IDEAS home Printed from https://ideas.repec.org/a/sae/reorpe/v53y2021i4p557-573.html
   My bibliography  Save this article

Finance Capitalism versus Industrial Capitalism: The Rentier Resurgence and Takeover

Author

Listed:
  • Michael Hudson

Abstract

Marx and many of his less radical contemporary reformers saw the historical role of industrial capitalism as being to clear away the legacy of feudalism—the landlords, bankers, and monopolists extracting economic rent without producing real value. However, that reform movement failed. Today, the finance, insurance, and real estate (FIRE) sector has regained control of government, creating neo-rentier economies. The aim of this postindustrial finance capitalism is the opposite of industrial capitalism as known to nineteenth-century economists: it seeks wealth primarily through the extraction of economic rent, not industrial capital formation. Tax favoritism for real estate, privatization of oil and mineral extraction, and banking and infrastructure monopolies add to the cost of living and doing business. Labor is increasingly exploited by bank debt, student debt, and credit card debt while housing and other prices are inflated on credit, leaving less income to spend on goods and services as economies suffer debt deflation. Today’s new Cold War is a fight to internationalize this rentier capitalism by globally privatizing and financializing transportation, education, health care, prisons and policing, the post office and communications, and other sectors that formerly were kept in the public domain. In Western economies, such privatizations have reversed the drive of industrial capitalism. In addition to monopoly prices for privatized services, financial managers are cannibalizing industry by leveraging debt and high-dividend payouts to increase stock prices. JEL Classification: B26, N20, B51

Suggested Citation

  • Michael Hudson, 2021. "Finance Capitalism versus Industrial Capitalism: The Rentier Resurgence and Takeover," Review of Radical Political Economics, Union for Radical Political Economics, vol. 53(4), pages 557-573, December.
  • Handle: RePEc:sae:reorpe:v:53:y:2021:i:4:p:557-573
    DOI: 10.1177/04866134211011770
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/04866134211011770
    Download Restriction: no

    File URL: https://libkey.io/10.1177/04866134211011770?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Michael Hudson, 2021. "Rent-seeking and asset-price inflation: a total-returns profile of economic polarization in America," Review of Keynesian Economics, Edward Elgar Publishing, vol. 9(4), pages 435-460, October.
    2. Jacob Assa & Ingrid Harvold Kvangraven, 2021. "Imputing Away the Ladder: Implications of Changes in GDP Measurement for Convergence Debates and the Political Economy of Development," New Political Economy, Taylor & Francis Journals, vol. 26(6), pages 985-1014, November.
    3. Michael Hudson, 2011. "Simon Patten on Public Infrastructure and Economic Rent Capture," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(4), pages 874-903, October.
    4. Geoffrey W. Gardiner, 2006. "The Evolution of Creditary Structures and Controls," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28844-7, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. J. W. Mason, 2021. "Comments on Michael Hudson: Making Capitalism Great Again? A Critique of the “Rentier Takeover†Thesis," Review of Radical Political Economics, Union for Radical Political Economics, vol. 53(4), pages 574-578, December.
    2. João Alcobia & Ricardo Cabral, 2023. "The Dutch disease of the Euro Area peripheral member states," Working Papers REM 2023/0257, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. H. Georg Schulze, 2010. "Ein Modell der Ekonomie als System von neuronalen Netzwerken - Ein Umriss [Connectionist Economics - An Outline]," Post-Print hal-01492977, HAL.
    2. Casey Carder Rockwell & David Crockett & Lenita Davis, 2020. "Mass incarceration and consumer financial harm: Critique of rent‐seeking by the carceral state," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(3), pages 1062-1081, September.
    3. Dirk Bezemer, 2012. "Credit cycles," Chapters, in: Jan Toporowski & Jo Michell (ed.), Handbook of Critical Issues in Finance, chapter 10, pages i-ii, Edward Elgar Publishing.
    4. Brian P Hanley, 2018. "A New Form of Banking -- Concept and Mathematical Model of Venture Banking," Papers 1810.00516, arXiv.org, revised Nov 2020.
    5. Semieniuk, Gregor, 2024. "Inconsistent definitions of GDP: Implications for estimates of decoupling," Ecological Economics, Elsevier, vol. 215(C).
    6. Takano, Guillermo, 2017. "Public-Private Partnerships as rent-seeking opportunities: A case study on an unsolicited proposal in Lima, Peru," Utilities Policy, Elsevier, vol. 48(C), pages 184-194.
    7. Rotta, Tomás N. & Kumar, Rishabh, 2024. "Was Marx right? Development and exploitation in 43 countries, 2000–2014," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 213-223.
    8. Thomas Palley, 2021. "Financialization revisited: the economics and political economy of the vampire squid economy," Review of Keynesian Economics, Edward Elgar Publishing, vol. 9(4), pages 461–492-4, October.
    9. Michael Hudson, 2013. "Capital gains, total returns and saving rates," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(2), pages 221-230.
    10. Dirk J. Bezemer, 2012. "Modelos contables y comprensión de la crisis financiera," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 14(26), pages 47-76, January-J.
    11. Mark R. S. Howard, 2023. "Book Reviews: Rentier Capitalism: Who Owns the Economy, and Who Pays for It?," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(4), pages 728-732, December.
    12. Eric Tymoigne, 2017. "On the Centrality of Redemption: Linking the State and Credit Theories of Money through a Financial Approach to Money," Economics Working Paper Archive wp_890, Levy Economics Institute.
    13. Pianta, Mario, 2023. "Inflation and distributive conflicts," MPRA Paper 119345, University Library of Munich, Germany.
    14. Dirk Bezemer, 2014. "Schumpeter might be right again: the functional differentiation of credit," Journal of Evolutionary Economics, Springer, vol. 24(5), pages 935-950, November.
    15. Bezemer, Dirk J., 2010. "Understanding financial crisis through accounting models," Accounting, Organizations and Society, Elsevier, vol. 35(7), pages 676-688, October.

    More about this item

    Keywords

    financialization; rentier capitalism; FIRE sector;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:reorpe:v:53:y:2021:i:4:p:557-573. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.urpe.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.