Capitalism and Rent: A Destructive Relationship – An Interview with Hartmut Elsenhans

Rachid Ouaissa in conversation with Hartmut Elsenhans

Rachid Ouaissa:  What inspired you to write this book?

Hartmut Elsenhans: The book is a summary of my argument on capitalism. Capitalism is characterised by the appropriation of surplus via anonymous markets based on demand for goods produced with investment goods, for which income is created in excess of the labour costs of the consumption goods industries. This is an extension of the profit theory of Michal Kalecki. with additional historical and sociological insights. Capitalism is therefore an accident in history. It depends on the capacity of the labouring masses to impose rising mass incomes, which trigger spending on investment goods. This spending aims always at reducing unit costs of production. In the middle range, this reduces overall demand if real wages remain constant. The pressure of the labouring masses has to be therefore rather continuous.  

Potential surplus may exceed the cost of investment spending and may therefore, as usual in crisis, not be appropriated by demand creation for investment spending. I assume that the natural tendency of the powerful and resourceful is to not let this potential additional income go unused. They will use political means and market imperfections for appropriating this potential additional income. They will therefore create market imperfections in order to get hold of it or produce it. This additional income is rent, because it is not based on market competition but on the most diversified nonmarket instruments. It leads to the emergence of a rent-based class. This can be a decentralised oligarchy. In the Maghreb, there is, to different degrees, a tendency towards centralisation. I call state class such a more or less centralised rent-based class which, independently of its formal judicial appearances -private or public, has access to privilege primarily via its position in or relation to the state apparatus.

Rachid Ouaissa:  How does this book connect to or deviate from your previous research?

Hartmut Elsenhans: The book does not deviate from my previous research but summarises it in a relatively short version, intended for a non-specialised larger audience than my other publications. It extends, however, to special problems of the Maghreb countries as it deals with the blockages in the Maghreb to join export-oriented industrialisation as the major vehicle of globalisation in those economies of Asia, which successfully overcame underdevelopment by pushing their manufactured exports. This book is also connected to my previous research on Algeria.

Rachid Ouaissa: Who do you anticipate as the target audience for this book, and what kind of impact would you like it to achieve?

Hartmut Elsenhans: My expected audience is constituted by the rather large mass of people who are interested in development problems. The book therefore avoids entering into special discussions but concentrates on its central theoretical and political message as outlined above. The impact I hope for is a critical reflection of the very similar neoclassical and Marxist interpretations of capitalism which insist on maximum reduction of labour incomes in order to force the availability of surplus from which growth is expected. As long as this view prevails, even well-minded social movements fall into the trap of defending surplus appropriation with necessarily neglecting mass demand.

Rachid Ouaissa: In what ways does your book contribute to or diverge from prior scholarly work on the Economies of the Maghreb?

Hartmut Elsenhans: The book differs from prior scholarly work in two respects. It argues against mainstream development theory by relativizing the need for maximising surplus in order to achieve development and privileges the importance of the demand for products manufactured by the use of investment goods. As the state classes in the Maghreb countries did not succeed in limiting the search for privileges and in launching mass demand by simultaneously restructuring their economies, foreign demand is an important trigger for launching industrialisation and also industrial diversification. This requires getting your export prices right. The usual argument that this can be achieved by limiting real wages at home is misleading. The international costs of local labour depend on exchange rates. In the case of the successful Asian countries, lowering exchange rates was possible because wage goods were produced locally. The production was triggered not by state intervention primarily, but by the additional demand created by additional employment in the production of manufactured export goods. It was promoted by limited state intervention which did not degenerate in state waste because of the overarching role of word market demand.

As rent does not impose strictly the rule of competitiveness on those in control of resources are, political conviction and culture play their roles. In contrast to social cultural approaches to development I argue, however, that such wasteful behavioural practices will only bepartially overcome by influencing the inherited cultural norms. Much more important is the extension of the realm of profit. I argue that therefore the launching of mass consumption is central. As already stated, overcoming the illusion that maximising surplus without caring for demand that creates development is a central goal of my approach.

Rachid Ouaissa: You have expressed a rather pessimistic view regarding the Maghreb’s prospects for globalization participation. What do you envision as future opportunities for the Maghreb, both as individual states and as a geopolitical entity?

Hartmut Elsenhans: Opting for devaluation driven export-oriented manufacturing requires the possibility of devaluing the currency below purchasing power parity. Labouring masses will receive more additional purchasing power on the local market income than the additional export proceeds have on the world market. The difference must be cleared by local production. As costs of production are either caused by incomes of labour or costs of inputs, there are two mechanisms to influence. An increase in wage goods production requires, at the level of development of the Maghreb economies, especially more food production. Additional food production is difficult to realise due to natural conditions for agriculture in the Maghreb countries and the level of demographic growth achieved. Broadening input production rendered easier by homogeneity of demand. Export-oriented manufacturing of initially homogeneous products favours upstream diversification, as does a relatively egalitarian distribution of internal consumption demand

I am rather sceptical whether the Maghreb countries can compete with the rice agricultures of South-east and East Asia. I am however rather optimistic that the closeness to a dynamic, even not the most dynamic first world market is an asset for the Maghreb countries when multipolarity forces the European Union to organise its periphery.

The Maghreb will integrate this geopolitical space as individual countries. The political differences between the state classes are very great, despite similar economic bases in rent. These differences will not allow the fusion of the state classes which will defend their economic bases even in case of parallel integration into the economic space organised by the European centre.

Rachid Ouaissa: In your work, you consistently draw comparisons between the Maghreb and other regions of the Global South. How relevant do you find Rent Theory, as proposed by Elsenhans, particularly in light of the growing influence of the BRIC nations, for transregional research?

Hartmut Elsenhans: There are only three BRICS which are relevant for the question of productively transforming rent, China, India, and Brazil. They basically used differences in productivity backlog for financing diversification in industry by intelligently subsidising upstream production. The most successful examples are seen in the first generation of newly industrialising countries like South Korea or Taiwan. So Singapore taxed labour-intensive low wage productions and subsidised skill acquisition through training of its workforce. But also China, Brazil, and India have succeeded in taming the rent by letting the market operate complementing it by limited state intervention. They used available rents for rather limited programs of diversification, punctual and not comprehensive planning which the state classes are rarely capable of.

I do not expect large transregional coalitions, but a multipolar system where China, India and Brazil are poles which organise geopolitically close partners around them with conflicts on the delimitation of spheres of influence.

In such a process, the Maghreb countries could become springboards for poles out of the region to access the European Union market.


Prof. Hartmut Elsenhans

Prof. emeritus, Leipzig, born 1941, taught in Berlin, Frankfurt, Marburg, Konstanz, Leipzig, Montreal, Dakar, Salzburg, New Delhi, Islamabad. Field research France, Algeria, Bangladesh, Senegal, Mali, Vietnam. Central argument: Capitalism, profit and development depend on rising mass incomes and hence on the empowerment of the labouring masses. The powerful always fight against such empowerment, with increasing success because of globalisation of rent.

Prof. Rachid Ouaissa

Rachid Ouaissa received his Baccalaureate in Akbou/Algeria; he studied political science at the Martin-Luther-Universität in Halle/Saale, and received his PhD from Universität Leipzig. He was Assistant Professor in the Department of International Relations at the Universität Leipzig. He was visiting scholar in the Department of International Development Studies at Dalhousie University, Halifax in Canada. Since 2009 Rachid Ouaissa is the chair of “Politics of the Near and Middle East” at the Centre for Near and Middle East Studies at Phillips-Universität Marburg. He is member of the scientific board of the Wissenschaftskolleg zu Berlin (WIKO); Member of the research programme “Europe in the Middle East – the Middle East in Europe” (EUME) at the Forum Transregionale Studien, Berlin; Member of the Centre for Interdisciplinary Research on Religions at Philipps-Universität Marburg and Member of the Centre for Peace and Conflict Research at Philipps-Universität Marburg. He is also member of the selection board of the Friedrich Ebert Foundation.


Citation: “Capitalism and Rent: A Destructive Relationship” – An Interview with Hartmut Elsenhans, in: TRAFO – Blog for Transregional Research, 05.12.2023, https://trafo.hypotheses.org/49627



Diesen Blogbeitrag zitieren
Forum Transregionale Studien (2023, 5. Dezember). Capitalism and Rent: A Destructive Relationship – An Interview with Hartmut Elsenhans. TRAFO – Blog for Transregional Research. Abgerufen am 21. Mai 2024, von https://doi.org/10.58079/ut8f

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The Berlin-based Forum Transregionale Studien promotes the internationalization of research in the humanities and social sciences. It provides scope for collaboration among researchers with different regional and disciplinary perspectives and appoints researchers from all over the world as Fellows. More...

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