With Brexit imminent, commentators have been widely pondering the likely consequences for the UK economy, with many anticipating a major economic shock. But the occasion has also prompted some commentators to reflect and take stock: to ask not so much where might we be going but where, at this key moment in political and economic history, are we now? The Financial Times has led the way, launching a series of informative articles in August on the current state of play in the national economy.
Though clearly timely, the FT series is also limited. The articles in question have a great deal to say about the key metrics by which national economies tend to be measured and about how the UK economy is ‘performing’ on these counts: in terms of growth, productivity, investment and so forth. They also consider the role in the economy today of its major sets of economic actors, such as workers and consumers. But they do not tell us very much about what types of activities the UK economy currently consists in – that is, the question of what UK-based companies and their workers actually predominantly do, rather than how productively and at what rate of growth. As Brexit nears, what sort of economy, in short, is the UK’s?
The stock answer to this question in recent decades has been that the UK’s has become a services economy, which is, of course, true. The service industries today contribute around 80 percent of national economic output; manufacturing’s share has slumped to about 10 percent. But while true, the answer is not very illuminating. For one thing, the service industries’ percentage share was already in the mid-60s by the end of the 1970s, which is when the latest stage in the transformation of the UK economy is generally acknowledged to have begun. Furthermore, ‘services’ contains multitudes: anything and everything from landscaping to social work. The label conceals more than it reveals.
Focusing specifically on the so-called ‘neoliberal’ period since Margaret Thatcher’s Conservatives took power in 1979, commentators have increasingly offered a more precise answer to the ‘what sort of economy’ question. It is not just services in general that have become dominant, but financial services in particular. The UK’s, it is claimed, is an economy now dominated by finance. To use the favoured parlance, it has been thoroughly ‘financialised’.
Yet this answer is wrong. Or, more exactly, it is only partly right. To be sure, finance has become vastly more significant since the 1970s. But so too have various other sectors, and often to a comparable or even in some cases – such as real estate – a greater extent. To argue that the UK economy has been financialised is to offer only a very partial picture of this wider economic transformation.
What that transformation has entailed is the advancement to a position of structural dominance of economic activities all organized around the control of scarce assets, including but not limited to financial assets. Assets like land, intellectual property, and infrastructure. The term collectively given to such activities is rentierism. The economic actors – usually companies but sometimes individuals or households – engaging in such activities are rentiers. And the incomes they enjoy are rents.
Defining ‘rent’ specifically as income derived from the ownership, possession or control of scarce assets and under conditions of limited or no competition, I explore the post-1970s ‘rentierization’ of the UK economy at length in a new article. As well as analysing empirically the degree of rentierization that has taken place and the extent to which rentier capitalism now dominates the UK, the article does two main things.
The first is to map out the main varieties of contemporary rentierism, which comes in many forms, even if these forms share a common foundation in the generation of income based on the control of scarce assets. Understanding the diversity of such forms is crucial to understanding the rentier demesne that the UK economy has in large measure become. The following table provides an overview of the eight core asset types that constitute the scaffolding of this economy, identifying the main ways in which these assets come under rentiers’ control, examples of prominent rentier firms, and the types of rents they enjoy. The article expands on these skeletal details.
|Asset||Primary means of gaining asset control||Principal rental streams||Examples of prominent rentiers|
· Creation of credit money by private banks
· Acquisition of financial assets in primary and secondary markets
· Capital gains
· Acquisition in markets
· Privatization of landholdings of formerly state-owned enterprises
|· Ground rent||
· British Land Company
· Land Securities Group
|Natural resources||· Leasing agreements with mineral rights owners||· Product sales||
· Royal Dutch Shell
|Intellectual property||· Registration of rights (e.g. to patents, trademarks) with state intellectual-property offices||
· Product sales
· Licensing of intellectual property
|Radio spectrum||· Bidding for licenses through state-run spectrum auctions||· Service charges||
· CK Hutchison
|Digital platforms||· Organic creation||
· Service charges
· Advertising fees
· London Stock Exchange
|Natural monopolies||· Privatization of state-owned enterprises||· Service charges||
|Service contracts||· Bidding processes (various)||· Service fees||
The second contribution of the article is to explain the forces and factors accounting for post-1970s rentierization. Four decades of neoliberal approaches in the pivotal realms of monetary and fiscal policy and policies relating to asset ownership and property rights, I argue, have created highly favourable conditions both for the production and maintenance of scarce commercial assets, and for those in possession of such assets to extract rents securely from them. The Thatcher revolution, and everything that has happened since, has served to subdivide the economy into a series of sinecures upon which large firms stake their claims, protected from competition by watertight rights over scarce resources. UK neoliberalism has given rentierism its head.
What the article does not do is attempt to assess the consequences of rentierization in the UK. What, for example, has it entailed for the key sets of actors – such as consumers and workers – identified by the FT in its pre-Brexit ‘state of play’ series? And how has it affected rates of investment, productivity and growth? These questions, along with many others, are taken up in a forthcoming book, Rentier Capitalism (Verso, 2020).