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Thursday, 3 December 2020
What is Rentier Capitalism?
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«rent-seeking, financialisation, and how it is responsible for the stark inequalities»
The question as always is not just whether workers are exploited, but how much by whom. Especially if one accepts the marxian theory of exploitation, and the marxian dialectical materialism, in the phase where capitalism is dominant the degree of exploitation matters a lot while waiting for the transition to socialism.
In the current situation in the UK the degree of exploitation of workers through productive work seems to me rather smaller than that through property and finance rentierism
Consider as to finance rentierism just two "details":
* The cost of finance has risen over the past decades from 2% to 8% of GDP. 8% of GDP is also the cost of the NHS. While the cost of finance has quadrupled, the rate of growth of GDP per person has halved. Shifting 6% of GDP from finance to productive wages would go a long way towards improving the lot of workers. That 8% means that the average family earning £50,000 a year pays directly or indirectly around £4,000 a year in fees to finance rentiers.
* As a specific example of that rise, private "stakeholder" money purchase/defined contribution pensions using a share based savings accounts typically have fees of 1-2% of the value of the account per year, whether the fund is being accumulated or the pension is paid out. Typically once the owner of the account retires the account can pay around 3-4% of its value per year, while continuing to pay 1-2% of that value in fees to the finance industry. That means that usually 30-50% of every pension is paid to the finance industry. The NHS pensions scheme costs around 0.5% of the pensions paid out, which is typical of state pensions schemes like Social Security in the USA. The DWP costs around 3.5% of the benefits it pays out, and that includes not just pensions but also much more complex benefits like unemployment and disability benefits. That's still 10 times lower than the cost of a "financialised" pension.
I used finance rentierism here because my usual example is property rentierism, which is arguably even bigger, as so many people pay 30-60% (or more) of their income to property rentiers. Note that includes also rent on commercial real estate like shops. Even a small reduction in the degree of exploitation through property rentierism would result in much better outcomes for workers than any realistic wage increase won by unions...
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