Beyond Lenocracy

John Michael Greer

I think most people have had the experience of watching a jumble of unorganized thoughts sort out all at once into a lattice of meanings, with a single word filling the role of seed crystal. It’s something that happens to me tolerably often.  Much of the direction of my life was set, for example, one day in my early twenties when the word “decline” became such a seed crystal, and helped me see that the future taking shape around me was neither progress nor collapse but the common fate of all civilizations.

I’ve recently had another such verbal seed crystal drop into my mind. This one wasn’t anything like as worldshaking as the concept of decline has turned out to be, and it also had a curious feature; I grasped the concept in an instant but I had to invent a word for it. The word I came up with is “lenocracy.” The first part of that word comes from leno, the Latin term for a pimp. Yes, what the word means is a government of pimps.

Let’s unpack that phrase a little bit. If, as the saying goes, prostitution is the world’s oldest profession, then pimping must be up there in the oldest half dozen or so. What makes a pimp economically interesting is that he adds no value to the exchanges from which he profits.  He doesn’t produce any goods or services himself.  His role is wholly parasitic.  He inserts himself into the transaction between the sex worker who provides the service and the customer who wants it, and takes a cut of the price in exchange for allowing the transaction to happen.

This kind of parasitic interaction is far from unusual in economics, but it’s not always as common as it is now. There are societies and eras in which most economic activity is mediated by pimps of various kinds, and other societies and other eras in which such arrangements are relatively rare (and often harshly penalized). Right now, in the modern industrial world, we live in an economy where nearly all exchanges are subject not just to the exactions of a single pimp but to whole regiments of pimps, each of whom has to be paid in order for the exchange to take place.  Furthermore, this orgy of pimping is sponsored, controlled, and mandated by government at all levels and by the holders of political and economic power more generally.  Thus, lenocracy.

One way to see lenocracy in action is to go walking through the old downtown district of any small city or large town in today’s America. You’ll find a lot of empty storefronts. If you stop into a local bar, have a few beers, and ask some carefully chosen questions, you’ll discover two fascinating things. The first is that there are plenty of people in town who would gladly patronize a wide range of businesses the town no longer offers.  The other is that there are plenty of people who would happily open and run those businesses if they could.

According to conventional economic thought, this is an absurd situation.  You have commercial spaces begging for tenants, you have customers eager to spend money, you have people out of work who would be delighted to find a job, and you have budding entrepreneurs who would be just as delighted to rent spaces, open businesses, provide goods and services, and hire employees. The law of supply and demand would seem to mandate a rush of new businesses.  Yet nothing of the sort happens, or has happened for many years. Why?  The answer is lenocracy.

Consider the hoops you have to jump through in order to open a business. You can’t just talk to the landlord, arrange for a reasonable rent, come up with whatever facilities and products you need, and hang out your shingle. To begin with, of course, the rent won’t be reasonable. If the law of supply and demand were functioning according to theory, all those empty storefronts would drive the cost of a commercial rental down to the point that business startups could afford it—but the rents haven’t come down.  A galaxy of financial gimmicks mediated by federal, state, and local bureaucracies makes it possible for big corporate landlords to profit even when their buildings are mostly empty, so they are immune from market pressures.

Even if you can scrape together the money to afford a storefront, though, that’s merely the beginning of your troubles. As soon as you start putting a business together, the regiment of pimps mentioned earlier comes running with their hands out. Each of them demands a cut. There are the bankers, the insurance agents, the real estate agents, the salespeople, the middlemen, and many more, and of course alongside them are the government officials, local, state, and federal, with a schedule of fees that inevitably gets longer and more onerous with every year that passes. Few if any members of the regiment just described provide anything of value in exchange for their cut, but you can’t simply ignore them.  That’s what makes our current situation a lenocracy:  the power of the state gives their claims the force of law.

Maverick economist E.F. Schumacher pointed out years ago that one of the crucial but neglected factors in economics is the cost of providing a workplace for each employee.  Where that cost is low, employment booms and so does the grassroots level of the economy, since there are plenty of jobs and thus plenty of people who have money to spend on goods and services. Where that cost is high, the grassroots wither, but the rich become richer, because they can force those who do have money to spend it at the businesses they own. It’s partly because this factor has been ignored in conventional economics that corporate capture of government bureaucracies has become such a plague on the market economy.

The resulting situation has obvious problems. All those empty storefronts across America bear witness to one of the largest of these:  lenocracy is not effectively counterbalanced by market forces, and so when unchecked it can quite readily expand until it strangles productive economic activity altogether.  On paper, the United States has had economic growth in nearly every quarter for decades—but that’s only true if you include the earnings of the FIRE (finance, insurance, and real estate) sector, the heart of today’s American lenocracy.  Leave that out and the economic picture is far less rosy.  If you also leave out the economic consequences of the expansion of government bureaucracy at all levels, and of the explosive financialization of health care that followed in the wake of Obamacare, it becomes painfully clear that in terms of productive economic activity, the United States has been sinking into a serious depression for decades.

Lenocracy also leads to an unhealthy centralization of economic power in the hands of big and politically well-connected corporations.  A case currently before the US Supreme Court makes a good example of this.  Congress many years ago allowed federal bureacrats to put inspectors on fishing vessels, but the officials up and decided one day that every fishing vessel in the US has to have a government inspector on board, and the owner of the vessel has to pay the inspector’s salary and benefits.  This detail isn’t something that Congress mandated by passing a bill; it was an edict handed down by a claque of unelected Washington DC bureaucrats who aren’t answerable to the public. (If this reminds you of certain old comments about taxation without representation, dear reader, be aware that you’re not alone in that.)

Think for a moment about the differential impact of this regulation on big corporate-owned fishing boats and small, family-owned boats.  Corporate fishing vessels routinely have dozens of crew on board, so adding one more is not much of a strain; corporations also have the clout and the financial leverage to make sure that the inspector is, shall we say, encouraged to report that all federal regulations are being followed, whether this is true or not. The smaller players, by contrast, don’t have the clout or the bribe money, and they may be going to sea with only five people aboard; add a sixth, at the federal government’s pay scale, and you’ve very likely slipped over the line from profit to loss.  Thus the regulation is one of many pressures forcing small proprietors and family firms out of the industry and restricting it to huge corporate combines. Since small businesses are far more effective engines of job creation and innovation than big corporations, this pushes costs onto the economy as a whole.

Finally, once it metastatizes far enough, lenocracy makes it impossible for a society to respond to crisis in anything like an effective manner. In 1942, plunged suddenly into a world war, the United States launched a massive program of industrial expansion to turn out tanks, planes, guns, and ammunition at levels no nation had ever previously achieved, and succeeded.  Now?  We’re running out of weapons and ammunition to pass on to the Ukrainian army, and the best the US defense industry can manage is a modest increase in production scheduled for 2025. Any more timely response is bogged down by the fact that even the simplest military procurement has to go through an entire lenocracy of senators, representatives, Congressional aides, Pentagon officials, defense industry executives, consultants, contractors, subcontractors, fixers, managers, micromanagers, and more, all of whom have inserted themselves between the factory worker who makes a gun or an artillery shell and the soldier who needs it, and all of whom extract their cut one way or another from the military budget.

Meanwhile the Russian defense industry is churning out tanks, bombs, and ammunition at a pace several times greater than the entire NATO alliance put together. Russia has its own problems with lenocracy—nearly all modern nations do—but it also has a leadership ruthless enough that any lenocrat whose exactions get in the way of military production risks an accidental fall from a tenth-story window.  Russia’s current leaders lived through the collapse of the Soviet Union and thus are well aware that they can lose. Our leaders lack that useful awareness, and so lenocracy spreads unchecked here—at least so far.

The fatal weakness of lenocracy is shown with remarkable clarity, in fact, by the results of the sanctions the United States and its allies aimed at Russia after the Russo-Ukrainian war began a little less than two years ago. Those sanctions, as I trust my readers remember, were expected by Western politicians and pundits to cripple the Russian economy so severely that the Russian people would rise up against Putin, and accept the dismemberment and despoliation of their country that Western elites have been so publicly daydreaming about for decades.

That wasn’t what happened, because the West didn’t provide any essential goods or services to the Russian economy. Nearly all of what it provided was various kinds of pimping.  Most of the Western goods that Russian consumers bought weren’t made in Western countries; some of them were manufactured in the global South, slapped with Western labels and steep markups, and then sold to the Russians, while others were manufactured in Russia itself by franchisees of Western firms. When the sanctions came into force, Russian importers simply arranged to get the same products with Chinese labels slapped on them instead, and the Russian government passed a law allowing franchisees of Western corporations to tear up the franchise agreements, change their brand names, and go merrily on with business. Meanwhile Russia’s exports, which are far more tangible—oil, coal, gas, grain, and the like—found no shortage of buyers outside the West.

What this turn of events revealed to the world is that it was possible to do without the dubious “services” of the Western lenocracies.  The implications of that discovery are only just beginning to shake the global economy.  It’s already being felt in Africa, where the nations of Mali, Niger, and Burkina Faso have shaken off the lenocratic control of their former colonial overlord France. Until the recent coup d’etat overthrew Niger’s French-backed president, for example, Niger was getting about 8 US cents a kilogram for the uranium from its rich mines. The going price for uranium in the global market is about US$200 a kilogram.  The noticeable difference between those two figures was being sucked up by French lenocrats under various pretexts. (That difference was also making the French nuclear power system look much more profitable and viable than it actually is, but that’s a discussion for another day.)

The bigger picture, though, is the slow unraveling of the worldwide lenocracy that props up the United States both as global hegemon and as a mythical fairyland of absurdly extravagant consumption. The US dollar’s role as global reserve and exchange currency is the mechanism that matters here. Economic globalization, encouraged and tolerably often enforced by the two-headed monster of US corporate and government power, forced nearly every nation on the planet to stockpile US treasury bills and other dollar-denominated investments to backstop the flow of credit for global trade. That permitted the US government to run gargantuan budget deficits and push the T-bills off on the rest of the world, propping up levels of government and corporate expenditure that couldn’t have been paid for in any honest way.

Now, though, the bloom is off the rose. Russia has demonstrated once and for all that it’s possible for a nation to thumb its nose at the Western lenocracies and thrive. Other nations are backing away from the US dollar at various rates of speed, working out arrangements to trade in local currencies with their neighbors or cutting deals with Russia and China. Excess dollars are starting to pile up in various corners of the US economy, driving bursts of inflation. Signs of economic turbulence are showing up everywhere except the official statistics. (As Bernard Gross predicted forty years ago in his prescient book Friendly Fascism, economic indicators in today’s America have become economic vindicators, saying whatever the regime in power wants them to say.) Outside the lenocratic class, life has become harder for most Americans, and even within the lenocracy, the steady metastasis of the system has run into unexpected barriers.

Consider the fate of the DEI movement, until recently the cutting edge of American lenocracy. According to its proponents, the initials DEI stand for diversity, equity, and inclusion; its opponents argue that “Didn’t Earn It” is a more accurate translation, but here again, we can leave that argument for another time.  The movement has its roots in the affirmative action policies of the 1960s and 1970s, by way of the spate of diversity training programs that spread through corporate life in the 1990s and 2000s.

In this latest manifestation of the same trend, corporations, nonprofits, and government bureaucracies were expected to establish and staff DEI departments at their own expense, piling another financial burden on all and sundry, in order to impose an ever-expanding set of mandates meant to force blind conformity with the latest fashions in cultural politics. As a full-employment program for university graduates with critical theory degrees, which was of course its central purpose, DEI worked quite well.  Like most such projects, however, it did very little for the people it was supposedly there to help, and its impact on profitability was far from benign—the phrase “get woke, go broke” reflects the impact of DEI on business generally.

As recently as 2020, despite all this, DEI seemed poised to install itself immovably as yet another layer of well-paid bureaucrats profiting off economic activity of every kind. Now? Some state governments have banned DEI programs in their bureaucracies and universities, and some corporations are backing away from DEI and turning their attention to such old-fashioned concerns as making a profit instead. Such well-publicized fiascos as Bud Light’s woke-inspired self-immolation grab the headlines, but there are deeper trends at work. The proliferation of lenocracy in American society is running up against hard limits. Some of those limits are external—for example, the erosion of the dollar’s status as world reserve currency—and others are internal—for example, the rise of a populist political movement that increasingly takes aim at the entire lenocratic structure—but they all suggest that the status quo in today’s America is failing.

I suspect the hard limits just mentioned are responsible for the tone of desperation that seems to be spreading through lenocratic circles these days. I’m thinking among many other examples of the recent flurry of press releases insisting that a study had just showed that growing your own vegetables in a backyard garden is bad for the climate. The dubious assumptions and interesting reasoning that supports that claim would take a post of its own to unpack, so we can leave it for now. The point that I want to make here is that the real problem with growing your own vegetables—the real problem, in fact, with doing anything for yourself, or for your family and friends and community—is that there’s no way for pimps to cash in on it. It’s as though people were pairing up and heading off to bed without any cash changing hands, leaving pimps to stand helplessly around and wonder where their next month’s rent is coming from.

Of course it’s also relevant that main reaction the study got from the public, once it hit the mainstream media, was raucous laughter. These days most people know that scientific studies by and large say exactly what their funding sources want them to say, and that trusting the earnest utterances of the mainstream media is right up there on a par with believing the guy from Nigeria who wants your help getting ten million dollars out of the country. The collapse of trust in the lenocratic system has been richly earned. History suggests that it’s likely to be followed not too far in the future by a more general collapse of the system itself.

Exactly how that process will unfold from here is anybody’s guess. With the federal government staggering under an unpayable US$34 trillion dollar deficit, state governments increasingly supporting the idea of a balanced budget amendment that would force mass layoffs of federal bureaucrats, the Republican Party drawing up plans to eliminate whole departments of the federal government, and the US military so visibly weak that hostile countries are circling like sharks trying to decide who gets to take the first bloody bite, there are any number of ways that the final crisis of the current lenocratic system could play out.

It remains a safe bet, however, that if a situation is unsustainable, sooner or later it won’t be sustained. A nation that can’t manufacture an adequate supply of cannon shells to defend its interests, because too many people are too busy extracting unearned wealth from the procurement process, is a nation that’s either going to shake off its parasites or go under. While we’re waiting to see what happens next, planting that backyard garden or doing other things that don’t depend on lenocracy is probably a good idea—and if, dear reader, you make your living providing some service that nobody would pay for if the system didn’t require it, you might want to find some other way to make a living before the bottom drops out of that market.

Source: Ecosophia