There is a long-established argument that from its origins in the long 16th century capitalism has had an inbuilt tendency to contradiction and fracture. Left to its own devices, Adam Smith confessed, the rich will get richer and the poor poorer. The compelling way in which Karl Marx revised the political economy of Smith and his successors was by appending a theory of exploitation. The rich, as owners of capital (the bourgeoisie), get richer through exploiting those who lack capital and have no option but to get a job, in the process becoming workers or wage labourers (the proletariat). Workers effectively become commodities to be bought and sold in the job market. But workers, the true producers of goods, are paid less in wages than they make for their employers when the products of their labour are sold. This surplus value is siphoned off in the form of profit. This signals a core contradiction at the heart of the capitalist enterprise. Smith was aware of it, but it was Marx who offered a full-blown theory. However, Marx’s theories have dated after more than a century and a half and even committed Marxists frequently disagree on the nature and extent of their relevance to today’s economic system. These are matters of ongoing debate, but enough has been said to permit a meaningful characterisation of what I shall call rentier capitalism.
The advent of rentier capitalism is usually dated as the 1970s. Its character can be represented easily enough. Rent can be defined as the payment to someone (the rentier) who receives this payment (rent) solely by virtue of controlling something valuable. This ‘something’ can take different forms and is typically seen as an asset. So, an asset is an item of value that is owned and is valuable precisely because control over it gives the owner the capacity to generate future income. Rentier assets are hugely variable. Some, like housing, telecommunications infrastructure and digital platforms, are physically constructed in either actual or virtual space. Others, like intellectual property rights and outsourcing contracts, are legal rather than physical constructs. Yet others, like land and natural resources, are not constructed at all but simply exist. Rent, in short, is income to which control of a valuable asset is in a sense fundamental, and a rentier is the recipient of such income. No asset, no rentier.
The term ‘rentier capitalism’ refers to a system of production and reproduction in which incomes are dominated by rentiers. It is a system based on ‘having’ not ‘doing’. For classical economists like Smith and Ricardo, and for Marx largely too, rent was essentially land rent, and for them the focus was on the landowner’s monopoly power over his or her asset. Rent in rentier capitalism is different. Rent remains payment for monopoly control of an asset, but as indicated the asset need not be land. There now exist ‘asset markets’ in all shapes and sizes. Financial assets feature among these.
For some commentators the concept of rent should be further refined. In the case of bankers, for example, rent might reasonably be seen as the amount of their income they are able to command over and above what would be required to get them to perform their activities. Rent-bearing assets, some have argued, are those characterised by monopoly power not just in ownership or control, but also in terms of their commercialisation on the market. This leads us to the following redefinition: rent is income derived from the ownership, possession or control of scarce assets under conditions of limited or no competition.
This slightly laborious business of defining terms matters. Rent-based or asset-management capitalism in the twenty-first century has seen a significant acceleration. Moreover, this acceleration has taken place under cover of the ideology of neoliberalism. It crept up on us prior to breaking into a trot, then a run. Some of the core assets together with their principal income streams are: (i) financial (interest, dividends, capital gains); (ii) natural resource reserves (product sales); (iii) intellectual property (product sales, royalties); (iv) digital platforms (commissions, advertising fees); (v) service contracts (service fees); (vi) infrastructure (service fees, licensing fees); and (vii) land (ground rent). Financial resources play the most significant role in the UK. There is a strong case too for claiming that the UK has led the way down the road of enabling contract rentiers and infrastructure rentiers through outsourcing and privatisation respectively. Rentier capitalism has set down especially strong roots in the UK. Moreover, the characterisation of rentier capitalism offered here helps explain my choice the term ‘capital monopolists’ to designate the dominant class fraction in contemporary UK.
I have written almost exclusively of structural relations of class on the grounds that, unlike relations of race, gender and so on, those of class are intrinsic to the nature of capitalism and the contradictions it exhibits. Studies of the origins of capitalism show that it typically inherited from pre-existing social formations, cultures, institutions and organisations already composed along the lines of race and gender. Britain exhibited this pattern prior to the genesis of capitalism along its shores. So, what does it mean to say that class is ‘intrinsic to the nature of capitalism’, while race and gender are not? The key point is that although capitalism from its onset utilised pre-existing social divisions of race (most notoriously by exploiting black slave labour) and gender (by subjugating women economically and socially), it remains the case that neither racial nor gender divisions are required by capitalism. Divisions of race and gender offered themselves up as ready-made and exploitable resources in the formation and advancement of capitalism. Class relations and divisions, on the contrary, were, and remain, part and parcel of what it is for a society to be capitalist. Back to Marx: the class positions and interests of owners of capital and workers are in direct opposition: the former necessarily exploit and thrive at the expense of the latter. Whether or not capitalists and workers belong to a particular race or are men or women is incidental in capitalism systems, this despite the fact that capitalism inherited and has taken on a racialised and gendered character.
Marx readily accepted that social divisions by class in the second half of the nineteenth century varied from society to society, for all that the underlying bourgeois/proletariat conflict remained paramount in his analyses. There have been innumerable attempts to conceptualise and measure social class in more recent times, notwithstanding continuing inter-societal variation. Predictably, the criteria adopted for differentiating classes in the UK have been much debated. I have opted in my latest writings to follow the lead of the late American sociologist, Erik Ohlin Wright. Initially formulated to capture class divisions in the USA, Wright’s scheme has applicability also to the UK. It can be described in the following way:
- An extremely rich capitalist class and corporate managerial class, living at extraordinarily high consumption standards, with relatively weak constraints on their exercise of economic power. The American class structure is the most polarised class structure at the top among developed capitalist countries, though with the UK in hot pursuit. It is within this class that the capital monopolists are embedded.
- An historically large and relatively stable middle class, anchored in an expansive and flexible system of higher education and technical training connected to jobs requiring credentials of various sorts, but whose security and future prosperity is now uncertain.
- A working class that was once characterised by a relatively large, unionised segment with a standard of living and security similar to that of the middle class, but which now lacks these protections.
- A poor and precarious segment of the working class, characterised by low wages and relatively insecure employment, subjected to unconstrained job competition in the labour market with minimal protections by the state.
- A marginalised, impoverished sector of the population, without the education and skills needed for jobs above the poverty level and living in conditions that make it extremely difficult to acquire those skills. The USA remains the most polarised at the bottom among developed capitalist countries.
But delineating the different classes is the start of the story for sociologists, not its conclusion. There are several important preliminary points to be made. First, there is indeed a degree of polarisation between rich and poor, with segments of the middle class also being ‘squeezed’. For increasing numbers of people, and across Wright’s class boundaries, precarity is the new reality. This may not equate to the order of polarisation between bourgeois and proletariat predicted by Marx, who underestimated the rapid emergence and growth of the middle class in countries like England, but there has certainly been a marked and accelerating growth in material inequality of late.
Second, and this is a point insisted on by Wright, allowance must be made for contradictory class locations. What does this mean? It is an argument that has special salience for Marxists committed to a clear distinction between bourgeois owners of capital and proletarian wage labourers. Some people do not fit neatly into either of these categories. For example, managers can have contradictory interests: like workers they are exploited by capitalists, who make a profit from managerial work, but like capitalists they dominate and control workers. Small employers are ‘petit bourgeois’ and capitalist in that they are exploiters of labour power, but they are also direct producers. And what about salaried professionals? Some new measures of social class used in large-scale research make allowance for much of this. But they do so at a price as far as sociologists interested in social class as a social structure are concerned.
Third, it is vital that we recognise that social structures like class relations exist, to reiterate, beneath-the-surface. They can only be detected via their effects on events on-the-surface. A central argument here is that class relations must exist given the patterns of events detected in our fractured, rentier society. Governments in the UK dance to the tune played by the capital monopolists, with the open or tacit support of those with allied interests in Wright’s classes (1), (2) and even (3). If governments of whatever political complexion start faltering or missing steps, the threat of ‘capital flight’ is swiftly announced and reinforced by the mass media. There is nothing inevitable about this, it’s just how things presently are.
And fourth, if the class-based agendas of the capital monopolists and their allies are the principal cause of the fracturing of society under rentier capitalism, they are also the main obstacle to addressing this and to bringing about a more just and equable distribution of material and psychosocial resources in the UK.