A hierarchy where access to credit, not ownership of land, determines who sits above whom.
Modern banking is usually described in market language: competitive institutions, freely chosen contracts, borrowers and lenders meeting as equals. But the actual structure is layered and one-directional. A central bank sets the terms on which it will lend to major commercial banks; those banks then set the terms on which they lend to businesses and households, adding their own markup; households and small borrowers sit at the bottom of the chain with no comparable access to either tier above them. Credit is extended downward through the layers, and debt service, interest, is extracted back upward through them, the same directional flow a feudal hierarchy runs on rent and obligation rather than free exchange between equals.
That resemblance has real economic lineage, even if the exact phrase “financial feudalism” does not. The economist Michael Hudson has argued for decades that Western economies are reverting to a rentier structure he explicitly calls neo-feudalism or a lapse into “debt peonage,” in which the finance, insurance, and real estate sector plays the role landlords played before the 19th century, extracting economic rent through interest and financial fees rather than producing real value, while industry and households become increasingly debt-strapped to service it. Hudson’s framing centers on extraction without reciprocal obligation: a feudal lord took a share of a vassal’s harvest without producing it; a modern rentier finance sector takes a comparable share of income through debt service without contributing a comparable amount of productive output.
Honesty about the term itself matters here: “financial feudalism” is not an established term of art in economics or political theory the way “rentier capitalism” or Hudson’s own “neo-feudalism” are. It functions as a rhetorical label for a real, documented structural pattern, tiered credit access and one-directional extraction, rather than as a phrase with its own citable literature. Readers should treat it as a vivid shorthand for Hudson-style rentier analysis, not as a term Hudson or any cited economist coined outright.
Source: Michael Hudson, “Finance Capitalism versus Industrial Capitalism: The Rentier Resurgence and Takeover,” American Journal of Economics and Sociology (2021); Michael Hudson, interviews and essays on debt peonage and neo-feudalism, michael-hudson.com.