The economic understanding of rent differs somewhat from the popular usage of the term. While the rent one pays to a landlord is a form of rent, it is only a highly visible, and instructive, example of a much larger and more encompassing concept.
The relationship of land to economics traces back to the beginning of the discipline, a time when the first political economists, the so-called ‘physiocrats’ in France (Quesney, Condorcet, Condillac etc.), theorised a formal, politically significant relationship between land and value: the physiocrats understood land as the source of all value. Farming, or otherwise working the land created tangible value, and therefore, economic policy should be directed towards maximising value produced from land. It is perhaps not a coincidence that this way of thinking developed during the early advance of colonialism.
After the physiocrats, Adam Smith and David Ricardo become interested in the ways in which land and value interacted. Ricardo, a pioneer of ‘classical economics’, wrote a highly influential exploration of rent in his book On the Principles of Political Economy and Taxation. In the book, Ricardo argues that the role of the free market, in its drive to increase productive wealth and economic growth is to minimise the advantage gained by ‘rent seeking’, i.e. securing territories or properties in order to grow the landlord’s personal wealth. This wealth generated by rent seeking – a point later recognised by many economists – may not necessarily reach the larger productive economy, Instead, it would tend to be used primarily for further rent seeking opportunities.
Later economists also tried to develop theories for minimising the rentier economy, John Maynard Keynes, for example, spoke of ‘the euthanising of the rentier’ as a cornerstone of creating a productive, fair economy. While these theories dominated the post-World War Two economies of Western Europe, another form of rent-seeking was advancing: rentierism based on intellectual property. Copyright law had existed for centuries by the turn of the millennium, but its true potential has been realised in the age of medical and artistic patents. The ‘rights’ to a chemical formula or a creative work became engines for rent-seeking on previously unimaginable scales. If one thinks back to the physiocrats and Ricardo, rent-seeking was primarily done in relation to material properties that could only be extracted to certain degrees in accordance with the laws of physics, which present limits on the availability of energy and space. Rents extracted from patents and copyright could now theoretically be extended infinitely without the physical constraints of land and material objects such as cars or horses. To take a familiar example, in the days of physical media, one could buy a record with a song on it and use it as often as the medium held up, but the right to reproduce the song lay with the copyright holder and led to many perverse cases of value extraction wherein the creator of a work remained poor but the rentier with the copyright became rich. The digital economy has brought another layer entirely to the rentier economy. Almost all digital products, from software to digital assets (e.g. video game skins or accessories) can be reproduced infinitely. Thus, opportunity for rent-seeking has expanded further, moving into the material geographies one would associate with the thinking of the physiocrats. Today buying objects such as automobiles, or even land itself, is subject to modes of digital rent-seeking inscribed into the purchase process. Land, and other objects rooted in material scarcity (e.g. fine art) can now be securitised such that multiple owners can extract rents from a single object or parcel of territory (and, ensuingly, extract rents from subletting their securities). Thus, digital rentierism has deepened existing physical rentierism, entrenching inequalities in the manner described in Thomas Piketty’s Capital in the 21st Century.
The uneven advance of Web 3.0/metaverse technologies belies an even more intense rent-seeking space. Metaverse spaces are by definition ‘pre-enclosed’ as they are already proprietary extractive sites from the point of their creation – unlike, for example, land which has to be physically then legally enclosed. In such spaces opportunities to extract value from the ‘same’ digital space or commodity extend as far as the imagination of a rent seeker can stretch.
The economic understanding of rent differs somewhat from the popular usage of the term. While the rent one pays to a landlord is a form of rent, it is only a highly visible, and instructive, example of a much larger and more encompassing concept.
The relationship of land to economics traces back to the beginning of the discipline, a time when the first political economists, the so-called ‘physiocrats’ in France (Quesney, Condorcet, Condillac etc.), theorised a formal, politically significant relationship between land and value: the physiocrats understood land as the source of all value. Farming, or otherwise working the land created tangible value, and therefore, economic policy should be directed towards maximising value produced from land. It is perhaps not a coincidence that this way of thinking developed during the early advance of colonialism.
After the physiocrats, Adam Smith and David Ricardo become interested in the ways in which land and value interacted. Ricardo, a pioneer of ‘classical economics’, wrote a highly influential exploration of rent in his book On the Principles of Political Economy and Taxation. In the book, Ricardo argues that the role of the free market, in its drive to increase productive wealth and economic growth is to minimise the advantage gained by ‘rent seeking’, i.e. securing territories or properties in order to grow the landlord’s personal wealth. This wealth generated by rent seeking – a point later recognised by many economists – may not necessarily reach the larger productive economy, Instead, it would tend to be used primarily for further rent seeking opportunities.
Later economists also tried to develop theories for minimising the rentier economy, John Maynard Keynes, for example, spoke of ‘the euthanising of the rentier’ as a cornerstone of creating a productive, fair economy. While these theories dominated the post-World War Two economies of Western Europe, another form of rent-seeking was advancing: rentierism based on intellectual property. Copyright law had existed for centuries by the turn of the millennium, but its true potential has been realised in the age of medical and artistic patents. The ‘rights’ to a chemical formula or a creative work became engines for rent-seeking on previously unimaginable scales. If one thinks back to the physiocrats and Ricardo, rent-seeking was primarily done in relation to material properties that could only be extracted to certain degrees in accordance with the laws of physics, which present limits on the availability of energy and space. Rents extracted from patents and copyright could now theoretically be extended infinitely without the physical constraints of land and material objects such as cars or horses. To take a familiar example, in the days of physical media, one could buy a record with a song on it and use it as often as the medium held up, but the right to reproduce the song lay with the copyright holder and led to many perverse cases of value extraction wherein the creator of a work remained poor but the rentier with the copyright became rich. The digital economy has brought another layer entirely to the rentier economy. Almost all digital products, from software to digital assets (e.g. video game skins or accessories) can be reproduced infinitely. Thus, opportunity for rent-seeking has expanded further, moving into the material geographies one would associate with the thinking of the physiocrats. Today buying objects such as automobiles, or even land itself, is subject to modes of digital rent-seeking inscribed into the purchase process. Land, and other objects rooted in material scarcity (e.g. fine art) can now be securitised such that multiple owners can extract rents from a single object or parcel of territory (and, ensuingly, extract rents from subletting their securities). Thus, digital rentierism has deepened existing physical rentierism, entrenching inequalities in the manner described in Thomas Piketty’s Capital in the 21st Century.
The uneven advance of Web 3.0/metaverse technologies belies an even more intense rent-seeking space. Metaverse spaces are by definition ‘pre-enclosed’ as they are already proprietary extractive sites from the point of their creation – unlike, for example, land which has to be physically then legally enclosed. In such spaces opportunities to extract value from the ‘same’ digital space or commodity extend as far as the imagination of a rent seeker can stretch.