Development, Capitalism, and Rent : The Political Economy of Hartmut Elsenhans

'The essays in this volume are refreshingly different in their tone and mode of analysis. Using a few basic concepts like rent, balance of class power, and wage-led growth through mass consumption, the author provides a multi-dimensional explanatory framework for development. With impressive scholarship, he links history, economics and sociology seamlessly with country-based observations. Whether in agreement or not, the reader, an experienced researcher or an aspiring scholar, will feel greatly rewarded by the insightful freshness of these essays.' -Amit Bhaduri, Professor Emeritus, Jawaharlal Nehru University, New Delhi, India 'One of my greatest revelations as a young scholar came when I read Hartmut Elsenhans' 1983 article "Rising Mass Incomes as a Condition of Capitalist Growth". Almost 30 years, and dozens of articles, later, Elsenhans' much more fully developed theory still provides one of the freshest, most insightful, and coherent policy-relevant visions of the economy of our supposedly "post"-colonial world. This volume celebrates Elsenhans' long career with a welcome introduction to his vision.' -Craig N. Murphy, Betty Freyhof Johnson '44 Professor, Wellesley College, USA 'Hartmut Elsenhans is the most clear-sighted political economist of our time. This book rounds out his theory of rent with a series of articles not previously available in English. Highly recommended!' -Salvatore Babones, University of Sydney, Australia This book combines Hartmut Elsenhans' ideas on the laws of motion of capitalism and his approach to world system analysis and rent theory, his thoughts on development theory and finally, international relations and the past, present, and future dynamics of the international system. Hartmut Elsenhans shows that capitalist growth depends on rising mass incomes and on the strength of labor unions and their bargaining power. This alternative approach challenges mainstream assumptions on capitalism, growth, and development by both leading leftist authors, such as David Harvey, Immanuel Wallerstein, Andre Gunder Frank or Samir Amin, as well as by neoclassical economists and western institutionalist political and social scientists. Hartmut Elsenhans offers a unique approach to understand the dynamics of capitalism as well as the prospects for development. This Festschrift brings together his major contributions on these topics that were initially never or only published in German or French. Hannes Warnecke-Berger is Senior Researcher at the University of Kassel, Germany. He is a political scientist and the author and editor of various books and articles, including Politics and Violence in Central America and the Caribbean (2018), and Politics and History of Crime and Violence in Central America (2017) Contents 5 List of Contributors 7 1 Introduction: Rent, Capitalism and the Challenges of Global Uneven Development—Hartmut Elsenhans’ Work in Context 8 1.1 Euthanasia of the Rentier? 11 1.2 Contradictions of Capitalism 15 1.3 Global Uneven Development 17 1.4 Structure of the Book 19 References 20 Part I Contradictions of Capitalism 24 2 Contradictions of Self-Centered Development 25 2.1 Self-Centered Development and the Satisfaction of Basic Needs with Rising Mass Incomes in the Third World Is Important for the Maintenance of Political Equilibria and Growth in the Western Industrialized Countries 25 2.2 Some Hints on the Nature of Development Processes in General 28 2.3 An Outline of the Perspective of Overcoming Underdevelopment 31 2.4 The Contradiction Between Planning and Equality 36 2.5 State-Class and Rent 39 2.6 Rapid Industrialization and the Rural-Urban Gap 42 2.7 The Demobilization of the Peasantry 45 2.8 The Foreign Economic Relations Contradictions 46 2.9 The Ideological Contradiction 47 2.10 Concluding Remark 49 References 50 3 Markets and Morals 55 3.1 The Invisible Limits for Capitalists 56 3.2 Threats to the Operation of the Capitalist System by Its Own Development 61 3.3 Obstacles for Moralization of Capitalism in Case of Imperfect Competition 69 References 74 4 Individualist Household Strategies for Future Security: A Basis for the Decline of Welfare Capitalism 77 4.1 Increased Savings of Private Households 80 4.2 Basic Assumptions of the Model 82 4.3 Increased Savings and Unrealistically Explosive Growth in Contradiction Even with Endogenous Growth Theory 85 4.4 Increased Savings May Lead to Underconsumptionist “Overaccumulation” with an Inevitably Declining Rate of Profit 87 4.5 The Impossibility of a Redistribution of the Stock of Fixed Capital Through Savings 91 4.6 Short-Term Solutions Aggravate the Problem: The Demand Gap Cannot Be Closed by Rising Real Wages if There Is a Rising Propensity to Save Out of Household Incomes 93 4.7 The Transfer of Household Savings to Financial Markets Leads to the Intensification of Deflationary Tendencies in the Real Economy 95 4.8 Conclusion 96 4.9 Perspectives 99 4.10 List of Symbols 101 References 101 Part II Rent, Marginality, and Pitfalls of Development 105 5 Overcoming Marginality as an Objective of the Struggle Against Poverty 106 5.1 The Emergence of Marginality and Rent in the Transition to Capitalism 108 5.1.1 A Basic Model with Marginality in Agriculture 108 5.1.2 The Results of Increasing Productivity 112 5.1.3 The Analysis of the Industrial Sector 114 5.1.4 Growth of the Industrial Sector by Luxury Consumption 118 5.2 International Exchange of Surplus Sharpens the Marginality Trap 120 5.3 The Impact of Income Redistribution 121 5.4 Late-Comers’ Investing of Rents in Case of Low Productivity Backlog 123 5.5 No Rents in Case of Plentiful Agriculturally Useful Land 125 5.6 Marginality and the External Sector 126 5.7 The Central Importance of the Agricultural Question for Poverty-Oriented Policies 129 References 132 6 Global South: The Transition to Capitalism Against Rent 139 6.1 The Ubiquity of Rent 139 6.2 Profit Depends on the Expansion of Mass Incomes 142 6.3 Marginality as Founding Mechanism of Underdevelopment and the Permanence of Rents 148 6.4 The Weberian Impasse 151 6.5 The International Dimensional of the Reinforcement of Rent 155 6.6 Centralization of the Rents by the State 161 6.7 The Contemporary Globalization of New Forms of Rent 162 References 169 Part III The International System Between Capitalism and Rent 176 7 Economic Rent: Obstacle to Development or Fuel for Long-Term Growth 177 7.1 The Inevitable Emergence/Persistence of Rent in the Transition to Capitalism 179 7.2 Integrating Foreign Trade into the Model 183 7.3 Bureaucratic Development Societies Under the Dominance of State Classes 187 7.4 Antistatist Political Movements and Export-Oriented Industrialization: The Permanence of Rent 194 7.5 The Transfer of the Rent-Appropriating State to the West as Result of the Persistence of Rent in the South 202 References 206 8 Terms-of-Trade and Underdevelopment: How to Benefit from Improving Terms-of-Trade: A Discussion of the Link Between Terms-of-Trade and the Development Blocking Internal Social and Economic Structures 210 8.1 The Precapitalist Character of the Argument that Improving Terms-of-Trade Are an Instrument for Overcoming Underdevelopment 211 8.2 Deteriorating Terms-of-Trade as the Basis of Industrial Development in the Center 213 8.3 The Marginality-Cum-Rent Syndrome as the Key Characteristic of Underdevelopment 218 8.4 The Lack of Solidarity of the Marginalized and the Exploited in a Marginality-Cum-Rent Situation 222 8.5 Overcoming the Marginality Trap Through a Redistribution of Rent and the Empowerment of Labor 225 8.6 The Reinforcement of Rent-Based Political Structures Through Rent-Financed Industrialization 227 8.7 The Priority of Investment as an Ideological Heritage 230 8.8 The Necessity of Accepting Deteriorating Terms-of-Trade as an Instrument of Catching up 232 8.9 Export-Led Manufacturing: Productively Dissipating a Rent Through Declining Terms-of-Trade 234 8.10 Pragmatism, State, Market and Overcoming Underdevelopment 237 References 242 Part IV Postscript 249 9 Postscript by Hartmut Elsenhans 250 9.1 At Odds with Neoliberalism and Marxism 250 9.2 On the Limits of Mainstream Rent Theory 252 9.3 Profit Depends on Rising Mass Incomes 253 9.4 On the Emergence of Raw Material Rents and the Transfer of the System of Relative Prices from the Center to the Periphery 254 9.5 On the Failure of Using Rent for Overcoming Rent, or the Contradictions of Rent-Based State Classes 255 9.6 The Shift to Export-Oriented Manufacturing and the Threats to Developed Industrial Countries 257 9.7 On the Export of Rent Structures to the West 258 9.8 Rising Mass Incomes, Greener Growth and the Philosophy of History 259 9.9 On the Danger of Turning Back to Rent-Based Structures 260 References 261 Index 263