We see an extended conflict in the wake of capitalization. Capitalism selects for certain types of behavior and people. These selection effects are starkly different from the selection effects illiquid forms of capital, which before capitalization were not even considered capital. The essence of older forms of illiquid capital is violence. Whether direct violence in the forms of men with swords or the protection of fortifications. The serfs, the farm and the fort are the archetype of illiquid capital. As the cost of defense decreases, there begins a divergence between defense ( both active and passive ) and capital. Liquid capital, especially other forms than currency, is only widely possible when one does not have to protect property passively or directly employ protection to prevent theft ( there will always be a minimum level of protection needed though). During the early middle ages even merchants, who are usually the archetype furthest from violence, formed bands to defend themselves from raiders, barbarians and robbers. Italian merchants even formed navies to defend themselves from pirates. Certainly in the absence of security, trade becomes an occupation only for the brave, bold and armed.
Separating capital from violence creates a distortion in the market. Where before property was only maintained via defense by property owners. Now free men can utilize generated safe zones to protect their property. This means their incentives in the short term, their lifespan, lie with maximization of capital. Not all actors will desire or achieve wealth but eventually a form of wealth generation will emerge that was previously unavailable to illiquid capital owners. Of these capitalistic methods some will come into direct conflict with the goals of those who maintain defenses. Some of these methods will eventually hurt the average person. Many will describe this subversion as evil, but in practice both illiquid capitalists and liquid capitalists are amoral actors. The difference is that illiquid capitalists have more incentive to maintain the commons.
The crux of civilization is successfully internalizing the positive externalities of security into the corporation. The people must be absorbed into private government as subjects so that they cannot free ride off services. This guarantees institutions providing security are compensated properly for their services. By absorbing the subjects into a private corporation the aristocrat can eschew both the cost of barter for security and the cost of organizing actors to pay for defense ( the creation of excludable goods). While security can be an excludable good, history has tended to produce security as a non-excludable good requiring that adequate security be maintained by a hegemonic actor with a natural monopoly ( I use natural loosely here it may be natural in the geopolitical but not the capitalistic sense).
Naturally wealth does benefits most actors. As the availability of capitalistic methods spread the degrees of separation between actors and violence increases further, fewer actors are directly or indirectly affected by or involved in violence/defense. The interests of individual actors (note not the group) begin to align with the capitalists and their liquid wealth. However, by this point many liquid capitalists are as wealthy or wealthier than the illiquid capital holders. Many illiquid capital holders must adjust their methods. The demesne system was eventually supplanted in many areas when aristocrats realized that it was cheaper to rent their land to farmers than to take care of their own serfs. Much in the same way wage slaves are cheaper than real slaves. Eventually especially creative amoral capitalists invent ways of making money which directly affect the well being of the average citizen. However these methods are usually unpopular with existing illiquid capital holders. They have a few options: bribe the illiquid capital holders or find new owners for the illiquid capital. A defining factor of the illiquid capital owners is lower time preference. While many capitalists have lower time preference few have a time preference as low as illiquid capital holders. The combination of low time preferences and illiquid capital is what makes sovereigns so incentivized to increase the value of their property and maintain it.
The modern world has provided one of the worst incentive models ever conceived. It is more sinister than anything that could have been imagined by a single man. In fact it defies the understanding of those that employ it. It is so ingenious in that it allows the unwitting academics to repeatedly play the savior all the while writing another episode of destruction and upheaval.
To return to better governance by theorizing any sort of modern aristocracy I posit that we cannot first imagine a perfected system. We must first look to the natural avenues in which a natural aristocracy might arise and secondly provide a generic but descriptive definition of aristocracy. While it is traditional to define aristocracy in terms of their martial prowess I believe that this is somewhat inadequate. Aristocracy is responsible for defense but that is only part of their nature, many real aristocrats throughout history have outsourced defense to mercenaries. Ergo defense is necessary but insufficient for aristocracy. What is the primary characteristic of the Aristocracy is the holding of illiquid assets. This could be artificially illiquid assets as in non-transferable assets via contract or practice or functionally illiquid assets, as in assets than cannot be transferred within reason. The second quality is indeed a hegemony on violence in a geographic region. The aristocracy should be the clear winner in any local conflict ( unless it is with someone higher up the hierarchy). This does not necessarily mean the aristocracy should be warriors, although it doesn’t hurt. A man with an army but no illiquid capital is a warlord, bandit or general. A man with an army and liquid capital is still just a warlord, there is nothing to tie him to any particular piece of land or people and his capital can travel with him on his predatory ventures. A man with illiquid capital but no army is just an businessman. It is not until the warlord becomes a sedentary bandit that he truly becomes an aristocrat, alternatively it is not until the merchant builds an army that he becomes an aristocrat. Until those conditions are met the aristocrat has little in common with their subjects. Afterword, both conditions are met and their fates are tied together with their people. Hierarchy is implied in either the owning of land and people or military might. If you cannot decide what to do with your property or army ( within reason ) then you are neither owner or general.
Back to my point about not imagining natural aristocracy as a perfected system. When we look back any aristocracies golden age we are looking at an evolved and formalized system. No system emerges as a finished product ( and products must often be revised and improved to compete ). Systems emerge by fulfilling a need they change both as they improve the cost and efficacy of fulfilling that need and as the environment changes ( often due to the byproducts of the system). Aristocracy in 900 AD did not look like Aristocracy in 1400 AD nor 1100 AD. In the same way Rome was not “founded” as a Republic nor did it truly end as one. Systems tend to change and any long lived system will not be static. Humans have an ability to adapt their environments, any system which is no longer adaptive will eventually be outcompeted. This is not to say that change must be quick. Reckless change throws away important foundational systems without a stable way to replace them. Systems must adapt to new circumstances without throwing out the hard won wisdom of the specialized knowledge of their particular form of civilization.
In risk of sounding too libertarian here, government is just the strongest gang in town. This is not meant as a slight against government. A well functioning government does far more good than harm and it should not be viewed as a moral ill. In private governments gestation phase it often is indistinguishable from bandits, pirates or indeed a gang. This is not to say a gang, especially a modern one, is a desirable form of government. They are however, a form which has been selected for that maintains both a hierarchy, territory and defense. They have also been selected for violence and criminality, but to some extent, so were the original robber barons. I do not hope the future is ruled by the gangs we see today, however their structure and forms are worth noting if at the very least as another form which has again and again throughout time.
Unlike societies where persons were owned by person or corporation today governments and corporations increasingly atomize and make more liquid workers. For an unnatural hierarchy, one which derives its power from social capital rather, there is always an incentive to grab power from the social and economic sphere for itself. Since a democratic government is not an institution which builds it can only usurp power from its subjects. A natural hierarchy builds it’s own social, political, material and martial capital. Education just one of many tools which moves people from illiquid capital to liquid capital. Apprenticeships create illiquid capital. A black smith may move about and work in different places, but ultimately he spent his life training as a blacksmith. A Harvard grad while they have no real skills has demonstrated through signalling that they are smart. Demonstrating intelligence then becomes a prerequisite for getting a job. This also forms a cost barrier as college becomes more expensive. If we regard the college method as a form of liquidation. We can see that it only really benefits those who can successfully signal intelligence. For the vast majority of workers constant shifting of jobs, destroys skill capital by the inefficiency of transfer. Many of the inefficiencies of our current system are equally derived from modern psychosis, bad governance and immoral capitalists. Books could be and have been written on this unfortunate synthesis in the modern age.
To end on a positive note, I will call back to better times so as to not be so fatalistic. There was a time when lords, merchants and priests worked hand in hand to spread the word the law and wealth. During these times merchants would brave the winter storms to bring their most valued goods salted fish to far off lands so that they could celebrate lent ( salted fish was usually consumed in lieu of meat during a fast). Along with beer, it was the only good allowed to be shipped out during the beginning of winter storms ( they banned shipment of normal goods from Nov 11th to Feb 2nd). All other goods, except beer, would have to wait for shipment till the storms quelled, but an exception was made so that people could have the only meat allowed during their fast ( beer and fish could be shipped as late as Dec 6th nearly month after other goods). Merchants brought not only their goods, but their religion spreading Christianity to pagan lands. They also brought their laws working with lords and castilians to spread their laws of property and trade. They said prayers that their greed would not overcome them and build churches in foreign lands to practice their faith. They told tales of the town of Winetha which was fabled to be destroyed by God “like Sodom and Gomorrah, because of its sins; for its inhabitants had grown hard and proud and disdainful, trusting in wealth, and despising God.” They built halls that they might band together and practice their culture among an alien people. These halls were built in or next to their churches the houses of their faith. They protected each other from pirates, bandits and greedy lords alike. While we might mark the merchants as a necessary evil, it was not always so, there is room in time and history for a synthesis of god, aegis, people and religion. There is nothing fatalistic about those who work in liquid capital, but as fallen people there will always be temptation and sinners.