To mark PPE@10 this feature continues a series of posts to celebrate ten years of Progress in Political Economy (PPE) as a blog that has addressed the worldliness of critical political economy issues since 2014.
A frightful hobgoblin stalks throughout Europe and North America. High-income countries are haunted by a ghost, the ghost of rentiers. Hence tropes have emerged about the Parousia of rentiers. Familiar nativity tales of capitalism conjure images of wealthy landlords reaping free gifts of nature due to hereditary title. Meanwhile, immiserated wage-labourers, cunning industrialists and wily merchants fire the crucible of a new society that rewards effort instead of accidents of birth.
Their apparent resurrection is as twenty-first century monopolists who own and control systems of provision for technology, minerals, food, housing and most other goods and services required to live. For those who zealously claim that the truth of this brave new world is captured by the cognate notions of rentier capitalism, the asset economy or techno-feudalism, it is twentieth-century capitalism that met with the fate of euthanasia Keynes famously divined for rentiers.
Driven by alarming trends in economic inequality, declining access to affordable housing and the concomitant social ills of destitution and precarity, the rent question is posed anew. Policy debates in Australia, from where this intervention is offered, hinge on issues of unaffordable housing, climate change mitigation and adaptation, financial industry shenanigans and the perils of apparently free trade vis-à-vis autarky. Embedded within this milieu of everything between rapturous hyperbole and sober reflection are notions of ‘rent’ that (un)wittingly, if not uncritically, accept precisely what concepts of rent must first explain.
The remarks to follow offer points of departure for rescuing rent from the banality of novelty in hyper-exploited academia. In this dystopian ‘knowledge’ factory, even the sharpest thinkers are incapable of acting on the pithy injunction issued by Joan Robinson, the brightest economist never to win a sham Nobel Prize in economics: ‘the purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.’
The crux of the problem of rent is not that the word conjures up too many contested meanings, but rather that it doesn’t, anymore. Prior to the formalist revolution of the 1950s, rent was given its due by those charged with the responsibility of thinking through the arcane logic of economic concepts in material contexts. Rent could mean the payment for the use of land, or it could mean an ‘economic’ rent, which meant the amount over and above the price required to keep a factor of production – land, labour, capital or ‘entrepreneurship’ (a dubious addition to the three-factor model of production after c.1870, probably cooked up by a proto-tech bro hoping to impress ‘da boys’) – in use. In this latter framing, anything can command a rent, so long as it is procured in a market for the purpose of producing goods or services. In the worst cases, proselytisers of ‘everything-rent’ go further to insist that any attempts to control prices, say by pesky trade unions in collective bargaining or government policy ‘interventions’ to address market failures, erodes consumer surplus.
It is this latter form of rent that has captured the imaginations, and research workloads, of those defying the punitive (il)logic of academia – publish or perish. The problem of adopting the prevailing approach to ‘economic rent’ is that it presupposes all economic categories are mediated through markets. Rent ceases to exist if markets work as the textbooks say they should. If there is a level of competition in a market that is deemed acceptable, opportunities for appropriating rents should not exist. Therefore, the very discussion of ‘economic’ rent as a problem means that even those genuinely seeking solutions already accept that markets are what mediate the production and consumption of goods and services.
This may seem like a sensible assumption in 2024. Is anything produced or consumed in the absence of markets? Without getting into the vexed question of the extent to which consumption and production should be coordinated through markets, let’s reflect on markets in more detail to determine whether twenty-first century life does in fact presuppose THE market.
First, what is a market? Crack open any textbook used in an introduction to microeconomics course and you’ll come across some variation of the following: markets are comprised of buyers and sellers whose interactions are mediated by something called a price mechanism, which is the determination of price according to the seesawing forces of supply and demand. Supply more and demand decreases; demand more and supply decreases. Price moves down in the former and up in the latter. In a situation of perfect competition, which, to be fair, most economists know does not exist, this seesawing would move toward price equilibrium, wherein supply matches demand and the market clears so that the next round of production can begin.
Are all consumption goods produced and consumed according to these mechanisms? Well, in short, no. Consider the housing market as one example. There’s plenty of demand for housing but apparently not enough to call forth the corresponding supply required to drop the prices of housing stock down to affordable levels for most people.
Or, to take another example, consider the rising cost of food. The vaunted duopoly of grocers in Australia claim they are increasing prices for food in order to anticipate the rising costs associated with their logistical supply chains and procurement schedules. Investigations have since revealed that these firms are in fact the drivers of inflation, justifying raising prices with reference to the very price rises they initiated.
Now, to be fair again, economists have not only acknowledged that perfect competition does not exist, but they also offer explanations for the perversions of competition. A few familiar notions are those of imperfect competition, information asymmetry and market failure. Joan Robinson even wrote a book on the economics of imperfect competition that sharpened our understanding of monopoly, monopsony and competitive equilibrium. To be fairer still, every time something happens in the real-world that can’t be explained by the prevailing theory of markets and price, economists do a great job at attempting to explain the anomaly by confecting yet another model of deviation from the ideal of perfect competition.
Nobel Prizes awarded to Gary Becker and Joseph Stiglitz for setting up the micro foundations of macroeconomics offer glimpses into the colonising imperatives of mainstream economics. Becker’s ingenious tautology justifies the gender wage-gap through biological comparative advantage in the household division of labour. Stiglitz’s analytical coup endogenised society into the economy so that both market and non-market behaviour must be explained through the optimising behaviour of individuals. The world imagined by mainstream economics derives society through homo economicus rather than locating an economy enmeshed within its society. Short-lived excitations from so-called behavioural economics have since been nudged into obscurity as merely more of the same. Economics imperialism remains an appropriate characterisation of the logic of knowledge in the social sciences today.
It is therefore curious that recent conceptual ‘innovations’ in the critique of capitalism have internalised logics once resisted as anathema to the project of providing alternative modalities of thought to mainstream economics. One explanation is that those striving to articulate the critique are increasingly unable to engage as rigorously with their own historiography as previous generations. The perverse outcome of this tendency, with respect to rent theory, is that even the most diligent and critical scholars struggle to locate threads of dissenting views among the waves of ‘novelty’ surging through the academic publishing cycle amid rounds of promotion applications.
Fortunately, a recent contribution to the discourse offers a map to those who would brave the chaos of the past and present of rent theory. This humble intervention, conveniently titled Rent, is as compelling as it is concise. The brief musings offered above are but a taste of the dazzling conceptual insights and nuanced historical inquiry revealed in Rent. Citations of the book in articles published in journals with an impact factor higher than 50 are welcomed by the author, as are reviews by any of the Nobel Prize recipients mentioned above. Signed copies are available from the author upon request, so long as postage is paid beforehand, alongside a subscription to the author’s Patreon!
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