One upon a time, Lord Poncenby of Moneyshire rode into the small town of Greensville, atop a magnificent white steed and accompanied by an extensive retinue in finest livery. He declared that he loved the town so much, he had come to offer his grace and favour to the simple folk. If they would only swear fealty to his Lordship, and agree to a few modest conditions and changes in the town, he promised they would enjoy a bounty such that the town had never seen. When they agreed, Lord Poncenby appointed a few local barons and minor nobles who had appeared very keen to act as champions, and left a couple of his own castellans in strategic positions to make sure, before galloping back to Moneyshire, presumably for a banquet or something. True to his word, the investment flooded in, and the townspeople enjoyed a golden age of growth and prosperity.
But, as time went on, the lord started to make extra demands – special treatment here, extra tithes there. We can’t refuse those demands, said the local barons, otherwise the lord would withdraw his gentle favours from Greensville and bestow them on the next town over instead, who had already agreed to the new terms. Poncenby himself had made it very clear that he would withdraw his favour if he was not promptly appeased – it seemed his love for Greensville wasn’t quite as wide or deep as the townsfolk had thought. It’s in our own interests, the nobles said, to keep him happy, even if it was a bit painful to do so – after all, where would they find another lord to favour them?
“Why do we need a lord anyway?”, shouted one villager from a small group of malcontents shuffling suspiciously at the edge of the crowd, “If we encouraged a range of businesses owned by people in the village, then we wouldn’t have to beg Lord Poncenby’s favour all the time, with his ever increasing demands!”
“Madness!” shouts a baron, “We will never, ever find a better way to support Greensville than Lord Poncenby. It’s Lord Poncenby or destitution, and you risk bringing his wrath down upon us for suggesting otherwise!”. Fearful of this, the crowd booed and heckled the dissidents until they were quiet.
So Greensville did what Poncenby asked, conceding to more and more demanding terms, and each time the apocalypse scenario of a future without Lord Poncenby’s favour was used to justify it. Soon, Greensville was so specialised to serving House Poncenby that few born in the town had the opportunity to experience anything else, and those who might have had other ideas either put them aside as pipe dreams, or left Greensville forever, to be replaced by other loyal staff from the Poncenby estate. “See?”, said the baron several years on, “I told you it was madness to think the people of Greensville could do anything else, look around!”.
Although Lord Poncenby had appointed barons from the local populace on his initial visit, over time as the old barons retired they were increasingly replaced from outside, heads full of strategies approved directly by the Poncenby estate, the local townspeople increasingly filling mostly the rank and file.
In the end, the people of Greensville counted themselves lucky that House Poncenby continued to grant them its favour, even though each generation found itself working harder and for longer for a poorer lifestyle than their parents had, forced into deeper and deeper debt just to live a normal life. But they did this gratefully, because as everyone knew, it was better than nothing at all, for indeed nothing is all there was except for House Poncenby – some people had suggested otherwise once, a long time ago, but everyone knew that had been nonsense.
House Poncenby itself got richer and richer, but never again visited Greenville, being as it was just one chattel in their portfolio. Other noble houses similarly did very well, convincing vast shires to cede long-term power to them for the price of external investment. Life, as a member of the nobility, was good.
[For a more sensible discussion of the general case, see Capitalism and the contraction of the middle-class]