What is a rentier, exactly?
In its simplest terms, a rentier is someone who gets their income from rent on assets they control, rather than by selling their labour – a landlord being the obvious example. Since the 1970s, the term “rentier” has also been applied to states: a “rentier state” is one which raises most of its revenue from rent on exported assets (particularly oil), rather than through taxes on domestic production.
Defining rentier capitalism and the rentier economy
More recently, scholars like Mariana Mazzucato and Guy Standing have popularized the concept of rentier capitalism. Unlike Thomas Piketty, they don’t see increasing economic inequality as an inexorable tendency of capitalism. Instead, they argue that many market economies have become “rentierized”: that is, they have evolved in a way that rewards companies that control property, infrastructure, natural resources, patents, and financial instruments, at the expense of both ordinary citizens and companies in productive sectors.
Control of assets enables companies to set arbitrary prices – or, in other words, to “extract rents”. For example, pharmaceutical companies benefit from patents, which help them extract rent for drugs they have developed, pushing up the costs of medical treatment for ordinary citizens. At the same time, citizens must pay a higher proportion of their earnings in tax than “big pharma” – both because corporation tax rates are typically lower than income tax rates, and because it is easier for companies than for individuals to choose which jurisdictions they pay tax in. Meanwhile, companies in sectors like manufacturing find it harder to access capital because they are in a less structurally advantaged position than rentiers, leading to declining innovation and weakening productivity.
Brett Christophers offers an economic (rather than a moral) critique of rentier capitalism, emphasizing two additional characteristics of rentier firms. First, the asset under the rentier’s control must be scarce; and second, the users of the asset must be “captive”, with no negotiating leverage or ability to switch to a different provider. One of Christophers’ examples is Thames Water, the utility company which has controlled the water supply and sewerage infrastructure in Greater London and the surrounding area since water privatization in 1989. Because its customers are unable to switch suppliers, Christophers argues, it has little incentive to invest in improving infrastructure – instead, it is incentivized to maximise profit through rent extraction.
In summary, to call a firm a rentier is to say that it:
- Exploits its control of a scarce resource…
- …to charge arbitrary prices…
- …to captive users…
- …with consequences that are morally objectionable, economically damaging, or both.
Are the big tech companies rentier capitalists?
This brings us to big tech. At the time of writing, eight of the world’s largest ten companies by market capitalization are tech companies, and eight of the world’s ten richest people are tech billionaires, so it’s understandable that theorists of rentier capitalism should want to bring tech companies into the scope of their analysis. Often, they are treated collectively as “digital platforms” which extract “platform rents”.
In some cases this is apt. A duopoly in the mobile operating system market gives Apple and Google a gatekeeper position in the adjacent market for mobile apps. To reach potential users, app developers have no alternative but to list their products on the App Store and the Play Store, for which Apple and Google charge a service fee of 30% of app revenues (reduced to 15 per cent in some circumstances). The asset (app store listings) is scarce; the price (15-30%) is arbitrary; the users (app developers) are captive; and the consequences (entrenching Apple and Google at the expense of smaller rivals) are economically damaging in that they harm competition. It therefore makes sense to say that Apple and Google act as extractive rentier capitalists in the mobile app market.
The platforms that make up what was – in more optimistic times – called “the sharing economy” are superficially similar. For Guy Standing, platforms like Uber and TaskRabbit are rentiers because they make the casualized workers of the Precariat pay for introductions to buyers of their services (taxi rides and odd jobs respectively). However, it is not clear that these digital platforms meet the same rentiership criteria as the App Store and the Play Store. Substitutes are available to Uber drivers and “Taskers” – not just competing digital platforms such as Lyft and Thumbtack, but also in the form of older, low-tech solutions to the problem of finding customers (minicab operators, classified advertising, neighbourhood leafleting, and so on). And if the users are not captive, the fees charged by the platforms must be market-responsive (not arbitrary).
Airbnb, a digital platform which intermediates short-term property rentals, has also been called a rentier – though not because service providers (“hosts”) must pay fees, but because it enables more property owners to become “mini-landlords” by turning their homes into rent-generating assets. It is hard to identify what scarce asset Airbnb controls would lead to the exploitation of Airbnb “guests”, as many alternatives are available, from direct competitors like Booking.com to long-established holiday rental businesses like Hoseasons. Airbnb’s market share surely reflects the appeal of its brand and proposition, rather than a structural advantage gained from control of a technological asset. It is perhaps better understood as a facilitator of rentierization (like the intellectual property system, or tax havens), rather than as an extractor of platform rents.
What about social media? Is Facebook a rentier? For Christophers, the revenues Facebook generates from advertisers are platform rents. However, while it’s true that Facebook Ads Manager is an asset that Facebook controls, media inventory is far from scarce. In fact, advertisers can access an abundance of substitutes. Speaking from personal experience, inflation in Facebook media costs from 2014 onwards encouraged me to divert more of Bought By Many’s marketing budget into other channels: affiliate networks, Google Ads, TV, and even direct mail. Much of Facebook’s appeal to advertisers is that it is a route to 2.6 billion consumers: but there are many other routes, which become more or less attractive based on market-driven fluctuations in media prices. Unlike Thames Water, Facebook has market incentives to invest in improving infrastructure.
Recent work by Kean Birch, Margaret Chiappetta and Anna Artyushina argues that data is the scarce resource which Facebook controls – hence their term “data rentiership”. In this view, it is Facebook users, rather than advertisers, who are the target of rent-seeking. Rents are extracted from users in the form of personal data; and users are captive because there is no social media app through which they can reach a comparable proportion of their personal networks. Whether one is persuaded by this argument boils down to whether one agrees with the conceptualization of data as a resource, analogous to oil or gold (for what it’s worth, I don’t).
None of this is to suggest that tech companies don’t produce any morally objectionable and/or economically damaging outcomes – just that the model of rentier capitalism doesn’t fit neatly onto them as a category. Tech companies’ business models are many and varied, and the biggest firms operate in multiple markets, each of which have their own structures and dynamics: one can’t assume that because Google acts as a rentier in the mobile app market, its provision of search or video streaming must also involve rentiership. Rentier capitalism provides a helpful frame for explaining the development of market economies since the 1980s, but understanding the moral and economic implications of big tech needs other tools.