Traders in the New York Stock Exchange. Photo: Richard Drew / AP/Press Association Images. All rights reserved.The 20th century income distribution system has broken down irreparably. Recall the post-1945 consensus under which the shares of income going to capital and to labour were roughly stable, when workers and corporations shared the gains from productivity growth, and when rental income was modest. Those relying on wages, particularly in the precariat, can no longer rely on money wages to giving them economic security, or look forward to being able to do so.
Today, not only is the share going to profits rising, and the share going to labour falling, but the share going to many forms of rent is rising dramatically. Linked to rent-seeking, within the share going to profits more is going to a minority, and within the labour share more is going to a minority. The precariat is trebly hit. In that historic context, the left’s defining challenge is to build a new income distribution system suited to the 21st century global economy. So far, they have ducked the challenge and are paying the price.
Keynes famously predicted the euthanasia of rentiers – those gaining from scarce capital and property. He thought that as capital would become less scarce, it would lose the ability to extract rental income. For a while after the second world war, that seemed to be happening. But that didn't account for the gathering global transformation: the painful construction of a global market system, analogous to Karl Polanyi’s 'great transformation', which was about the construction of national market systems. As this ongoing global transformation stretches into the 21st century, we have entered the age of rentier capitalism: where property ‘rights’ triumph over free markets. It is no accident.
