We live in the age of rentier capitalism. It is the crisis point of the Global Transformation, during which claims made for capitalism have been wholly undermined by a developing system that is radically different from what its advocates say. They assert a belief in ‘free markets’ and want us to believe that they are extending them. That is untrue. Today we have a most unfree market system.
How can politicians say we have a free market system when patents guarantee monopoly incomes for 20 years, preventing anyone from competing? How can they claim there are free markets when copyright rules give guaranteed income for 70 years after a person’s death? Far from trying to stop these and other negations of free markets, governments are creating rules that encourage them.
The twentieth-century income distribution system has broken down. Since the 1980s, the share of income going to labour has shrunk in most economically significant countries. Real wages on average have stagnated or fallen. Today, a tiny minority of people and corporations are accumulating vast wealth, not from ‘hard work’ or productive activity, but from rental income.
‘Rentiers’ derive income from possession of assets that are scarce or artificially made scarce. Most familiar is rental income from land, property, minerals or financial investments, but other sources have grown too. They include the income lenders gain from debt interest; income from ownership of ‘intellectual property’; capital gains on investments; ‘above normal’ company profits (when a firm has a dominant position); income from subsidies; and income of financial intermediaries derived from third-party transactions.