You don’t have to be a Tea Party conservative to believe that the economy is threatened when there are too many “takers” and not enough “makers.” The “takers” who threaten the dynamism and fairness of industrial capitalism the most in the 21st century are not the welfare-dependent poor — the villains of Tea Party propaganda — but the rent-extracting, unproductive rich.
The term “rent” in this context refers to more than payments to your landlords. As Mike Konczal and many others have argued, profits should be distinguished from rents. “Profits” from the sale of goods or services in a free market are different from “rents” extracted from the public by monopolists in various kinds. Unlike profits, rents tend to be based on recurrent fees rather than sales to ever-changing consumers. While productive capitalists — “industrialists,” to use the old-fashioned term — need to be active and entrepreneurial in order to keep ahead of the competition, “rentiers” (the term for people whose income comes from rents, rather than profits) can enjoy a perpetual stream of income even if they are completely passive.
Rents come in as many kinds as there are rentier interests. Land or apartment or rental-house rents flow to landlords. Royalty payments for energy or mineral extraction flow to landowners. Interest payments on loans flow to bankers and other lenders. Royalty payments on patents and copyrights flow to inventors. Professions and guilds and unions can also extract rents from the rest of society, by creating artificial labor cartels to raise wages or professional fees. Tolls are rents paid to the owners of necessary transportation and communications infrastructure. Last but not least, taxes are rents paid to territorial governments for essential public services, including military and police protection.
Private sector parasites
Why must people continually try to ‘re-invent’ the language? Are they just trying and confuse the issue? There is “earned income” which takes the form of “wages or profit;” and there is “unearned income and taxes” which this person wants us to call “rent.” Further there is no such thing as a “productive capitalist.” “Productive capitalist” is a contridiction in terms. To explain: one can have a pile of money and use it to build a factory equipped with the latest machinery, but unless workers earning wages run those machines in that factory and “produce” something which is then sold to other workers, the Capitalist is not only not productive, but he is no longer a guy with a pile of money because he’s broke. Workers are productive but they are NOT Capitalists. Truth be told workers could get along quite well without a single Capitalist breathing the air.
Actually the term “rentiers” has been around as long as there’s been the study of economics. Adam Smith’s The Wealth of Nations identified the problem. Indeed, the ‘parasitic’ nature of rentiers was the impetus behind the creation of the income tax in the late 19th Century. I’ve seen several articles lately posing the question imhotep brings up, economy without Capitalists. And I think I’ll just replace Capitalist with parasite (parasitoid?) in the future . . . for the sake of accuracy. We need to unmask the real ‘takers’ in society.