FRAGMENT THREE: RENTIER CAPITALISM AND STRUCTURAL DIVISIONS
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. I shall consider class, command, race and gender in turn.
Class
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.
The items here are notably consistent with the picture of the UK’s post-1970s fractured society painted in Fragment One. 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 of this text 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.
Command
Relations of command here stand for those of the state, hence my use of the phrase ‘class/command dynamic’ to capture the way global capital buys power from the nation state and gets an altogether better return on its investment in rentier than in welfare state capitalism. Command relations are focused on the polity, that is, on those MPs elected by constituencies to represent them in the House of Commons. However, while the proportion of MPs from racial/ethnic minorities has increased considerably over recent years, as has that of women MPs, working-class representation has diminished dramatically. We now have a professional class of frequently privately and university-educated politicians in the UK, over half of whom worked in politics prior to being elected MPs. As far as membership of the government is concerned, the situation is starker. The proportion of those in cabinets educated privately is even higher, in Labour as well as Conservative cabinets. This pattern applies also to the civil service, and civil servants from Wright’s class (3), (4) and (5) are less likely to be promoted. What all this means is that there is a considerable, and often growing, disparity between members of constituencies and the MPs they elect to represent them, which is even more pronounced in relation to both cabinet membership and senior membership of the civil service.
There are a few comments to be added at this juncture. First, the apparatus of the state is complex and extends well beyond the club-like membership of the House of Commons and the upper echelons of the civil service. Moreover, its tentacles are growing. Regulators have become very much part of the state, and since Thatcher’s policy of appointing ‘our own people’ have lost much of their prior independence. The engagement too of consultants has become normalised: 245,000 of these were employed in the year to March 2023 (compared with 85,000 five years earlier). Returning to parliament, the House of Lords is by common consent an indefensible and undemocratic throwback to the past, and other institutions like the judiciary, also with its tap routes deep in historical privilege, enjoy powerful linkages with the polity.
A second point is that the executive has in recent years taken more advantage of the fact that the UK does not have a written constitution to assume more powers over decision-making. This was made especially apparent during the COVID-19 pandemic, no more so than when Johnson’ cabinet attempted to prorogue (discontinue) parliament to avoid being held to account (an initiative ruled illegal by the Supreme Court). A third point is linked with this wilful avoidance of parliamentary scrutiny. It became customary during the pandemic to castigate the government for ‘chumism’ or cronyism, namely, finding clandestine ways to reward like-minded colleagues and friends, typically by fast-tracking contracts for medical and public health goods. Many of these goods turned out to be unusable. A more accurate term here would be corruption. And many of those who were given, and took, sums of public money amounting to billions of pounds sterling have yet to be held to account. It is an attribute of contemporary UK neoliberal governance that it is itself in the market for the purchase of policy and practice.
Race
The existence of a social structure of race relations is likewise clear from the empirical study of events in the UK. And again, it is through their effects that their existence can be exposed and affirmed. Given England’s history as a conquering imperialist power committed to the brutal enslavement and prolonged mistreatment of colonised peoples, this should not surprise us. Indeed, reference has been made to a long established and deeply embedded ‘internal colonialism’ in the UK. Among countless examples of routine racial discrimination across the full gamut of day-to-day living, it is perhaps the Windrush scandal that stands out. This involved people of Caribbean descent who were wrongly detained in the UK, denied legal rights and threatened with deportation. Some lost their jobs and were denied the benefits and medical care to which they were entitled. Many had been born UK citizens, and many too were members of the ‘Windrush Generation’ (named after the ship that brought one of the first groups of West Indian migrants to the UK in 1948). The scandal hit the headlines when in 2018 future UK Prime Minister Theresa May, then Home Secretary, announced what the Conservatives hoped would prove a vote-winning ‘hostile environment policy’ aimed at reducing migration. This initiative precipitated widespread criticism and anger and led to the announcement of a compensation scheme for West Indian migrants who had been subject to racist maltreatment; but it’s slow and ineffectual response only added insult to injury. Anti- Black racism has persisted throughout the UK into the twenty-first century, as every Black citizen knows only too well.
But anti-Black racism is far from the only form of racism in the UK. And racism continues to be politicised. May’s attempt to mobilise voters against what was presented as ‘the growing problem of migration’ was not an isolated event. Two further examples involving the politics of racism will suffice for now. Both reflect the shift in the political spectrum towards the right, a feature of many societies in the Global North in the era of rentier capitalism. In the UK this was aided and abetted by the right-wing sponsored referendum campaign for Brexit, which was ultimately successful. The campaign made much of an urgent need to control our borders, hitherto allegedly rendered impossible by UK membership of the European Union. Racism became an explicit political device. During the successive premierships of May, Johnson, Truss and Sunak an undertaking to ‘stop the boats’ that were crossing the English Channel daily to deposit desperate refugees and asylum seekers who aspired to new lives in the UK metamorphosed into an explicitly racist appeal to the electorate. Those who made it across dangerous waters were subject to cruel detainment and maltreatment by Conservative Home Secretaries Priti Patel and Suella Braverman. Arrangements were in place to process and dump many of them in Rwanda, though this was abandoned on the election of Starmer’s Labour Party in 2024. However, Starmer too is committed to cutting migration and to appealing to voter racism.
The second example involves a different sort of politicisation of racism. Antisemitism has been an unwelcome aspect of British life for many centuries. Reflecting ubiquitous antisemitism in Europe, the English king Edward I expelled the entire Jewish population from England in 1290 (though this was reversed in the seventeenth century by Cromwell for reasons of statecraft as well as theology). Antisemitism unquestionably remains a feature of life today. But it is no less clear that it was effectively ‘weaponised’ to help depose the twice-elected left-oriented leader of the Labour Party, Jeremy Corbyn. Pro-Israeli lobbyists, strongly represented in the membership of the influential grouping ‘Labour Friends of Israel’, feared to see a pro-Palestinian Prime Minister of the UK. Right-wing members of Labour were also keen to undermine Corbyn to secure a more amenable leader who would go with the capitalist flow. False charges of antisemitism under Corbyn, magnified many times over by mass media misrepresentation, did the trick for them. The Israeli leadership is currently using the manufactured charge of antisemitism against any citizen or government calling out its devastating genocide in Gaza.
Like social class, race as an enduring social structure clearly exists and no less clearly exerts a causal influence on the events we experience. But it is not always easy to gauge the relative effect of each of class and race on a specific event or series of events. Sometimes events are misleadingly attributed to specific social structures. In many studies in the US, for example, race masks class in considerations of the causes of longstanding material hardship. Material deprivation and suffering are attributed to race when it is class that exercises overriding responsibility (ie racial minorities typically cluster in Wright’s classes (3), (4) and (5)). Caution must therefore be exercised when analysing research data. Most often events are the product of a mix of structural causes. Moreover, if structures always tend to have a potent effect on cultures, institutions, organisations, and on agency too, it is by no means exceptional that explanations of events of interest rest at these non-structural levels.
Gender
As with race, gender relations were established long before those of class. Capitalism was from the outset gendered as well as racialised. And just like structural relations of class and race, those of gender must exist given the regular patterning of events in the UK. Obviously, this is no longer simply a matter of women voting in general elections (the thrust of the first wave of feminism), or whether or not they enjoy material equality with men, for all that much still remains to be done (the thrust of the second wave of feminism). Gender relations colonise the ways people think and feel and insinuate themselves into their mindsets and their everyday activities and events. Many of our habits and routines are gendered just as they are classed and racialised. For example, many women continue to undertake unpaid care work, often without either reflecting on or deciding to do so, and without being reconciled to its implications for their own lives and wellbeing. Notwithstanding the progress made through the last century, the UK in the twentieth-first century remains resolutely patriarchal. Just as all those who belong to racial and ethnic minorities are aware of the omnipresent possibility and threat of encountering discrimination, so too are women. In addition, male violence against women is not diminishing. To borrow a phrase from Michel Foucault, it’s as if a ‘male gaze’ follows women around, no more alarmingly than on the streets at night. It’s as if men are present as a threat even when they are physically absent.
What has been called a third wave of feminism had its origins in the mid-90s. Its focus was on questioning and challenging longstanding concepts around the ‘body’, ‘sexuality’ and ‘gender’ itself. It was characterised by ambiguity and irony. Difference was to be celebrated as performance. It is questionable to what extent this recasting of feminism seeped into the general population. But it calls to mind the brief discussion of cultural relativity in Fragment One and can reasonably be seen as an illustration of it. Consider the present debate around the enduring biological distinction between male and female. It is a distinction academics are now being reprimanded, even being suspended from their jobs, for defending. Those in the rival camp are insisting that the male/female binary is a social construction whose time has come and gone. An offshoot of their argument is that people can defy and even deny the sex they are ‘assigned at birth’ and choose to be either men or women. This thesis goes beyond trans men and women choosing to live as women and men respectively to insist that they can become women and men. It is an ongoing debate that has been described as toxic and has had an impact on government and on social and health policy.
Once again, a couple of extra comments are in order. First, for all the undoubted achievements of the second wave of feminism women remain systematically disadvantaged in the private sphere of family and household and in public arenas like the workplace. Their disadvantage cannot be entirely captured by statistical data on trends, important though these are. Like people from the working class and racial minorities, women’s agency can be compromised by still-pervasive structures, cultures and ideologies that they are not fully aware of. Maybe ‘contaminated’ is a better word than compromised here. And second, as the trans debate has indicated, there are novel divisions resulting in a substantial fragmentation of contemporary feminism. The strong degree of uniformity of purpose that characterised the first and second waves of feminism has dissipated. Hiding here is a further irony, another by-product of rentier capitalism’s cultural relativity. Segments of the feminist community in the third wave have in effect given patriarchal institutions and organisations a free pass by buying into the worlds of post-truth, cancel culture and gaslighting and their policing via the denouncement of people who are held to be beyond the pale via the new device of hate crimes.
What Causes What?
The focus in this fragment has been on how social structures exert a strong influence on our lives. The arguments have assumed that key structures like those of class, command, race and gender infiltrate our lives and impinge on our agency via cultures, institutions and organisations. Their tentacles are long and encircle us largely unawares. Our sense of them tends to come and go as we negotiate our ways through the landscapes in which we find ourselves. This causal chain running from social structures to organisations informs much of the analysis in this short text. We will see for example how the hard-headed and uncompromising decisions taken capital monopolists behind oak-panelled doors, in men-only city clubs or digitally, and relayed via paid lobbyists to leading politicians, result in the exposure of people they have already made vulnerable to sickness and premature death. Remember the mantra: capital buys power to make policy in its interests.
But if this causal chain from social structures to organisations, and thence into our minds and bodies, is a constant theme, it is important to recognise that the chain from individuals in organisations through institutions and cultures to structures can also occur. Indeed, it is this ‘reverse causation’ that can deliver shifts in social policy and even transformative change. But how this can be is for the next fragment.