Rentier Capitalism: Who Owns the Economy, and Who Pays for It?

"It is. The author is an economic geographer, who has written a lot of very interesting books about the structure of the economy and finance in particular. This is really about the way that, in lots of different areas of the economy, there is a concentration of power by people who have bought particular kinds of assets, and they’re extracting monopoly rents—in effect—through that ownership. It covers land, housing, private equity, and infrastructure ownership. And, when you see it all together, it’s quite a striking reminder of the way—in the UK economy, in this case—concentration of ownership has continued to increase in recent decades. People have observed this phenomenon in the US. Thomas Philippon had a book that came out last year that was very good about that US experience . This does the same sort of thing for the UK and flags the issue of why ownership of assets is something to worry about. “If capitalism doesn’t give us progress over time, what’s the point of it?” For a generation now, UK policymakers have said that it doesn’t matter who owns an asset as long as it’s well-run. And so, in a way, it harks back to the very old debates about whether the public sector should own natural monopolies and whether privatization is a good or a bad thing. I think he’s mainly advocating backing away from the kinds of policies that have made these trends possible. So, for example, private equity has been significantly encouraged by tax breaks and the privileging of debt finance over equity finance. That’s something that lots of economists over the years—for instance in the Mirrlees Review —have identified as something that significantly distorts the way that investments get funded. In my view, the solution to monopolies is that you take competition policy seriously and apply it in these kinds of contexts. No, he doesn’t. That’s my gloss on it. I do competition economics, so I see it as the solution to everything, I suppose! But there is an important question here about whether the issue is one of monopoly, or whether it’s the private ownership of assets. Each answer will take you to different solutions. If you think the problem is ownership per se , then you do have to start looking at the structures of ownership. Whereas, if it’s not just that, you’ve got a broader array of policy levers at your disposal. Yes, and it links to the kinds of income inequality and wealth inequality that we’ve seen emerging since the 1980s because the people who get their hands on these assets and extract the rents have become extremely wealthy. Often, they are asset stripping and keeping costs down as much as they can. And the people who work for them are often on low incomes, in precarious jobs or terrible conditions. Part of our best books of 2020 series."