Rentier capitalism

From Wikipedia, the free encyclopedia

Rentier capitalism describes the economic practice of gaining large profits without contributing to society.[1][2][3] A rentier is someone who earns income from capital without working. This is generally done through ownership of assets that generate yield (cash generated by assets), such as rental properties, shares in dividend paying companies, or bonds that pay interest.[4]

Modern economists agree that the power dynamics of the rentier-tenant relationship are oppressive,[5][6] but capitalist theories such as the natural "euthanasia of the rentier" famously put forth by John Maynard Keynes have been abandoned in light of the increase in rent-seeking behavior seen over the past century.[7][8][9] Economist Guy Standing expects that a revolt against rentier capitalism has to come from the precariat, as the proletariat is too wedded to forms of social democracy to lead a revolt.[10]

Usage by Marxists[edit]

Although the combination of words "rentier capitalism" was never used by Karl Marx himself, it is compatible with the Marxist idea of surplus value extraction. In his early works, Karl Marx juxtaposed the terms "rentier" and "capitalist" to argue that a rentier tends to exhaust his profits, whereas a capitalist must perforce re-invest most of the surplus value in order to survive competition. He wrote, "Therefore, the means of the extravagant rentier diminish daily in inverse proportion to the growing possibilities and temptations of pleasure. He must, therefore, either consume his capital himself, and in doing so bring about his own ruin, or become an industrial capitalist".[11]

Later in life, including in the manuscript later published as Capital, Vol. 3 Marx tended to further distinguish so-called rentiers into interest-bearing (finance) capitalists and a separate class of landowners, arguing that the interest from invested capital and rent from private land were economically different.[12] He did however in various places, including a letter to Friedrich Engels acknowledge that at some point finance capital might come to own all land and in doing so eliminate the separate landlord class.[13] It is a matter of ongoing debate as to whether or not this has come to pass.[14]

Vladimir Lenin asserted that the growth of a stratum of idle rentiers under capitalism was inevitable and accelerated due to imperialism:

Hence the extraordinary growth of a class, or rather, of a stratum of rentiers, i.e., people who live by 'clipping coupons' [in the sense of collecting interest payments on bonds], who take no part in any enterprise whatever, whose profession is idleness. The export of capital, one of the most essential economic bases of imperialism, still more completely isolates the rentiers from production and sets the seal of parasitism on the whole country that lives by exploiting the labour of several overseas countries and colonies.[15]

Current usage[edit]

Current usage of the term 'rentier capitalism' describes the gaining of 'rentier' income from ownership or control of assets that generate economic rents rather than from capital or labour used for production in a free competitive market.[16] The term rentier state is mainly used not in its original meaning, as an imperialistic state thriving on labor of other countries and colonies, but as a state which derives all or a substantial portion of its national revenues from the rent of indigenous resources to external clients.

Guy Standing has claimed rentier capitalism has become predominant in capitalistic economies since the 1980s.[17] Brett Christophers of Uppsala University, Sweden has asserted that rentier capitalism has been the foundation of the United Kingdom's economic policy from the 1970s onwards.[18] With the return of high inflation to the United Kingdom in 2022, political economist William Davies surveys recent British economic events in light of rentier capitalism.[19]

See also[edit]

References[edit]

  1. ^ Peter Frase (7 July 2011). "Slouching towards rentier capitalism".
  2. ^ Monbiot, George (29 August 2011). "Academic publishers make Murdoch look like a socialist". The Guardian.
  3. ^ Dariush M. Doust (January–February 2010). "Rentier capitalism and the Iranian puzzle" (PDF). Radical Philosophy (159): 45–49.
  4. ^ Aligica, Paul Dragos; Tarko, Vlad (2014). "Crony Capitalism: Rent Seeking, Institutions and Ideology: Crony Capitalism". Kyklos. 67 (2): 156–176. doi:10.1111/kykl.12048. S2CID 154030054.
  5. ^ Fukuyama, Francis (May 2016). "What is corruption?" (PDF).
  6. ^ Smith, Adam (1776). The Wealth of Nations. pp. Book 1, Chapter 6, Paragraph 8.
  7. ^ Keynes, John Maynard (1936). "The General Theory of Employment, Interest and Money". Nature. 137 (3471): Chapter 24. Bibcode:1936Natur.137..761B. doi:10.1038/137761a0. S2CID 158925115.
  8. ^ Tho (30 March 2020). "Keynes and the Euthanasia of the Rentier". Mises Institute. Retrieved 20 February 2022.
  9. ^ Piketty, Thomas; Saez, Emmanuel; Stantcheva, Stefanie (February 2014). "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities". American Economic Journal: Economic Policy. 6 (1): 230–271. CiteSeerX 10.1.1.682.1476. doi:10.1257/pol.6.1.230. ISSN 1945-7731.
  10. ^ Forrester, Katrina (26 October 2016). "The Corruption of Capitalism by Guy Standing review – work matters less than what you own". The Guardian. ISSN 0261-3077. Retrieved 13 February 2023.
  11. ^ Marx, Karl (1932). "Third Manuscript: Private Property and Labor". The Economic and Philosophical Manuscripts. Moscow: Marx–Engels Institute – via Marxists Internet Archive. See also the article Economic and Philosophic Manuscripts of 1844.
  12. ^ Marx, Karl (1991). Capital: Volume 3. London: Penguin Classics. pp. 759–761.
  13. ^ Marx, Karl; Engels, Frederick (2010). Marx & Engels Collected Works, Volume 41: Letters 1860-1864. London: Lawrence & Wishart. p. 398.
  14. ^ Manning, F.T.C. (2022). "A Defence of the Concept of the Landowning Class as the Third Class". Historical Materialism. 30 (3): 79–115.
  15. ^ Lenin, Vladimir Ilyich (1963). "Imperialism, the Highest Stage of Capitalism". Lenin's Selected Works. Vol. 1. Moscow: Progress. pp. 667–766 – via Marxists Internet Archive.
  16. ^ Birch, Kean (6 February 2019). "Technoscience Rent: Toward a Theory of Rentiership for Technoscientific Capitalism". Science, Technology, & Human Values. 45: 3–33. doi:10.1177/0162243919829567.
  17. ^ Standing, Guy. The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay, London: Biteback (2016)
  18. ^ Christophers, Brett (12 August 2020). "The PPE debacle shows what Britain is built on: rentier capitalism". The Guardian. London, United Kingdom. ISSN 0261-3077. Retrieved 27 December 2020.
  19. ^ Davies, William (30 May 2022). "This age of inflation reveals the sickness ailing Britain's economy: rentier capitalism". The Guardian. London, United Kingdom. ISSN 0261-3077. Retrieved 30 May 2022.

Bibliography[edit]