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Dossier « Capitalismes et régimes rentiers »

Dealing with rent and rentier economies: New perspectives from institutional economics

An introduction to the issue “Capitalisms and rentier regimes”
Apprivoiser la rente : les enjeux des phénomènes rentiers et leur traitement par l’économie institutionnelle. Introduction au dossier
Apropiarse de la renta: Los desafíos de los fenómenos rentísticos y su tratamiento por la economía institucional. Introducción al tema
Adrien Faudot et Julien Vercueil


L’économie hétérodoxe étudie la rente sous différents angles. Le premier est celui de la source du revenu ; le second est celui de ses impacts macroéconomiques ; le troisième, celui de la distribution du revenu. Cette introduction au dossier souligne la contribution des articles publiés dans ce numéro selon chacun de ces angles. De son côté, la théorie de la régulation a développé une lecture en termes de « régime d’accumulation rentier », l’incluant dans l’analyse de la variété des capitalismes tout en rendant possible un dialogue avec l’économie du développement. Elle montre en particulier que les hiérarchies institutionnelles co-évoluent avec les fluctuations de la rente. La notion de régime d’accumulation rentier permet également de comprendre comment certains pays en développement sont en mesure de développer des institutions résilientes malgré des faiblesses structurelles.

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1Rent has been a significant issue in economics for more than two centuries. Whether from classical, Marxist, neoclassical, or the most recent institutionalist approaches, rent as a theoretical concept and an empirical object has drawn constant attention. In this introduction, we propose to explore the perspectives adopted by the authors of this special issue to actualize and develop our understanding of rentier phenomena in the contemporary world.

2The classical definition of rent provided by David Ricardo more than two centuries ago refers to agricultural rent. Rent is defined as “that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil” (Ricardo, 1821, p. 33). The Ricardian definition of rent provides us with a limited but convenient starting point. As rent may come from many other sources than land, it is necessary to extend this conception as follows: when one owns an asset and extracts from it a revenue (that may be significantly greater than the average profit in the sector), this income can be defined as a rent. Akin, but not quite the same, is the definition by Thorstein Veblen, for whom rent was an “unearned income” captured by “vested interests” through predation of collective wealth, business activities, or simply inheritance (Hudson, 2012).

3Rentier activities are diverse and subject to change. In the case of extractive industries – economists’ first choices when thinking about rent – their location and operating costs evolve, depending on the degree of depletion of the resource deposits. This strongly influences the amount and fluctuations of rents. Obviously rent is not limited to raw materials: it may result from real estate and the financial sector, high technological industries bestowing a monopoly position on private actors and, in rarer instances, from manufacturing industries with “national champions” protected by the state. Rent variation depends on technology and demand dynamics, which are not readily subject to forecast, as we have seen during the still ongoing Covid-19 pandemic in the case of the oil and gas industry (IEA, 2021). Therefore, at the macroeconomic level, the revenue provided by rent can be volatile, leading governments and companies to build buffers to mitigate the effects of this instability. When rent fluctuations are severe and last for significant periods, they may shape the economy, which brings us to the sectoral and macroeconomic impact of rent.

4As rentier activities expand, exhibiting significantly higher net revenues than other sectors, they attract the bulk of investment resources available in the country. Therefore, they influence the costs of the productive factors and overshadow other sectors exposed to international competition. Accordingly, the development of rentier activities occurs at the expense of other activities. Drawing on a neoclassical model of partial equilibrium, the abundant literature on the Dutch disease (Corden & Neary, 1982; Corden, 1984) emphasizes the negative consequences of developing rentier activities in displacing resources from exposed sectors to rentier sectors, as the result of a real appreciation of the exchange rate. In our view, current debates over rent call for these traditional questions to be re-visited. Rent analysis raises essential issues such as exchange rate regimes, the sources and nature of inflationary processes, current account (im-)balances, and the manufacturing sector’s competitiveness (Bresser-Pereira, 2008). It is also necessary to complete and generalize these approaches by showing how, in an institutional context characterized by the permeability between political and economic powers, vested private interests in rentier sectors can become strong enough to counter any attempt to mitigate the sectoral and macroeconomic distortions caused by rent. In the long run, the sheer size reached by a rentier sector can contribute to a lock-in in which the dependency of the growth regime regarding rent, combined with the political power gained by the primary recipients of the rent, can significantly alter the regulatory capacities of public authorities.

5Rent strongly affects income distribution, leading to a considerable differentiation of primary incomes and wealth, mainly when private companies capture it. Therefore, the role of the state in reallocating rent among economic actors and the whole population must be underlined: taxation, nationalization of rent-producing assets and redistribution of income through subsidies are the most common means of state intervention in such circumstances (Talha, 2003). In the case of raw material extraction, rent depends on an exhaustible resource. These characteristics and their consequences for income distribution can foster specific fiscal treatments resulting from political compromises and, therefore, can take various forms that are not necessarily conducive to reducing income inequalities (Hertog, 2017). In some cases, tax treatments of the rentier sectors are designed to take due account of the intergenerational consequences of the exhaustion of resources. When it comes to the rent produced by the extraction of hydrocarbons, the debate also focuses on the distributional implications of measures aimed at curbing greenhouse gas emissions at the national and global levels (Pisani-Ferry, 2021).

1. Exploring the sources of rent

6The articles compiled in this special issue, the interview given by Jomo Kwame Sundaram, and the reading note on Ryan Collins’s book are all illustrative of the three perspectives mentioned above. Referring back to Richard Theodore Ely, one of the founders of the “old institutionalist economy” (Rutherford, 1994), Franklin Obeng-Odoom’s contribution proposes a reflection on the concept of rent, an analysis of its formation, and insights into the challenges raised by its consequences in terms of income and wealth distribution. Obeng-Odoom argues that studying rent as a surplus not only allows us to analyze the sources of rent but also, extending Ely’s examples of land management into contemporary African countries, to understand how courts regulate private and public actors’ access to rent-producing assets – mainly land, in the cases studied by the author. In Obeng-Odoom’s terms, “concentration, dispossession, discrimination” are the main distributional problems that arise from rent-producing assets. Problems become acute when, as is the case in some countries studied by Obeng-Odoom, the judiciary becomes subject to influence from the vested interests fueled by rents.

7A complementary approach is proposed in Hannes Warnecke-Berger’s article. Being a primary source of foreign exchange for the receiving economies and representing a form of windfall gain for local communities, remittances are treated as rent in this contribution. Depending on their amount, remittances can exert similar effects as oil-exporting countries’ earnings on domestic economies. However, the main focus of Warnecke-Berger is not macroeconomic: he insists both on the political economy of these countries, in which rent can alleviate the political pressure on national authorities, shifting part of the accountability to expatriate workers, and on the “moral economy” of the relation between those who left the country and those receiving remittances. Here, the moral links binding community members justify the financial links at the microeconomic level while contributing to the macroeconomic regulation of the national economy.

8Situated in the context of a mine-dependent region of Northern Ontario, Canada, David Leadbeater’s contribution provides a critique of the standard conceptualization of the so-called “inclusive rentier syndrome” (Polese & Shearmur, 2002). In this presentation, higher-than-average wages that are reportedly paid in mining industries tend to exert upward pressure on local wages in other industries, causing a crowding-out effect, in a scheme very similar to the classical Dutch disease reasoning – i.e., real appreciation being represented as the relative prices between rent-related sectors and other tradable sector prices. Workers that have inherited the mining worker culture are allegedly unable to attract new industries. David Leadbeater explores and debunks this framework. He shows that the notion of rent hides a normative – one may say “bourgeois” – definition of how workers should “discipline” themselves and follow the rules of their labour market.

9The contribution of Constantin Lopez is broadly in line with the traditional macroeconomic conception of a rentier economy. In his historical analysis of the economic trajectory of Ecuador since 1972, rent is considered in its macroeconomic dimension and analyzed as an exogenous variable. The political-economic analysis of its macro-management enables the author to distinguish three different periods corresponding to three modes of interaction between the rentier sector and the political elite. The article emphasizes how changing political coalitions can alter the macroeconomic policies aimed at tackling the macroeconomic and distributional challenges posed by the variable nature of oil rent.

2. How does rent affect economic development?

10For the economists belonging to Classical Political Economy (from Smith to Malthus and Ricardo) and for Marx, trying to shed light on the conflict between social classes for the surplus distribution, rent was both unavoidable – be it linked to the differential natural endowment of arable lands, as in Malthus’ work, or embedded in the logic of capital accumulation for Marx – and fundamentally harmful to economic development. Contemporary development economics extends this tradition, aiming at explaining how rent can affect development trajectories.

11Rentier activities often take on an essential role in developing countries because most of them rely on exploiting available resources to extract exchange value that will facilitate imports that the country cannot produce by itself. However, the role of rent in development policy extends largely beyond this case. Obeng-Odoom offers the example of the ruling decisions of courts in South Africa and other Sub-Saharan countries regarding the selling of arable land to multinational corporations (MNCs). Jomo Kwame Sundaram, in the interview, evokes the history of tin production in Malaysia and advocates the legitimacy of “rents” stemming from trade tariffs for local agricultural producers in South East Asian countries. Studying the political economy of Ecuador, Constantin Lopez shows how conflicts over the use of rent between neo-extractivists and anti-extractivists were strong enough to jeopardize the elaboration of a long-term development policy for the country.

12Since its beginning, development economics has emphasized the difficulty for developing countries to escape sectoral specialization and the peripheral role they play compared to advanced economies. New developmentalism has tried to renew development economics in the past decades: according to this approach, developing economies have a spontaneous bias to develop rentier sectors, but their long-term interest is to struggle against this bias. They have to overcome powerful rentier interests willing to extract rent from available natural resources, which implies an entrepreneurial state taxing all rentier activities. Bresser-Pereira (2008) calls such a policy the “neutralization of the Dutch disease”. According to him, the Dutch disease results from the prominence of rentier activities extracting Ricardian rents, first and foremost raw materials (while the Dutch disease is not limited to these activities, as we can see in this issue with Warnecke-Berger’s article on remittances). In the case of Ecuador, Constantin Lopez shows that, even after regaining control over the oil sector, the state is still financially vulnerable to a reversal of the situation in the global oil market, as was shown by the fall in oil prices after 2012.

13The analysis of rent and underdevelopment is paradigmatic for new developmentalism. When the state does not intervene to neutralize the Dutch disease, i.e., to neutralize the rentier sector, the economy remains underdeveloped and relies heavily on imports from advanced economies. Even when the state is engaged in implementing industrial policies – or at least pretends to be–, as said by Jomo K. S. in his interview, sometimes “good intentions have not been good enough”, and such development policies fail to reach their target, partly because vested interests capture the state and corrupt the elites. As Jomo argues, this may leave some room for incentive policies as a complement to serve policy objectives. However, the rent-led-growth regimes – which we can call “rentier regimes” – prove to be both surprisingly stable over time and capable of renewing themselves when necessary. From there on, it is worth studying Régulation Theory and its analysis of the rentier accumulation regime.

14Interestingly, one may qualify the argument that rent is a concern for developing countries only. First, advanced economies also produce natural resources in conflict with other sectors that may suffer from deindustrialization. In this issue, David Leadbeater investigates how mining activities leave their mark on some regions of Canada. Second, advanced economies are also subject to rentier behaviours. Some social scientists – especially from the Marxist political economy – highlight contemporary financialized capitalism’s rentier nature, emphasizing the financial, insurance, and real estate sector (FIRE sector) (Christophers, 2019; Hudson, 2021; see also Ryan Collins’s book reviewed in this issue). According to them, the financialized growth regime in Western countries is driven by this unproductive FIRE sector which, in a sense, is sucking money out of producing sectors.

3. Distributional effects of rent

15Considering rent – as we have done in this introduction – as a windfall income coming from the sole ownership of a given asset (land, real estate, financial assets, oil deposits, intellectual property rights, or any other form of material or immaterial assets able to generate windfall revenues that can be higher than average), we admit that the initial distribution of asset ownership can strongly influence the ensuing income distribution. Conversely, since owners of significant assets can save a larger part of their income than others, the dynamics of wealth and income accumulation at the scale of the whole society is, by essence, an explosive one: cumulative concentration leads to levels of income and wealth inequality that might quickly become politically unsustainable. At least partly to mitigate the risk, public and fiscal policies have been used to curb the explosive nature of the dynamics of inequality caused by rent by redistributing part of the global wealth. Thomas Piketty’s work offers a historical perspective on the links between wealth, rent, and income distribution on the one hand and the evolution of fiscal schemes in several countries on the other hand (Piketty, 2014). Piketty stresses the pivotal role of fiscal institutions in regulating the distributional effects of rent, a perspective also developed by Alenda and Robert (2018) in a previous issue of this journal.

  • 1 For an institutionalist analysis of the notion of property as a bundle of rights published in the R (...)

16Several contributions to this volume address this question. Hannes Warnecke-Berger underlines the political dimension of remittances that can partly compensate, from the perspective of expatriate workers’ families, for the lack of redistributive means of domestic public institutions. However, in terms of reducing inequality, private transfers cannot substitute for fiscal pressure and public services provided by the state. Moreover, while remittances represent a form of international income transfer from rich to poor countries, the amount of international currency they represent is subject to sudden and significant variations that can jeopardize the state’s efforts to stabilize the macroeconomic outlook. Franklin Obeng-Odoom’s contribution focuses on African economies and shows that the social stratification of most of these countries is closely related to rent. For instance, modest landowners find it difficult not to accept offers from MNCs to purchase their land, fueling land grabbing that increases inequality. Contemporary interethnic post-colonial relations bear the scars of the inherited unequal distribution of wealth since, in most countries, the redistribution of land property (a “bundle of rights” in R. Ely’s terminology)1 did not follow independence. Therefore, in many African countries, the concentration of land is still a powerful agent of inequality.

17David Leadbeater’s contribution shows how neoclassical views on rent-producing industries and associated differentiation in wages can artificially oppose workers in the mines with workers in exposed sectors on the basis of fragile hypotheses about the capital-labour distribution of the surplus and local spill-over effects. Studying the example of Ecuador, Lopez shows how the concentration of productive resource property fuels income inequality in the country, a problem that has been aggravated by neoliberal policies implemented in the 1980s and 1990s. Also, in Jomo K. S.’s views set out in the interview, income and capital distribution is the main issue raised by rent. Jomo says that the state has to reinforce its ability to retain a significant share of all kinds of rents and its capacity to keep domestic capital at home so that it can be reinvested domestically. Only then, provided it is not captured by vested interests, will the state be in a position to ensure both development and equity in the country. That is why, Jomo contends, tax cooperation at the international level should be enhanced in order to compensate for the initially unequal situations of countries in the global financial market.

4. Régulation Theory and rentier regimes

18Régulation Theory offers exciting views on each perspective mentioned above. It may dialogue with new developmentalist analyses, insisting on conflicts and compromises arising from the formation and use of rent. Rentier sectors and regimes have been studied by authors using the regulationnist theoretical framework (Juillet, 1971; Tahla, 2003; Boyer, 2015; Alenda & Robert, 2018; Vercueil, 2019). While stressing their diversity, these authors analyze various examples of institutionalized compromises emanating from the widespread will to control rent-producing assets. In doing so, they enlarge and contextualize what neoclassical theory calls “rent-seeking” behaviors in an institutional framework in which coalitions can emerge from conflicts and negotiations. The outcomes of those conflicts and compromises are relevant to Régulation Theory in that they are part of “the social and economic patterns that enable accumulation to occur in the long term between two structural crises” (Boyer & Saillard, 2002, p. 38). They mitigate the contradictions arising from the fundamentally unstable nature of rentier regimes although they may fail to achieve this outcome, opening the way to crises of varying severity.

19Hence, again, the central role of the state in this kind of regime is rightly underlined in this special issue and in most regulationist works (for a survey, seen Tahla, 2003). However, the powerful private actors with privileged access to the rentier sector may weaken the state. The challenges raised by rent-based fiscal revenues can entail various governance problems (corruption and sometimes criminalization of part of the economy, raised in Jomo K. S.’s interview). These challenges become particularly acute when they take the shape of a “state capture” by the principal owners of the rentier sector. In such a case, leaders can develop, thanks to the new power obtained via the extraction of rent, an ability to block electoral competition or even the democratic aspirations of the population (see also Jomo’s views about autocratic regimes and rent in this volume). Of course, the relation between rent and political regimes is far from deterministic. In rentier regimes, the form of the state and its administration, but also its functions and relations with civil society often co-evolve with the fluctuations of the rent (Tahla, 2003), but not in a mechanical way since some countries exhibit both abundant resources and democratic development (Haber & Menaldo, 2011).

20Régulation Theory identifies the hierarchy between several primary institutional forms that compose the domestic economy. In rentier regimes, the dominant institutions are related to international insertion. In this volume, the case of Ecuador studied by Lopez illustrates this domination, as the domestic currency has been replaced by the US dollar, underlining the pressure of variations in financial flows caused by oil exports on domestic institutions. For rentier economies that have kept their capacity to manage their currency, the exchange rate regime and the way it is managed are vital because it determines both the capacity to attract and retain a share of the financial flows coming from export sectors in the context of a boom and the vulnerability – or resilience – of the domestic financial system in case of a bust. Other institutions that shape the international insertion of the national economy are essential, too. International trade regulations, investment and migration regimes (the latter being illustrated by Warnecke-Berger’s contribution on remittances) and the way the state manages international competition are also significant factors. The variety of rentier regimes is congruent with the diversity of hierarchical arrangements among institutional forms.

21The contributions to this special issue offer an illustrative sample of how heterodox and socio-economic analyses may address the challenges posed by rent to contemporary economies. Obviously, the dialogue between Régulation Theory and other institutional perspectives on rentier economies is still far from complete. Further research is needed especially on how the regulation of natural resource rents can interact with – or impair – climate policies that are under consideration on most governments’ agendas. We hope that this special issue will stimulate cooperation among scholars from diverse heterodox traditions and see them develop their research conjointly along these lines.

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1 For an institutionalist analysis of the notion of property as a bundle of rights published in the Revue de la régulation, see Orsi (2014).

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Adrien Faudot et Julien Vercueil, « Dealing with rent and rentier economies: New perspectives from institutional economics »Revue de la régulation [En ligne], 31 | 2nd semestre / Autumn 2021 | décembre 2021, mis en ligne le 17 janvier 2022, consulté le 20 mai 2022. URL : ; DOI :

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Adrien Faudot

Maître de conférences, Grenoble INP, CERAG, Université Grenoble Alpes, 38000 Grenoble France ;

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Julien Vercueil

Professor, Centre de Recherches Europes-Eurasie (CREE), Inalco, 65, Rue des Grands Moulins, 75013 Paris France ;

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