What's in a Name??

Bett Christophers  put it rather nicely - 

Scholars have made various attempts to capture the essence of the model which governs 

the UK economy . The two with most traction are “financialisation” and “neoliberalism”.

Neither concept quite suffices  - rather the UK economy is a quintessential case of “rentier capitalism”.

To understand rentier capitalism, one first needs to understand rent. Rent is income generated 

by virtue of exclusive ownership or control of a scarce asset of some kind. A rentier is the recipient 

of this income: the individual or, more commonly, corporation that controls the asset. Rentier 

capitalism is an economic order organised around income-generating assets, in which overall 

incomes are dominated by rents and economic life is dominated by rentiers. Fundamentally 

orientated to “having” rather than “doing”, it is based on a proprietorial rather than entrepreneurial 

ethos. That, in short, is the UK since the 1970s.

But my fellow-blogger Dave Pollard expressed it even better in his most recent post
 

In a recent extraordinary essay, the historian blogger Aurélien analyzed the types of activities that make up our economy, and how the pursuit of each type of activity dictates our political priorities. There are, for him, four types of activities that make up our economy and the pursuit of each type of activity dictates our political priorities.

• in boom times, creative and productive activities prevail, the economy is strong, and political regulations, laws and incentives are oriented towards the encouragement of sustainable, value-creating activities.

• But when the resources that drive the economy (especially energy) become costly or 

• scarce, and the economy falters or stagnates, economic activity shifts toward unsustainable 

• extractive, rentier and predatory activities, most of which are actually useless, unnecessary

• and even value-destroying.

• And he continues -

Pre-industrial economies were extractive - people mined, cut down trees, hunted and gathered crops, or planted small gardens. This was fine as long as the population remained small enough that the resources extracted had time to self-renew. But as the human population grew, these resources were increasingly depleted. The first victims of this were the large mammals across the world, rendered extinct through overhunting. Now, we are facing shortages of affordable resources of all kinds.

Beginning with the Enclosure Movement in the 18th century, global economies shifted towards value-destroying activities. This began with the dismembering of usury laws, the rise of banks, and the shift of the upper caste from industrialists to rentiers, renting properties to farmers and home-owners, and charging interest on loans, instead of doing anything productive.

Simultaneously, with the availability of currencies to transact new kinds of activities, predatory economic activities soared. Military confiscations and pirates have existed as long as militaries have, of course, but now human societies also had to deal with gangsters extorting payments and tolls, theft of cash, and the requirement to pay bribes to get things done. And the top caste, ever seeking ways to acquire more wealth without having to earn it, established an entire new “professional-managerial” class, exploiting the increasing complexity and unmanageability of the economy by creating do-nothing jobs for themselves and their children — as ‘managers’, lawyers, consultants, auditors, specialized ‘trainers’, lobbyists, and marketers.

None of this activity actually produces anything of value, and most of it merely adds unnecessarily to the cost of products and services - but the top caste were able to persuade legislators that these activities merited the highest professional salaries, and that these activities should actually be included in GDP, rather than subtracted from it. At one time, just as one example, the music “industry” was about making and playing music, and the proceeds went mostly to the musicians. But then the “industry” was taken over by an oligopoly that intermediated between the musicians and the public, and extracted, in the form of fees, royalties, and markups, almost all of the proceeds, leaving most musicians impoverished. And now, as Aurélien laments, there is more money to be made as an IP lawyer suing musicians for copyright violations, than there is in the creation of music itself. That’s where we find ourselves today.

Aurélien suggests that the mindset that allows this “arises when society loses faith in the

 future and in our ability to construct it”.

We have entered a period where politics in the widest sense has become nothing but extractive

and consists essentially of seeking opportunities for personal, professional and financial 

benefit from the conflict, stagnation and decline of current societies. For we live in a society 

where, for the first time in several centuries, it seems impossible to seriously imagine a better

 world for all, or even most.
Once the economy became so perverted towards non-productive activity, it was inevitable 

that our political system would become likewise perverted to reward such non-productive activity. 

Aurélien explains:
If you are a Minister in charge of an important function of government, it makes sense 

for you to starve this function of resources, rather than improving it. Why? Because the

 worse the system performs, the greater will be the demand by those with money for alternatives.

• Once a postal service loses a monopoly on certain deliveries for example, an entire field 

• of extraction opens up for lawyers, financiers, advertising agencies, logistic consultants and others to promote the development of private-sector alternatives. 

• Likewise, the more you can inculcate the feeling among the general population that things 

• are getting worse  and services will inevitably decline, the more they will accept this state of affairs, and feel there is no alternative to paying more for worse service.

So: Step 1: Shift the economy, and how it is measured, so you and your top caste colleagues 

get paid exorbitantly for doing nothing of value. 
Step 2: Use your wealth and power to bully governments to change government policies and

 laws to reward extractive, rentier and predatory economic activities above all others, and 

then to deregulate and cut taxes on profits from such activities. 
Step 3: Propagandize the public to believe this is “progress” and “the free market at work” 

and to relentlessly lower their expectations of what both corporations and governments can and should do for them.

I find this a very clear and succinct analysis of what’s happening – 

not just in the UK but in Europe as a whole.