The Rent is Too Damn High(ly Central to Modern Economies)

Rentier Capitalism: Who Owns the Economy and Who Pays for It? by Brett Christophers, Verso. 512 pages.

LIKE SO MANY OF US, Karl Marx spent a summer after college trying to figure out why anyone has to pay rent. He wrote down two quotes in his 1844 notebooks as guidance to the problem. One was from Adam Smith: “The landlords, like all other men, love to reap where they never sowed, and demand a rent even for the natural produce of the earth.” The other was from the French economist Jean-Baptiste Say, and was more direct: “Landlords’ right has its origin in robbery.” Marx and Smith and Say and all of their classical contemporaries agreed: rent was unearned, inefficient, and extractive, and for those reasons it was a relic of a pre-capitalist past. So why does it dominate the richest economies of twenty-first century capitalism?

Since the 2014 publication of Thomas Piketty’s Capital in the Twenty-First Century, the figure of the rentier has emerged in critiques of contemporary capitalism that come from different points on the political spectrum. Piketty showed that inequality has overwhelmingly been driven by the capital incomes of the top one percent (or tenth or hundredth of one percent), which led even Bill Gates to agree that “excess wealth concentration can have a snowball effect if left unchecked.”  Liberals like Paul Krugman and Joseph Stiglitz bemoaned abnormal or excess profits received above competitive market rates. Work from left-wing academic critics like Andrew Sayer, Guy Standing, and Mariana Mazzucato sharpened the point further: rents are unearned incomes extracted by people who own things rather than do things or make things.

The story of the rise of the rentier is a new version of what had become a stale narrative about the rise of neoliberalism. Following Piketty’s chronology, the story goes like this: there was an earlier era of rentier dominance in the unfettered capitalism of the nineteenth century Gilded Age. That world came crashing down in the destruction of physical and financial capital between 1914 and 1945, leading to about thirty good years when organized labor was strong, taxes were high, governments were interventionist, and median incomes were rising. All of that changed in the long crisis of the 1970s and the policy responses of the 1980s. Inequality began to rise again, finance was deregulated, and neoliberal governments came to power, promptly breaking labor strikes with police violence and privatizing everything they could lay hands on. After thirty years of crisis from 1914 to 1945 and thirty years of suppression from the 1940s to the 1970s, the rentier returned to political and economic dominance from the 1980s onward.

The preponderance of rentier wealth and the attendant distortions to national economies, democratic politics, and international institutions has contributed to a parallel conversation about whether financialization, automation, information, or capital overaccumulation have led us into a new phase of capitalism, or indeed out of capitalism and into something worse.

In his detailed and stimulating book, Rentier Capitalism (first published in late 2020 and due out as a paperback in June), the political economist and economic geographer Brett Christophers offers a unifying interpretation of how rentierism works, providing a synthetic analysis of the contemporary British economy as a case study. The UK’s economy is currently dominated by finance, fossil fuel extraction, intellectual property, digital platforms, and the recipients of privatization, especially in real estate. Christophers aims to show how each of these sectors is a symptom of the same underlying malady, the rentier model, as well as how, collectively, the dominance of the cross-sector rentier alliance has produced the sclerotic economy, gaping inequality, and virulent politics that characterize global capitalism today.