(2008) In periods of looming collapse, wealthy elites protect their funds like rats fleeing a sinking ship. In times past they bought gold when currencies started to weaken. (Patriotism never has been a characteristic of cosmopolitan finance capital.) Since the 1950s the International Monetary Fund has made loans to support Third World exchange rates long enough to subsidize capital flight. In the United States over the past half-year, bankers and Wall Street investors have tapped the Treasury and Federal Reserve to support prices of their bad loans and financial gambles, buying out or guaranteeing $12 trillion of these junk debts. Protection for the U.S. financial elite thus takes the form of domestic public debt, not foreign currency.
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It may be time to ask whether neoliberal pro-rentier economics has turned America and the West into a Failed Economy. Is there really no alternative? Have the neoliberals made the shift of planning from governments to the financial oligarchy irreversible?
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Industrial capitalism always has been a hybrid, a symbiosis with its feudal legacy of absentee property ownership, oligarchic finance and public debts rather than the government acting as net creditor. The essence of feudalism was extractive, not productive. Their common denominator of the economic doctrines of Adam Smith, David Ricardo, John Stuart Mill, and the last great classical economist, Marx, was to view rent and interest as inherently extractive, not productive. That is why feudal realms created industrial capitalism as State Policy in the first place – if only to increase its war-making powers. The question must now be raised as to whether only socialism can complete the historical task that classical political economy set out for itself – the ideal that Progressive Era individualists hoped that American capitalism might be able bring about without having to take the radical step of shedding its legacy of commercial banking indebting property and monopoly ownership of infrastructure that rightly should be in the public domain. This was the great debate of a century ago. It needs to be revived today.
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Today’s neoliberal ideology paints a false picture of what the classical economists and American Progressives envisioned as free markets. They were markets free of economic rent (rentier income, including monopoly price gouging) and interest (and of taxes that support an aristocracy or oligarchy). Progressives and socialists alike sought to free economies from these overhead charges. The alternative to today’s neoliberal ideology is a century and a half old, classical political economy and its successor Progressive Era ideals, and socialism sought to nationalize the land (or at least to fully tax rentier income as the fiscal base). Governments were to create their own credit, not leave this function to wealthy elites via a bank monopoly on credit creation. Today’s Obama-Geithner rescue plan is just the reverse.
michael-hudson.com/...
The rentier capitalist reality is different from Marx’s configuration but only in the same way that many have elaborated how the social structure of accumulation connects to the analyses of capital and inequality.
Marx believed that capitalism was inherently built upon practices of usury and thus inevitably leading to the separation of society into two classes: one composed of those who produce value and the other, which feeds upon the first one. In "Theories of Surplus Value" (written 1862–1863), he states "...that interest (in contrast to industrial profit) and rent (that is the form of landed property created by capitalist production itself) are superfetations (i.e., excessive accumulations) which are not essential to capitalist production and of which it can rid itself. If this bourgeois ideal were actually realisable, the only result would be that the whole of the surplus-value would go to the industrial capitalist directly, and society would be reduced (economically) to the simple contradiction between capital and wage-labour, a simplification which would indeed accelerate the dissolution of this mode of production."[10]
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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.
en.wikipedia.org/...
The basic business model here is the business model that has defined the British economy from the 1970s to the present, from the North Sea to PPE.
What is that model? Scholars have made various attempts to capture its essence. The two that have gained most traction are “financialisation” and “neoliberalism”. Neither concept quite suffices, even as both get at important developments. Rather, the UK economy is a quintessential case of rentier capitalism. It is an exemplar of what the Nobel-winning economist Paul Krugman called a “rentier regime”.
To understand rentier capitalism, one first needs to understand rent. Rent is income generated by virtue of exclusive ownership or control of a scarce asset of some kind. A rentier is the recipient of this income: the individual or, more commonly, corporation that controls the asset. Rentier capitalism is an economic order organised around income-generating assets, in which overall incomes are dominated by rents and economic life is dominated by rentiers. Fundamentally orientated to “having” rather than “doing”, it is based on a proprietorial rather than entrepreneurial ethos. That, in short, is the UK since the 1970s.
In the PPE case, the asset is the exclusive £252m contract. In the North Sea case, it was the exclusive exploration licence and resulting oil. Alongside contracts and natural resources, five other key categories of asset make up the contemporary rentier economy.
- Land and buildings, including housing, represent the most obvious.
- Intellectual property (IP) – patents, brands and copyright – is another, so crucial in the pharmaceutical, consumer products and creative industries sectors.
- Another is infrastructure of various kinds, and in particular privatised networks for the delivery of water, energy and telecommunication services.
- Platforms, and especially digital platforms, that profit from control of the spaces of capitalist trade, are the penultimate kind.
- Last but not least, there are financial assets.
If “financialisation” denotes the growing importance of these and of their owners, it is perhaps best thought of as a leading edge of rentier capitalism, not the totality of our economic moment.
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The main problems with rentier capitalism are twofold. First, rentiers are inclined to sit on and sweat their income-generating assets, rather than innovate; it is a recipe for economic stagnation. And second, because incomes accrue disproportionately to the asset-owning elite, it is an engine for growing inequalities of both income and wealth. You only have to look at the London housing market to see that process in action.
Rentier capitalism is not unique to contemporary Britain. It exists, and has existed, much more widely, geographically and historically. But, courtesy of policies that have been almost unimaginably rentier-friendly since the 1970s, the UK is rentier capitalism’s apotheosis, where its prototypical ills – vast inequalities combined with entrenched stagnation – are on full display.
www.theguardian.com/...
Rent-seeking is the effort to increase one's share of existing wealth without creating new wealth.[1] Rent-seeking results in reduced economic efficiency through misallocation of resources, reduced wealth creation, lost government revenue, heightened income inequality,[2] and potential national decline.
Attempts at capture of regulatory agencies to gain a coercive monopoly can result in advantages for rent-seekers in a market while imposing disadvantages on their uncorrupt competitors. This is one of many possible forms of rent-seeking behavior.
en.wikipedia.org/...
Michael Hardt, following Marx, portrays the transition between different economic eras in terms of the dominant form of property in each. Under feudalism and early capitalism, the dominant form is "immobile" property, chiefly land. Under mature industrial capitalism, it is "mobile" property, chiefly the outputs of industrial production. But today, mobile property is becoming subordinate to "immaterial property": copyrights, patents, affect, care, financial claims, and so on. The interesting twist is that it is only under the regime of mobile property that profit becomes the dominant form of value extraction. In both the regime of immobile property and the regime of immaterial property, the dominant form of value extraction is through rent. The key difference between rents and profits is that, according to Hardt:
In the collection of rent, the capitalist is deemed to be relatively external to the process of the production of value, merely extracting value produced by other means. The generation of profit, in contrast, requires the engagement of the capitalist in the production process, imposing forms of cooperation, disciplinary regimes, etc.
www.peterfrase.com/...
The globe's 2,750 billionaires now control 3% of all wealth, up from 1% in 1995 — that makes them wealthier than half the planet, according to a new report from a group founded by economist Thomas Piketty.
The wealth gap is roughly as wide as it was more than a century ago when the Gilded Age led to massive disparities between rich and poor, the World Inequality Lab found. The study was coordinated by Piketty, an expert on inequality known for his book "Capital in the Twenty-First Century," as well as fellow inequality experts Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley.
In the U.S., the gaps in wealth between rich and poor Americans "are close to those observed at the beginning of the 20th century," the study noted. The poorest Americans are falling behind their counterparts in other nations. Although average household wealth in the U.S. is more than three times that of China, the poorest 50% of Americans possess less wealth than the poorest half of China's citizens, the researchers found.
www.cbsnews.com/...
Russia, Ukraine and the doomed 30-year quest for a post-Soviet order.
Now war has come and it is clear that back in 1989 and 1990, amid all the celebrating, we missed something. For a long time, we rightly trumpeted the ways that dissolution of the line dividing cold war Europe created freer societies and wider life choices for central and eastern European nations and new post-Soviet states. The focus was, justifiably, on those people for whom that line’s erasure represented a triumph. Certainly that is my memory of that happy time.
Looking back now, however, it appears that it was all too easy to forget the people who had lost out — above all Putin. It was also easy to forget that Russia, despite all the woes after the Soviet collapse, remained a world-class power, with a sprawling landmass, abundant natural resources, an enormous military and a strategic nuclear arsenal. And it was easy to ignore how seriously Putin was taking the conflict with the west over Ukraine’s future, and how much he wanted to recreate Moscow’s line of control
www.ft.com/...
I will try to explain some of the stuff above in a subsequent piece. I’ve been so distracted by the current crisis in Ukraine, as you can tell from my other postings.
