So here are the 1e government types.
"AUTOCRACY - Government which rests in self-derived, absolute power,
typified by a hereditary emperor, for example.
BUREAUCRACY - Government by department, rule being through the
heads of the various departments and conducted by their chief administrators.
CONFEDERACY - Government by a league of (possibly diverse) social
entities so designed as to promote the common good of each.
DEMOCRACY - Government by the people, i.e. the established body of
citizens, whether through direct role or through elected representatives.
DICTATORSHIP - Government whose final authority rests in the hands of
one supreme head.
FEODALITY - Government of a feudal nature where each successive layer
of authority derives power and authority from the one above and
pledges fealty likewise.
GERIATOCRACY - Government reserved to the elderly or very old.
GYNARCHY - Government reserved to females only.
HIERARCHY - Government which is typically religious in nature and
generally similar to a feodality.
MAGOCRACY - Government by professional magic-users only.
MATRIARCHY - Government by the eldest females of whatever social
units exist.
MILITOCRACY - Government headed by the military leaders and the
armed forces in general.
MONARCHY - Government by a single sovereign, usually hereditary,
whether an absolute ruler or with power limited in some form (such as
the English monarchs, limited in rule by the Magna Carta).
OLIGARCHY - Government by a few (usually absolute) rulers who are coequal.
PEDOCRACY - Government by the learned, savants, and scholars.
PLUTOCRACY - Government by the wealthy.
REPUBLIC - Government by representatives of an established electorate
who rule in behalf of the electors.
THEOCRACY - Government by god-rule, that is, rule by the direct
representative of the god.
SYNDICRACY - Government by a body of syndics, each representing
some business interest."
As you can see, Feudalism is only one of the many ways of governing in D&D and is by no means the default. This is confirmed also in the 1e DMG by the following.
"Upper Class: Nobles, gentlemen, the wealthiest of merchants and most
important guildmasters, from which are drawn the most important law
makers and executives.
Middle Class: Merchants and guildmasters, with master artisans and the
like making up the balance. They provide lesser officials.
Lower Class: Tradesmen, journeymen, laborers, and all others form the
lower class. From their number is drawn the common council."
In a Feudal society, nobles are at the top. Period. The inclusion of wealthy merchants, guildmasters and gentlemen in the upper class is contrary to feudal society. Unless of course they were also nobles.
