corporatively cemented job insecurity represent the most
negative forms of refeudalization at the bottom of the social hierarchy. By contrast, the
refeudalization of the present-day economic upper classes is assuming no less un-bour-
geois forms than those that can be observed in the return of labour beyond contractual
equality and social security.
At the apex of the social structure, a new oligarchy of wealth has arisen based on a his-
torically unique increase in personal wealth. This unprecedented prosperity is not a func-
tion of modern economic principles such as performance, competition and market
successes, as would accord with the self-understanding of a bourgeois-capitalist social
order, but of strategies for securing privileges that have their origins in pre-capitalist times.
Let us take as an example the development of the leading incomes in the management sec-
tor. Even in the United States, the ratio of the income of CEOs to the average salaries of
workers in their companies in the mid-1960s was twenty to one. By 2012, the so-called
CEO pay ratio in the United States had increased to 273 times the average salary (Mishel,
2013). A similar development has also taken place in European countries that still see
themselves as ‘social market economies’. Thus, the directors of the 30 largest listed com-
panies in Germany in 1989 received an annual salary of on average DM 500,000, which at
the time was also twenty times the average employee’s income. In 2010, the salaries of
management board members had risen to €6 million per year, which represented a two
hundredfold increase in the ratio to the average income (Wehler, 2013: 79).
If we inquire into the causes of these immense gains, we will find that there is no
single economic factor that could account for this surge in the earnings of top manage-
ment, such as dramatically increasing differences in their performance or a sudden rise
in their productivity. The top incomes are not based on ‘pay for performance’. They are
instead an expression of the increased power of the executive and supervisory boards of
joint-stock companies to extract far more revenue from their companies than any top
managers could contribute through their own performance.
Neckel 9

In economic terms, this kind of profit maximization involves subverting market pro-
cesses. Market activity always involves uncertainty over whether the assets invested will
in fact yield a profit. In particular, competition, although it is a constitutive precondition
of markets, can thwart profit prospects by destroying the expected revenues. The most
advantageous option, therefore, is always to secure revenues unmolested by competition
(Neckel, 2015). However, opportunities to extract personal earnings without exposure to
market forces are extremely unequally distributed within society. Membership of the
upper classes affords numerous opportunities to escape market forces and maximize
one’s revenues free from the pressures of performance and competition. The status posi-
tions of privileged groups on management boards, supervisory boards, and other eco-
nomic governing bodies provide opportunities to grant mutual privileges, whether in the
form of direct payments, perks, guaranteed bonuses, or benefit entitlements.
In this way, a reward system of cumulative benefits develops on the model of the
‘Matthew effect’, which, in contrast to Merton’s (1968) classical analysis, does not accrue
to individual actors, but to entire closed groups, the economic leadership groups (DiPrete
and Eirich, 2006). Within their reference system a kind of ‘status market’ (Aspers, 2007:
435 ff.) develops on which privileges are traded. The hallmark of status markets is that the
ranking of values is not determined by standards such as ‘quality’ but by the social struc-
tures that the market players have built up. What a player receives or has to offer on a
status market, therefore, depends on the rank he or she occupies in a status system. When
high-status actors meet who recognize each other based on their top financial position,
then the value of the good of financial benefits that they negotiate is independent of any
measure of performance. And the players on a status market do not pay attention to such
performance standards. What interests them is instead the social position whose height
can confer, consolidate, or jeopardize benefits. The status market of the economic upper
class is an example of how economic logic never exists independently of the logic of
social relations, by which they are deeply stamped. Thus, we have to contend with, from
the reward system of cumulative benefits to the top business managers, an upper-class
variant of a ‘symbolic economy of honor’, which Pierre Bourdieu (1977) first discovered
with the Kabyle people of Algeria. The status market of the top managers serves as an
economy of symbolic goods, as here traded monetary values are above all indications of
rank in an economic power configuration. Recognition is accepted in the form of a cash
sum, and the sums in their turn are essential status symbols.
The decisive factor for success on the status markets of economic elites is not market
demand, therefore, but the social position of the privileged group that enables it to grant
mutual advantages at the expense of companies and the surrounding economy. Such
strategies are made possible by the social structure of a closed group whose members are
very similar and control the hierarchical positions on management and supervisory
boards that enable them to translate leadership positions in management into opportunity
structures for their own enrichment.
The rules governing the exercise of such economic power are generally known as
‘rent-seeking’ (Stiglitz, 2012: 28 ff.) or ‘rent extraction’ (Bebchuk et al., 2002), because
it is a matter of extracting high incomes from companies without contributing anything
in return – hence rents. In this way, the beneficiaries are accorded a special right that
restricts the scope of competition, or completely overrides it, and precisely in virtue of
10 Journal of Sociology 00(0)

this fact leads to a redistribution of income based on the ‘winner-takes-all principle’

(Frank and Cook, 1995).
The payment of such rents, which are extracted from companies as privileged bene-
fits, led to the unique increase in wealth at the pinnacle of society that is also changing
the structure of social inequality as a whole. The American social structure researcher
David Grusky from Stanford University also regards the different degrees to which rents
are available to different classes as decisive for the drastic deepening of social inequality
over the past three decades (Grusky and Weeden, 2011). While a policy of rent destruc-
tion applied among the lower social classes insofar as minimum wages were economi-
cally devalued, at the pinnacle of the social structure, by contrast, strategies of rent
creation have enjoyed enduring success, in particular in the form of guarantees of exces-
sive earnings for top management. Just as neoliberalism led to the corrosion of guaran-
teed benefit entitlements among lower earners, in the penthouse of the social hierarchy
such entitlements were created on a massive scale. With regard to European societies
such as Germany, this development can also be described as ‘asymmetrical marketiza-
tion’ that affects different social classes in completely different ways. While the lower
strata are exposed to deregulated labour markets extending to the return of non-free
work, numerous institutions were created for the top earners which establish guaranteed
claims to maximum income precisely in virtue of deactivating market processes and
competition (Neckel, 2015).
The privilege of being able to draw rents without contributing anything in return, the
spectacular sums of which are based on exploiting the economic environment and taking
advantage of opportunity structures, is not the only factor that is currently leading to a
kind of feudal capitalism and a new ‘gilded age’, as this has become known in interna-
tional inequality research (Krugman, 2014). Other factors involved in refeudalization
that likewise correspond to the historical arsenal of corporative privileging are directly
political in nature. The unparalleled preferential treatment accorded a global wealthy
class, which derives its gigantic revenues above all from the financial markets, is the
result of a kind of official gift economy for the wealthy (Stiglitz, 2012: 47 ff.). In most
Western countries, multibillion euro gifts in the form of massive tax cuts on capital gains,
inheritances, and high incomes have been awarded over the past twenty years. The neo-
liberal policy of tax cuts for the rich and the companies and banks they control can be
traced back mainly to the fact that the wealthy population groups, due to their economic
strength, have been politically successful in imposing a de facto veto on encroachments
on their pecuniary interests.
The American political scientist Jeffrey Winters traces the success of this ‘politics of
wealth defense’ back to an ‘income defense industry’, which in the last two decades has
been constructed by the rich and super-rich (Winters, 2011a, 2011b). Due to the immense
financial means achieved by the richer social strata, a whole force of tax experts, eco-
nomic advisers, lawyers, lobbyists for media campaigns, think tanks, and party groups
has been mobilized, summoned to offer political guarantees for the defence of wealth.
Winters sees in this a proof, additionally, of the growth of the distribution of political
power according to a ‘winner-takes-all’ economy, so that the wealthiest social groups are
more powerful than all the average citizens combined. To measure the chances for politi-
cal influence among the population for each class of wealth, Winters has developed a
Neckel 11

‘material power index’. Measuring respective net wealth, the ‘material power index’
presents a picture regarding the chances of political influence whereby the 1% of the
richest Americans – around 3 million people – are more than one hundred times more
powerful than the average of their compatriots. By far the greatest differences, however,
become apparent when one takes only the top 0.1% who own the highest percentile of
total wealth. These mere 400 people are each nearly 22,000 times as powerful as the
average of the remaining 317 million US Americans. This would be –according to
Winters – perhaps as great a power differential as that between a senator and a slave in
the Roman Empire (compare Winters, 2011a: 215 ff., 2011b: 22).
Sociologically, the question arises as to which concept best grasps the organizational
form of this kind of privilege. Scholars such as Jeffrey Winters or Wolfgang Streeck
(2014) do not shy away from speaking here of the development of a new ‘oligarchy’,
thus adopting a category which since 1990 has been used principally for the rich mag-
nates behind the political scenes in Russia, Ukraine, Singapore or China.
If these countries’ authoritarian political systems present one political reference-point
for economic interests, comparatively oligarchies in the West can be seen as marking
how democracy and oligarchies can coexist as two contradictory forms of interest-
sources in a political system. New research on this speaks of how we, under Western
capitalism today, deal with a so-called ‘civil oligarchy’ (Winters, 2011a), which differ-
ently from the war-like, lordly, or Sultanic oligarchies of the past do not themselves
govern directly but rather are supported by the state and the rule of law, through which
they exercise enormous power in favour of their wealth and interests. In modern democ-
racies, oligarchs can be seen to have powerful common economic interests, which do not
have to agree perfectly with each of their political preferences to bind them together for
the common imperative of the defence of their riches. In addition, despite their absti-
nence from direct political, engagement, they hold an exceptionally effective political
position as, by means of their immense financial power, state and society remain depend-
ent on many of their economic choices. The civilian oligarchs thus change the balance of
power between democratic institutions and the privileged economic interests definitively
in their own favour.

Refeudalization in present-day society

It is not bourgeois-capitalist principles such as performance and competition, then,
that determine incomes and wealth, but social status, economic power, and political
favours. Together these developments are leading to a situation in which present-day
modern societies are once again exhibiting levels of social inequality that character-
ized the early 19th century, as Thomas Piketty (2013) has recently shown. At that
time, the top decile of the population controlled around 80–90% of the total assets.
Today, even in societies such as Germany, it is approximately 70–75%, after the regu-
lated capitalism of the post-war welfare state era had lowered this proportion to
between 45 and 55% (see Piketty, 2013: 541 ff., 591 ff.). Accordingly, the Gini coef-
ficient in a country like Germany was already at 0.78 in 2012, which among compa-
rable countries was exceeded only by the United States with a value of 0.87 (Grabka
and Westermeier, 2014: 156).
12 Journal of Sociology 00(0)

Thomas Piketty speaks in this connection of the return of ‘patrimonial capitalism’

based on a hyper-concentration of capital in the hands of a new oligarchical wealthy
class (see Piketty, 2013: 541 ff.). In the present-day patrimonial society, dynastic struc-
tures of economic power are developing in which inheritance (see Beckert, 2008, 2010)
and marriage once again play a preeminent role and in which those who come into pos-
session of great wealth have revenues that one could never acquire through education,
work, and performance (see Piketty, 2013: 546).
Viewed in a long-term historical perspective, one of the paradoxical aspects of this
social change is that today the wealthiest segment of the economic bourgeoisie that
achieved prosperity and influence in the capitalist era through the market and competi-
tion is now trying in turn to secure its position with same means of rent extraction and
inherited dynastic power as the aristocratic upper class once did. In this historical com-
monality, the major owners of capital, together with the rich investors in the financial
markets and top management, represent a closed and corporatively privileged class.
They owe their dominant position in the economic processes of globalization and finan-
cial capitalism to the refeudalization of modern capitalism, and hence to a paradoxical
social development of counter-movement, of the political-economic Vertigo effect. This
neo-feudal economic position is bound up with the increase in the political power of this
class in present-day post-democracies – a political power which the upper classes spe-
cifically use to safeguard their economic interests. This combination of economic and
political power in the hands of the new oligarchy of wealth brings back to life a pre-
modern formation of social classes in which there is little separation between the spheres
of politics and the market or between law and economics.
The merit of Habermas’ study of the structural transformation of the public sphere is
that he showed, with reference to the refeudalization of the public sphere, how capitalism
in the course of its modernization can lose the bourgeois character to which it owed to its
origin, and hence also the normative traits that set it apart as something historically new.
This concerns, on the one hand, the public sphere that Habermas himself had in view
more than fifty years ago. On the other hand, understood as a paradigm of social change
in general, the theory of the refeudalization of modern capitalism also highlights other
important spheres of contemporary society. We can thus gain a better understanding of
both the current pauperization of work and the return of extreme forms of exploitation,
as well as the emergence of new wealth oligarchies and the growth of dynastic power, if
we analyse these drastic forms of social change in terms of a theory of refeudalization.
Processes of refeudalization also can be used to document the extent to which modern
capitalism has been uncoupled from its previous normative foundations. Present-day
Western society is apparently witnessing the end of the historical link between capitalism
and bourgeois society, so that capitalism and bourgeois society no longer determine each
other, and a paradoxical consequence is the emergence of a modern capitalism without
bourgeois structures. It is possibly this lack of bourgeois structures that is a cultural pre-
condition for the triumphal march of capitalism in the 21st century.

Funding
The author(s) received no financial support for the research, authorship, and/or publication of this
article.
Neckel 13

Notes
1. Concerning paradox as a mode of capitalist modernization, see Honneth (2002), Hartmann
and Honneth (2006), and Honneth and Sutterlüty (2011).
2. See, for instance, the narratives of decay in respect to the ‘reconfiguration of liberal capital-
ism’ (Adorno, 2001 [1968]) in the writings of the classical Frankfurt School.

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Author biography
Sighard Neckel is professor of Sociology at the University of Hamburg, Germany. Before taking
his chair at Hamburg University he held professorships at the German universities of Frankfurt and
Giessen, and the University of Vienna, Austria. He has been a visiting professor in the USA,
Australia, South Korea and Switzerland and is currently a member of the ‘Social Sciences’ Review
Board of the German Research Foundation. His major interests in research are economic sociol-
ogy, social inequality, sociology of emotions and social theory.

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