Notes on the concept of rentier capitalism

There are three distinct understandings of rent in the history of political-economy. On the one hand, they all turn on assumptions and arguments concerning economic value and the rights to that value. On the other, and unlike Marx, they distinguish between rent and profit—whether that is to imply that rent, as distinguished from profit, is an undeserved claim on wealth or, by contrast, to suggest that it has a quality distinct from misbegotten or ‘artificial’ profits because its value emerges organically from the earth or the rights to such value descend mysteriously from the heavens.

The first or most prominent understanding of rent is pivotal to the political-economic theory of David Ricardo—and Thomas Robert Malthus, in whose writings Ricardo claimed to have discovered “the true doctrine of rent.” For them, rent was a positive concept, part of the holy trinity of ‘wages, rent and profit’ that determined the allocation of rights to the product of the earth. They distinguished the category of rent from profit by emphasizing the fertility of the soil—in their account, the fertility of the soil was a gift of nature (or God, in Malthus’ case), whose value was miraculously bequeathed to the landowner without the intercession of private property laws, wars and territorial expansion.

The second approach to rent is that associated with the writings of Adam Smith and, more famously perhaps, John Maynard Keynes. While they diverged a great deal, they both considered rent as an unproductive (Smith) or ‘parasitical’ (Keynes) impost on the purportedly proper circuit of capital, right and taxable income. Indeed, Malthus’ argument on rent was largely developed in opposition to Smith. Keynes’ remark, in 1936, enthusiastically heralding the “euthanasia of the rentier” was an appalling antisemitic trope, whose timing is often treated as if it were insignificant by those who want to preserve its assumptions.

The third understanding of rent is both more recent and, in some respects, much older and opaque. It plays up to antisemitic tropes about finance that have their origin in Catholic strictures against usury, one result of which was the medieval outsourcing by monarchs of financial administration to non-Christians who could be scapegoated when convenient. At the same time, it implicitly carves out a broader distinction between legitimate and illegitimate territorial rights by substituting the classical association of rent with ‘ground-rent’ or landed property with a larger, positive diagram of national-imperial rivalries. It is the reflux of a European Christian theology of right resurfacing in twentieth century nationalist discourses of ‘anti-imperialism’ and ‘anti-capitalism’ that preserves nationalist claims to both territory and profit.


Along those lines, for Costas Lapavitsas the theory of rentier capitalism has been a significant part of his argument for Grexit and Lexit—along with a distinctive theory of finance capital which, in his view, is much the same thing.

According to Lapavitsas, although “Marx did not use the term” rentier in his analysis of finance, he wants nevertheless to argue that “‘moneyed’ capitalists are essentially rentiers, in contrast to active capitalists who borrow capital to generate profits.”

While Lapavitsas refers the reader to Marx’s discussions of finance, he does not tell us in which context Marx did discuss rent.

In “The Poverty of Philosophy,” Marx turns to Ricardo, and writes: “Rent, in the Ricardian sense, is patriarchal agriculture transformed into commercial industry, industrial capital applied to land, the town bourgeoisie transplanted into the country.” He proceeds to mock the ways in which the transformation of agriculture into an industry has, for Ricardo, shattered the presumably organic bonds that underpinned the patriarchal system, with consequences not only for the farmer or landowner but also the agricultural worker’s attachment to the landowner.

In the next passage, Marx suggests that the concept of rent marks a reactionary search for a bucolic foundation within the tumultuous course of class conflict:

Hence the jeremiads of the reactionary parties, who offer up all their prayers for the return of feudalism, of the good old patriarchal life, of the simple manners and the fine virtues of our forefathers. The subjection of the soil to the laws which dominate all other industries is and always will be the subject of interested condolences. Thus it may be said that rent has become the motive power which has introduced idyll into the movement of history.

I can understand why Lapavitsas would want to gloss over these remarks, given the association he wants to draw between a critique of ‘rentier capitalism’ and support for Brexit and Grexit.

He nevertheless still has to explain how the concept of ‘the rentier’ (the personification of rent) was incorporated into purportedly Marxist discussions of political-economy as if it were a synonym for finance capital.

The strongest influence in this regard, he suggests, was “Lenin’s discussion of ‘parasitical rentiers’” in his book on imperialism. “Lenin,” he continues, “took the idea from Hobson, the liberal critic of imperialism. The bulk of Lenin’s economic analysis, on the other hand, drew on Hilferding, in whose work there is no mention of the ‘parasitical rentier’. Hilferding did not relate finance to rentiers” (141-42).

Lenin, then—not Marx.


In Lenin’s Imperialism, the Highest Stage of Capitalism, there are actually two sources who mention imperial ‘parasitism’—one of those is Hobson, the other is Schulze-Gaevernitz.

Firstly, Lenin cites a lengthy passage from Hobson, which warns of “the gigantic peril of a Western parasitism” expanding into China. Hobson, however, was very far from suggesting that exploitation or capitalism were a problem. His accusation of ‘parasitism’ is premised on an argument about the sources and allocation of profit. In Hobson’s view, the owners of industry and land have a legitimate right to accumulate the wealth that comes from manufacturing and agriculture—just not the “financiers, investors, and political and business officials,” whom he considers a drain on profits.

Secondly, Lenin suggests that the “description of ‘British imperialism’ in Schulze-Gaevernitz’s book reveals the same parasitical traits,” namely, the relatively immense growth in the source of British national income from other parts of the world. Schulze-Gaevernitz’s book was titled British imperialism and English free trade at the beginning of the twentieth century, and published in 1906.

I do not know if Lenin had read Marx’s “Poverty of Philosophy” when he wrote Imperialism in 1917 (or Otto Bauer’s earlier review of Schulze-Gaevernitz’s book). But the reactionary lament rings rather loudly in Schulze-Gaevernitz’s account of the problems of British imperialism. Lenin continues, quoting and paraphrasing Schulze-Gaevernitz:

While the ‘merit’ of imperialism is that it ‘trains the Negro to habits of industry’ (you cannot manage without coercion …), the ‘danger’ of imperialism lies in that ‘Europe will shift the burden of physical toil—first agricultural and mining, then the rougher work in industry—on to the coloured races, and itself be content with the role of rentier, and in this way, perhaps, pave the way for the economic, and later, the political emancipation of the coloured races.’

As critical as I am of Lenin—I think that he inverted much of Marx’s methodology and theory—I would honestly prefer to read this passage as critical of Schulze-Gaevernitz’s distinctively conservative ambivalence on imperialism’s dangers. Yet he does not make that easy. In his very next sentence he instead affirms Schulze-Gaevernitz’s overarching campaign against eudemonia (pleasure or happiness) as a principle of economic life. That is, in the next sentence Lenin complains—much like Schulze-Gaevernitz had done— that “[a]n increasing proportion of land in England is being taken out of [agricultural] cultivation and used for sport, for the diversion of the rich.”

Contrast Lenin’s brief mention with Otto Bauer’s lengthier review of Schulze-Gaevernitz’s book in 1907, in which Bauer argued that the book reflects “the cultural currents prevalent among the German bourgeoisie at the beginning of the twentieth century.”

In Schulze-Gaevernitz’s book, the principal conflict is framed as support for ‘English free trade’ (advanced through the subsidy of manufacturing and agricultural exports from England) versus ‘British imperialism’ (which built railways and bridges in foreign lands), and turned into an argument for the conversion of Anglicanism into something closer to German Protestantism. As Bauer put it, Schulze-Gaevernitz’s argument is a preoccupation with the ‘spiritual decline’ of the English bourgeoisie, put forward as an explanation of its economic decline, which can only be restored by drawing on “German idealism,” thereby putting “an end to English cultural decomposition.” Indeed, Schulze-Gaevernitz’s broader argument across all his writings turns on the moral-economic juxtaposition of unproductive pleasure-seeking and productive moral pursuits—the renewal of the latter, he insisted, would save the European bourgeoisie, Western civilisation and capitalism.

Schulze-Gaevernitz’s denunciations of a pleasure-seeking bourgeoisie were neither anti-imperialist, anti-bourgeois or pro-proletarian—they were theological arguments about salvation, a sermon for returning the respective classes and nations to their proper roles and properly-productive ranks. Hence Schulze-Gaevernitz’s apocalyptic warning that ‘British imperialism’—as distinct from support for English export industries—would “pave the way for the economic, and later, the political emancipation of the coloured races”


There are others, beside Lapavitsas, who have focused on rent and rentier capitalism recently—although few others that claim it is a Marxist theory. There is Guy Standing’s book, The Corruption Of Capitalism: Why Rentiers Thrive and Work Does Not Pay. As the title suggests, it too is not a critique of capitalism but, instead, its “corruption,” or how the “claims made on behalf of capitalism have been subverted” by “rogues.” There are others, and I might come back to a discussion of these at some later time.

But the point is this: the concept of rent is a way of distinguishing presumably ‘bad’ rent from ‘good’ profit. It trades heavily in antisemitic tropes, patriarchal nostalgia and an implicit ethno-geopolitics because its philosophical source is Christian theologies of political, economic and territorial right. It is a reactionary lament about the decline and corruption of a distinctive understanding of law and order—not a Marxist critique of capitalism or, for that matter, imperialism.


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