The Roots of Rentier-dom
THAT monopolistic behaviour is possible even when there are many owners is shown by the urban real estate market, in which there is a multitude of owners and yet in which all these owners profit from the maintenance of an invisible mountain of monopoly in the form of urban location values, which rise toward the middle of town like an invisible mountain, whence also the expression ‘property climbers’. Real estate investors, as a class, may well put pressure on the government not to do anything that might reduce the height or steepness of the mountain that they are all climbing, even though this ultimately pits them against the rest of society including the long-term health of the city: the goose that lays their golden eggs.
For antisocial monopoly and disembedded, footloose capital do not only make for exploitation, but in fact also for actual social corrosion and disintegration. To return to the jigsaw example, after a while, nobody wants to play the game any more. The city where real estate is too expensive ceases to attract productive investment, and young people flee.
This is an old argument with regard to real estate and the market for land, by the way. A certain tension between the capitalist (and workers) who operate the factory on top of the land, and the person who owns the land beneath, has long been identified by some economic critics; some, indeed, quite mainstream, such as the nineteenth-century liberal John Stuart Mill, who dubbed the growing return to such a landowner, as the city grew and prospered due to the efforts of those above, the ‘unearned increment’.
The same argument gives rise to the word rentier, derived from rent and referring to a recipient of the kind of income that could, in theory, be taxed a a rate of 100% without affecting actual production. This is not true of the industrial capitalist, and not true of the workers, but it is true of those who passively own land.
After all, there are cities in Europe, such as Vienna, where the government owns much of the land, which effectively amounts to the same thing as a 100% tax on land.
In nineteenth-century America, the reformer Henry George proposed that land should bear the full burden of taxation, exempting industrial capitalists and their workers. George didn’t mean that farmers should be taxed for their efforts. He was referring, primarily, to location values in their most absract and windfall-prone sense: to the ability to erect a keep out sign on a location on the map that might become more valuable over time. This, he argued, should bear an annual tax sufficient to support the state, an idea that came to be known as the ‘single tax’.
This was not to be levied to the point where it confiscated all value. But it was to be levied to the point where it supported all the costs of the state, including the cost of all state infrastructure projects, such as government railways, that added further value to the land.
It’s surprising how many economic authorities have acknowledged that George’s single tax makes a lot of sense in theory, while murmuring that that would be hard to get through the political process in practice. Many Continental-European and East Asian countries and cities do in fact operate a more or less Henry-Georgist policy of high taxes on unimproved land and extensive public landownership, in the most central locations and beside the government railways, as well.
But invariably, we find that in such societies an aristocratic landowning class was at some time overthrown by wars and revolutions of the kind that have been especially plentiful in Continental Europe, at least up until 1945. The coat of arms of Austria, whose capital city of Vienna possess three square kilometres of prime real estate in the public realm, thus features a traditional looking eagle with a mural crown on its head but also, one notices more closely, a hammer and a sickle and a broken chain.
That of Italy’s modern republic features a cogwheel, representing the first article of the Italian constitution which states that Italy is “a democratic republic, founded on labour.”
And of course, we all know how many revolutions there have been in France, where they are onto their Fifth Republic.
Whereas, in the more stable countries of the English-speaking world, nothing of the sort has ever happened in recent centuries: save partially and in ways that were largely reversed in the post-Civil War American South. More stable, in other words — and also more ossified and plutocratic, especially when it comes to the ownership of land.
Urban real estate is undoubtedly the most obvious example of a sector prone to the formation of an antisocial rentier monopoly with many owners: indeed to the point that some would say it is a special case. But then again, the American healthcare system also looks suspiciously like an antisocial monopoly with many owners. And perhaps the same is true of other sectors as well.
Now, if America still practiced the form of capitalism in which the corporation was a “community and societal patron,” and in which the potential rapaciousness of urban property climbers and other sectors prone to a mountain of monopoly were also kept in check, then Marxist and otherwise economically radical views would still be quite marginal in American society.
But it does not, and so a majority of millennials favour socialism.
Which of course, comes with the qualification that there are many different definitions of socialism.
For many, I suspect, the socialisation of capital simply means its re-embedding, not so much to re-create Eisenhower’s America as something akin to European social-democracy today.
But anyway, in an economy of complex and joint production, and burgeoning cities, it is a fact of life that the more ruthlessly disembedded or antisocial the behaviour of capital vis-a-vis all those trapped in society’s networks of commitment — the more that capital behaves like a bull in society’s china shop , in other words — the more that the workers will talk of socialism and the socialisation of capital, whatever that is held to mean precisely.
Whether we are talking about socialisation in the Marxist sense: or simply a matter of teaching capital some manners and sociability, once again.