The establishment is waking up to the dangers of "rentier capitalism" but more than cosmetic change is requiredby Ann Pettifor / October 5, 2019 / Leave a comment
I have been making speeches about rentier capitalism for years. Each time I use the word “rentier” in public, I encounter puzzled looks. Like the term “usury,” it has conveniently dropped out of use. Rather suddenly, however, it may be making a comeback.
In a special edition of the Financial Times, with a dramatic cover wrap which was virtually blank but for the giant words “Capitalism: Time for a Reset,” its economics doyen Martin Wolf went out of his way to define it for readers, guessing they too had to be enlightened. In an essay which bemoaned stagnant wages and productivity, inadequate competition, and rampant inequality, he explained that rentier capitalism “means an economy in which market and political power allows privileged individuals and businesses to extract a great deal of such rent from everybody else.” The half-forgotten term is as old as Adam Smith, who first defined rentiers as capitalists who were able “to reap where they never sowed.”
The FT’s heralding of a “new agenda” for capitalism excited comment from right and left alike—though the fact it came after the newspaper’s dismissal of Labour’s proposals to address the very problems Wolf highlighted as threatening the established “liberal economic model” suggests doublethink, or at least a temptation to will the ends of reform while dismissing the means.
The FT was following hot on the heels of the recent decision of 181 American CEOs to downgrade the pursuit of shareholder value above all else, and instead pledge “a fundamental commitment to all our stakeholders.” Doctrinaire right-wingers accused this “Business Roundtable” of shattering true American free-market capitalism, by which they meant Milton Friedman’s version of capitalism.
While it is remarkable that American CEOs are thinking along these lines, it’s hard to take the Roundtable seriously. Its chairman is one Jamie Dimon, chief executive of America’s largest bank, JPMorgan Chase—a company some would say is built on rentier capitalism. At about the same time Dimon presided over his avowedly reformist roundtable, a report was published by Rainforest Action Network which claimed that in the three years after the Paris Climate Agreement his bank had committed a vast $196bn in financing for the fossil fuel industry to fund “extreme new ventures such as ultra-deep-sea-drilling, Arctic oil extraction” and fracking.
Dimon’s business is banking: the…