How rent, housing and finance turned unearned income into the core logic of contemporary capitalism
Alberto Garzón
Feb 13, 2026
Ecosocialist Notebook
One of the great nightmares of the first political economists was embodied by a social group whose wealth multiplied without any effort on their part. They were called rentiers, although, in practice, at the time, this was more or less the same as saying landowners. In their view, this social class was a feudal remnant that obstructed the development of capitalism and dragged down economic growth. As John Stuart Mill wrote, landowners “grow richer, as it were in their sleep, without working, risking or economizing”.
This rentierism was attacked from two angles. The first was moral in nature: was it fair that some people should become wealthy solely by virtue of owning property, without contributing any labour or adding to collective well-being? After all, landowners obtained rents as a toll for allowing others to work the land, which is why people very soon began to speak of “unearned income.” The second critique was economic: if those rents were too high, capitalist profits would be squeezed, and growth would slow. Rentierism was not only unjust but also inefficient.
For the classical economists, what truly mattered was the increase in capitalist profits, since these were the only ones that could be reinvested in productive improvements capable of driving growth. The problem with landowners was that their rents were usually spent on luxury goods and services that did not contribute to general welfare—although the Reverend Malthus defended them because of the role he attributed to these proprietors in maintaining the traditional social order. By contrast, economists such as Adam Smith, David Ricardo and John Stuart Mill himself valued effort and work—virtues they did not see reflected in a nobility educated in the values of feudal elites. For them—and as later economic historiography would also acknowledge—one of the great problems of the Spanish Empire was that it devoted the enormous wealth extracted from the Americas not to improving its productive capacity—industrialisation, as we would say today—but to conspicuous consumption that reinforced the social position of merchants, conquistadors and elites in general. That is, a form of rent-seeking (not in the neoclassical sense).
Over time, the concept of rentierism disappeared from the vocabulary of most economists. Today, it is rare to read or hear economists question certain types of income: in conventional economics, all incomes are treated as equivalent and considered equally functional for economic development. However, before this intellectual shift took place, the debate reached a critical moment with the figure of Henry George, a controversial economist who came second in the 1886 New York mayoral election.
George extended the classical line of reasoning and vigorously defended a single tax on land. His proposal was grounded in a very particular economic vision: he supported the free market and private ownership of the fruits of labour, but argued that natural resources belonged to the community as a whole. Consequently, he considered it unjust that owners should enrich themselves by appropriating something that belonged to everyone, such as land. This way of thinking led him to make the fight against rentierism the central axis of his political-economic programme.
The core of the argument was simple but very powerful. As John Stuart Mill had already noted, land rents increased without the owner having to do anything: their value depended on the community's economic dynamics. George illustrated this clearly: land acquired in a remote and isolated location would be worth little more than the value of the products grown on it. But if that area developed with the arrival of merchants, businesses and infrastructure, the very same plot of land would multiply in value even though its productivity had not changed at all. That new value would be entirely the result of collective development, yet the rent generated would go exclusively to the owner. Hence, George proposed a high tax on that appreciation, so that what the community had created would be returned to it. It is therefore unsurprising that these ideas provoked fierce opposition from property-owning elites and an especially harsh conflict with the Church—which excommunicated a priest allied with George and even went so far as to debate banning the economist’s works.
What matters is that both George’s argument and his proposal remain fully relevant today. Land is revalued according to its geographical centrality: the greater the surrounding economic activity—businesses, infrastructure, services—the higher its value. This is a paradigmatic case of rentierism: the extraction of “unearned” economic rents simply by owning a scarce resource. From the 1930s onwards, and largely following Keynes, the debate on rentierism shifted from land ownership to the financial sphere. The growth of the financial system showed that it was also possible there to grow rich “while sleeping,” while at the same time diverting resources that could have been allocated to productive activities. Over time, however, the concept of rentierism vanished from the dominant economic grammar.
The problem is that today it is impossible to understand central processes of our time—such as the housing crisis or the hegemony of finance—without recovering this classical concept. The difference with the nineteenth century is that today large segments of the population participate in this rentierism, albeit to varying degrees: the “democratisation” of access to home ownership and to financial products has made it easier for many households to supplement their regular income with rents that seem to fall from the sky—money that multiplies while we sleep.
Today, housing offers returns comparable to those of any other financial activity, such as investing in medium-sized firms. If speculating in housing yields a return of 15 per cent—as happened in Spain in 2024—while investing in government bonds yields 3 per cent, capital will rationally flow towards the former. This is precisely what the classical economists denounced as an inefficient allocation of resources. And this is, broadly speaking, our current landscape: it is not uncommon to hear that large fortunes—artists, television presenters or politicians—invest in real estate through investment funds that operate as genuine rent-extraction machines. What future awaits an economy with such incentives, where capital is not used to modernise the country but to allow certain social groups to live off rents?
The classical economists would also have reminded us that unearned incomes exist only at the expense of other people’s work: they are, in essence, parasitic incomes. Just think of the housing market. When someone buys a home as an investment and later sells or rents it out, the income derived is exclusively from ownership, not from any effort. And those rents do not fall from the sky: they are extracted directly from the pockets of other citizens—non-owners—who need these scarce goods and must work hard to pay for them. In the financial sphere, the mechanism is more sophisticated but fundamentally the same: money appreciates because funds engage in rent-extraction operations, for example, by buying companies, restructuring them, and cutting workers’ wages.
Conventional economics has abandoned discussion of property and power, making the reproduction of rentierism easier. The logical consequence is rising inequality, since only those who already own scarce assets, such as housing, can access “unearned” rents. The concentration of ownership increases inequality and, in turn, generates new dynamics of concentration. How else can one explain that, in Spain today, the richest 10 per cent of households own 50 per cent of total wealth?
The great paradox is that today we do not live under the capitalism imagined by Adam Smith or John Stuart Mill, but under its reverse. Those authors conceived capitalism as a system that, for all its limits, rewarded work, innovation and productive investment, and that should actively combat unproductive rents for both moral and economic reasons. Contemporary capitalism, by contrast, has done exactly the opposite: it has normalised unearned incomes, stripped them of any moral charge and integrated them into the very heart of its functioning.
Thus, rentierism has ceased to appear as an anomaly or a dysfunction and has become a respectable—even desirable—form of accumulation. This shift is not merely technical or academic, but profoundly political. By giving up talking about rents, economics has helped to neutralise the social conflict they generate and to legitimise a structure of inequality based on the concentration of property. When housing, land or financial assets are treated as mere investments, it is concealed that the rents they produce are extracted from other people’s labour and from collective effort. The result is a system that rewards ownership over contribution and consolidates an increasingly parasitic economy.
One of the great nightmares of the first political economists was embodied by a social group whose wealth multiplied without any effort on their part. They were called rentiers, although, in practice, at the time, this was more or less the same as saying landowners. In their view, this social class was a feudal remnant that obstructed the development of capitalism and dragged down economic growth. As John Stuart Mill wrote, landowners “grow richer, as it were in their sleep, without working, risking or economizing”.
This rentierism was attacked from two angles. The first was moral in nature: was it fair that some people should become wealthy solely by virtue of owning property, without contributing any labour or adding to collective well-being? After all, landowners obtained rents as a toll for allowing others to work the land, which is why people very soon began to speak of “unearned income.” The second critique was economic: if those rents were too high, capitalist profits would be squeezed, and growth would slow. Rentierism was not only unjust but also inefficient.
For the classical economists, what truly mattered was the increase in capitalist profits, since these were the only ones that could be reinvested in productive improvements capable of driving growth. The problem with landowners was that their rents were usually spent on luxury goods and services that did not contribute to general welfare—although the Reverend Malthus defended them because of the role he attributed to these proprietors in maintaining the traditional social order. By contrast, economists such as Adam Smith, David Ricardo and John Stuart Mill himself valued effort and work—virtues they did not see reflected in a nobility educated in the values of feudal elites. For them—and as later economic historiography would also acknowledge—one of the great problems of the Spanish Empire was that it devoted the enormous wealth extracted from the Americas not to improving its productive capacity—industrialisation, as we would say today—but to conspicuous consumption that reinforced the social position of merchants, conquistadors and elites in general. That is, a form of rent-seeking (not in the neoclassical sense).
Over time, the concept of rentierism disappeared from the vocabulary of most economists. Today, it is rare to read or hear economists question certain types of income: in conventional economics, all incomes are treated as equivalent and considered equally functional for economic development. However, before this intellectual shift took place, the debate reached a critical moment with the figure of Henry George, a controversial economist who came second in the 1886 New York mayoral election.
George extended the classical line of reasoning and vigorously defended a single tax on land. His proposal was grounded in a very particular economic vision: he supported the free market and private ownership of the fruits of labour, but argued that natural resources belonged to the community as a whole. Consequently, he considered it unjust that owners should enrich themselves by appropriating something that belonged to everyone, such as land. This way of thinking led him to make the fight against rentierism the central axis of his political-economic programme.
The core of the argument was simple but very powerful. As John Stuart Mill had already noted, land rents increased without the owner having to do anything: their value depended on the community's economic dynamics. George illustrated this clearly: land acquired in a remote and isolated location would be worth little more than the value of the products grown on it. But if that area developed with the arrival of merchants, businesses and infrastructure, the very same plot of land would multiply in value even though its productivity had not changed at all. That new value would be entirely the result of collective development, yet the rent generated would go exclusively to the owner. Hence, George proposed a high tax on that appreciation, so that what the community had created would be returned to it. It is therefore unsurprising that these ideas provoked fierce opposition from property-owning elites and an especially harsh conflict with the Church—which excommunicated a priest allied with George and even went so far as to debate banning the economist’s works.
What matters is that both George’s argument and his proposal remain fully relevant today. Land is revalued according to its geographical centrality: the greater the surrounding economic activity—businesses, infrastructure, services—the higher its value. This is a paradigmatic case of rentierism: the extraction of “unearned” economic rents simply by owning a scarce resource. From the 1930s onwards, and largely following Keynes, the debate on rentierism shifted from land ownership to the financial sphere. The growth of the financial system showed that it was also possible there to grow rich “while sleeping,” while at the same time diverting resources that could have been allocated to productive activities. Over time, however, the concept of rentierism vanished from the dominant economic grammar.
The problem is that today it is impossible to understand central processes of our time—such as the housing crisis or the hegemony of finance—without recovering this classical concept. The difference with the nineteenth century is that today large segments of the population participate in this rentierism, albeit to varying degrees: the “democratisation” of access to home ownership and to financial products has made it easier for many households to supplement their regular income with rents that seem to fall from the sky—money that multiplies while we sleep.
Today, housing offers returns comparable to those of any other financial activity, such as investing in medium-sized firms. If speculating in housing yields a return of 15 per cent—as happened in Spain in 2024—while investing in government bonds yields 3 per cent, capital will rationally flow towards the former. This is precisely what the classical economists denounced as an inefficient allocation of resources. And this is, broadly speaking, our current landscape: it is not uncommon to hear that large fortunes—artists, television presenters or politicians—invest in real estate through investment funds that operate as genuine rent-extraction machines. What future awaits an economy with such incentives, where capital is not used to modernise the country but to allow certain social groups to live off rents?
The classical economists would also have reminded us that unearned incomes exist only at the expense of other people’s work: they are, in essence, parasitic incomes. Just think of the housing market. When someone buys a home as an investment and later sells or rents it out, the income derived is exclusively from ownership, not from any effort. And those rents do not fall from the sky: they are extracted directly from the pockets of other citizens—non-owners—who need these scarce goods and must work hard to pay for them. In the financial sphere, the mechanism is more sophisticated but fundamentally the same: money appreciates because funds engage in rent-extraction operations, for example, by buying companies, restructuring them, and cutting workers’ wages.
Conventional economics has abandoned discussion of property and power, making the reproduction of rentierism easier. The logical consequence is rising inequality, since only those who already own scarce assets, such as housing, can access “unearned” rents. The concentration of ownership increases inequality and, in turn, generates new dynamics of concentration. How else can one explain that, in Spain today, the richest 10 per cent of households own 50 per cent of total wealth?
The great paradox is that today we do not live under the capitalism imagined by Adam Smith or John Stuart Mill, but under its reverse. Those authors conceived capitalism as a system that, for all its limits, rewarded work, innovation and productive investment, and that should actively combat unproductive rents for both moral and economic reasons. Contemporary capitalism, by contrast, has done exactly the opposite: it has normalised unearned incomes, stripped them of any moral charge and integrated them into the very heart of its functioning.
Thus, rentierism has ceased to appear as an anomaly or a dysfunction and has become a respectable—even desirable—form of accumulation. This shift is not merely technical or academic, but profoundly political. By giving up talking about rents, economics has helped to neutralise the social conflict they generate and to legitimise a structure of inequality based on the concentration of property. When housing, land or financial assets are treated as mere investments, it is concealed that the rents they produce are extracted from other people’s labour and from collective effort. The result is a system that rewards ownership over contribution and consolidates an increasingly parasitic economy.
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