Towards a Natural History of Capitalism: economic rents, regimes of accumulation, and oligarchy

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Margin Call (2011)

This is an ongoing conversation with Ted Fertik. 

It was great talking today man. The first battle in the great war between Braudel and Marx was very productive. You have really helped me clarify my own thoughts. Tell me if this sounds like a reasonable offer for an armistice:

The labor theory of value explains some fraction of the variation in economic value and wage slavery is an important feature of the lived experience in modern times. I personally find a narrower Marxist frame quite useful: examine the strategies used by capitalism to deal with labor militancy within the larger political economy. On such home turf so to speak, attention to wage labor, labor’s share of labor productivity growth, and more generally the tug-of-war between labor and capital is decidedly warranted. But working with Braudel we can go much, much further. Here’s a strategy.

We pay attention to the connection between regimes of accumulation built on economic rents (ie, earnings over and above what would obtain under free market competition) on the one hand and oligarchy on the other. Think about this: If competition were the dominant fact of the market-capitalism quasi-object then the distribution of wealth ought to get more diffuse under greater competitive pressure and over time simply due to entropy.

But how then do we explain higher rates of accumulation precisely when competition is supposed to be the fiercest, ie in the modern neoliberal era?? The reality is that neoliberalism is an intensification of market discipline only for the losers while the winners have grown fat feasting on the anti-market.

Industrial concentration, rents, and oligarchic distributions of wealth track each other. The political economy of this threefold comovement demands interrogation. What ties the three together is the fact that regimes of rapid rates of wealth accumulation are built on the systematic harvesting of persistent economic rents. Rents serve not only as attractors of capitalism’s attention, as in the standard picture; but also as sources of high rates of accumulation itself.

This gets more interesting as you go into the details. For instance, oligopolistic firms share their rents with their employees. What explains the distribution of compensation of employees is interfirm variation rather than within-firm variation. In measuring the rates of accumulation, we therefore have to include what looks like extraordinary labor compensation (high salaries, bonuses and stock options) at oligopolistic firms (beginning with CEO compensation) as well as their supernormal profits.

The beauty of the neoliberal regime is that the capital market acts to ‘rationalize’ sectors into stable oligopolistic regimes. These rents find their way all the way to the coffers of core market-based financial intermediaries who use their privileged access to lucrative asset classes (which are unavailable to retail investors, eg fixed-income derivatives) and their privileged information on order flow and endogenous fluctuations, to corner some serious rent. That’s your market-based financial regime of accumulation. Then you have surveillance platform capitalism of the Valley, pace Zuboff. And so on and so froth throughout the history of capitalism. I think this is a powerful frame of reference.

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