#rentier economics

[liberalsarecool]

Exploitation is root of most of our problems. You are given endless distractions, but most of what grinds you down is the bottomless greed/avarice of capitalism.

[writerfx]

Will The Western World Survive Its Rentier Economies?

Amongst other important topics, Dr. Michael Hudson explains why there's now zero prospect of the USA ever restoring its economy to the productive capacity it last enjoyed during the 1960s and 1970s.

The following text has been copied from Dr. Michael Hudson’s own website, before being slightly edited/syncopated. My own minor additions are enclosed in [square brackets], while deleted sentences/paragraphs are indicated thus [ …]. To visit the original text, click here to open his webpage in a new tab. To skip the related (intervening) text on this page, and jump straight to the two podcast…

[mostlysignssomeportents]

Yanis Varoufakis’s “Technofeudalism: What Killed Capitalism?”

Monday (October 2), I'll be in Boise to host an event with VE Schwab. On October 7–8, I'm in Milan to keynote Wired Nextfest.

Socialists have been hotly anticipating the end of capitalism since at least 1848, when Marx and Engels published The Communist Manifesto - but the Manifesto also reminds us that capitalism is only too happy to reinvent itself during its crises, coming back in new forms, over and over again:

https://www.nytimes.com/2022/10/31/books/review/a-spectre-haunting-china-mieville.html

Now, in Technofeudalism: What Killed Capitalism, Yanis Varoufakis - the "libertarian Marxist" former finance minister of Greece - makes an excellent case that capitalism died a decade ago, turning into a new form of feudalism: technofeudalism:

https://www.penguin.co.uk/books/451795/technofeudalism-by-varoufakis-yanis/9781847927279

To understand where Varoufakis is coming from, you need to go beyond the colloquial meanings of "capitalism" and "feudalism." Capitalism isn't just "a system where we buy and sell things." It's a system where capital rules the roost: the richest, most powerful people are those who coerce workers into using their capital (factories, tools, vehicles, etc) to create income in the form of profits.

By contrast, a feudal society is one organized around people who own things, charging others to use them to produce goods and services. In a feudal society, the most important form of income isn't profit, it's rent. To quote Varoufakis: "rent flows from privileged access to things in fixed supply" (land, fossil fuels, etc). Profit comes from "entrepreneurial people who have invested in things that wouldn't have otherwise existed."

This distinction is subtle, but important: "Profit is vulnerable to market competition, rent is not." If you have a coffee shop, then every other coffee shop that opens on your block is a competitive threat that could erode your margins. But if you own the building the coffee shop owner rents, then every other coffee shop that opens on the block raises the property values and the amount of rent you can charge.

The capitalist revolution - extolled and condemned in the Manifesto - was led by people who valorized profits as the heroic returns for making something new in this world, and who condemned rents as a parasitic drain on the true producers whose entrepreneurial spirits would enrich us all. The "free markets" extolled by Adam Smith weren't free from regulation - they were free from rents:

https://locusmag.com/2021/03/cory-doctorow-free-markets/

But rents, Varoufakis writes, "survived only parasitically on, and in the shadows of, profit." That is, rentiers (people whose wealth comes from rents) were a small rump of the economy, slightly suspect and on the periphery of any consideration of how to organize our society. But all that changed in 2008, when the world's central banks addressed the Great Financial Crisis by bailing out not just the banks, but the bankers, funneling trillions to the people whose reckless behavior brought the world to the brink of economic ruin.

Suddenly, these wealthy people, and their banks, experienced enormous wealth-gains without profits. Their businesses lost billions in profits (the cost of offering the business's products and services vastly exceeded the money people spent on those products and services). But the business still had billions more at the end of the year than they'd had at the start: billions in public money, funneled to them by central banks.

This kicked off the "everything rally" in which every kind of asset - real estate, art, stocks, bonds, even monkey JPEGs - ballooned in value. That's exactly what you'd expect from an economy where rents dominate over profits. Feudal rentiers don't need to invest to keep making money - remember, their wealth comes from owning things that other people invest in to make money.

Rents are not vulnerable to competition, so rentiers don't need to plow their rents into new technology to keep the money coming in. The capitalist that leases the oil field needs to invest in new pumps and refining to stay competitive with other oil companies. But the rentier of the oil field doesn't have to do anything: either the capitalist tenant will invest in more capital and make the field more valuable, or they will lose out to another capitalist who'll replace them. Either way, the rentier gets more rent.

So when capitalists get richer, they spend some of that money on new capital, but when rentiers get richer, them spend money on more assets they can rent to capitalists. The "everything rally" made all kinds of capital more valuable, and companies that were transitioning to a feudal footing turned around and handed that money to their investors in stock buybacks and dividends, rather than spending the money on R&D, or new plants, or new technology.

The tech companies, though, were the exception. They invested in "cloud capital" - the servers, lines, and services that everyone else would have to pay rent on in order to practice capitalism.

Think of Amazon: Varoufakis likens shopping on Amazon to visiting a bustling city center filled with shops run by independent capitalists. However, all of those capitalists are subservient to a feudal lord: Jeff Bezos, who takes 51 cents out of every dollar they bring in, and furthermore gets to decide which products they can sell and how those products must be displayed:

https://pluralistic.net/2022/11/28/enshittification/#relentless-payola

The postcapitalist, technofeudal world isn't a world without capitalism, then. It's a world where capitalists are subservient to feudalists ("cloudalists" in Varoufakis's thesis), as are the rest of us the cloud peons, from the social media users and performers who fill the technofuedalists' siloes with "content" to the regular users whose media diet is dictated by the cloudalists' recommendation systems:

https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys

A defining feature of cloudalism is the ability of the rentier lord to destroy any capitalist vassal's business with the click of a mouse. If Google kicks your business out of the search index, or if Facebook blocks your publication, or if Twitter shadowbans mentions of your product, or if Apple pulls your app from the store, you're toast.

Capitalists "still have the power to command labor from the majority who are reliant on wages," but they are still mere vassals to the cloudalists. Even the most energetic capitalist can't escape paying rent, thanks in large part to "IP," which I claim is best understood as "laws that let a company reach beyond its walls to dictate the conduct of competitors, critics and customers":

https://locusmag.com/2020/09/cory-doctorow-ip/

Varoufakis points to ways that the cloudalists can cement their gains: for example, "green" energy doesn't rely on land-leases (like fossil fuels), but it does rely on networked grids and data-protocols that can be loaded up with IP, either or both of which can be turned into chokepoints for feudal rent-extraction. To make things worse, Varoufakis argues that cloudalists won't be able to muster the degree of coordination and patience needed to actually resolve the climate emergency - they'll not only extract rent from every source of renewables, but they'll also silo them in ways that make them incapable of doing the things we need them to do.

Energy is just one of the technofeudal implications that Varoufakis explores in this book: there are also lengthy and fascinating sections on geopolitics, monetary policy, and the New Cold War. Technofeudalism - and the struggle to produce a dominant fiefdom - is a very useful lens for understanding US/Chinese tech wars.

Though Varoufakis is laying out a technical and even esoteric argument here, he takes great pains to make it accessible. The book is structured as a long open letter to his father, a chemical engineer and leftist who was a political prisoner during the fascist takeover of Greece. The framing device works very well, especially if you've read Talking To My Daughter About the Economy, Varoufakis's 2018 radical economics primer in the form of a letter to his young daughter:

https://us.macmillan.com/books/9780374538491/talkingtomydaughterabouttheeconomy

At the very end of the book, Varoufakis calls for "a cloud rebellion to overthrow technofeudalism." This section is very short - and short on details. That's not a knock against the book: there are plenty of very good books that consist primarily or entirely of analysis of the problems with a system, without having to lay out a detailed program for solving those problems.

But for what it's worth, I think there is a way to plan and execute a "cloud rebellion" - a way to use laws, technology, reverse-engineering and human rights frameworks to shatter the platforms and seize the means of computation. I lay out that program in The Internet Con: How the Seize the Means of Computation, a book I published with Verso Books a couple weeks ago:

https://www.versobooks.com/products/3035-the-internet-con

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/09/28/cloudalists/#cloud-capital

[thepowerisyouth]

The news is grossly misinforming the public about an inherently flawed financial system.

We need to step back from any very very specific type of analysis and think of this as a centuries old problem

Wealth disparity

The "rentiers" (landlords, anyone who makes money lending out their assets and taking a fee for that lending) is inherently a supplier to the economy

Any person who is being forced to rent out assets from a rich rentier is, by nature, their demander

Demand sets the price first, so long as suppliers are slow to wake up to the reality of lack of demand in their world

Its the most basic economics in the world: wealth disparity must end unless they just kill us all and shoot off to space

When the PRICE to rent someones assets (no, not just the interest rates, but also renting a house or renting an underpaying job with the future promise of a better paying life) is too high that demand is faltering, and people are maxing out credit cards to afford bills-- we know it will all end soon.

[sublimeobservationarcade]

The Problems With Work

We face a number of challenges for the concept we know of as ‘work’. Some of these challenges are relatively new, such as the AI revolution happening now, and some are more long term, like increasing specialisation and the failure of many jobs to provide any real meaning or purpose for the worker doing them. The problems with work are multifaceted and many. Indeed, the very idea of work may be outdated and irrelevant in our rapidly changing economic landscape. You may be surprised at the number of us who now garner most of their contentment in life from other sources outside of their main income generating occupation.

Work Fast Becoming An Obsolete Idea

The excitement in the global economy at the moment, represented by the share price of the tech stocks in the US, is all about AI. The continuing replacement of technical and middle management jobs with AI programs will see work fast becoming an obsolete idea for many previously employed within these sectors of the economy. There has been a disconnect between the kind of jobs many have been performing and the level of satisfaction which can come from a job well done, as that experience is becoming rarer all the time. The loss of manufacturing jobs in Western economies, as they were moved offshore to developing countries where wages were much lower, directly contributed to the demise of job satisfaction levels for many having to make do with jobs in the gig economy. Being involved in making something can offer the participant a purpose, even if they only play a part in the overall process. Mechanisation and automation have been reducing human involvement in manufacturing for some time now. Capitalism and businesses focus on the bottom line, seeing the labour input as just numbers in the overall profit and loss equation. The trend toward greater concentration within industries has seen companies merge and swallow up their smaller rivals. This has resulted in greater investment in technologies which replace humans with machines. AI is another leap in this direction to include white collar jobs upstairs and not just on the factory floor.

Photo by Pixabay on Pexels.com

Work Dominated By Corporate Concentration

Globally we see markets dominated by duopolies and oligopolies in every sector. Huge corporations with massive market power that belittles consumers and their ability to influence prices. We have witnessed the rise of these corporate behemoths, which have way more power, an imbalance of power, in relation to their customers and their workers. Governments have been complicit in allowing these companies to merge and thus remove competitive forces from their markets. Corporate lobbyists have bought the ears of elected representatives to have their way with oversight committees. Government agencies have been neutered by companies poaching their staff in return for better wages and other more shady means. The end result is that human beings are treated as secondary to company profits and shareholder dividends. If you really think about this for a second it is totally crazy, we are sacrificing our brothers and sisters within workforces for a select few who benefit financially from the success of these corporate entities. We are further sacrificing, many more of us who are the consumers of, in lots of instances, these essential services or products in terms of the higher prices we are paying at the checkout. Millions of human beings are being shafted for a minority. This goes on in the AI revolution, where these same few are overseeing the uptake of a technology designed to directly replace human beings. Talk about shooting yourself in the foot as a species. We value making greater profits at the expense of creating a world where humans are bereft of having the dignity of work. The craziness of this is there for all to see. More alarmed experts among us are warning about the very real dangers of AI terminating our existence in the foreseeable future as a matter of course. If we continue to value machines over humans, this is a very real and present danger. The recent Microsoft CrowdStrike blue screen of death IT outage is an example of our overreliance on one company providing computer servers for networks and essential services like airline travel, government administrative services, and businesses everywhere. We are putting too many eggs in the one basket because of the over-concentration of corporate power in the IT sector.

Photo by Pranavsinh suratia on Pexels.com Capitalism Cannibalising Us For More Profits You can see this happening with our current set up because capitalism overrides all other concerns in its endless desire for ever greater levels of profitability. Governments are becoming smaller and weaker in comparison to these giant corporate entities. Most multinational corporations pay very little tax, as they move their profits around to tax free shelters. Governments have been decidedly unsuccessful in reversing this trend through new legislation. Big business and their accountancy firms always seem to have the ear of our politicians. Government services are dependent upon taxation revenue to provide the necessary levels demanded by their citizens. Health, education, national security, and social services are still largely dependent upon governments for their revenue to operate effectively. It is the poorer workers who carry the greatest load via income tax, whilst the big end of town engages enough accountants to legally avoid and minimise their tax requirements. The privatisation of many government services over the last 40 years, since Reagan, has seen a whole host of sectors now serviced by private equity run firms. Some have been effective, but many have not. Health is not a sector best served by ‘for profit’ concerns, as there are real problems when corners are cut, and costs screwed down to the detriment of people’s lives. Hospitals, private hospitals, are run like billion-dollar corporations where the pharmaceutical giants retain massive influence over how things are run. Medical insurance is another factor which has made America the most expensive place in the world to get treatment in a private hospital. More Americans are pushed into bankruptcy on the back of their outrageous medical bills than for any other single reason. Workers Run Second To Shareholders & Investors The problems with work can be manifold. The demise of union power in most Western economies has coincided with stagnant wage growth over the last three decades. The power has shifted to and resides with the corporations over the workers. The current cost of living crisis borne on high inflation post pandemic has seen the wages of most workers fall further behind in its buying power. The housing crisis, which is happening globally in Europe, Australia, the UK, Canada, and the States, has seen rents go through the roof, rising by 30% in many instances. This is highly inflationary. Food, energy, insurance, and housing costs have been rising for the last 3 years making the lives of workers much harder. So, not only has the satisfaction levels at the kind of jobs we do dramatically dropped but the return on our labour has also gone down. Governments and central banks value shareholders far more than workers within their equations. This has been going for more than 3 decades now. Even labour sided governments have been operating under the neoliberal economic model for the last 30 years. Clinton in the US, Blair in Britain, and the Labor governments in Australia have put their faith in the privatisation of government services paradigm to the detriment of many of their citizens. Workers have been classed as second-class concerns for too long in the shadow of the glorification of corporatisation and privatisation. Banks have become massively wealthy via their corporate concentration and market share. Banks no longer trumpet the absolute security of their depositor’s funds, instead they primarily provide the convenience of digital transactional exchange for a fee. User pays is the name of the game in the 21C – the rentier economy where subscriptions, fees and charges have replaced the need to increase productivity to be highly profitable. Every sector operates in this manner now – renting out IP, access, mining rights, and such like to customers and other businesses. Labour does not rate highly within this economic model and the future for workers does not look rosy on this score. Those in power at the big end of town do not value human beings and are actively investing in technologies to further reduce their reliance on the human factor. It is insane when viewed from a holistic perspective and when regarding the health and wellbeing of humanity. We are all being overtly betrayed by a cohort of CEOs, economists, accountants, investors, and billionaire entrepreneurs. The stupidity is next level, and the likely demise of humanity is on the cards.

Photo by Pixabay on Pexels.com The Mania For Machines & AI There is no one capable of arresting this momentum. The President of the United States is not positioned to do so, even if there was a candidate intelligent enough to wish to do so. Capitalism is a system driven by money managers of huge hedge funds, pension funds, merchant banks, investors, currency dealers, and central bankers. Politics and governments bow down to the money and share markets when push comes to shove and the next cyclical crisis is always just around the corner. The markets love technology, and the tech stocks are driving the growth in investment. There is no one person or group sane enough and with enough kudos to sway the surge toward AI. We are hurtling headlong toward our own likely demise. You may have heard of the tulip fever that infected Holland in the 17C, where an investment mania for tulips threatened their economy. Markets and investors can lose their heads, which is how we end up with crashes and economic disasters of epic proportions. Bullshit Jobs & Finding Solace In Recreation The problems with work may include it becoming largely unnecessary for the functioning of the modern economy. Let’s say AI takes over all the jobs in a futuristic world and does everything better. What are we all going to do? What are our children going to fill their lives with? What will become of the dignity of work? Will we find our purpose and meaning in recreation? Many of us already source greater meaning from our recreational interests than from our meaningless jobs. The late David Graeber wrote a book about the prevalence of Bullshit Jobs. That many jobs we do are largely unnecessary and serve little real purpose. Will the consumption of video games and the streaming of entertainments provide us with contentment within our lives? How will AI view all these parasitic human beings lolling about on the sidelines? Will we find ourselves being evaluated as surplus to requirements by the machines running the show?

Photo by Andrea Piacquadio on Pexels.com Billionaires Shaping Our Working Lives Many of us are being herded out of work by billionaires hell bent on maximising their profits. The Elon Musk’s. The Mark Zuckerberg’s.  Jeff Bezos. Charles Koch. Bill Gates. Peter Thiel.  The power and wealth of these super wealthy individuals and their corporations are changing our worlds according to their profit motives. Democracy has been weakened and damaged by the proliferation of oligarchs. Bad billionaire’s like Putin and his ilk are involved in authoritarian regimes and organised crime on a massive scale. Our working lives are being shaped by the greed and machinations of these modern-day Lords and Princes. Soulless Jobs I know for me that my work must have some meaning, or I struggle with staying the course. Yes, economic necessities may drive me to find income generating work, but I cannot stay in a job merely for the money. If I am confronted with stupidity, meaninglessness, an absence of integrity, or nepotism in my work I rarely hang around for long in that job. Most of the positions I have left, have been, according to me, fucked up by those supposed to be driving the bus. Life is too short to stay in jobs that depress or bedevil. Devaluing Our Work The problems with work include central banks that operate on a 5% unemployment rate as their definition of full employment within their economies. This is millions of people out of work and the misery that entails factored into the spreadsheets of economists and bankers. How can that be in the 21C? Have we come such a miniscule way from the bad old days? Economics rules the roost, as we have seen via the reaction of all the central banks to the high inflation post pandemic and their quantitative easing. Raising interest rates to dampen spending and demand within the economy. This has exacerbated the housing crisis and pushed rents up even higher prolonging sticky inflation. The working poor pay the steepest price for our reliance on monetary policy over all other means of managing the health of the economy. Those who can least afford it cop it in the neck. Investors and the wealthy can ride out the tight times without undue economic pain. Working has always been a poorly performing activity in comparison to other forms of wealth creation. Labour has traditionally offered a fairly meagre return on investment. When you think about the history of chattel slavery and peonage slavery, we humans have had a pretty rotten attitude toward the labour of our fellow and sister human beings. In contrast to this, we are endlessly enamoured of technology and value this far more than our own working efforts. We are a strange lot when you think about it. Robert Sudha Hamilton is the author of America Matters: Pre-apocalyptic Posts & Essays in the Shadow of Trump.

©HouseTherapy Read the full article

[cinnamaya]

Debunking Rent Control Naysayers

I was recently sent this Brookings Institute article from 2018 entitled 'What does economic evidence tell us about the effects of rent control?' written by Rebecca Diamond as a counter argument to rent control advocacy. This article is one of many published by increasingly desperate economic think tanks. I've debunked many articles like this before in various places (and probably this one, they're all pretty indistinguishable), but I thought I'd put it together in one place as succinctly as possible. In my writing I treat the quoted piece with exactly the amount of respect and formality it deserves, which is to say, very little. So, let's take a look at what Rebecca Diamond tells us about what economic evidence tells us about rent control!

"Steadily rising housing rents in many of the US’s large, productive cities have reignited the discussion whether to expand or enact rent control provisions. Under pressure to fight rising rents, state lawmakers in Illinois, Oregon, and California are considering repealing laws that limit cities’ abilities to pass or expand rent control. While rules and regulations of rent control vary from place to place, most rent control consists of caps on price increases within the duration of a tenancy, and sometimes beyond the duration of a tenancy, as well as restrictions on eviction."

So far so good.

"New research examining how rent control affects tenants and housing markets offers insight into how rent control affects markets. While rent control appears to help current tenants in the short run, in the long run it decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood."

Because this is the Brookings Institute, this will all be very selectively chosen, pro financial capital research. Anyone expecting an actually objective article from an economic think-tank is clearly looking in the wrong place. These people's one job is to legitimize capitalism. Still, it's worth looking at their points because in this case, both their arguments and the underlying studies are both morally and logically shoddy.

"A substantial body of economic research has used theoretical arguments to highlight the potential negative efficiency consequences to keeping rents below market rates, going back to Friedman[!!!] and Stigler (1946). They argued that a cap on rents would lead landlords to sell their rental properties to owner occupants so that landlords could still earn the market price for their real estate. Rent control can also lead to “mis-match” between tenants and rental units. Once a tenant has secured a rent-controlled apartment, he may not choose to move in the future and give up his rent control, even if his housing needs change (Suen 1980, Glaeser and Luttmer 2003, Sims 2011, Bulow and Klemperer 2012). This mis-allocation can lead to empty-nest households living in family-sized apartments and young families crammed into small studios, clearly an inefficient allocation. Similarly, if rental rates are below market rates, renters may choose to consume excessive quantities of housing (Olsen 1972, Gyourko and Linneman 1989). Rent control can also lead to decay of the rental housing stock; landlords may not invest in maintenance because they can’t recoup these investment by raising rents. (Downs 1988, Sims 2007).

First of all, any article that quotes Milton Friedman is immediately suspect. He is irrelevant to economics and his ideas have had disastrous consequences for our economic system. But let's take a look at the arguments and their basic logical flaws:

Rent control leads landlords to sell their properties - This is a good thing. Landlords are an unnecessary middleman in the housing market and a drain on the economy.

Rent controls lead to "Inefficient Allocation" - A completely irrelevant argument considering a lack of rent control does nothing to increase this efficiency. Rather than people who already lived in "inefficiently allocated" apartments, however, they just go to the highest bidder.

"if rental rates are below market rates, renters may choose to consume excessive quantities of housing" - please.

Landlords wont invest in maintenance - In what world do landlords maintain their apartments anyway? Landlords will always do the bare minimum. The free market forces them to. That's market efficiency at work.

"Of course, rent control also offered potential benefits for tenants. For example, rent control provides insurance against rent increases, potentially limiting displacement. Affordable housing advocates argue that these insurance benefits are valuable to tenants. For instance, if long-term tenants have developed neighborhood-specific capital, such as a network of friends and family, proximity to a job, or children enrolled in local schools, then tenants face large risks from rent appreciation. In contrast, individuals who have little connection to any specific area can easily insure themselves against local rental price appreciation by moving to a cheaper location. Those invested in the local community are not able to use this type of “self-insurance” as easily, since they must give up some or all of their neighborhood specific capital. Rent control can provide these tenants with this type of insurance."

Yep. This is all fine.

"Until recently, there was little data or natural experiments with which to assess the importance of these competing arguments, and to assess how rent controls affects tenants, landlords, or the broader housing market. But newly-available housing-market data spanning periods of dramatic change in rent control laws in Cambridge, MA and in San Francisco, CA have allowed economists to examine these questions empirically. While these studies do find support for the idea that existing tenants benefit from the insurance provided by rent control, they also find the overall cost of providing that insurance is very large."

This is blatantly false. Rent controls have been around far longer than the USA. There is plenty of data and literally years of economic analysis on this stuff.

"From December 1970 through 1994, all rental units in Cambridge built prior to 1969 were regulated by a rent control ordinance that placed strict caps on rent increases and tightly restricted the removal of units from the rental stock. The legislative intent of the rent control ordinance was to provide affordable rental housing, and at the eve of rent control’s elimination in 1994, controlled units typically rented at 40-plus percent below the price of nearby non-controlled properties. In November 1994, the Massachusetts electorate passed a referendum to eliminate rent control by a narrow 51–49 percent margin, with nearly 60 percent of Cambridge residents voting to retain the rent control ordinance. This law change directly impacted properties previously subject to rent control, enabling landlords to begin to charge market rents."

Tragic. Let's see what the effects were.

"Autor, Palmer, and Pathak (2014) (APP), studies the impact of this unexpected change and find that newly decontrolled properties’ market values increased by 45 percent."

It inflated housing prices. Good for people to whom housing is an asset. Bad for people to whom housing is a… house.

"In addition to these direct effects of rent decontrol, APP find removing rent control has substantial indirect effects on neighboring properties, boosting their values too. Post-decontrol price appreciation was significantly greater at properties that had a larger fraction of formerly controlled neighbors: residential properties at the 75th percentile of rent control exposure gained approximately 13 percent more in property value following decontrol than did properties at the 25th percentile of exposure."

It made it more expensive to buy, not only in those houses, but the surrounding areas? Doesn't sound like it was making housing more accessible so far.

"This differential appreciation of properties in rent control–intensive locations was equally pronounced among decontrolled and never-controlled units, suggesting that the effect of rent control had been to reduce the whole neighborhood’s desirability."

Didn't they say earlier that rent controlled units were so desirable that people wouldn't move? Perhaps they mean desirability to outside landlords.

"The economic magnitude of the effect of rent control removal on the value of Cambridge’s housing stock is large, boosting property values by $2.0 billion between 1994 and 2004. Of this total effect, only $300 million is accounted for by the direct effect of decontrol on formerly controlled units, while $1.7 billion is due to the indirect effect. These estimates imply that more than half of the capitalized cost of rent control was borne by owners of never-controlled properties. Rent controlled properties create substantial negative externalities on the nearby housing market, lowering the amenity value of these neighborhoods and making them less desirable places to live.  In short, the policy imposed $2.0 billion in costs to local property owners, but only $300 million of that cost was transferred to renters in rent-controlled apartments."

"Capitalized cost" being the keyword here. Their investments weren't as profitable. This does NOT translate to actual cost like the article suggests, much less for the tenants. None of the renters were maintaining the asset prices of their rentals on balance sheets because they are tenants not owners. "But the owners have to pay the costs!" you might say. True, but if it weren't profitable, then the landlords wouldn't be renting the buildings.

"Diamond, McQuade, and Qian (2018) (DMQ) examine the consequences of an expansion of rent control on renters, landlords, and the housing market that resulted from a unique 1994 local San Francisco ballot initiative. In 1979, San Francisco imposed rent control on all standing buildings with five or more apartments. Rent control in San Francisco consists of regulated rent increases, linked to the CPI, within a tenancy, but no price regulation between tenants. New construction was exempt from rent control, since legislators did not want to discourage new development. Smaller multi-family buildings were exempt from this 1979 law change since they were viewed as more “mom and pop” ventures, and did not have market power over rents. This exemption was lifted by a 1994 San Francisco ballot initiative. Proponents of the initiative argued that small multi-family housing was now primarily owned by large businesses and should face the same rent control of large multi-family housing. Since the initial 1979 rent control law only impacted properties built from 1979 and earlier, the removal of the small multi-family exemption also only affected properties built 1979 and earlier. This led to a differential expansion in rent control in 1994 based on whether the small multi-family housing was built prior to or post 1980—a policy experiment where otherwise similar housing was treated differently by the law."

Well, the last example wasn't too convincing. Let's see if this one is any better.

"To examine rent control’s effects on tenant migration and neighborhood choices, DMQ examine panel data that provides address-level migration decisions and housing characteristics for the majority of adults living in San Francisco in the early 1990s. This allows them to define a treatment group of renters who lived in small multi-family apartment buildings built prior to 1980 and a control group of renters living in small multi-family housing built between 1980 and 1990. Their data allows them to follow each of these groups over time up until the present, regardless of where they migrate."

So, before getting into it, what would be the ideal outcome here? If the rent control laws were effective, we would see tenants in the rent controlled buildings experiencing:

more economic freedom due to decreased housing costs

less displacement of rent controlled tenants.

The first point is pretty unambiguously clear, and supported by mountains of evidence. The real question pertains to the second point: Can the tenants benefiting from these cost reductions stay in their apartments and continue to see these benefits?

Let's see what happened.

"Between five and ten years after the law change, the beneficiaries of rent control are 19 percent less likely to have moved to a new address, relative to the control group’s migration rate. Further, impact on the likelihood of remaining in San Francisco as whole was the same, indicating a large share of the renters that rent control caused to remain at their 1994 address would have left San Francisco had they not been covered by rent control."

Holy moly.

"These effects are significantly stronger among older households and among households that have already spent a number of years at their address prior to treatment. This is consistent with the fact that both of these populations are likely to be less mobile."

So older people more integrated with their neighborhood didn't have to move? This rent control thing sounds great!

"Renters who don’t need to move very often are more likely to find it worthwhile to remain in their rent controlled apartment for a long time, enabling them to accrue larger rent savings. Finally, DMQ find these effects are especially large for racial minorities, likely indicating that minorities faced greater displacement pressures in San Francisco than whites."

Less displacement ✓

"While expansion of rent control did prevent some displacement among tenants living in San Francisco in 1994, the landlords of these properties responded to mitigate their rental losses in a number of ways."

"Rent control made me do it," - landlords.

"In practice, landlords have a few possible ways of removing tenants. First, landlords could move into the property themselves, known as move-in eviction. Second, the Ellis Act allows landlords to evict tenants if they intend to remove the property from the rental market, for instance, in order to convert the units to condos. Finally, landlords are legally allowed to offer their tenants monetary compensation for leaving. In practice, these transfer payments from landlords are common and can be quite large."

All valid points.

"DMQ find that rent-controlled buildings were 8 percentage points more likely to convert to a condo than buildings in the control group. Consistent with these findings, they find that rent control led to a 15 percentage point decline in the number of renters living in treated buildings and a 25 percentage point reduction in the number of renters living in rent-controlled units, relative to 1994 levels. This large reduction in rental housing supply was driven by converting existing structures to owner-occupied condominium housing and by replacing existing structures with new construction."

An unfortunate side effect, but there are a few things to note:

Landlords moving into their own units works exactly once.

While some renters being pushed out is bad, at least the housing is owned by individual people rather than one landlord. If anything this increases the stability of housing in the area.

"This 15 percentage point reduction in the rental supply of small multi-family housing likely led to rent increases in the long-run, consistent with standard economic theory. In this sense, rent control operated as a transfer between the future renters of San Francisco (who would pay these higher rents due to lower supply) to the renters living in San Francisco in 1994 (who benefited directly from lower rents). "

If only there were a way to control those rent increases.

"Furthermore, since many of the existing rental properties were converted to higher-end, owner-occupied condominium housing and new construction rentals, the passage of rent control ultimately led to a housing stock that caters to higher income individuals."

Except we already know people in rent controlled units experience greater overall stability even considering the housing converted into condos, so this less important movement is more than offset by the benefits.

"DMQ find that this high-end housing, developed in response to rent control, attracted residents with at least 18 percent higher income."

This is an INCREDIBLY dubious causal claim. This housing was developed after rent control, but we can look at any other city to see this isn't some unique trend. In fact, the original study cited here finds that, if anything, the displacement in rent controlled units is contingent on gentrification and not vice versa. They argue, "This evidence is consistent with the idea that landlords undertake efforts to remove their tenants or convince them to leave in improving, gentrifying areas. In addition, the rent control tenants are more likely to remain at their address within the less gentrifying areas[…]These combined effects lead tenants treated by rent control to live in lower quality areas." (Diamond, McQuade & Qian, 2019) An argument against rent controls that seems reasonable on the surface level, but is absurd upon closer inspection. These tenants remain in neighborhoods which are less desirable by choice. The argument here depends on the idea that displacement is ever acceptable, justifying it with the data suggesting some tenants on average might have been displaced into slightly higher income neighborhoods. It's a justification which I'm sure will bring great comfort to those being pushed out of their homes due to increasing rents.

Hidden deeper in this argument, however, is another flaw. The entire point is tautological. Gentrification IS the displacement of lower income tenants, so to argue that rent control pushed people out of gentrified neighborhoods and kept people in non-gentrified neighborhoods is like saying gentrified neighborhoods gentrified and non gentrified neighborhoods didn't gentrify. This isn't to suggest that this point is lost on Diamond, McQuade & Qian. I'm quite sure they understand what gentrification is and would never unintentionally make such an error.

"Taking all of these points together, it appears rent control has actually contributed to the gentrification of San Francisco, the exact opposite of the policy’s intended goal. Indeed, by simultaneously bringing in higher income residents and preventing displacement of minorities, rent control has contributed to widening income inequality of the city."

As said above, this supposed contribution to gentrification seems to actually be the reverse. Neighborhoods which were able to push out rent controlled tenants were more gentrified. It's not a particularly salient point, but to claim any more would be to make unsubstantiated causal claims. I would also like to note that this is not the policy's intended goal. Rent control is meant to keep rents cheaper in rent controlled units. Of course if you expect rent control to be a silver bullet to every problem of gentrification and urbanization, then it will be a failure in your eyes. This is doubly true in cases where the rent control is not universal.

Additionally, the fact that "preventing displacement of minorities" is a point against rent control here shows exactly who the author's sympathies are really for.

"It may seem surprising that the expansion of rent control in San Francisco led to an upgraded housing stock, catering to high-income tastes, while the removal of rent control in Cambridge also lead to upgrading and value appreciation. To reconcile these effects, it is useful to think about which types of landlords would respond to a rent control expansion versus a rent control removal. In the case of rent control expansion, some landlords will choose to recoup some of their losses by converting to condo or redeveloping their building to exempt it from rent control. However, other landlords may choose to accept the rent control regulation, and no longer perform maintenance on the building and allow it to decay."

Finally a great point! Landlords ARE bad, Rebecca, keep going…

"In the rent control expansion case, one would see an increase in condo conversions and upgrades, driven by the landlords that chose to respond in this way. However, when rent control is removed, the landlords who own the rent controlled buildings are the ones who didn’t choose to convert to condo or redevelop in response to the initial passage of rent control. Indeed, one would expect this subset of landlords to choose to upgrade and invest in their properties once the rent control regulation is removed."

This whole section is meant as some sort of justification for the fact that getting rid of rent controls leads to the same exact results that counted against rent controls in the main argument. The only point it really makes is that we shouldn't get rid of rent controls. Anyone who can't see the absurdity at this point has ulterior motives. Ultimately, one should only expect landlords to do the bare minimum, rent control or no rent control. That is why we need legal protections, and most importantly tenant organizing to make sure landlords actually keep these places livable.

"Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood."

Decreases affordability?? You have to wonder how the author came to that conclusion so contrary to the very first point in the article (housing prices decreased). This alone shows how deceitful this Diamond is being.

We've already seen why the gentrification point is moot. As for those "negative externalities," I fail to see how increased rents in non-rent controlled apartments is a satisfactory argument for anything but an expansion of rent control.

"These results highlight that forcing landlords to provide insurance to tenants against rent increases can ultimately be counterproductive. If society desires to provide social insurance against rent increases, it may be less distortionary to offer this subsidy in the form of a government subsidy or tax credit. This would remove landlords’ incentives to decrease the housing supply and could provide households with the insurance they desire. A point of future research would be to design an optimal social insurance program to insure renters against large rent increases."

What in this hypothetical is stopping the landlords from just increasing the rent in the long run to counteract the subsidies and tax credits?

Additionally, we see a hint of another popular anti rent control fallacy here. "Decrease housing supply" is misleading because housing supply is not decreasing. In fact, housing for sale temporarily increases. There are however two factors which lead to a decrease in the rental supply. The first is the conversion into condos, which does push rents up. This is irrelevant to the problem, however, considering that rent controls directly counteract that and any other supply based fluctuations. The other decrease of supply in the rental market, ironically, is exactly what rent controls are intended to do. This decrease is due to people renting apartments and not being forced to move. This decrease in supply also roughly coincides with a corresponding decrease in demand because people can be confident and secure staying in the rentals they choose to rent.

"The authors did not receive any financial support from any firm or person for this article or from any firm or person with a financial or political interest in this article. They are currently not an officer, director, or board member of any organization with an interest in this article."

This you?

[i-just-like-commenting]

Remember, kids, no matter what economic model you believe in, landlords are the worst.

[economicsresearch]

page 538 - birdie with a short beak.

I am so mad. And I'm pretty sure that other blogger is to blame.

I think.

[racefortheironthrone]

Could the Iron Throne be able to issue bonds, to finance its expenses, instead of going to the Iron Bank for a loan?

A government issuing bonds is the same thing as the government taking out a loan. The main difference is that, in the case of issuing a bond, the government is spreading out its borrowing between many lenders by selling bonds on the open market to anyone who wants to buy them rather than having that loan owed to a single entity like the Iron Bank. This means that the government is less beholden to any one creditor and it's less likely that the government's creditors can use their economic leverage to affect government policy.

The second advantage of structuring government debt through bonds is that it allows the government to break its total borrowing needs into smaller, more affordable units. Very few financial institutions would have had the capital to finance the £1,200,000 that made up the government's inaugural loan at the Bank of England in 1690 - but a lot more people could afford to lend the government £10, £25, £50, or £100 pounds.

Between this and later innovations in marketing bonds to the general public, the market for government debt was massively expanded. Not only did this create a class of rentiers who were now personally invested in the government's success, but it also immediately deepened the capital markets by creating a large supply of stable assets that could be bought and sold and borrowed against. While some of the shortcomings of the Hamilton musical and Chernow's biography have become more obvious in hindsight, they're not wrong about the impact of Hamilton's policies as Treasury Secretary on the development of the American economy.

The difficulty facing the Iron Throne in adapting an early modern system of government finance is that it doesn't have the state capacity to run this kind of an operation: it doesn't have a central bank to act as the government's marketer, issuer of banknotes, and lender of last resort; it doesn't have a sinking fund to manage the level and price of debt; it hasn't issued charters to merchant's guilds or joint-stock companies that could combine the small capital of individuals and thus more easily afford to buy bonds; and it doesn't have enough literate people who've studied accounting to staff a royal bureaucracy large enough to coordinate and keep records of all of this economic activity.

[dailyanarchistposts]

J.5.6 Why are mutual credit schemes important?

Mutual credit schemes are important because they are a way to improve working class life under capitalism and ensure that what money we do have is used to benefit ourselves rather than the elite. By organising credit, we retain control over it and so rather than being used to invest in capitalist schemes it can be used for socialist alternatives.

For example, rather than allow the poorest to be at the mercy of loan sharks a community, by organising credit, can ensure its members receive cheap credit. Rather than give capitalist banks bundles of cash to invest in capitalist firms seeking to extract profits from a locality, it can be used to fund a co-operative instead. Rather than invest pension schemes into the stock market and so help undermine workers pay and living standards by increasing rentier power, it can be used to invest in schemes to improve the community and its economy. In short, rather than bolster capitalist power and so control, mutual credit aims to undermine the power of capitalist banks and finance by placing as much money as much possible in working class hands.

This point is important, as the banking system is often considered “neutral” (particularly in capitalist economics). However, as Malatesta correctly argued, it would be “a mistake to believe … that the banks are, or are in the main, a means to facilitate exchange; they are a means to speculate on exchange and currencies, to invest capital and to make it produce interest, and to fulfil other typically capitalist operations.” [Errico Malatesta: His Life and Ideas, p. 100] Within capitalism, money is still to a large degree a commodity which is more than a convenient measure of work done in the production of goods and services. It can and does go anywhere in the world where it can get the best return for its owners, and so it tends to drain out of those communities that need it most (why else would a large company invest in a community unless the money it takes out of the area handsomely exceeds that put it?). It is the means by which capitalists can buy the liberty of working people and get them to produce a surplus for them (wealth is, after all, “a power invested in certain individuals by the institutions of society, to compel others to labour for their benefit.” [William Godwin, The Anarchist Writings of William Godwin, p. 130]). From this consideration alone, working class control of credit and money is an important part of the class struggle as having access to alternative sources of credit can increase working class options and power.

As we discussed in section B.3.2, credit is also an important form of social control — people who have to pay their mortgage or visa bill are more pliable, less likely to strike or make other forms of political trouble. Credit also expands the consumption of the masses in the face of stagnant or falling wages so blunting the impact of increasing exploitation. Moreover, as an added bonus, there is a profit to be made as the “rich need a place to earn interest on their surplus funds, and the rest of the population makes a juicy lending target.” [Doug Henwood, Wall Street, p. 65]

Little wonder that the state (and the capitalists who run it) is so concerned to keep control of money in its own hands or the hands of its agents. With an increase in mutual credit, interest rates would drop, wealth would stay more in working class communities, and the social power of working people would increase (for people would be more likely to struggle for higher wages and better conditions — as the fear of debt repayments would be less). By the creation of community-based credit unions that do not put their money into “Capital Markets” or into capitalist Banks working class people can control their own credit, their own retirement funds, and find ways of using money as a means of undermining capitalist power and supporting social struggle and change. In this way working people are controlling more and more of the money supply and using it in ways that will stop capital from using it to oppress and exploit them.

An example of why this can be important can be seen from the existing workers’ pension fund system which is invested in the stock market in the hope that workers will receive an adequate pension in their old age. However, the only people actually winning are bankers and big companies. Unsurprisingly, the managers of these pension fund companies are investing in those firms with the highest returns, which are usually those who are downsizing or extracting most surplus value from their workforce (which in turn forces other companies to follow the same strategies to get access to the available funds in order to survive). Basically, if your money is used to downsize your fellow workers or increase the power of capital, then you are not only helping to make things harder for others like you, you are also helping making things worse for yourself. No person is an island, and increasing the clout of capital over the working class is going to affect you directly or indirectly. As such, the whole scheme is counter-productive as it effectively means workers have to experience insecurity, fear of downsizing and stagnating wages during their working lives in order to have slightly more money when they retire (assuming that they are fortunate enough to retire when the stock market is doing well rather than during one of its regular periods of financial instability, of course).

This highlights one of the tricks the capitalists are using against us, namely to get us to buy into the system through our fear of old age. Whether it is going into lifelong debt to buy a home or putting our money in the stock market, we are being encouraged to buy into the system which exploits us and so put its interests above our own. This makes us more easily controlled. We need to get away from living in fear and stop allowing ourselves to be deceived into behaving like “stakeholders” in a Plutocratic system where most shares really are held by an elite. As can be seen from the use of pension funds to buy out firms, increase the size of transnationals and downsize the workforce, such “stakeholding” amounts to sacrificing both the present and the future while others benefit.

The real enemies are not working people who take part in such pension schemes. It is the people in power, those who manage the pension schemes and companies, who are trying to squeeze every last penny out of working people to finance higher profits and stock prices — which the unemployment and impoverishment of workers on a world-wide scale aids. They control the governments of the world. They are making the “rules” of the current system. Hence the importance of limiting the money they have available, of creating community-based credit unions and mutual risk insurance co-operatives to increase our control over our money which can be used to empower ourselves, aid our struggles and create our own alternatives (see section B.3.2 for more anarchist views on mutual credit and its uses). Money, representing as it does the power of capital and the authority of the boss, is not “neutral” and control over it plays a role in the class struggle. We ignore such issues at our own peril.

[fundgruber]

If constructing and owning these cables has become a top priority and competition for Big Tech, are cables a material, economic, and geopolitical mechanism of accumulation that remains nevertheless determined by capitalist social relations? Or is their role in increasing these companies’ intellectual monopolies and thus the phenomenon of rentier capitalism (or techno-feudalism) a sign that we are in a new mode of production? We cannot fully answer these questions here, but two elements seem crucial and point heavily in the balance of the first hypothesis; towards an explanation anchored on a capitalistic imperialist, geopolitical rivalry. First, we see the rising importance of the security dimension regarding cables and related infrastructure, illustrated by the Nord Stream pipeline sabotage in September 2022, and by the threat made by Russia of sabotage in June 2023, leading to NATO officially focusing its efforts on this area (Bueger et al 2022; NATO 2023; Besch 2023). Second, there is a particular density to the “entanglement of the tech giants and the American state” (D’Eramo 2022, 11), today and in the early twentieth century (Morozov 2023), which is coupled with recent arguments for contemporary forms of “political capitalism” (Riley and Brenner 2022). These justify a focus on the emergence of two new European main hubs for cable landing (Bude, UK, and Marseille, France) as additional cases for taking an imperialist perspective to the development of these technologies. Bude will have nine cables arriving at its beaches by 2024 (Submarine Cable Map 2023), and Marseille will have sixteen cables landing in its port by 2025 (Marseille Fos 2023). These concentrated landing sites show the role of the state in managing and negotiating the location, construction and ownership of these cables, their landings by tech companies, and their impact on local and national economies that seek to gain from these shared investments.

Maïa Pal and Neal Harris, Capital is Dead. Long Live Capital! A Political Marxist Analysis of Digital Capitalism and Infrastructure. in: tripleC, Vol 22 No 1 (2024)

[argyrocratie]

"At Future of Freedom Foundation, Jacob Hornberger writes: “America’s welfare state way of life is based on the notion that the federal government is needed to force people to be good and caring to others.” 

Um, no. America’s welfare state way of life is based on the notion that, since the capitalist state redistributes massive amounts of income and wealth upwards from producers to rentiers as profit, rent, and interest, compensatory state action — namely, returning a tiny fraction of that income to the neediest — is necessary to preventing capitalism from collapsing from social disorder or insufficient aggregate demand.

The welfare state did not come about as the result of any idealistic “notion” on the part of do-gooders and bleeding-hearts. Such people may have helped sell it politically, but the architects of the welfare state were hard-headed capitalists who rightly understood its necessity for keeping capitalism to sustainable levels of extraction. Of course the capitalist state was motivated in part by the grass-roots activism of the destitute and unemployed, but the specific form the welfare state took was determined by policy elites understanding of the system’s survivability needs.

Ironically, no one understands the need for a powerful interventionist regulatory and welfare state better than capitalists. And nothing would destroy capitalism faster than right-libertarians who, if given free rein, would balance the federal budget, pay off the debt, and eliminate the welfare state.

Way back in the 1860s, Karl Marx characterized the Ten-Hour Day legislation passed by the British Parliament as employers acting through their state to limit the exploitation of labor to sustainable levels. The length of the working day in 19th century Britain presented capitalists with a problem akin to the prisoner’s dilemma. 

It was in the interest of the capitalist class as a whole that the exploitation of labor be kept to sustainable levels, but in the interest of capitalists severally to gain an immediate advantage over the competition by working their own laborers to the breaking point. The capitalist state solved the problem by limiting the working day on behalf of employers collectively, so that individual employers could not defect from the agreement. In the chapter on the Ten-Hour Day in Capital, he wrote:

These acts curb the passion of capital for a limitless draining of labour power, by forcibly limiting the working day by state regulations, made by a state that is ruled by capitalist and landlord. Apart from the working-class movement that daily grew more threatening, the limiting of factory labour was dictated by the same necessity which spread guano over the English fields.

Marx referred, later in the same chapter, to a group of 26 Staffordshire pottery firms, including Josiah Wedgwood, petitioning Parliament in 1863 for “some legislative enactment”; the reason was that competition prevented individual capitalists from voluntarily limiting the work time of children, etc., as beneficial as it would be to them collectively: “Much as we deplore the evils before mentioned, it would not be possible to prevent them by any scheme of agreement between the manufacturers…. Taking all these points into consideration, we have come to the conviction that some legislative enactment is wanted.”  

The smarter capitalists, similarly, support a welfare state for two main reasons. First, the capitalist state’s upward distribution of income in the form of economic rents creates a maldistribution of purchasing power, which in turn results in chronic tendencies toward underconsumption and idle production capacity — tendencies which periodically almost destroyed capitalism (most notably in the Great Depression of the 1930s). Redistributing a small portion of this income to at least the poorest part of the population, and otherwise bolstering aggregate demand, is necessary in order to prevent depression. 

Second, if the worst forms of destitution are not addressed, starvation and homelessness will reach levels that threaten political radicalization, disorder, and violence.

At every step of the way, the primary architects of the 20th century mixed economy were hard-headed capitalists. There is enough historiography on this theme by James Weinstein, Gabriel Kolko, G. William Domhoff, and Frances Piven to keep Hornberger busy for many months.

If anything destroys the average person’s faith in freedom, it is the pretense of people like Hornberger that the capitalist system they defend is the product of freedom rather than of massive state violence, and the association in the popular mind of the language of “freedom” with the system they experience daily as a boot on their neck."

-Kevin Carson, "Capitalism, Not Welfare, Has Destroyed Faith in Freedom"

[momxijinping]

Michael Hudson argues that the industrial capitalism of a previous era has given way to a new form of financial capitalism. Today’s financial capitalists, unlike capitalists in Marx’s day, now claim their share of the surplus by passively extracting interest or economic rents broadly, rather than through control of the production process. Like landlords and other non-capitalist elites, their pursuit of private wealth does not develop the forces of production, broaden the social division of labor, or prepare the ground for socialism. Pursuit of rents, unlike market competition, generates pressure neither for improvements in the production process, nor for cost-reducing public investment. So the transition from industry to finance as the dominant form of surplus appropriation has been associated with economic stagnation and a withdrawal of the state from social provision. [1]

Other writers have told versions of this story, but Hudson’s is one of the more convincing I have seen. I am not, however, convinced. I do not think that “financial” and “industrial” capital can be separated in the way he proposes, or that their historical evolution can be understood as a transition from one to the other.

[...]

It is true that the development of a new, more efficient production process involves real gains for society while land speculation, for instance, does not. But how do those social gains come to be claimed as profit by the capitalist? First, by the exclusive access they have to the means of production. And second, by their ability to sell at a price above their costs of production. On both sides, market power or rents are essential to industrial capitalism.

Hudson is aware of this, of course, and notes that to Marx, owners of industrial capital are also “part of the rentier class in principle.” If he followed this thought further I think he would find it creates problems for the larger dichotomy he is arguing for.

Capital is a process or a circuit: M-C-P-C'-M'. We often think of this circuit as happening at the level of an individual commodity, but it applies just as much at larger scales. We can think of the growth of an industrial firm as the earlier part of the circuit where value comes to be embodied in a concrete production process, and payouts to shareholders as the last part where value returns to the money form.

Industrial production doesn’t require that its results be eventually realized as money. But industrial capitalism does. From that point of view, the financial engineers who optimize the movement of profits out of the firm are as integral a part of industrial capital as the engineer-engineers who optimize the production process.

[...]

What we see historically is an oscillation, a back and forth or push and pull, rather than a well-defined before and after. And moves in one direction in one place can coexist with or even reinforce moves the other way elsewhere. For example, Hudson following Marx points to the fight to overturn the corn laws as an example of the progressive side of industrial capital. But we should add that the flip side of Britain specializing in industry within the global division of labor was that other places came to specialize more in primary production, with a concomitant increase in the power of landlords and reliance on bound labor. Something we should all have learned from the new historians of capitalism is how intimately linked were the development of wage labor and industry in Britain and the US North with the development of slavery and cotton production in the US South. [8] In this case as in others, much of what Hudson calls financial capitalism has developed alongside, and complementary to, industrial capitalism. In the present context, it can be argued that much of what appears as financialization today reflects the fact that looking at the United States in isolation we see only part of a global value chain. [9]

Turning to the present, then, it is true, as Hudson says, that in recent decades the holders of financial assets have reasserted their claims against productive enterprises in the United States and elsewhere. But I do not think this can be usefully described as a “relapse back toward feudalism and debt peonage.” A creditor or feudal overlord stands outside the production process. Peasants and debt peons have direct access to means of production, but are forced to hand over part of the product. Capitalists by contrast get their authority and claim on surplus from control over the production process itself, today as much as when Marx wrote.

[...]

Companies like Walmart and Google and Amazon are clearly examples of industrial capitalism, relentlessly seeking to push down costs of production. Cheap consumer goods at Walmart lower the costs of subsistence for workers today just as cheap imported food did for British workers in the nineteenth century.

This is in no way to defend Amazon and Walmart, though we shouldn’t deny that their logistical systems are genuine technological accomplishments that a socialist society could build on. [12] The point is just that the greatest concentrations of wealth today still arise from the competition to sell commodities at lower prices.

Finally, I have some concerns about the political implications of this analysis. If we take Hudson’s story seriously, we may see a political divide between industrial capital and finance capital, and the possibility of a popular movement seeking alliance with the former. But while finance is a distinct social actor, I do not think it is useful to think of it as a distinct type of capital, one that is antagonistic to productive capital. As I have written elsewhere, the financial sector as a distinct institution is better seen as a “weapon by which the claims of wealth holders are asserted against the rest of society.” [13]

I am not sure this kind of program, even if feasible, does much to support a more transformative political project. Hudson quotes Simon Patten’s turn-of-the-last-century description of public services like education as a “fourth factor of production” that are necessary to boost industrial competitiveness, with the implication that similar arguments might be successful today. As a public university teacher, I reject the idea that my job is to raise the productive capacity of workers, or reduce the overhead costs of American capital. Nor do I think we will be successful in defending education and other public goods from defunding and austerity on those grounds.

[mostlysignssomeportents]

Big Tech’s “attention rents”

Tomorrow (Nov 4), I'm keynoting the Hackaday Supercon in Pasadena, CA.

The thing is, any feed or search result is "algorithmic." "Just show me the things posted by people I follow in reverse-chronological order" is an algorithm. "Just show me products that have this SKU" is an algorithm. "Alphabetical sort" is an algorithm. "Random sort" is an algorithm.

Any process that involves more information than you can take in at a glance or digest in a moment needs some kind of sense-making. It needs to be put in some kind of order. There's always gonna be an algorithm.

But that's not what we mean by "the algorithm" (TM). When we talk about "the algorithm," we mean a system for ordering information that uses complex criteria that are not precisely known to us, and than can't be easily divined through an examination of the ordering.

There's an idea that a "good" algorithm is one that does not seek to deceive or harm us. When you search for a specific part number, you want exact matches for that search at the top of the results. It's fine if those results include third-party parts that are compatible with the part you're searching for, so long as they're clearly labeled. There's room for argument about how to order those results – do highly rated third-party parts go above the OEM part? How should the algorithm trade off price and quality?

It's hard to come up with an objective standard to resolve these fine-grained differences, but search technologists have tried. Think of Google: they have a patent on "long clicks." A "long click" is when you search for something and then don't search for it again for quite some time, the implication being that you've found what you were looking for. Google Search ads operate a "pay per click" model, and there's an argument that this aligns Google's ad division's interests with search quality: if the ad division only gets paid when you click a link, they will militate for placing ads that users want to click on.

Platforms are inextricably bound up in this algorithmic information sorting business. Platforms have emerged as the endemic form of internet-based business, which is ironic, because a platform is just an intermediary – a company that connects different groups to each other. The internet's great promise was "disintermediation" – getting rid of intermediaries. We did that, and then we got a whole bunch of new intermediaries.

Usually, those groups can be sorted into two buckets: "business customers" (drivers, merchants, advertisers, publishers, creative workers, etc) and "end users" (riders, shoppers, consumers, audiences, etc). Platforms also sometimes connect end users to each other: think of dating sites, or interest-based forums on Reddit. Either way, a platform's job is to make these connections, and that means platforms are always in the algorithm business.

Whether that's matching a driver and a rider, or an advertiser and a consumer, or a reader and a mix of content from social feeds they're subscribed to and other sources of information on the service, the platform has to make a call as to what you're going to see or do.

These choices are enormously consequential. In the theory of Surveillance Capitalism, these choices take on an almost supernatural quality, where "Big Data" can be used to guess your response to all the different ways of pitching an idea or product to you, in order to select the optimal pitch that bypasses your critical faculties and actually controls your actions, robbing you of "the right to a future tense."

I don't think much of this hypothesis. Every claim to mind control – from Rasputin to MK Ultra to neurolinguistic programming to pick-up artists – has turned out to be bullshit. Besides, you don't need to believe in mind control to explain the ways that algorithms shape our beliefs and actions. When a single company dominates the information landscape – say, when Google controls 90% of your searches – then Google's sorting can deprive you of access to information without you knowing it.

If every "locksmith" listed on Google Maps is a fake referral business, you might conclude that there are no more reputable storefront locksmiths in existence. What's more, this belief is a form of self-fulfilling prophecy: if Google Maps never shows anyone a real locksmith, all the real locksmiths will eventually go bust.

If you never see a social media update from a news source you follow, you might forget that the source exists, or assume they've gone under. If you see a flood of viral videos of smash-and-grab shoplifter gangs and never see a news story about wage theft, you might assume that the former is common and the latter is rare (in reality, shoplifting hasn't risen appreciably, while wage-theft is off the charts).

In the theory of Surveillance Capitalism, the algorithm was invented to make advertisers richer, and then went on to pervert the news (by incentivizing "clickbait") and finally destroyed our politics when its persuasive powers were hijacked by Steve Bannon, Cambridge Analytica, and QAnon grifters to turn millions of vulnerable people into swivel-eyed loons, racists and conspiratorialists.

As I've written, I think this theory gives the ad-tech sector both too much and too little credit, and draws an artificial line between ad-tech and other platform businesses that obscures the connection between all forms of platform decay, from Uber to HBO to Google Search to Twitter to Apple and beyond:

https://pluralistic.net/HowToDestroySurveillanceCapitalism

As a counter to Surveillance Capitalism, I've proposed a theory of platform decay called enshittification, which identifies how the market power of monopoly platforms, combined with the flexibility of digital tools, combined with regulatory capture, allows platforms to abuse both business-customers and end-users, by depriving them of alternatives, then "twiddling" the knobs that determine the rules of the platform without fearing sanction under privacy, labor or consumer protection law, and finally, blocking digital self-help measures like ad-blockers, alternative clients, scrapers, reverse engineering, jailbreaking, and other tech guerrilla warfare tactics:

https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys

One important distinction between Surveillance Capitalism and enshittification is that enshittification posits that the platform is bad for everyone. Surveillance Capitalism starts from the assumption that surveillance advertising is devastatingly effective (which explains how your racist Facebook uncles got turned into Jan 6 QAnons), and concludes that advertisers must be well-served by the surveillance system.

But advertisers – and other business customers – are very poorly served by platforms. Procter and Gamble reduced its annual surveillance advertising budget from $100m//year to $0/year and saw a 0% reduction in sales. The supposed laser-focused targeting and superhuman message refinement just don't work very well – first, because the tech companies are run by bullshitters whose marketing copy is nonsense, and second because these companies are monopolies who can abuse their customers without losing money.

The point of enshittification is to lock end-users to the platform, then use those locked-in users as bait for business customers, who will also become locked to the platform. Once everyone is holding everyone else hostage, the platform uses the flexibility of digital services to play a variety of algorithmic games to shift value from everyone to the business's shareholders. This flexibility is supercharged by the failure of regulators to enforce privacy, labor and consumer protection standards against the companies, and by these companies' ability to insist that regulators punish end-users, competitors, tinkerers and other third parties to mod, reverse, hack or jailbreak their products and services to block their abuse.

Enshittification needs The Algorithm. When Uber wants to steal from its drivers, it can just do an old-fashioned wage theft, but eventually it will face the music for that kind of scam:

https://apnews.com/article/uber-lyft-new-york-city-wage-theft-9ae3f629cf32d3f2fb6c39b8ffcc6cc6

The best way to steal from drivers is with algorithmic wage discrimination. That's when Uber offers occassional, selective drivers higher rates than it gives to drivers who are fully locked to its platform and take every ride the app offers. The less selective a driver becomes, the lower the premium the app offers goes, but if a driver starts refusing rides, the wage offer climbs again. This isn't the mind-control of Surveillance Capitalism, it's just fraud, shaving fractional pennies off your paycheck in the hopes that you won't notice. The goal is to get drivers to abandon the other side-hustles that allow them to be so choosy about when they drive Uber, and then, once the driver is fully committed, to crank the wage-dial down to the lowest possible setting:

https://pluralistic.net/2023/04/12/algorithmic-wage-discrimination/#fishers-of-men

This is the same game that Facebook played with publishers on the way to its enshittification: when Facebook began aggressively courting publishers, any short snippet republished from the publisher's website to a Facebook feed was likely to be recommended to large numbers of readers. Facebook offered publishers a vast traffic funnel that drove millions of readers to their sites.

But as publishers became more dependent on that traffic, Facebook's algorithm started downranking short excerpts in favor of medium-length ones, building slowly to fulltext Facebook posts that were fully substitutive for the publisher's own web offerings. Like Uber's wage algorithm, Facebook's recommendation engine played its targets like fish on a line.

When publishers responded to declining reach for short excerpts by stepping back from Facebook, Facebook goosed the traffic for their existing posts, sending fresh floods of readers to the publisher's site. When the publisher returned to Facebook, the algorithm once again set to coaxing the publishers into posting ever-larger fractions of their work to Facebook, until, finally, the publisher was totally locked into Facebook. Facebook then started charging publishers for "boosting" – not just to be included in algorithmic recommendations, but to reach their own subscribers.

Enshittification is modern, high-tech enabled, monopolistic form of rent seeking. Rent-seeking is a subtle and important idea from economics, one that is increasingly relevant to our modern economy. For economists, a "rent" is income you get from owning a "factor of production" – something that someone else needs to make or do something.

Rents are not "profits." Profit is income you get from making or doing something. Rent is income you get from owning something needed to make a profit. People who earn their income from rents are called rentiers. If you make your income from profits, you're a "capitalist."

Capitalists and rentiers are in irreconcilable combat with each other. A capitalist wants access to their factors of production at the lowest possible price, whereas rentiers want those prices to be as high as possible. A phone manufacturer wants to be able to make phones as cheaply as possible, while a patent-troll wants to own a patent that the phone manufacturer needs to license in order to make phones. The manufacturer is a capitalism, the troll is a rentier.

The troll might even decide that the best strategy for maximizing their rents is to exclusively license their patents to a single manufacturer and try to eliminate all other phones from the market. This will allow the chosen manufacturer to charge more and also allow the troll to get higher rents. Every capitalist except the chosen manufacturer loses. So do people who want to buy phones. Eventually, even the chosen manufacturer will lose, because the rentier can demand an ever-greater share of their profits in rent.

Digital technology enables all kinds of rent extraction. The more digitized an industry is, the more rent-seeking it becomes. Think of cars, which harvest your data, block third-party repair and parts, and force you to buy everything from acceleration to seat-heaters as a monthly subscription:

https://pluralistic.net/2023/07/24/rent-to-pwn/#kitt-is-a-demon

The cloud is especially prone to rent-seeking, as Yanis Varoufakis writes in his new book, Technofeudalism, where he explains how "cloudalists" have found ways to lock all kinds of productive enterprise into using cloud-based resources from which ever-increasing rents can be extracted:

https://pluralistic.net/2023/09/28/cloudalists/#cloud-capital

The endless malleability of digitization makes for endless variety in rent-seeking, and cataloging all the different forms of digital rent-extraction is a major project in this Age of Enshittification. "Algorithmic Attention Rents: A theory of digital platform market power," a new UCL Institute for Innovation and Public Purpose paper by Tim O'Reilly, Ilan Strauss and Mariana Mazzucato, pins down one of these forms:

https://www.ucl.ac.uk/bartlett/public-purpose/publications/2023/nov/algorithmic-attention-rents-theory-digital-platform-market-power

The "attention rents" referenced in the paper's title are bait-and-switch scams in which a platform deliberately enshittifies its recommendations, search results or feeds to show you things that are not the thing you asked to see, expect to see, or want to see. They don't do this out of sadism! The point is to extract rent – from you (wasted time, suboptimal outcomes) and from business customers (extracting rents for "boosting," jumbling good results in among scammy or low-quality results).

The authors cite several examples of these attention rents. Much of the paper is given over to Amazon's so-called "advertising" product, a $31b/year program that charges sellers to have their products placed above the items that Amazon's own search engine predicts you will want to buy:

https://pluralistic.net/2022/11/28/enshittification/#relentless-payola

This is a form of gladiatorial combat that pits sellers against each other, forcing them to surrender an ever-larger share of their profits in rent to Amazon for pride of place. Amazon uses a variety of deceptive labels ("Highly Rated – Sponsored") to get you to click on these products, but most of all, they rely two factors. First, Amazon has a long history of surfacing good results in response to queries, which makes buying whatever's at the top of a list a good bet. Second, there's just so many possible results that it takes a lot of work to sift through the probably-adequate stuff at the top of the listings and get to the actually-good stuff down below.

Amazon spent decades subsidizing its sellers' goods – an illegal practice known as "predatory pricing" that enforcers have increasingly turned a blind eye to since the Reagan administration. This has left it with few competitors:

https://pluralistic.net/2023/05/19/fake-it-till-you-make-it/#millennial-lifestyle-subsidy

The lack of competing retail outlets lets Amazon impose other rent-seeking conditions on its sellers. For example, Amazon has a "most favored nation" requirement that forces companies that raise their prices on Amazon to raise their prices everywhere else, which makes everything you buy more expensive, whether that's a Walmart, Target, a mom-and-pop store, or direct from the manufacturer:

https://pluralistic.net/2023/04/25/greedflation/#commissar-bezos

But everyone loses in this "two-sided market." Amazon used "junk ads" to juice its ad-revenue: these are ads that are objectively bad matches for your search, like showing you a Seattle Seahawks jersey in response to a search for LA Lakers merch:

https://www.bloomberg.com/news/articles/2023-11-02/amazon-boosted-junk-ads-hid-messages-with-signal-ftc-says

The more of these junk ads Amazon showed, the more revenue it got from sellers – and the more the person selling a Lakers jersey had to pay to show up at the top of your search, and the more they had to charge you to cover those ad expenses, and the more they had to charge for it everywhere else, too.

The authors describe this process as a transformation between "attention rents" (misdirecting your attention) to "pecuniary rents" (making money). That's important: despite decades of rhetoric about the "attention economy," attention isn't money. As I wrote in my enshittification essay:

You can't use attention as a medium of exchange. You can't use it as a store of value. You can't use it as a unit of account. Attention is like cryptocurrency: a worthless token that is only valuable to the extent that you can trick or coerce someone into parting with "fiat" currency in exchange for it. You have to "monetize" it – that is, you have to exchange the fake money for real money.

The authors come up with some clever techniques for quantifying the ways that this scam harms users. For example, they count the number of places that an advertised product rises in search results, relative to where it would show up in an "organic" search. These quantifications are instructive, but they're also a kind of subtweet at the judiciary.

In 2018, SCOTUS's ruling in American Express v Ohio changed antitrust law for two-sided markets by insisting that so long as one side of a two-sided market was better off as the result of anticompetitive actions, there was no antitrust violation:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3346776

For platforms, that means that it's OK to screw over sellers, advertisers, performers and other business customers, so long as the end-users are better off: "Go ahead, cheat the Uber drivers, so long as you split the booty with Uber riders."

But in the absence of competition, regulation or self-help measures, platforms cheat everyone – that's the point of enshittification. The attention rents that Amazon's payola scheme extract from shoppers translate into higher prices, worse goods, and lower profits for platform sellers. In other words, Amazon's conduct is so sleazy that it even threads the infinitesimal needle that the Supremes created in American Express.

Here's another algorithmic pecuniary rent: Amazon figured out which of its major rivals used an automated price-matching algorithm, and then cataloged which products they had in common with those sellers. Then, under a program called Project Nessie, Amazon jacked up the prices of those products, knowing that as soon as they raised the prices on Amazon, the prices would go up everywhere else, so Amazon wouldn't lose customers to cheaper alternatives. That scam made Amazon at least a billion dollars:

https://gizmodo.com/ftc-alleges-amazon-used-price-gouging-algorithm-1850986303

This is a great example of how enshittification – rent-seeking on digital platforms – is different from analog rent-seeking. The speed and flexibility with which Amazon and its rivals altered their prices requires digitization. Digitization also let Amazon crank the price-gouging dial to zero whenever they worried that regulators were investigating the program.

So what do we do about it? After years of being made to look like fumblers and clowns by Big Tech, regulators and enforcers – and even lawmakers – have decided to get serious.

The neoliberal narrative of government helplessness and incompetence would have you believe that this will go nowhere. Governments aren't as powerful as giant corporations, and regulators aren't as smart as the supergeniuses of Big Tech. They don't stand a chance.

But that's a counsel of despair and a cheap trick. Weaker US governments have taken on stronger oligarchies and won – think of the defeat of JD Rockefeller and the breakup of Standard Oil in 1911. The people who pulled that off weren't wizards. They were just determined public servants, with political will behind them. There is a growing, forceful public will to end the rein of Big Tech, and there are some determined public servants surfing that will.

In this paper, the authors try to give those enforcers ammo to bring to court and to the public. For example, Amazon claims that its algorithm surfaces the products that make the public happy, without the need for competitive pressure to keep it sharp. But as the paper points out, the only successful new rival ecommerce platform – Tiktok – has found an audience for an entirely new category of goods: dupes, "lower-cost products that have the same or better features than higher cost branded products."

The authors also identify "dark patterns" that platforms use to trick users into consuming feeds that have a higher volume of things that the company profits from, and a lower volume of things that users want to see. For example, platforms routinely switch users from a "following" feed – consisting of things posted by people the user asked to hear from – with an algorithmic "For You" feed, filled with the things the company's shareholders wish the users had asked to see.

Calling this a "dark pattern" reveals just how hollow and self-aggrandizing that term is. "Dark pattern" usually means "fraud." If I ask to see posts from people I like, and you show me posts from people who'll pay you for my attention instead, that's not a sophisticated sleight of hand – it's just a scam. It's the social media equivalent of the eBay seller who sends you an iPhone box with a bunch of gravel inside it instead of an iPhone. Tech bros came up with "dark pattern" as a way of flattering themselves by draping themselves in the mantle of dopamine-hacking wizards, rather than unimaginative con-artists who use a computer to rip people off.

These For You algorithmic feeds aren't just a way to increase the load of sponsored posts in a feed – they're also part of the multi-sided ripoff of enshittified platforms. A For You feed allows platforms to trick publishers and performers into thinking that they are "good at the platform," which both convinces to optimize their production for that platform, and also turns them into Judas Goats who conspicuously brag about how great the platform is for people like them, which brings their peers in, too.

In Veena Dubal's essential paper on algorithmic wage discrimination, she describes how Uber drivers whom the algorithm has favored with (temporary) high per-ride rates brag on driver forums about their skill with the app, bringing in other drivers who blame their lower wages on their failure to "use the app right":

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4331080

As I wrote in my enshittification essay:

If you go down to the midway at your county fair, you'll spot some poor sucker walking around all day with a giant teddy bear that they won by throwing three balls in a peach basket.

The peach-basket is a rigged game. The carny can use a hidden switch to force the balls to bounce out of the basket. No one wins a giant teddy bear unless the carny wants them to win it. Why did the carny let the sucker win the giant teddy bear? So that he'd carry it around all day, convincing other suckers to put down five bucks for their chance to win one:

https://boingboing.net/2006/08/27/rigged-carny-game.html

The carny allocated a giant teddy bear to that poor sucker the way that platforms allocate surpluses to key performers – as a convincer in a "Big Store" con, a way to rope in other suckers who'll make content for the platform, anchoring themselves and their audiences to it.

Platform can't run the giant teddy-bear con unless there's a For You feed. Some platforms – like Tiktok – tempt users into a For You feed by making it as useful as possible, then salting it with doses of enshittification:

https://www.forbes.com/sites/emilybaker-white/2023/01/20/tiktoks-secret-heating-button-can-make-anyone-go-viral/

Other platforms use the (ugh) "dark pattern" of simply flipping your preference from a "following" feed to a "For You" feed. Either way, the platform can't let anyone keep the giant teddy-bear. Once you've tempted, say, sports bros into piling into the platform with the promise of millions of free eyeballs, you need to withdraw the algorithm's favor for their content so you can give it to, say, astrologers. Of course, the more locked-in the users are, the more shit you can pile into that feed without worrying about them going elsewhere, and the more giant teddy-bears you can give away to more business users so you can lock them in and start extracting rent.

For regulators, the possibility of a "good" algorithmic feed presents a serious challenge: when a feed is bad, how can a regulator tell if its low quality is due to the platform's incompetence at blocking spammers or guessing what users want, or whether it's because the platform is extracting rents?

The paper includes a suite of recommendations, including one that I really liked:

Regulators, working with cooperative industry players, would define reportable metrics based on those that are actually used by the platforms themselves to manage search, social media, e-commerce, and other algorithmic relevancy and recommendation engines.

In other words: find out how the companies themselves measure their performance. Find out what KPIs executives have to hit in order to earn their annual bonuses and use those to figure out what the company's performance is – ad load, ratio of organic clicks to ad clicks, average click-through on the first organic result, etc.

They also recommend some hard rules, like reserving a portion of the top of the screen for "organic" search results, and requiring exact matches to show up as the top result.

I've proposed something similar, applicable across multiple kinds of digital businesses: an end-to-end principle for online services. The end-to-end principle is as old as the internet, and it decrees that the role of an intermediary should be to deliver data from willing senders to willing receivers as quickly and reliably as possible. When we apply this principle to your ISP, we call it Net Neutrality. For services, E2E would mean that if I subscribed to your feed, the service would have a duty to deliver it to me. If I hoisted your email out of my spam folder, none of your future emails should land there. If I search for your product and there's an exact match, that should be the top result:

https://www.eff.org/deeplinks/2023/04/platforms-decay-lets-put-users-first

One interesting wrinkle to framing platform degradation as a failure to connect willing senders and receivers is that it places a whole host of conduct within the regulatory remit of the FTC. Section 5 of the FTC Act contains a broad prohibition against "unfair and deceptive" practices:

https://pluralistic.net/2023/01/10/the-courage-to-govern/#whos-in-charge

That means that the FTC doesn't need any further authorization from Congress to enforce an end to end rule: they can simply propose and pass that rule, on the grounds that telling someone that you'll show them the feeds that they ask for and then not doing so is "unfair and deceptive."

Some of the other proposals in the paper also fit neatly into Section 5 powers, like a "sticky" feed preference. If I tell a service to show me a feed of the people I follow and they switch it to a For You feed, that's plainly unfair and deceptive.

All of this raises the question of what a post-Big-Tech feed would look like. In "How To Break Up Amazon" for The Sling, Peter Carstensen and Darren Bush sketch out some visions for this:

https://www.thesling.org/how-to-break-up-amazon/

They imagine a "condo" model for Amazon, where the sellers collectively own the Amazon storefront, a model similar to capacity rights on natural gas pipelines, or to patent pools. They see two different ways that search-result order could be determined in such a system:

"specific premium placement could go to those vendors that value the placement the most [with revenue] shared among the owners of the condo"

or

"leave it to owners themselves to create joint ventures to promote products"

Note that both of these proposals are compatible with an end-to-end rule and the other regulatory proposals in the paper. Indeed, all these policies are easier to enforce against weaker companies that can't afford to maintain the pretense that they are headquartered in some distant regulatory haven, or pay massive salaries to ex-regulators to work the refs on their behalf:

https://www.thesling.org/in-public-discourse-and-congress-revolvers-defend-amazons-monopoly/

The re-emergence of intermediaries on the internet after its initial rush of disintermediation tells us something important about how we relate to one another. Some authors might be up for directly selling books to their audiences, and some drivers might be up for creating their own taxi service, and some merchants might want to run their own storefronts, but there's plenty of people with something they want to offer us who don't have the will or skill to do it all. Not everyone wants to be a sysadmin, a security auditor, a payment processor, a software engineer, a CFO, a tax-preparer and everything else that goes into running a business. Some people just want to sell you a book. Or find a date. Or teach an online class.

Intermediation isn't intrinsically wicked. Intermediaries fall into pits of enshitffication and other forms of rent-seeking when they aren't disciplined by competitors, by regulators, or by their own users' ability to block their bad conduct (with ad-blockers, say, or other self-help measures). We need intermediaries, and intermediaries don't have to turn into rent-seeking feudal warlords. That only happens if we let it happen.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/11/03/subprime-attention-rent-crisis/#euthanize-rentiers

Image: Cryteria (modified) https://commons.wikimedia.org/wiki/File:HAL9000.svg

CC BY 3.0 https://creativecommons.org/licenses/by/3.0/deed.en

[thepowerisyouth]

Wah-wahhhh. Poor Mr. Trump cant get a small loan of $500 million USD to help cover his legal fees.

I wonder though-- is this a sign of troubled times in rich circle funding?

Yes, Trump is unpopular, but still-- Rich folks are used to getting loan offers thrown at them like pebbles on a bedroom window. And $500 mil is a drop in the hat in 'good times'. Just a thought. Financial crisis...

(Trump absolutely has collateral worth the bond amount, even at liquidation discounts, which raises even more questions about cashflow problems in New York funding circles)

[femciolente]

Lumpen Theory : Genealogy of a Panoptilumpenism (Part 2)

The conception of the Lumpenproletariat as pure “leeches” or “burdens” as Marx would have them for most of the development of his theory, does nothing but reaffirm, and in a sense justify, the virtual-colonial exploitation of one of the most miserable elements ever conceived by humanity. Sadly, at no point could the JNL’s perspective become a majority in any capacity, and even intellectual circles have fallen off with the idea of considering such an avant-garde scene as relevant or possibly interesting for the furthering of class analysis. Our modern Technocapital advancements have proven these conceptions of the Lumpenproletariat as an ever expanding entity and conception, one that is really up to date with the tendencies and evolutions of the market and the productive forces subordinated to it. Lumpenization as a process is, inherently, a modern phenomenon. Capitalism devolved into a commodity driven mechanism at the middle of the 20th century, as the ones like Debord denoted. The construction of such a strong baseline and spectacular culture towards the commodity itself was only done once the development of the modules of capitalism settled and could bring out a certain “abundance” of said commodities. Via this, there was a certain death of the industrial core of capitalism. Not in its literal sense, capitalism  had retained and even amplified its destructive industrial capacities and vision, but because the directive threat of both the liberal art of governing and the becoming-sentient technocapital advancements had done were no longer centred on pure industry, it was accompanied by more than purely that. As this, the 80’s and the beginning of neoliberal uniformist globalisation began the process of the creation of the service economy, now with the working force of the western first world being driven towards the new disciplinary form of embankment : the cubicle and the office. Via this, the fragmentation of what was the proletariat began diving directly into the realm of biopower itself : no longer was pure labour alienation the issue for these now obsolete western factory workers, the whole recuperated war machine of the state and its newly developed labour controlling arms are purposely transforming the scenarios in which these labourers operate, and hence delving them deeper into what can only be considered an entropic mess of an economic transformation. The welfare state, now that the productivist social democratic compromise had become completely overridden by total business ontology, the logical step was to turn the lives of these producers into one of total alienation inside the realm of non-existent production and pure data recuperation and management. The 21st century, via its enormous decentralisation and increased fluidity in the forms that Technocapital seeks to take in the larger and broader scheme of things, began creating a new form of production, inside and at the same time outside of the service economy : the previously mentioned data collecting in favour of the concentrating and newly appearing “Rentier bourgeoisie”, as B. Ceka would come to call them. For her, these newly uses of data in order to reinforce the structural integrity and reach of technocapital itself are nothing but a new form of labour exploitation, directly via the involvement of this newly imprisoned proletarian force, but also by the Lumpenproletariat, primary subjects of such experimentation and dabbling. You see, the Lumpenization that takes place by both the death of the industrial 1st world and its impossibility of incorporation into the new service economy is a direct consequence and desired result of the development of new forms of capitalism. Via this, we can encounter the programmed death of the service economy, one in which Panoptilumpenism is applied into its full potential force.

No longer can we suffice for data management, that data must be used, it must be rhizomatically consumed into the new apparatuses of the internet and AI. Seka retains the core parts of the Landian fear of expansion of Technocapital towards “sentience” and autonomy, and applies it to a deeply Lumpenizing realisation : no longer is any part of the population free from violent forms of both control and exploitation, in the most decentralised forms possible to conceive. 

Andrew Culp detested the Rhizome for what it had become, a past realisation of what now is recuperated at the hands of the capitalist directors of the technocapital enterprise. The rhizomatic structure of what Deleuze wanted was now realised, in the entirely worst way possible. The hand of the rising Lumpenproletariat is being forced by the same theorist that could be key to their self-immediate Anarchoscape from the eye of the cybernetic biopower now applied deeply to its own core.

We can conceive of the business ontology that had  developed alongside technocapital, has now gained speed and was faced by much less Lumpen-Guided resistance, meaning that it was now more ingrained than ever in our era of cybernetic biopower. This development led to the pursuit of the delegation of economic responsibility, one in which the role of the Panoptilumpenist actions of the neoliberal economy became the forming of the “entrepreneur” in every factor of the population, but most concretely inside the Lumpen. The Lumpen, via this new form of virtual-colonial expansion, become their own responsibles for their economic activity, essentially starting what many like to call “the gig economy”, but what in reality is nothing but the true decentralisation of the realm of data management and its business-ontological application.

The profit motive becomes then the only guideline and prerogative of the Lumpen , one not enforced but suggested to them, not inherently tying them to a fixed and rigid industrial and bureaucratic labour form; but now one that is so flexible that it delves into the total non-existence of the personal life once enjoyed by the common proletariat. The continuation of the Lumpen as a liberated subject, on the outskirts of the labour productions remains true, as the Lumpenproletariat, with the delegation of economic power and capacities, have become themselves the only actors involved in their newly found subsistence. The common Uber eats driver, mostly exploited for being commonly of a cultural minority already segregated and pushed in many cases towards Lumpenization, that has found no solution but to collect and infinity of other gig jobs of spontaneous occurrence, of fluid continuation and of tremendous psychological strain becomes the new martyr of our movement, or at the very least it should become so. This one common fighter of the world has turned into a pure state of resistance towards this Panoptilumpenism, a pure form of revolt against what it is, essentially : a brutal regulation of the existence of a group nowadays conforming a majority of the world’s population, and sooner than later, will become the active actors in the taking down of Technocapital, in the heroic death that can so descriptively be defined an aesthetic projection towards the imposition of a deep desire towards pure affirmation. Part 2 -