Financial rentiers and the revenant conflict between rent and profit

This chapter, starting from an analysis of the relationship between rents and profit and its effects on capital accumulation in classical political economy, applies this analysis to the relationship between financial rents and profit, aiming to identify its possible effects on growth rates and possible stagnation trends. Utilising the supply side viewpoint that characterised classical and Marxian political economy, it shows how increase in the “rentier share” can shift a growing part of surplus value towards consumption of luxury goods, reducing the share devoted to new productive investments and capital accumulation. Moreover, as the part of surplus value that belongs to the “functioning capitalists” is determined by the general rate of interest that is presupposed in advance, before the production process begins, the chapter shows how the redistribution of surplus value between financial rentiers and functioning capitalists can reduce corporate profitability and produce significant effects on growth rates, inducing stagnation trends, as in the stationary state predicted by the classical economists.