Synopsis
There is a lie at the heart of global capitalism. Politicians, financiers and global bureaucrats claim to believe in free competitive markets, but have constructed the most unfree market system ever. It is corrupt because income is channelled to the owners of property - financial, physical and intellectual - at the expense of society.
This book reveals how global capitalism is rigged in favour of rentiers to the detriment of all of us, especially the precariat. A plutocracy and elite enriches itself, not through production of goods and services, but through ownership of assets, including intellectual property, aided by subsidies, tax breaks, debt mechanisms, revolving doors between politics and business, and the privatisation of public services. Rentier capitalism is entrenched by the corruption of democracy, manipulated by the plutocracy and an elite-dominated media.
Meanwhile, wages stagnate as labour markets are transformed by outsourcing, automation and the on-demand economy, generating more rental income while expanding the precariat.
The Corruption of Capitalism argues that rentier capitalism is fostering revolt, and concludes by outlining a new income distribution system that would achieve the extinction of the rentier while promoting sustainable growth.
"synopsis" may belong to another edition of this title.
About the Author
Guy Standing is Research Professor at the School of Oriental and African Studies, University of London, and is a Fellow of the Academy of Social Sciences.
He was previously Professor of Economic Security at the University of Bath and Professor of Labour Economics at Monash University in Australia, and was director of the Socio-Economic Security Programme of the International Labour Organization, in the United Nations. He is a co-founder and honorary co-president of the Basic Income Earth Network.
His books include The Precariat: The New Dangerous Class (2011), A Precariat Charter: From Denizens to Citizens (2014), Work after Globalization: Building Occupational Citizenship (2009) and Basic Income: A Transformative Policy for India (2015).
From the Back Cover
There is a lie at the heart of global capitalism. Politicians, financiers and global bureaucrats claim to believe in free competitive markets, but have constructed the most unfree market system ever. It is corrupt because income
is channelled to the owners of property - financial, physical and intellectual - at the expense of society.
tax breaks, debt mechanisms, revolving doors between politics and business,
and the privatisation of public services. Rentier capitalism is entrenched by the corruption of democracy, manipulated by the plutocracy and an elite-dominated media. Meanwhile, wages stagnate as labour markets are transformed by outsourcing, automation and the on-demand economy, generating more rental income while expanding the precariat. The Corruption of Capitalism argues that rentier capitalism is fostering revolt, and concludes by outlining a new income distribution system that would achieve the extinction of the rentier while promoting sustainable growth.
From the Inside Flap
There is a lie at the heart of global capitalism. Politicians, financiers and global bureaucrats claim to believe in free competitive markets, but have constructed the most unfree market system ever. It is corrupt because income
is channelled to the owners of property financial, physical and intellectual at the expense of society.
This book reveals how global capitalism is rigged in favour of rentiers to the detriment of all of us, especially the precariat. A plutocracy and elite enriches itself, not through production of goods and services, but through ownership of assets, including intellectual property, aided by subsidies,
tax breaks, debt mechanisms, revolving doors between politics and business,
and the privatisation of public services. Rentier capitalism is entrenched by the corruption of democracy, manipulated by the plutocracy and an elite-dominated media.
Meanwhile, wages stagnate as labour markets are transformed by outsourcing, automation and the on-demand economy, generating more rental income while expanding the precariat.
The Corruption of Capitalism argues that rentier capitalism is fostering revolt, and concludes by outlining a new income distribution system that would achieve the extinction of the rentier while promoting sustainable growth.
Excerpt. © Reprinted by permission. All rights reserved.
Preface
This book is about something worse than corruption by individuals
or companies. It is about the uncharted corruption of a claimed
ideal – ‘free markets’ – and how economies are being rigged to
favour owners of assets – the rentiers – while depressing incomes
from labour.
Some would say that capitalism is inherently corrupt, because
those who can cheat successfully for long enough do very nicely
and always have. Even many of those who espouse capitalism
unreservedly would grudgingly admit to that. Every day there
is a report of some economic crime. There are too many rogues
whose names are known to us to imagine that corruption does
not pay. There is a saying among Russian businessmen: never ask
how he got his first million.
Yet that is not what this book is about. It is about how the
claims made on behalf of capitalism have been subverted in
the construction of a system that is radically different from what
its advocates claim. They assert a belief in ‘free markets’ and want
us to believe that economic policies are extending them. That
is untrue. Today we have the most unfree market system ever
created. It is deeply corrupt because its leaders claim it is the opposite
of what it is becoming.
How can politicians look into TV cameras and say we have a
free market system when patents guarantee monopoly incomes
for twenty years, preventing anyone from competing? How can
they claim there are free markets when copyright rules give a
guaranteed income for seventy years after a person’s death? How
can they claim free markets exist when one person or company is
given a subsidy and not others, or when they sell off the commons
that belong to all of us, at a discount, to a favoured individual or
company, or when Uber, TaskRabbit and their ilk act as unregulated
labour brokers, profiting from the labour of others?
Far from trying to stop these negations of free markets, governments
are creating rules that allow and encourage them. That
is what this book is about.
One Man’s Nightmare…
There he was, speaking to the 2015 Financial Times Business of
Luxury Summit in the principality of Monaco, in the company
of glamorous wealth. With a personal fortune of upwards of
$5.5 billion – built on a tobacco inheritance and augmented by
luxury brands such as Cartier, Chloé and Vacheron Constantin –
South African Johann Rupert revealed he had been having nightmares.
He could not sleep, he said, because he saw inequality
generating envy, hatred and social warfare. He was worried stiff
by the prospect of revolt. Addressing his well-heeled audience,
he concluded, ‘It’s unfair. So that’s what keeps me awake at night.’
One feels Johann’s pain.
On the other side of the Atlantic, in Seattle, venture capitalist
and fellow plutocrat Nick Hanauer, another who drew his first
fat cheques from a dynastic family business, albeit one making
feather bedding rather than cigarettes, was worrying about pitchforks
aimed in his direction and his ‘fellow 0.01ers’. In his dreams,
he feared the sans-culottes of the French Revolution, who sent
the aristocrats to the guillotine. To avert the threat, he advocated
a higher minimum wage, a desirable move but hardly one that
would threaten the structures producing the malaise of inequality
and insecurity. But at least he recognised that revolt was justified.
Revolt takes many forms. Sometimes it stems from desperation;
there is nothing to lose. Sometimes it stems from a dying
moment, when the tide of history is drowning the losers, when
just standing up is an act of defiance. The miners’ strike in Britain
in 1984 was like that. It was resistance against loss of a way of
labouring that had turned adversity into a community of shared
identity. Similarly, the Luddites of the early nineteenth century
were resisting disruption to a way of life that weavers had forged
over generations as a means of dignifying their community.
Sometimes, though, revolt is more strategic, directed to an end
largely understood by those taking part, or by enough of those
leading it to give it coherence and sustainable strength. These are
the revolts of those wanting to accelerate change and steer it in
new directions.
The anger of injustice is combined with a belief that something
better can be achieved. In such times throughout history, a collective
energy comes from the shared anxieties of people who
feel common pressures and a common resentment towards those
taking the pickings of society while they are left behind, losing
rights they had come to expect. In such circumstances, revolt is
against the minority who are gaining from social structures that
are anything but natural.
The theme of this book is that conditions have been created in
which some sort of revolt is increasingly likely. It will conclude by
considering what that might look like and who might be its leaders.
Before doing so, the nature of the problem and the scale of
the challenge must be understood. Chapter 1 begins by laying
out the global context, recalling the decay of institutions and
social policies that had served the post-1945 era reasonably well
and how they were dismantled. It was no golden age; it was merely
better in many respects than what had preceded it.
Chapter 2 considers the institutional architecture that has been
carefully constructed to orchestrate the development of a global
market system in which rentiers – those living off income gained
from property and other assets – are thriving at the expense of
most people in most societies. International bureaucracies in
Geneva, Washington DC, London and elsewhere have shaped the
rules that have made the system so unfree and the gains by
the plutocracy and elite so vast.
Chapter 3 deals with one of the dirty secrets of the age: the
stealthily built edifice of subsidies that in diverse ways flow to the
plutocracy, the elite, their corporate equivalents and other rentiers.
Those below them pay the price in higher taxes, lower benefits and
worse public services. The rentiers have shunted much of their
wealth into tax havens, as the Panama Papers leaked in spring 2016
so comprehensively revealed. No fewer than seventy-two former or
current heads of state or government – princes, sheikhs, Presidents
and Prime Ministers – were exposed, as well as a wide array of the
world’s wealthiest. Those tax havens did not come about and persist
for many years by accident; they were and remain a means of subsidising
the rich, a hand-out they neither earn nor deserve.
Chapter 4 reviews a contrasting side of the global economy,
the spread of many forms of debt, which might once have been
expected to fade as economies became richer and their residents
wealthier. If it is any consolation to those saddled with debts that
frighten them into sleeplessness, the reality is that the system has
been corrupted to such a degree that it depends on systemic debt
enmeshing millions of people. Again, it is not an incidental or
accidental feature.
Chapter 5 considers another shocking reality: the way in which
the public sphere and the historically created commons nurtured
over centuries are being privatised and commercialised. This is
accelerating the ecological crisis that threatens all of us and
is transferring precious aspects of community life to the rentiers.
It must be resisted, before it is too late.
Chapter 6 returns to a theme I have explored in earlier books:
the growth of the ‘precariat’, those living through unstable and insecure
labour, in and out of jobs, without an occupational identity,
financially on the edge and losing rights. In this book, the focus
is on how labour and work are being transformed by the silicon
revolution and the growth of new labour relationships. Politicians
and trade unions have barely touched on what is happening.
Chapter 7 looks at how the corruption of the free market
system has gone in tandem with the corruption and thinning of
democracy. The question that hovers in the background is stark:
do we have a democracy at all today?
Finally, Chapter 8 poses the biggest question of all: can the corruption
that rentier capitalism represents be overcome by normal
democratic means? Should we continue to play by its rules?
In sum, this book considers the rise of rentier capitalism and
its inherent corruption. While many of the examples are from
the UK, the context is the construction of a global architecture
facilitating rentiers and the enthronement of property rights over
citizenship rights.
• • •
The UK’s referendum on remaining in or exiting the European
Union was held as this book was going to press. The shock
52 per cent support for Brexit gives further testimony to the
book’s primary theme. It was a populist vote against the insecurity,
inequalities and austerity induced by a system of rentier
capitalism that has channelled more of the income to a minority
in a global Gilded Age. That revolt will be followed by others of
a similar kind, and politics will grow uglier, unless rent seeking
can be curbed and unless the desperate need for basic economic
security for all is recognised and met.
Guy Standing
June 2016
This book is about something worse than corruption by individuals
or companies. It is about the uncharted corruption of a claimed
ideal – ‘free markets’ – and how economies are being rigged to
favour owners of assets – the rentiers – while depressing incomes
from labour.
Some would say that capitalism is inherently corrupt, because
those who can cheat successfully for long enough do very nicely
and always have. Even many of those who espouse capitalism
unreservedly would grudgingly admit to that. Every day there
is a report of some economic crime. There are too many rogues
whose names are known to us to imagine that corruption does
not pay. There is a saying among Russian businessmen: never ask
how he got his first million.
Yet that is not what this book is about. It is about how the
claims made on behalf of capitalism have been subverted in
the construction of a system that is radically different from what
its advocates claim. They assert a belief in ‘free markets’ and want
us to believe that economic policies are extending them. That
is untrue. Today we have the most unfree market system ever
created. It is deeply corrupt because its leaders claim it is the opposite
of what it is becoming.
How can politicians look into TV cameras and say we have a
free market system when patents guarantee monopoly incomes
for twenty years, preventing anyone from competing? How can
they claim there are free markets when copyright rules give a
guaranteed income for seventy years after a person’s death? How
can they claim free markets exist when one person or company is
given a subsidy and not others, or when they sell off the commons
that belong to all of us, at a discount, to a favoured individual or
company, or when Uber, TaskRabbit and their ilk act as unregulated
labour brokers, profiting from the labour of others?
Far from trying to stop these negations of free markets, governments
are creating rules that allow and encourage them. That
is what this book is about.
One Man’s Nightmare…
There he was, speaking to the 2015 Financial Times Business of
Luxury Summit in the principality of Monaco, in the company
of glamorous wealth. With a personal fortune of upwards of
$5.5 billion – built on a tobacco inheritance and augmented by
luxury brands such as Cartier, Chloé and Vacheron Constantin –
South African Johann Rupert revealed he had been having nightmares.
He could not sleep, he said, because he saw inequality
generating envy, hatred and social warfare. He was worried stiff
by the prospect of revolt. Addressing his well-heeled audience,
he concluded, ‘It’s unfair. So that’s what keeps me awake at night.’
One feels Johann’s pain.
On the other side of the Atlantic, in Seattle, venture capitalist
and fellow plutocrat Nick Hanauer, another who drew his first
fat cheques from a dynastic family business, albeit one making
feather bedding rather than cigarettes, was worrying about pitchforks
aimed in his direction and his ‘fellow 0.01ers’. In his dreams,
he feared the sans-culottes of the French Revolution, who sent
the aristocrats to the guillotine. To avert the threat, he advocated
a higher minimum wage, a desirable move but hardly one that
would threaten the structures producing the malaise of inequality
and insecurity. But at least he recognised that revolt was justified.
Revolt takes many forms. Sometimes it stems from desperation;
there is nothing to lose. Sometimes it stems from a dying
moment, when the tide of history is drowning the losers, when
just standing up is an act of defiance. The miners’ strike in Britain
in 1984 was like that. It was resistance against loss of a way of
labouring that had turned adversity into a community of shared
identity. Similarly, the Luddites of the early nineteenth century
were resisting disruption to a way of life that weavers had forged
over generations as a means of dignifying their community.
Sometimes, though, revolt is more strategic, directed to an end
largely understood by those taking part, or by enough of those
leading it to give it coherence and sustainable strength. These are
the revolts of those wanting to accelerate change and steer it in
new directions.
The anger of injustice is combined with a belief that something
better can be achieved. In such times throughout history, a collective
energy comes from the shared anxieties of people who
feel common pressures and a common resentment towards those
taking the pickings of society while they are left behind, losing
rights they had come to expect. In such circumstances, revolt is
against the minority who are gaining from social structures that
are anything but natural.
The theme of this book is that conditions have been created in
which some sort of revolt is increasingly likely. It will conclude by
considering what that might look like and who might be its leaders.
Before doing so, the nature of the problem and the scale of
the challenge must be understood. Chapter 1 begins by laying
out the global context, recalling the decay of institutions and
social policies that had served the post-1945 era reasonably well
and how they were dismantled. It was no golden age; it was merely
better in many respects than what had preceded it.
Chapter 2 considers the institutional architecture that has been
carefully constructed to orchestrate the development of a global
market system in which rentiers – those living off income gained
from property and other assets – are thriving at the expense of
most people in most societies. International bureaucracies in
Geneva, Washington DC, London and elsewhere have shaped the
rules that have made the system so unfree and the gains by
the plutocracy and elite so vast.
Chapter 3 deals with one of the dirty secrets of the age: the
stealthily built edifice of subsidies that in diverse ways flow to the
plutocracy, the elite, their corporate equivalents and other rentiers.
Those below them pay the price in higher taxes, lower benefits and
worse public services. The rentiers have shunted much of their
wealth into tax havens, as the Panama Papers leaked in spring 2016
so comprehensively revealed. No fewer than seventy-two former or
current heads of state or government – princes, sheikhs, Presidents
and Prime Ministers – were exposed, as well as a wide array of the
world’s wealthiest. Those tax havens did not come about and persist
for many years by accident; they were and remain a means of subsidising
the rich, a hand-out they neither earn nor deserve.
Chapter 4 reviews a contrasting side of the global economy,
the spread of many forms of debt, which might once have been
expected to fade as economies became richer and their residents
wealthier. If it is any consolation to those saddled with debts that
frighten them into sleeplessness, the reality is that the system has
been corrupted to such a degree that it depends on systemic debt
enmeshing millions of people. Again, it is not an incidental or
accidental feature.
Chapter 5 considers another shocking reality: the way in which
the public sphere and the historically created commons nurtured
over centuries are being privatised and commercialised. This is
accelerating the ecological crisis that threatens all of us and
is transferring precious aspects of community life to the rentiers.
It must be resisted, before it is too late.
Chapter 6 returns to a theme I have explored in earlier books:
the growth of the ‘precariat’, those living through unstable and insecure
labour, in and out of jobs, without an occupational identity,
financially on the edge and losing rights. In this book, the focus
is on how labour and work are being transformed by the silicon
revolution and the growth of new labour relationships. Politicians
and trade unions have barely touched on what is happening.
Chapter 7 looks at how the corruption of the free market
system has gone in tandem with the corruption and thinning of
democracy. The question that hovers in the background is stark:
do we have a democracy at all today?
Finally, Chapter 8 poses the biggest question of all: can the corruption
that rentier capitalism represents be overcome by normal
democratic means? Should we continue to play by its rules?
In sum, this book considers the rise of rentier capitalism and
its inherent corruption. While many of the examples are from
the UK, the context is the construction of a global architecture
facilitating rentiers and the enthronement of property rights over
citizenship rights.
• • •
The UK’s referendum on remaining in or exiting the European
Union was held as this book was going to press. The shock
52 per cent support for Brexit gives further testimony to the
book’s primary theme. It was a populist vote against the insecurity,
inequalities and austerity induced by a system of rentier
capitalism that has channelled more of the income to a minority
in a global Gilded Age. That revolt will be followed by others of
a similar kind, and politics will grow uglier, unless rent seeking
can be curbed and unless the desperate need for basic economic
security for all is recognised and met.
Guy Standing
June 2016
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