Slouching towards rentier capitalism

July 7th, 2011  |  Published in Political Economy, Politics, Socialism  |  9 Comments

I feel like I've written a million almost-finished blog posts in the past month without coming up with anything I wanted to put up. But now I'm inspired, because something very interesting is going on in the progressive policy-wonk blogosphere right now. A whole bunch of different writers suddenly seem to be converging on an idea that I've also been playing with for a while: capitalism has gone through, or is going through, the transition to an economy in which rents rather than profits are the dominant form of value extraction.

This started when Robert Kuttner [touched off a conversation]( about the role of the rentier class in American politics. Kuttner frames our politics as a contest between the claims of the past and the claims of the future: the former are bonds, loans, and the like, while the latter are potentially productive investments. It's a framing that evokes an old tradition of differentiating productive and unproductive labor, but fingering the financial elite as rentiers is particularly suited to our moment. This idea then got picked up and elaborated in a whole bunch of different places ([Konczal]( , [Krugman]( , [Horning](

Konczal, in particular, has been great on this. Prior to Kuttner's essay, he had already been writing about the increasing [dominance of the financial sector]( in the economy. But what really blew my mind was the post he [put up today]( He goes much farther than any of the other comments by noting that what we really need is to "get a generalizable theoretical framework for conflicts between profits and rents in the post-industrial world." And in search of such a framework, he digs up a [Michael Hardt essay]( that poses the question in explicitly Marxist terms.

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.

This, I think, gets at the heart of what is going on in contemporary political economy. And it's mildly shocking to me to see somebody like Mike Konczal endorsing it, because this dude is no academic Marxist. He's a former financial engineer who now works at the [Roosevelt Institute](, which is just the sort of mainstream New Deal liberal outfit that it sounds like.

I do think Konczal gets it a bit wrong in one spot, though. Commenting on the Hardt essay, he says:

> Much of the modernization that Marx triumphed was a victory of profit-makers over rent-holders. What Hardt argues is that, as the economy becomes more and more about information, the crucial ends of capital holders is to take things that could belong to the commons and instead appropriate them as property rights and sell them off. The implies a prioritization of rent-holders over profit-makers in terms of power over the economy (also implying a regression back from the future that Marx thought would come after profit-makers – take that Hegelian Marxism!).

Take that, indeed! I think this line of argument is actually a lot more Hegelian than than Konczal gives it credit for. It's true that the return of the rentier looks, superficially, like a regression back to pre-capitalist social relations. And it may bring with it some seemingly atavistic political movements: I'm thinking in particular of movements for debt forgiveness, a political demand that dates back to [ancient times]( But while the form of value extraction as rent looks the same, the *content of the value-creating activity*--and the form of social life that this activity produces--is completely different.

Above, I noted that you can describe economic systems in terms of their dominant property form. But another way to look at it is in terms of the identity of their exploited class. Under a primarily agrarian system based on control of land, it's peasants; under industrial capitalism, factory workers. One big difference between the exploited classes under these two systems is that under the former, peasants are fragmented and isolated from each other, while under the latter the proletariat is brought together in factories and cities and hence becomes a unified and self-aware *class*. Marx famously (or infamously) referred to the "idiocy of rural life", by which he meant that peasants were "idiots" in the etymological [Greek sense]( people concerned exclusively with individual and private rather than public affairs. From the [*18th Brumaire*](

> The small-holding peasants form an enormous mass whose members live in similar conditions but without entering into manifold relations with each other. **Their mode of production isolates them from one another** instead of bringing them into mutual intercourse. The isolation is furthered by France’s poor means of communication and the poverty of the peasants. Their field of production, the small holding, permits no division of labor in its cultivation, no application of science, and therefore **no multifariousness of development, no diversity of talent, no wealth of social relationships**. Each individual peasant family is almost self-sufficient, directly produces most of its consumer needs, and thus acquires its means of life more through an exchange with nature than in intercourse with society. **A small holding, the peasant and his family; beside it another small holding, another peasant and another family. A few score of these constitute a village, and a few score villages constitute a department. Thus the great mass of the French nation is formed by the simple addition of homologous magnitudes, much as potatoes in a sack form a sack of potatoes**. Insofar as millions of families live under conditions of existence that separate their mode of life, their interests, and their culture from those of the other classes, and put them in hostile opposition to the latter, they form a class. Insofar as there is merely a local interconnection among these small-holding peasants, and the identity of their interests forms no community, no national bond, and no political organization among them, they do not constitute a class. They are therefore incapable of asserting their class interest in their own name, whether through a parliament or a convention. They cannot represent themselves, they must be represented.

Factory work has a completely different character than this, which is why Marx thought the proletariat was capable of becoming a "class for itself" that could lead the way in overturning capitalism, whereas the peasantry was politically inert.

Above, I noted that peasants and factory workers are the key exploited classes for agrarian and industrial capitalism respectively. What about rentier capitalism? Arguably--and definitely this is Hardt's argument--it's those who provide "immaterial labor". Some of these people are isolated from each other like peasants--women providing care in the home, for example. But a lot of them are engaged in producing what Hardt refers to as "the common": "the results of human labor and creativity, such as ideas, language, affects, and so forth". For instance, one of the big new facts about today's economy is that you have lots of people connecting, collaborating, creating and sharing things over the Internet, creating value that is then extracted by the big network-controlling rentiers like Google and Facebook. That's why Konczal is wrong, and rentier capitalism isn't a regression to an earlier mode of production but rather, as Hardt says in explicitly Hegelian jargon, the "negation of negation": first capitalism negates the individual property of the small proprieter, and then it negates its own form of property as it comes to depend increasingly on the common.

Now, it's certainly possible to argue that these kinds of mass sociality and creativity aren't promising for building political consciousness, and that they just encourage narcisissm, consumerism, and self-commodification. That's what I generally take [Rob Horning]( to argue, for example, and he's a thoughtful guy whose arguments need to be reckoned with. But while the comment sections on major websites might suggest that the class of immaterial laborers are "idiots" in the contemporary sense, they are in a quite different situation from the rural idiocy Marx described. The "multifariousness of development, diversity of talent, wealth of social relationships" that Marx thought was missing from the peasantry is precisely what contemporary forms of immaterial labor tend to foster. Hence I tend to be cautiously optimistic about their political potential. That, I think is the rational kernel of the talk of "multitude" by Hardt, Negri, et al, even though I tend to find their arguments kind of blustery and overly speculative. (I have some more things to say about creating a new collective agent of anti-capitalist struggle, but those will appear in my essay in the forthcoming issue of [*Jacobin*](

But it's certainly not inevitable that those who build the common will become a class for themselves. And if they don't, then we instead get a full-fledged rentier capitalism, in which the exploited class is held in new kinds of domination by the rentier class. That's what I was thinking about when I wrote about [Anti-Star Trek]( and [Idiocracy's theory of the future]( Which brings me back to why I was so excited about the whole rentier debate in the blogosphere. If so many people are coming around to these ideas from wildly different directions--Kuttner's old fashioned liberalism, Krugman's neoclassical economics, Hardt's post-modern Marxism, and my own weird mix of social democratic and communist impulses--then I start to think that we're hitting on something real and profound about how the current political economy is working.


  1. Age of Greed Review, Random Links 7/22/11 | Rortybomb says:

    July 22nd, 2011 at 4:46 pm (#)

    […] it is highly recommended.  He advances the rentier capitalism arguments we brought up with Hardt here, his anti-Star Trek post is getting great attention and he’s experiencing the invisible […]

  2. Age of Greed Review, Random Links 7/22/11 | FavStocks says:

    August 6th, 2011 at 7:30 am (#)

    […] it is highly recommended.  He advances the rentier capitalism arguments we brought up with Hardt here, his anti-Star Trek post is getting great attention and he’s experiencing the invisible […]

  3. Albin says:

    September 10th, 2011 at 5:22 am (#)

    I’ve been following your posts about Anti-Star Trek for a while, until I realised there’s really much more to you, heh.

    I think you’re very much on the spot here: a great deal of different attempts to grasp the current situation matches/refers to this transition to rentier capitalism you’re speaking of. Besides the examples you mentioned, I’d like to add the notion of »spotification« laid forward by a Swedish (non-orthodox marxist) blogger I’m following.

    It’s basically modelled on top of what Spotify are doing: replacing something free, uncontrolled and community-driven (music piracy) by something fenced-in, proprietary and centralised (music stored on their servers), limiting choice (fewer artists), and finally extracting rent either in the form of monetary payment, or by advertisments.

    In later updates ( he’s been extending his argument, discussing forced choice, confusopoly (intentionally confusing payment plans – the telecom industry is a model example here) and planned obsolesence.

  4. B6gb9y says:

    August 17th, 2012 at 4:21 am (#)

    Hi as you say in your article it is very encouraging to find that it is not just yourself who has been thinking along these lines. It struck me as odd that despite bailing out the banks, productive capitalist firms could not get any loans to expand production and create jobs. On the mainstream media all I could hear were excuses from the bankers, until I learnt that if you wanted to get money for buy to let schemes and similar parasite activities, there was no problem. i have just read that these parasites want to create perpetual copyright on a whole gamut of learning which should be in the public domain, as it was created by collective efforts for the benefit of humanity not profit. I could write a lot more, but what I would like to happen is for more ordinary working people to see what is being done to us, and so for this issue to be a lot more publicised in the mainstream media. Will that happen?, while academic journals and blogs such as these are important, its only when these issues are out in the cold light of day do we have a chance of fighting them. I do fear for the future if we are defeated on this issue.

  5. Ayn Rand and modern capitalism « maugre (n.) says:

    September 12th, 2012 at 2:19 pm (#)

    […] tempting to think that in today’s economy, which is increasingly characterised by rentier capitalism rather than industrial capitalism, she might have something to say in favour […]

  6. Devan Bailey says:

    March 21st, 2013 at 4:46 pm (#)

    Misuse of the word “farther” in the third paragraph. Should be “further.”

  7. How the True Parasites from the Private Sector Suck the System Dry | showmethemoneytbone says:

    March 22nd, 2013 at 10:59 pm (#)

    […] Unfortunately, with the exception of some leftist and liberal economic thinkers who distinguish “rentier capitalism” or “financial capitalism” from “industrial capitalism,” conventional political discourse doesn’t distinguish among profit-earning “makers” and rent-extracting “takers.” Many progressives and populists indiscriminately denounce “big business” and “the corporations” as though a productive consumer electronics manufacturer were no different than a company that monopolizes the tolls from a privatized municipal parking meter system.  At the same time, the center-left, whose upscale supporters tend to be credentialed upper-middle-class professionals, tend to ignore the antisocial aspects of the rent-extracting schemes of the professional guilds — medicine, law and the professoriate — as well as of their elite accomplices, the credential-granting universities…. […]

  8. Jake says:

    April 7th, 2013 at 11:24 pm (#)

    Don’t forget economist Michael Hudson too, but to be accurate Marx did already hint at this “rentier capitalism” in his younger years, in rebutting Proudhon:

    Thesis: Feudal monopoly, before competition.

    Antithesis: Competition.

    Synthesis: Modern monopoly, which is the negation of feudal monopoly, in so far as it implies the system of competition, and the negation of competition in so far as it is monopoly.

    Thus modern monopoly, bourgeois monopoly, is synthetic monopoly, the negation of the negation, the unity of opposites. It is monopoly in the pure, normal, rational state.

  9. Eric Blankenburg says:

    November 24th, 2013 at 8:27 pm (#)

    No one likes the dominance of the financial sector in the economy, except the people in the financial sector.

    But, the left’s “solution” is much worse than the disease.

    In fact, the left created the problem in the first place with regulations that destroy competition and programs that bail out losers.

    We need an economy where people are rewarded for success and punished for failure.

    Unfortunately, the big wigs on Wall Street — like Clinton’s Secretary of Treasury Robert Rubin (from Goldman Sachs) created a system where the big guys can fail but still somehow succeed with taxpayer bailouts.

    It’s sick and wrong. But the reality points to LESS government interference in the economy, not more as dimwitted leftists believe.

Leave a Response