What is rentier capitalism?

Rentier capitalism is a term used to describe an economic system in which a significant portion of income is derived from the ownership of assets, such as land, natural resources, or financial capital. Rentier capitalism is often contrasted with productive capitalism, in which income is derived from the creation of goods and services.

In a rentier capitalist system, the owners of assets are able to extract rent from those who use those assets. This rent can take the form of, for example, rent payments for land, royalties for natural resources, or interest payments on loans. The owners of assets are able to extract rent because they have a monopoly on the use of those assets.

Rentier capitalism can lead to a number of problems, including:

• Inequality: Rentier capitalism can lead to increased inequality, as the owners of assets are able to accumulate wealth without having to work.
• Instability: Rentier capitalism can be unstable, as it is based on the extraction of rent from those who use assets. If the demand for assets decreases, then the owners of assets may be unable to extract rent, which can lead to economic instability.
• Lack of investment: Rentier capitalism can lead to a lack of investment, as the owners of assets may prefer to extract rent from existing assets rather than invest in new ones.

There are a number of different perspectives on rentier capitalism. Some economists argue that rentier capitalism is a necessary part of a capitalist economy, as it provides a source of income for those who own assets. Others argue that rentier capitalism is a parasitic form of capitalism, as it does not contribute to the creation of wealth.

The term "rentier capitalism" was first coined by the economist Anwar Shaikh in the 1970s. Shaikh argued that rentier capitalism was becoming increasingly important in the world economy, as the ownership of assets was becoming more concentrated.

In recent years, there has been a growing interest in rentier capitalism, as economists have become concerned about the impact of rentier capitalism on inequality and economic stability.

Examples of rentier capitalism include:

1. Landlords: Individuals or companies that own and rent out real estate properties can be considered rentiers. They earn income through collecting rent payments from tenants without engaging in productive activities.
2. Intellectual Property: Companies or individuals that hold patents, copyrights, or trademarks can generate income by licensing or charging royalties for the use of their intellectual property. This form of rentier income is common in industries such as pharmaceuticals, entertainment, and technology.
3. Natural Resource Extraction: Countries that rely heavily on the extraction of natural resources, such as oil, gas, or minerals, often experience rentier capitalism. The state or a small group of individuals or companies benefit from the ownership or control of these resources and collect rents from their exploitation.
4. Financial Sector: In some cases, the financial sector can exhibit rentier characteristics. Financial institutions, such as banks, hedge funds, or private equity firms, earn profits by charging interest, fees, or commissions for providing financial services, often without directly contributing to productive activities.

Rentier capitalism is a subject of debate and criticism, as it can exacerbate inequality, hinder economic dynamism, and create distortions in resource allocation. Critics argue that excessive rent extraction can stifle innovation, investment, and productivity growth in an economy.

Brett Christophers

Brett Christophers is a British political economist and economic geographer. He is a professor at Uppsala University, Sweden, and the author of the book Rentier Capitalism: The Economics of Rentierism and the Decline of Democracy (2020).

Christophers argues that rentier capitalism is a form of capitalism in which the ownership of assets, such as land, natural resources, and financial capital, is concentrated in the hands of a small number of people. These asset owners are able to extract rent from those who use those assets, without having to contribute to the production of goods and services.

Christophers argues that rentier capitalism has become increasingly important in the world economy in recent decades. This is due to a number of factors, including the privatization of public assets, the financialization of the economy, and the rise of global inequality.

Christophers argues that rentier capitalism has a number of negative consequences, including:

• Increased inequality: Rentier capitalism can lead to increased inequality, as the owners of assets are able to accumulate wealth without having to work.
• Instability: Rentier capitalism can be unstable, as it is based on the extraction of rent from those who use assets. If the demand for assets decreases, then the owners of assets may be unable to extract rent, which can lead to economic instability.
• Lack of investment: Rentier capitalism can lead to a lack of investment, as the owners of assets may prefer to extract rent from existing assets rather than invest in new ones.

Christophers' work has been influential in the debate about rentier capitalism. His book Rentier Capitalism has been praised by economists and political scientists for its insights into the nature of rentier capitalism and its consequences.