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Finance Capitalism versus Industrial Capitalism: The Rentier Resurgence and Takeover

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  • 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
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    References listed on IDEAS

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    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, October.
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    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.
    3. Angela Wigger, 2024. "The New EU Industrial Policy: Opening Up New Frontiers for Financial Capital," Politics and Governance, Cogitatio Press, vol. 12.
    4. Antonio Focacci & Angelo Focacci & Alessandro Faenza, 2024. "The lens of the quantity theory of money to disentangle the perceived relationship between money growth and inflation: a PSVAR approach," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(3), pages 571-595, September.

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    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

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