Wealth appropriation and control over the work force in the world have deeply changed. Is this still capitalism? Rentiers throughout the world love to call themselves “capitalists”, since it assimilates them to the productive investors in the industrial times. As most of the wealth extraction nowadays comes from unproductive financialization and drain of natural resources, this amounts to borrowed legitimacy. It is time to rethink what system we are building: it does not fit into the “entrepreneur” and free-market narrative anymore.

(Ladislau Dowbor)

The Cambridge Dictionary defines surplus value as “the difference between the amount a worker is paid and the value the worker adds to the goods or services produced.” You need not be a Marxist to understand that high profits obtained through low salaries lead to exploitation and unbalanced growth. This is still a crucial issue since the economic cycle demands not only production but also purchasing power, so the goods and services can be sold. In the traditional 20th-century industrial economy, a reasonable balance was reached through the New Deal in the US, and the Welfare State in a few countries, basically the Global North, with public policies balancing interests through progressive taxation and the provision of public goods and services. This balance was brought down by the presently dominant wealth extraction through rentierism, or unproductive wealth generation, on top and much beyond the traditional surplus value. We call it neoliberalism, but there is nothing liberal in it.

An important challenge is to consider how far the new mechanisms of wealth appropriation represent systemic change. Slavery as a system was characterized by wealth extraction through brutal control and ownership of humans, making slaves work for their owners. Let us remind that it is not far away, in Brazil it was formally abolished at the end of the 19th century, and subsisting as illegal practice well into the 20th, also in the US, well into the modern capitalist age. Capitalism does not mind using precapitalistic control of the workforce. Feudalism also represented a system, basically in the age of wealth based on agriculture, control of land through feuds, and control of workers through serfdom. Apartheid in South Africa was also a system, with Africans parked in delimited territories, allowed to gain a salary if they had a “pass”, leading to a curious mixture of modern mining, industry and services and territorial exclusion. The capitalist world did not mind the system, and it still works in Palestine.

Does the present financialized capitalism represent a new system, a “mode of production” in the systemic sense? Marx did study the financial mechanism and called it “fictitious capital”, in that its gains relied on a second level of extraction, taking a part of the profits through interest rates. But it was a mere complement of the dominant industrial logic. In the present age of what has been called neoliberalism, François Chesnais updated the discussion by showing how dominant the financial intermediation system had become, to the point of changing the overall logic of capitalism, what he called a ‘systemic totality’, based on rentierism and financial globalization. What we see in recent years is an explosion of studies on the way this new system works, and in fact, it has little to do with the traditional accumulation of capital and appropriation of surplus value we still teach in our universities. What we are facing represents indeed a systemic change, another “mode of production”, involving the technological base, the social relations of production, the way wealth is appropriated, and the institutional framework.

Robert Reich brings us down to earth, concerning where big profits come from: “In the 1950s and ’60s, when banking was boring, the financial sector accounted for just 10 to 15 percent of U.S. corporate profits. But deregulation made finance exciting and exceedingly profitable. By the mid-1980s, the financial sector claimed 30 percent of corporate profits, and by 2001 — by which time Wall Street had become a gigantic betting parlor in which the house took a big share of the bets — it claimed a whopping 40 percent. That was more than four times the profits made in all U.S. manufacturing.”1. These are not profits based on production but on financial intermediation and speculation.

While Davos claims we are in the age of Industry 4.0, in fact, we are in the age of financial unproductive rentierism, but also of other forms of unproductive appropriation of social wealth, including the commons: Brett Christophers goes directly to the essential point: “Profits have increasingly taken the form of economic rents – including but not limited to financial rents – rather than income from trade or commodity production.” Rent and profits are radically different: “The definition of rent I use here, then, is effectively a hybrid of the heterodox and orthodox: income derived from the ownership, possession or control of scarce assets under conditions of limited or no competition.”2 If the dominant form of wealth appropriation is no more “trade and commodity production”, is this capitalism? With the industrial revolution, the agricultural sector continued to be important to the economy, but the restructuring of society as a whole followed industrial development interests and generated a new mode of production. How is it with the present transformation?

The digital revolution is as deep in terms of transforming our society as the industrial revolution was two and a half centuries ago. It is transforming the main form of wealth appropriation through rent on unproductive assets rather than profit on productive activities. And labor relations are migrating from regular safe wage and social benefits systems to the numerous flexible contracts, precariat and informal jobs. As to the institutional frame, we are migrating from nation-based regulation to global corporate power take-over. Social control in turn moves from organized labor, unions and negotiations, to a global surveillance and manipulation process through algorithms and behavior-oriented information and marketing.

The emerging power at the top is no longer in the hands of the likes of Ford or Toyota, but platforms in communication and intermediation such as Google, Apple, Facebook, Amazon and Microsoft (GAFAM), or financial asset management platforms such as BlackRock, State Street, Vanguard, or Crédit Suisse, to name a few. The role of the state is not to ensure the overall balance anymore, but to carve out a better place for the country, in the global interest game it does not control. We call it “market-friendly”, although it has little to do with the traditional free market competition. And we have global platforms, including the financial world, but no global governance.

We brought this issue here two years ago, in a paper called It is not a tiger anymore: capitalism woes. Instead of pointing to the changing stripes on the tiger, we should rather take a step back and consider whether it is still a tiger. As in traditional logic, a certain amount of quantitative changes eventually leads to a qualitative transformation. We can use the French Revolution parallel: in 1789, manufacturing, commerce and banking were already pushing for political space, while aristocrats were dancing in Versailles. In present-day expressions, the economy is in the digital age, while the fragmented 193 national governments are still in the analogic age. The new economy does not fit into the institutional frame, and the result is high-tech global chaos.3

So many institutions and concerned researchers have been shouting as loud as they can, pointing to the resulting dramas. An example is a tragic lot of adolescent girls and women in breeding age: “More than one billion adolescent girls and women suffer from undernutrition (including underweight and short height), deficiencies in essential micronutrients and anemia, with devastating consequences for their lives and wellbeing.”4 This has catastrophic consequences both for the mothers and the children. How do we tolerate this? The world production of cereals alone, 2,774 million tons in 2022, means we produce a kilo per inhabitant per day. A full ration of daily adult consumption of rice, to give example, is 180 grams. This is just an example. We have all the figures on climate change and are even allowed to watch the catastrophes on TV. The biodiversity dramas are presented in so many reports. Plastic is everywhere, just a more visible dimension of global pollution: corporations produce it, pocket the profits, but shrug off any responsibility for what happens afterward. Soil contamination, the destruction of original forests in Brazil, Indonesia and Congo, the list goes on and on. We look at the deepening dramas, and yes, it is time to take the kids to school. Global dramas and individual helplessness, the short-term takes over the structural challenges.

The issue, obviously, is that beyond the dramas, we have to look at the governance, or absence of governance, that generates them, and prevents us from reverting to them. Whether it is called a new eco-social contract as in the UN reports, or green new deal in so many social organizations, or “new rules for the 20th century” in Stiglitz’s writings, the fact is that the main challenge lies in the creation of the institutions that will allow us to face the most disastrous trends.

The idea is that we must stop hanging on to capitalism/socialism, or state/markets stale ideological discussions, and bring down our consensus building to the practical means of facing the key issues. Many of them are global, and we have no global decision-making process. Dani Rodrik, discussing the global technology fracture, an important dimension of our challenges, suggests we should use the governance mechanisms we have, which are national and local governments, to generate the necessary regional and global pacts. “Transnational regulatory cooperation and anti-trust policies could produce new standards and enforcement mechanisms. Even where a truly global approach is not possible – because authoritarian and democratic countries have deep disagreements about privacy, for example – it is still possible for democracies to cooperate among themselves and develop joint rules.”5 In Brazil we have been working on a local bottom-up approach, and it is promising. But none of this reaches the scale of the systemic deformation we are facing.

We have global problems but national-level governments, speculative finance instead of productive investment, rent-seeking instead of profits on socially useful inputs, behavior-based communication instead of honest information, and narratives instead of transparency. But most of all, we have governance systems stuck in the analogical past, lost in the turmoil of the new digital revolution and the new set of challenges. Conflicts are rising everywhere, but the solutions are not on the national level alone. This is a new system, generated by the digital revolution, and we must concentrate on the corresponding governance issues. Mission Economics, the way Mazzucato presents it, seems a reasonable approach. For Brazil, I called it Rescuing the Social Function of the Economy: a question of human dignity. How deep must we sink in the global chaos before enough political energy for change springs up?


1 Robert Reich, The real story behind the Silicon Valley Bank debacle, Newsletter, March 13, 2023.
2 Brett Christophers – Rentier capitalism: who owns the economy and who pays for it?, London, Verso, 2020, pages 5 and xxiv.
3 UNRISD – Crises of inequality: shifting power for a new eco-social contract.
4 UNICEF, Undernourished and underfed – 2023 Report.
5 Dani Rodrik, The coming global technology fracture, IPS, 21 September 2020.