Guy Standing, The Corruption of Capitalism

Guy Standing, The Corruption of Capitalism: Why rentiers thrive and work does not pay, Biteback Publishing, 2016, xv + 352 pp, 1 78590 044 0, hbk, £17.99

It would be easy to misinterpret the title of Guy Standing’s new book, so it is important to understand what this book is not. It is not an anticapitalist tract: that is, it does not suggest that markets are in principle a flawed method for allocating goods and services. It is instead an angry, evidenced and reasoned exploration of the ways in which capitalism has been corrupted by a variety of individuals and institutions: and in particular it is a description of the ways in which markets that capitalism’s advocates claim to be free are in fact highly controlled, to the benefit of those who control them.

Most of the book is a long list of the ways in which markets have been captured by the already wealthy. Owners of capital – whether that be land, property, or intellectual property rights – are the ‘rentiers’ of the book’s subtitle, whose ‘rental’ income from their existing assets enables them to increase their wealth and exacerbate today’s already high levels of inequality. The owners of capital have achieved financial deregulation, while workers have seen their freedoms in the labour market legislated away; and today’s new technologies have benefited capital at the expense of labour; governments and global financial institutions have enforced privatisations that hand rent-generating assets to private interests. Standing is particularly angry about the patents industry. Patents have often been largely or partially the result of publicly funded research, whereas their rental income goes to the patent owner rather than to the public funder; and patents are often hoovered up to prevent competition rather than to encourage it. Neither are investment treaties what they seem. Far from being socially useful, they regard governments that attempt socially beneficial policies as just another set of suable contractors. Standing takes issue with Paul Mason’s Postcapitalism. Information technology is not the birth of a new networked and enfranchising economy, because it has already been captured by the rent-seekers.

The list of corruptions continues: public subsidies that result in private profit; private debt, packaged and sold as an asset that generates rental income; plunder of such ‘commons’ as national and urban parks; the commercialisation of justice; the privatisation of public buildings such as schools and hospitals; and the bottling and sale of water – and now of mountain air. The migration of production from worker-employing firms to internet platforms that allocate tasks to doubtfully self-employed workers has shifted rent-seeking from physical capital to informational capital, and is resulting in a ‘precariat’: a common theme in Standing’s previous books. Standing’s penultimate chapter shows how the media and governments have been captured by the rent-seekers, meaning that neither media nor governments will want to do anything about tax havens or any of the other structures of corrupted capitalism, and his final chapter identifies the precariat as the only possible source of revolt. Among that chapter’s prescriptions are regulation of such labour brokers as Uber, and a Citizen’s Income. We have recently seen a court case grant employment rights to Uber drivers, and similar cases will no doubt follow. Whether we shall see a Citizen’s Income in the near future is an interesting question.

Throughout his book, Standing identifies a series of ‘lies’ that are being told about capitalism, and particularly the lie that markets are ‘free’ when they clearly are not. They never are, of course, and neither should they be – for their own good. Markets need to exist within a network of State and other institutions that regulate money, trade, contracts, and the environment, and that provide capitalist enterprises with educated and healthy workers. Those are the kinds of unfreedom that work both for markets and for the institutions and individuals working in them. The unfreedoms that Standing has identified are of a different kind, because they serve the interests of the few at the expense of the many – and at the expense of capitalism itself. A Citizen’s Income would serve a similar function to the first kind of unfreedom: it would be a State intervention that would benefit society and its members, and that would at the same time benefit capitalism. We should try it.