Rentier Capitalism

The Financial Times  (on Wednesday, 18th September) carried an article by Martin Wolf “ Why rigged capitalism is damaging Liberal Democracy “ .He writes “Economies are not delivering for most citizens because of weak competition, feeble productivity growth and tax loopholes”

Guy Standing in his 2016 book “The corruption of capitalism” explained how capitalism has been corrupted as the security of the many has been weakened to strengthen the position of those who hold the bulk of society’s wealth. He wrote, “we have a rigged system that leaves those without much property with few rights”. He borrows from John Maynard Keynes’ critique of the rentier class — broadly, those who live on income from property, including patents and copyright, and investments. And like Keynes, he wants to see the end of the rentier on the grounds that the system they have created is both inefficient and grossly unfair. Those at the bottom Standing calls the precariat — the workers most exposed to the insecurity typical of this era of rentier capitalism driven by globalisation.

The unfairness of housing policy in the UK, one of the more egregious examples of the power of the rentier, is highlighted as are labour conditions in the era of apps, where data are used to monitor and control a workforce with little by way of employment rights. Standing writes that “the precariat’s vulnerability today is everyone’s tomorrow.”

Wolf asks the question “Why is the economy not delivering?” The answer lies, he says, with the rise of rentier capitalism. In this case “rent” means rewards over and above those required to induce the desired supply of goods, services, land or labour. “Rentier capitalism” means an economy in which market and political power allows privileged individuals and businesses to extract a great deal of such rent from everybody else.

Wolf concludes his piece by arguing that “We need a dynamic capitalist economy that gives everybody a justified belief that they can share in the benefits. What we increasingly seem to have instead is an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality and, not coincidentally, an increasingly degraded democracy. Fixing this is a challenge for us all, but especially for those who run the world’s most important businesses. The way our economic and political systems work must change, or they will perish.”

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• To improve the understanding of and support for Land Value Taxation amongst members of the Liberal Democrats.
• To encourage all Liberal Democrats to promote and campaign for this policy as part of a more sustainable and just resource-based economic system in which no-one is enslaved by poverty.
• To promote Economic Reform to ensure a fair and just tax system to reduce inequality.
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* Joe is a Vice-Chair of Hounslow Liberal Democrats and Chair of ALTER.

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3 Comments

  • Thank you for this interesting posting.
    There is no doubt that there are major problems with the way we organise our society.
    One of the problems we have is the strange idea that there are two possible systems – capitalism and socialism. No one seems to notice that the terms are used in different ways by different people. They are used to justify the most ridiculous proposals without the need to discuss any actual evidence.
    For example we had a banking crisis. One major contributory factor was the risk taking behaviour of financial institutions. Or rather it was not risky, it was the putting of short term profit before everything. In the absence of clear analysis, there was another meaningless phrase introduced. That was austerity. It meant many things to many people. However what the majority saw was the tak9ng away of the progress which was made after the war. People with little had some of that little taken way.
    There is growing support for the ideas that our planet cannot support our present life style for much longer. It is time to start to discuss whether any policy is sustainable in terms of being able to be supported by the resources of our planet in the long term.
    Perhaps we could start with our own party’s policy papers and motions to conference?

  • Sue Sutherland 19th Sep '19 - 1:29pm

    A major rent that ordinary people seem about to pay, is the cost of Brexit. The rentier capitalists have ruthlessly controlled the popular press and put out disinformation about the EU in order to escape its power to regulate how they operate.
    Democracy needs to protect itself from this kind of abuse of power which I think of as extreme capitalism. Capitalism which has little regulation. Capitalism has brought higher standards of living to many people so I by no means wish to abandon it. I’d like to see the development of green capitalism because I think that provides a workable solution to climate change rather than forcing people to reduce consumption.
    I think most people in the party agree that capitalism needs control otherwise it ends up with a few people with immense power and wealth and a lot of people struggling to make ends meet by having several low paying jobs at once. The discussion seems to be mostly about the level of control rather than whether there should be no control at all.
    What we must do is recognise that people who have power and wealth will mostly use that to benefit themselves. We are fighting greed and privilege as well as racism and xenophobia. I hope we succeed in our aim to create a fairer society to the benefit of all because in the end Brexit is all about power and hanging on to what you have.

  • I believe these are three important contributions, and hope they will be much discussed — and soon. Whatever the initially apparent outcome of the Brexit convulsion, things are going to change, and the Lib Dems must not be slow in recognising the fact, and taking a lead in arguing and promoting change that really IS radical, and not tweaking. In particular, and with special reference to the three pieces above, I hope we shall be examining the blossoming idea of a Universal Basic Income (UBI) as a potentially major element in any grand Reformation in economic orthodoxy.

    There is a difficulty, however. It seems to me that there is considerable automatic or ‘gut’ resistance to the idea, on the part of most people, good as well as not: it does seem to go against the grain. And it is easy to see why, in a world or an economy dedicated to competition not only in government and economics, but in all aspects of life, so many of which are measured with a simple yardstick graduated in dollars. Is your choice of clothing influenced primarily by ideas of practicality and beauty, or by the desire to demonstrate your ability to pay for the latest, in your unacknowledged desire to overtake the Joneses? (Of course, I mean “one’s”, not ‘your’.)

    So it seems to me that what we Lib Dems ought to be doing now (not to be seen lagging behind thinking in the Greens and Labour) is to quickly get a grip on what UBI is, and how it would work, and with what benefits. Should we be examining developments in New Zealand, for example, where their government has started looking at Happiness, of all things!? Guy Standing’s recent Report for the Labour Shadow Chancellor describes UBI as Transformative, and I believe he is right.

    I also believe and hope that in the recovery from the Brexit trauma our party in particular ought to be in the forefront of reconstructive thinking. Brexit itself, surely , finally broke out as an eruption of dissatisfaction not with the EU, but with the way we have been brought down to live in a world dancing to the Capitalist tunes: there are others, and we must play them.

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