THREAD (long one this time)

I’m reading 2 new books: Brett Christophers' Rentier Capitalism, and @PeterKGeoghegan's
Democracy for Sale, and together they paint quite a picture. Let's explore...

TL:DR Our rentier economy seems also to have generated rentier politics. Dodgy procurement, plutocratic populism, all points to govt becoming a kind of second-rate rentier

Disclaimer: am still reading. Any errors of representation below are mine, obv.

Rentier capitalism first: Christophers says the UK economy is no longer about either manufacturing or even provision of services – the real action is rent extraction through the control of access to scarce assets. Hence “rentier capitalism”

For an excellent primer here's @MkBlyth's recent podcast with the author

https://bit.ly/35L8e8q 

Definitions: rent is income generated from ownership of something finite. E.g. When Scooter Braun sells Taylor Swift’s back catalogue to private equity, he’s extracting rent from something he didn’t make but to which he can control access #istandwithtaylor

Key asset categories now generating big rents include: land, natural resources, intellectual property, digital and comms platforms, and outsourcing and infrastructure contracts (of which more later)

Question for me is: what happens to politics when you have a rentier economy? Here’s where Geoghegan comes in.
According to him, contemporary politics has been bought (surprisingly cheaply, in the UK)

The always excellent @TPpodcast_ has the primer on Democracy for Sale https://bit.ly/2ISCipW 

But how did we get here? Did everyone suddenly get dishonest? I think the answer is more structural: the path to rentier capitalism is also the path to rentier politics. Here's how...

My intuition is we’ve seen a 3-stage evolution of our politics from 1. Neoliberalism through 2. Regulatory state to 3. Plutocracy (i.e. rentier politics)

Stage 1: BC says we have a rentier economy because neoliberalism privatised, and concentrated control of, all sorts of assets formerly held in common. The patterns of asset accumulation now dominating the UK economy mostly date to the 1980s and '90s e.g. North Sea oil rights

Stage 2: Political science tells us this high-neoliberalism period was followed by a transition into the regulatory state – instead of direct interventionism by govt we get arms-length service provision and regulatory steering

Crucially, the regulatory state represented the tamping down of political strife into a managerialist mode of government. Politics is de-fanged. Patterns of asset ownership not significantly contested in this period – norm of private ownership by now widely accepted

In a regulatory state era govt is a kind of neutral referee, concerned mainly with keeping the show on the road. Permissive view of asset ownership. Structural interference in the economy is off the table. Rentiers encounter little pushback

Regulatory state arguably also relies on the honesty of bureaucrats. Its largely non-antagonistic relationship with business creates chumminess that might easily slide into corruption

Stage 3: BC shows the trouble with rentier economies is they entrench low growth and high inequality. Which we know has created the conditions for a turn to populists by voters excluded from what little growth is available (see @jrhopkin’s new book) https://bit.ly/2IZ8tDC 

So populists ride public discontentment to power, but don’t have a solution for the underlying problems. So what do they do? On current evidence, mostly enrich themselves and their friends

Relationship between populism and graft is increasingly well evidenced (UK covid contracts; Trump administration in US; Orban family in Hungary). Conflicts of interest abound

So did everyone just turn crooked all of a sudden? On one level, yes – but the opportunity for plutocratic populism is there because of the structural changes in stages 1 and 2.

Traditional tax-and-spend is more difficult in a low growth rentier economy, and the delivery of public services is mostly at arm’s length from govt after the reg state era. But Govt still controls some important assets with potential for rent generation, esp via public contracts

So there are strong incentives for govt to get in on the action and behave like a rentier itself, or at least take a cut on all the rents that are out there

N.B. Using policy to take a cut out of private rents isn’t always venal. For example in planning law, local councils use s.106 deals to finance some community investments out of big planning gains - a tax on rents, if you will

But @PeterKGeoghegan shows that lately, the gains seem to be accruing to political parties (I guess it’s expensive to persuade voters to turn out even though they’re getting screwed) or individual politicians whose private financial interests far outweigh their public salaries

The mounting scandals around Covid contracts in the UK provide ample evidence: here's Geoghegan again: https://bit.ly/3kHVsf6 

This looks a lot like the political corollary of a rentier economy – you can’t grow, you can’t redistribute (at least not downwards), but you can still gatekeep some opportunities for rent generation, and maybe take a cut. Rentier politics is born. / END