Owning the future, p.3
Owning the Future, page 3
The asymmetry of resources and bargaining power between labour and capital means what at first appears to be a fair exchange between the worker and the employer is in fact a contract for legalised economic exploitation: under capitalism waged labour is by definition paid less than the value it produces, with the surplus accruing to the capitalist – for example, senior management or shareholders – who is then free to reinvest the surplus for their benefit. The unfreedom and inequality at the heart of wage labour is thus not the product of some inherent immorality of individuals but rather the unidirectional force of the system: the worker cannot claim the wealth they produce under capitalism because if they did, it would cease to function as a system, premised as it is on the growth of capital and accumulation. Ownership, by creating the conditions of market dependency; disproportionately siphoning off the surplus towards capital from labour; and concentrating coordinating power in the hands of capital owners, is constitutive of this hierarchy.32
This exploitation is undergirded by two essential processes: enclosure and expropriation.33 Property rights (often unjustly imposed) confer on certain individuals and organ-isations prioritised access and use of resources, allowing them to appropriate huge quantities of what Jason W. Moore and Raj Patel call ‘cheap natures’, those things made actively cheap (nature, money, work, care, food, energy, and lives) and available in the world for expropriation.34 Expropriation takes many forms:35 directly, from wage-labour in production, but also in the (ongoing) violent dispossession of the land of Indigenous peoples to the hyper-modern land and resource grabs underlying the commodity sectors;36 from the violent accumulation of New World slavery and genocidal conquest to the forms of bondage that suffuse informal employment and global supply chains; from the looting and legalised theft of the resources of the periphery by the capitalist centres, to colonial dispossesion and corporate asset-grabbing. This was and is a process of plunder on a world-transforming scale in which wealth is condensed into and through unequal property claims. In short, the appropriation of the wealth of others is not an unintended side effect, but the whole point. As Walter Rodney summarised in his seminal work, How Europe Underdeveloped Africa, ‘The acquisition of wealth is not due to hard work alone, or the Africans working as slaves in America and the West Indies would have been the wealthiest group in the world. The individualism of the capitalist must be seen against the hard and unrewarded work of the masses.’37 Importantly, the seizure of the ‘free gifts of nature’38 goes hand in hand with the mobilisation of the work of social reproduction (in effect the work of the home, from child-care to cooking and all manner of unpaid tasks) to drive capital accumulation, giving capitalism its gendered and racialised character.39 Throughout the pandemic these tendencies were strongly reinforced, not least with children staying home from school adding further social reproduction to the work of wage labouring. Contemporary expropriation also increasingly revolves around the question of who issues and controls debt. Unequal ownership of government debt, for example, transfers money from ordinary taxpayers to bondholders as governments pay interest from elevated borrowing in lieu of higher taxation, a political choice to prioritise financial asset owners.40 Meanwhile, extortionate rates on consumer credit and overdrafts redistribute money from individuals struggling on stagnant wages to creditors.41 This financial expropriation became particularly pronounced during the pandemic, from the acute and devastating monetary constraints imposed on governments of the Global South, to indebted households struggling to stay afloat on suspended incomes, to the surge in predatory acquisitions of distressed businesses by private equity firms.
The imperative to expropriate in order to sustain itself means that capitalism is and has always been racially unequal in character.42 Too often overlooked as the casualties of the 2008 financial crash, for example, the predatory extension of unsustainably expensive ‘subprime’ mortgages – ‘disproportionately perpetrated against the poor and communities of color’43 and packaged into tidy financial securities for yield-hungry investors – was borne out of finance’s drive to expand its horizons for expropriation. In the end it was not financiers who lost it all, but these same families whose homes were repossessed and whose security evaporated, and who – more than a decade later – are still paying disproportionately for a crisis they didn’t create.44
Expropriation also extends the ability to extract wealth beyond the classical exploitation of market-based wage labour into the unequal division of the impacts of ecological crisis.45 Property relations enable firms to designate certain lands and people ‘zones of sacrifice’ to serve the demands for resources and ‘sinks’ that sustain the everyday life of the global affluent, from mining sites devastating local ecology to land seizure for carbon offsets.46 Ownership claims – acting as a vehicle for normalising expropriation – have in this way been central to the construction of racial capitalism, acting as the fulcrum between the ‘mutually constitutive’ dynamics of economic exploitation and racial oppression.47 The legal codes and property forms that divide and order economic and social life based on exclusive ownership are what enable capitalism to assign differential value to human and non-human lives, communities, ecosystems, and forms of labour. The time is long overdue for their remaking.
2
The Primacy of Property
The standard of living of the average American has to decline.
— Paul Volcker, former chairman of the
Federal Reserve, 19791
We do need to see a moderation of wage rises, now that’s painful. I don’t want to in any sense sugar that, it is painful.
— Andrew Bailey, governor of the
Bank of England, February 2022
Our economic system is one which centres the interests of private property. There is nothing organic or inevitable about this arrangement. It has been cemented by a successful and carefully articulated poli tical project: neoliberalism. Neoliberalism is a political project whose founding goal was to make the world safe, free and profitable for property. Neo-liberal actors, over time and space, have sought to protect property from democratic demands and redistributional pressures, and in doing so restore property’s central role as an organising force in the economy.2 In the decades following the Second World War, the sharply declining dynamism of the advanced-capitalist world and the rising militancy and ambition of post-colonial states, worker movements, and social coalitions struggling for a world transformed were, to the architects of neoliberalism, direct threats to the prerogatives of property and the goals of profit and growth.3 Its emissaries – Margaret Thatcher and Ronald Reagan were most salient, but there were others before them – enacted sweeping reforms as a reaction to the erosion of capital’s power and profitability in the 1970s. The programme buoyed the power of private ownership, breaking decisively with the constraints imposed on capital that had been won by organised labour and the redistributive political movements of the post-war era.
There was no guarantee this counter-revolution would succeed, of course. The Left was confident, and the working class comparatively organised. Old hierarchies of power and status were being challenged everywhere, from the household to the factory floor. These challenges could have been resolved through the extension, not the retrenchment, of democracy. Against this possibility, however, an emergent neoliberal movement moved to protect and extend the rights of capital and to halt the erosion of the wealth of asset holders through inflation. The ‘economy’ was to be shielded from democratic intervention. Over time, a range of neo-liberal actors, from jurists and politicians to corporate interests and international organisations, have encased property relations within legal protections, safeguarding them against the threat of a more democratically accountable ownership regime.4 Contrary to the popular perception of neoliberalism, then, this was never a project that sought to roll back the state. Instead, it sought to harness and, often, expand state power to enforce market relations.5 The architects of neoliberalism emphasised the desirability and efficiency of ‘the market’ as the governing mode of social life and sought to inoculate economic goals against the dangerous spontaneity and unruly passion of political life. Yet they were also sceptical of the idea that market relations would emerge organically. Instead, the neoliberal era has been marked by consistent, coercive efforts to use state power to create and maintain a particular vision of a ubiquitous market society – finance-dominated, competitive, with technocracy dominant over politics – by extending private ownership and protecting property from egalitarian demands.6
The Deflationary Coalition
The mantra of this counter-revolution was simple: ‘Stabilise prices, crush labour, discipline the South’.7 It was driven by the aggressive and coordinated deployment of fiscal, monetary, and legal tools to reassert the rights of capital, overcome the perceived inefficiencies of planning relative to market forces, and eliminate the threat of organised labour. Privatisation was an essential tool in this respect. Selling off national infrastructure and assets for below-market rates, including housing, natural resources, railways, and utilities, transferred public wealth into private hands on a vast scale; fragmented and internationalised ‘national economies’ for the benefit of global investors and weakened state capacity, creating the self-reinforcing perception of a state less capable than the private sector.
The economic hierarchy created by this new arrangement, putting assets and asset owners first, was not just about redistributing ownership upwards through the privatisation of public wealth. A conjoined and critical goal was to implement a macro-political agenda that used fiscal and monetary policy to create favourable conditions for capital while breaking the power of labour and those living in the global ‘peripheries’, on whose resources, from cheap labour to raw materials, capitalist centres increasingly relied. The ‘Volcker Shock’8 – wherein the Fed aggressively increased interest rates as a tool in 1979–80 to induce a crushing recession and in doing so suppress inflation and traumatise the working class and indebted Global South – was the foundational event of this new world as much as the interrelated efforts to privatise public assets and expand the role and rights of private property ownership.9 The regulation of inflation is always a political struggle over the distribution of the social surplus. The Volcker Shock was totemic in this sense, ushering in an era that decisively favoured wealthy asset owners over ordinary wage-earners and tamed inflation by lowering living standards. As the Bank of England governor Andrew Bailey’s comments in our epigraph attest, that same instinct is alive and well today: a crisis not of their making will be resolved through an attack on the quality of life of ordinary people to protect the wealth and position of rich asset owners.
Driving and then sustaining the switch in inflationary regimes – from a world defined by wage inflation and asset-price stability, to wage stagnation and runaway asset-price inflation – was one of the signature achievements of the neoliberal turn. The result was to transfer wealth and income from labour to capital on a historic scale.10 Central to the endurance of this new consensus was the mobilisation of what political economist Yakov Feygin has termed ‘the deflationary bloc’, an electoral and economic coalition that united ordinary (and often new, thanks to strategic policies such as Right to Buy) homeowners, small-scale business owners, and the asset rich in pursuit of policies that protected and inflated their wealth, whether in real estate or financial assets, relative to wage-earners.11 The shift from defined benefit to defined contribution pensions – which made income dependent on financial market performance – augmented this. A new growth regime resulted, one that was returns-led rather than wage-driven, focused on maintaining the health of asset owners, and heavily reliant on debt-financed consumption over productive investment. Over time, the combination of new patterns of asset ownership (including broad-based home ownership), rapid inflation of the value of these assets, and the entrenched stagnation of wages created new dynamics of inequality that reshaped notions of class and social position.12 In the process, this created complex electoral cleavages: in the UK, for example, recent Conservative electoral dominance has rested not so much on the party’s appeal to the new working class, as on its domination of a heterogeneous asset-owning bloc.13
Unlike the post-war settlement preceding it, which benefited from an expanding mass market based on rising real wages and strong aggregate demand growth, neoliberalism was thus not particularly interested in wage growth – nor indeed in the disruptive effects of economic dynamism. Sustained strong growth risked causing inflationary pressure, likely triggering an increase in real interest rates that in turn would depress asset prices and increase the cost of borrowing, therefore harming the interests of key elements of this nascent political coalition, not least increasingly indebted homeowners and over-leveraged corporate actors. A low-pressure economy was not a sign of failure: better a slow-growing economy where capital rules and asset prices rise than a buoyant economy where labour is strong and power contested. Compounding this, the inability to replace manufacturing as the engine of growth in deindustrialising capitalist centres meant the post-’79 cycle of accumulation was defined by slowdown. Virtually every standard indicator – output, investment, employment, and wages – continued, with brief unsustained exceptions, their decade by decade, business cycle by business cycle deterioration.14
Traumatic as this experience was for many working communities, critically, profitability was revived. The active restructuring of the international economy away from manufacturing and towards finance under the wing of American power and the ongoing rentierisation of Anglo-capitalist societies increased the profitability of the overall economy,15 while doing little to address the deeper source of capitalism’s slowdown. Through this, capital’s share of income in advanced economies grew tremendously at the expense of labour, consolidating the power of a wealthy ownership class who appropriated the lion’s share of the gains, and cementing a new and expanded political coalition. In doing so, the neoliberal movement succeeded in restructuring the global economy in favour of asset-holders, thereby installing (in conjunction with the collapse of the Bretton Woods agreement in the early 1970s) the explosive growth of finance as the central driver of the Anglo-American economies.
The expansive, open-ended quality of an increasingly finance-led, asset-dominated global economy created a world in which, as Martijn Konings has written, ‘what really mattered was the possibility of keeping the system going, from one day to the next, above all keeping afloat those entities that could drag the whole system down with them’.16 Economic actors, whether corporations or households, became increasingly oriented towards generating sufficient cash flow to service their rising indebtedness, with power consequently flowing to the institutions that could generate credit and liquidity: corporations, the financial sector, and above all central banks. In this new world, the explosive growth of finance was not (and is not) a bubble bound to burst. Rather, it is a growth whose sustainability is dependent on political intervention and access to credit, rather than underlying attributes of the ‘real economy’.17 This access is predicated on ownership – for households, access to loans is supported by ownership of assets for collateral, such as a car or savings account; for corporations, the cost of borrowing is significantly influenced by the health of their balance sheet – in other words, their ownership of assets. Consider that we have had two economic heart attacks in the span of a decade: the 2008 financial crash, and the financial mayhem that ensued from the initial shock of the pandemic. In both cases, the centrality of asset owners and their interests (that is, high and rising asset prices) meant that central banks stood ready with the defibrillator, ensuring those interests were secured rather than letting the bubbles burst.
The Rise of the Rentier
As a result of these processes, Anglo-American capitalist economies are now defined by ‘rent’. Rent, as the geographer Brett Christophers argues, is ‘income derived from the ownership, possession or control of scarce assets under conditions of limited or no competition’, in contrast to production-based income within a competitive market. ‘Rentier capitalism’ thus describes an economy structured around the ownership of key types of assets and the income streams they generate, and by extension around those who own them.18 Christophers points to seven main asset classes that constitute the core of rentier capitalism: land and property (both residential and commercial); financial assets and the creditor-debtor relationship; intellectual property assets such as patents and copyrights; natural resources, such as hydro-carbons and metal commodities; digital platforms like Facebook; service contracts, such as for outsourcing; and the privatised utilities sector, including telecommunication, energy, transportation, and similar services. Together, these sectors form the nucleus of rentier economies, for which rent-seeking through concentrated ownership is no longer fringe but the beating heart.
On its own narrow terms, rentierism has worked, at least for its asset-owning beneficiaries. Profits have been restored, shareholder wealth enlarged, and wealth previously held by the public or belonging to the commons made available for private ownership and use. Contemporary forms of rentierism are centred around sweating assets instead of investment to create new value – in other words, it is ‘less about making anything and more about simply owning something’.19 Though this is a fundamentally property-driven ethos, rather than an entrepreneurial one, we should carefully avoid the temptation to establish a false dichotomy between a non-extractive ‘productive capitalism’ of justly earned corporate income, and the unearned spoils of extractive ‘rentier capitalism’. The extraction of value from labour and nature and the mesh of unremunerated activities and resources that sustain the economy remain fundamental to those profits; in other words, due to its underlying patterns of ownership, all of capitalism is in some fundamental sense about rent and the cornering of economic power through property.20 However, the pronounced turn towards rent-seeking in terms of the locus of power and profit within our societies has been key to reasserting the primacy of property, making asset ownership more fundamental than ever.
