January 28, 2022

The Rentier Economy: Britain’s (and the World’s) New Economic Model

Since 2010, the actual material conditions of ordinary people in this country have stagnated. Poverty, especially among children, has skyrocketed, and crime has soared. Inequality is at all-time highs, yet there are now more food banks than there are branches of McDonald’s. Ordinary people are too often picking up the bill where the wealthiest maintain ownership of the basic framework of life in this country.  

Since the privatisation blitz under Margaret Thatcher, private companies have increasingly turned away from actually ‘doing’ things, making products, general entrepreneurialism, but instead focusing on ‘having’. Why innovate and make better products when you can just own the stuff that other people need to make those products, and charge rent? In a rather prescient example, this is true of the current issue around patents and vaccines. Given that the AstraZeneca vaccine’s development was approximately 97% funded by public money, we’re effectively just giving AstraZeneca an asset that they can own, free of charge, and charge rent on for… what exactly? To be clear, this isn’t about specific doses, this is about the publicly researched and developed vaccine intellectual property, which we’ve just signed over to AstraZeneca despite it being the Government that funded 97% of the creation of that intellectual property. This is particularly galling when one considers the fact that there are several generic drugs firms around the world who have said that, were the patents waived, they would be able to produce hundreds of millions, if not billions of more doses, with one Bangladeshi firm saying that they could have 650 million doses made in the next year, something that would help alleviate the issues with coronavirus throughout the Indian subcontinent. 

This is only a recent example, however. One should also consider a less important (but more interesting) market. Video games. Increasingly in recent years, companies like Epic Games (makers of Fortnite) have moved towards making their own stores and launchers. With Epic, in particular, being known for its store that has been widely subsidised by Tencent’s recent purchase of a huge share in the company. This has effectively seen Epic (with the financial backing of Tencent) dumping huge stacks of cash on game studios to make games exclusively for the store, and providing free games on the store itself, effectively paying not to have any competition. The influence here of rentier capitalism is very clear. They’re effectively getting this asset (the store), paying to not have to compete with other companies, and then charging rent (a 12% cut of sales).  

The video game market is actually quite an interesting microcosm for this economic phenomenon as it allows us to think about this issue without considering the dreaded ‘c word’, which I’ll try not to mention for the rest of the article. Consider Epic’s flagship game, Fortnite. It’s been described by many not as a game with a storefront, but as a storefront with a game, and this trend of rent-seeking behaviour is clear with Fortnite. Fortnite itself is free. While it is a product, it is treated as an asset, which Epic can attempt to charge as much as it possibly can in ‘rent’. Rent, in this case, is the normalisation of microtransactions and the purchase of so-called ‘battle passes’ every so often in the game, effectively meaning that, if one wants to access the full features of the game, one must pay extra, and this is part of a broader market trend, away from games that people buy and are able to access the full features of forever, and towards games ‘as a live service’, where the games themselves are treated as assets which are initially purchased by the user, but where the user must again pay for full access on a regular basis through season passes, DLC, and others, including microtransactions and loot boxes. Why bother innovating and making stuff when you can get rich purely by owning the stuff that other people use on a regular basis, and charging rent? 

On a more serious note, however, this has increasingly become the case for many things, including delivery services, where companies that provide those services aren’t actually providing them, but are acting as ‘platforms’, the platform being an asset that the company can effectively leave alone, and wait for the rent to flow in from the labours of the underpaid gig economy workers. This is all on top of the booming rental sector in which landlords are allowed to get rich at the expense of the rest of us, despite not actually really doing anything. Sure, some might be alright but ultimately their only role in the economy is to own stuff, not actually make stuff, and we’re paying the bill.  

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January 2022