Inequality has become one of the central political topics of our time, even if the debate prompted by such figures as Thomas Piketty has thus far had little impact on government policy, and the trend towards ever-higher concentrations of wealth continues its inexorable march. According to the French economist Philippe Askenazy, the ‘fascination with the 1 per cent’ that has characterized much work in the field has blunted its critical edge.footnote1 Askenazy, who specializes in the study of work, and served on the French government’s Conseil d’Analyse Économique in the early years of the Hollande presidency, argues for a shift in focus towards the primary distribution of income and wealth. Much of the recent discussion has been limited to arguments for re-distribution after the fact, through taxes and social spending, thereby ‘naturalizing’ the sources of inequality in the primary distribution between capital and labour, ultimately leading to an impasse.
The prevailing orthodoxy accounts for the stagnation or decline of working-class incomes in Western economies by reference to productivity. The majority of workers are said to be less productive, either because competition from lower-income countries has reduced the value of the goods and services they produce, or because new technologies have made their labour redundant. Askenazy’s new book, Tous rentiers!, challenges such views. He argues that social-democratic parties, in reproducing the ‘productivity’ story, have surrendered to fatalism. By accepting primary distribution as ‘natural’, they are limited to proposing redistributive measures only—themselves problematic in the global economy—or abandoning the pursuit of equality altogether for the mirage of ‘equal opportunity’. Meanwhile the devaluation of work performed by the mass of people is pushing capitalism into a deflationary spiral. He links this dysfunctional primary distribution to the ability of powerful actors to capture ‘rents’—incomes deriving from certain socio-economic or political advantages, rather than their contribution to production. Those advantages can be challenged, and the primary distribution to which they give rise is therefore malleable. A second theme of the book is the ideology of private property, which is used to buttress existing rents by linking them to property rights. The notion of a ‘property-owning democracy’, sustained in particular by owner-occupation in housing, serves to defend the predatory claims of the strongest. Plain-spoken, trenchant and often witty, these discussions express a clear leftwards shift in Askenazy’s outlook.
In mainstream economics, ‘rent’ refers to a flow of income greater than would be needed to secure the resources in question. Thus, it would be possible to compress or reallocate such income without impairing production. The concept has its origin in Ricardo’s account of ground rent: as economic development takes place through capital accumulation, a share of the increased output goes to landlords, even though they have made no additional contribution to its production. Subsequently economists applied the term to other income flows. An important example is monopoly rents: were the market power of a monopolist to be reduced, there need be no reduction in the output of the commodity concerned (indeed, one might expect its output to grow). This overlaps with the notion of technological rents: if one firm acquires a more efficient process than its rivals, it might enjoy prices based on the established but now inefficient methods, and thus accrue ‘super-profits’. Such rents may be reinforced by patent law. Some wage incomes can be said to involve a rent, if a worker receives a higher wage than they could get elsewhere. This relates to the distinction between ‘insiders’ and ‘outsiders’, with the latter receiving the same wage they could obtain in another job, the former with a premium over that level. Then there are also the very high ground rents extracted by landlords from development in certain cities. The French in particular often refer to ‘situational rents’—advantages for some agents arising from their place in specific geographic, organizational or other structures. In the British context, there is the scandalous multiplicity of situational rents created by the outsourcing of public services and the sale of public assets.
Tous Rentiers! adopts what Askenazy calls ‘a broader and more neutral definition: rents are advantages which can be appropriated (accaparés) consistently by economic actors (capitalists, landlords, employees, the self-employed, entrepreneurs, states . . .) through economic, political or legal mechanisms which they may be able to influence.’ The seizure of rents in present-day capitalism is protected by an ideology of ‘propertarianism’ (propriétarisme), which defines certain jobs as ‘unproductive’, even as they generate productivity gains that boost rents further still. Redefining primary distribution today is not just a question of justice or public health, he argues: ‘By denying labour’s contribution to the production of wealth and stigmatizing as unproductive those who sustain development, capitalism condemns itself. A revaluation of work is essential if we are to escape from the wage deflation which today is locking economies into stagnation.’
As Askenazy points out, the primary distribution is also an index of social recognition for the value of one’s work: receiving a monthly income of €600 plus a wage subsidy of €400 is not the same as earning €1200 and paying €200 income tax. Beyond these considerations, excessive concern with the 1 per cent (or 0.1 per cent, or 0.001 per cent) over-simplifies the pattern of inequality. Askenazy offers a neat demonstration of the limits to Thomas Piketty’s account, which relies on the equation α = r × β: that is, α, the share of capital in national income, is equal to r, the rate of profit times β, the capital/income ratio. Behind this formulation is a tendency to view both the rate of profit and the capital intensity of production as ‘natural’, or determined by technical factors and the workings of competition. Askenazy turns Piketty’s formulation around (r = α / β) to give a completely different, Marxist, interpretation. The rate of profit r depends on the rate of exploitation, α, divided by β, the organic composition of capital: both of these determinants, the first most immediately, result from social conflict between labour and capital.