On The Sorrows Of The Rentier Class

One of the irritations that has to be endured in the contemporary world is frequently having to listen to clueless leftists complain about capitalism when it comes to the behavior of companies like Billboard and their anticompetitive policies towards those who do their job better when it comes to searching through music chart records. In general, there are a lot of people who like to blame all of the problems of the contemporary world on capitalism, without realizing that problems with power dynamics are inherent in our existence as human beings and that all human societies that have existed under other economic regimes have similarly shown the same struggle for power and position and the same general abuse of power. It is worthwhile at this point to discuss a basic aspect of economics that is nevertheless not well understood. There are only a few ways that people can gain money. Capitalists gain money through selling goods and services that there is a market for which is able and willing to pay them for the convenience and quality of what they offer. Laborers gain money through the wages for their labor, upon which they pay for the necessities of life as well as their wants. Rentiers gain money passively through their ownership of land and other forms of property that pay them accordingly (including pension plans and the like). To these three categories we may add the beggar class, who make a living through the generosity of others without providing useful goods, services, and labor in return.

It is important to know where people are before one can seek to understand their behavior. We might expect Billboard to be a capitalist firm that seeks to profit off of its services. But this is not the case. Billboard is a rentier, an owner of potentially lucrative chart data with 80 years or so of history that they receive fees for and are not inclined to work in order to make it more attractive to potential customers, and this attitude shapes their behavior towards others who deal with their proprietary data. By behaving more like a feudal lord concerned to reflect their exclusive ownership of trademarks and data streams than a capitalist who sees such data as a potential profit source for a group of potential customers who are passionate about that data and what it says, we can better understand them. A great many companies behave the way that they do, seeking to own territory and then defend it against all comers rather than seeing the desirability of what they have as a potential for greater income to be attained through trading and marketing. This is not to say that efforts at gaining money through trading and marketing are not occasionally irritating and bothersome (hence the existence of ad block software on my computer), but only that the behavior of people and institutions and companies makes sense best when we understand their mentality. If we expect rentiers to behave as capitalists, we will be disappointed, because their motive is not to make as much money as possible through providing goods and services that there is a clear and obvious market for but rather to preserve the value of their property as a source of passive income for which they do not have to labor to increase.

In many ways, the term rentier capitalism is a bit of an oxymoron. Rentiers and capitalists, properly understood, have very different motives and attitudes. A door-to-door salesman is a capitalist. They have a good to sell and are seeking people who are willing to pay for that good. If demand for a given good or service increases, the natural response of a capitalist is to increase their ability to serve that market through the purchase of capital goods and the hiring of labor to meet that demand. A rentier has no such profit motive or interest. This is why, for example, the DMV is so difficult to deal with. A DMV with a profit motive may be no less irritating, but it will be irritating in a different way, through efforts to profit off of goods and services to customers, rather than as a rentier actively limiting the amount of work that it has to do through long-lines and the like. A great deal of confusion exists in the contemporary world about the behavior of companies and people because we think they should behave as capitalists when in fact they are rentiers and act accordingly.

It is not as if rentiers are inherently bad people, or that they do not offer something to others. It is just that being a rentier is inherently a matter of seeking privilege and an ease of life through one’s position as an owner of (potentially lucrative) property. A great deal of the suffering and misery of ordinary people comes through their dealing with rentiers. The toxic relationship between slum landlords and angry renters in many cities where property is dear and where there are few if any motives to invest in housing stock is a classic case where the combination of malregulation and the natural motives of rentiers create disincentives to building new housing stock or spending a lot of money on maintenance. The behavior of government bureaucrats and crony capitalists is entirely understandable when we realize that they are rentiers who profit from access to power. A genuine capitalist recognizes labor as a vital input in business processes that lead to profit for themselves and others. A rentier, on the other hand, is frequently contemptuous of labor and desires to do as little of it as possible, and may even look down on those peasants who must live by their wits or the sweat of their brow.

A great deal of our own contemporary trials may be well understood when we see that rentier motivations are at the basis of them. The wide disparity that exists between the struggle of college athletes, many of whom will never make a living from their sport, and the immense money that is generated by college athletics as a whole is due to the fact that the NCAA and universities in general are rentiers, while college athletes are only laborers. The massive appeal of various multi-level marketing schemes in contemporary society and much of the suffering of the those trapped in the gig economy comes from the fact that the taxi industry as well as the temporary labor market is not a capitalist economy but a rentier one, and that the position of people who make money from the efforts of others further down in their stream is as a rentier collecting tolls and fees from the labor of others rather than someone profiting from their own labor or their own provision of goods and services to others. Where our income stream depends on position and property, we are properly speaking in some sort of feudal economy rather than a genuinely capitalist one, and we are slow to recognize this fact and respond accordingly.

About nathanalbright

I'm a person with diverse interests who loves to read. If you want to know something about me, just ask.
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