Finance Capitalism versus Industrial Capitalism: The Rentier Resurgence and Takeover

 August 10, 2021

Publication by Michael Hudson : Sage Journals

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.

1. Introduction

2. Marx’s View of the Historical Destiny of Capitalism: To Free Economies from Feudalism

3. Capitalism’s Alliance of Banks with Industry to Promote Democratic Political Reform

4. The Banking Sector Lobbies against the Real Estate Sector, 1815–1846

5. The Alliance of Banking with Real Estate and Other Rent-Seeking Sectors

6. The Rentier Squeeze on Budgets: Debt Deflation as a Byproduct of Asset-Price Inflation

7. Finance Capital’s Fight to Privatize and Monopolize Public Infrastructure

8. Finance Capitalism Impoverishes Economies while Increasing Their Cost Structure

9. Today’s New Cold War Is a Fight by Finance Capitalism against Industrial Capitalism

10. Summary: Finance Capital as Rent-Seeking

11. Some Final Observations: Financial Takeover of Industry, Government, and Ideology

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