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Class, Assets and Work in Rentier Capitalism

In: Historical Materialism
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  • 1 Department of Social and Economic Geography, Uppsala University, Uppsala, Sweden
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Abstract

‘Rentier capitalism’ is the term increasingly used to describe economies dominated by rentiers, rents, and rent-generating assets. A growing body of scholarship considers how the ownership of such assets by individuals and households is reshaping patterns of class and inequality and accordingly requires the reconceptualisation of the latter phenomena. The significance of company-owned assets and corporate rents for class, inequality and their conceptualisation has not been considered, however. This article offers an exploratory investigation along these lines, highlighting the importance of employees’ working relationship to company-owned, rent-generating assets for their class position. The article further reflects on how developments in this regard might be approached from the perspective of Marx’s writing on value, labour and class, and the challenges that those developments potentially pose to Marxian concepts.

Abstract

‘Rentier capitalism’ is the term increasingly used to describe economies dominated by rentiers, rents, and rent-generating assets. A growing body of scholarship considers how the ownership of such assets by individuals and households is reshaping patterns of class and inequality and accordingly requires the reconceptualisation of the latter phenomena. The significance of company-owned assets and corporate rents for class, inequality and their conceptualisation has not been considered, however. This article offers an exploratory investigation along these lines, highlighting the importance of employees’ working relationship to company-owned, rent-generating assets for their class position. The article further reflects on how developments in this regard might be approached from the perspective of Marx’s writing on value, labour and class, and the challenges that those developments potentially pose to Marxian concepts.

There is not much on which Marx, Keynes and mainstream (orthodox) economics tend to agree, but one notable such commonality concerns rent, which, for all three, represents a marginal, residual or ephemeral phenomenon within capitalism. Marx, of course, emphasises landed forms of rentierism, and thus treats the rentier as residual, harkening back to feudalism. It puzzled Marx that under nineteenth-century industrial capitalism, the landed rentier had not yet passed into the night, but instead was still capable of extracting a share of the surplus value created by workers in production. Keynes, for his part, focuses on financial forms of rentierism. His view was not so much that financial rentierism was an anachronism, a relic of a bygone age that should by right have dissipated, as land rentierism was for Marx. Rather, Keynes believed that under the right circumstances, financial rentierism would soon dissipate. His argument was that a greater abundance of capital – something of which he was strongly in favour – would bring about the euthanasia of the financial rentier. Meanwhile, orthodox economics treats rent as an aberration from an idealised norm, a phenomenon of the historicEl and theoretical margins. The entire mainstream edifice is structured around the expectation that competition will ultimately and ordinarily prevail in a market system. With the exception of a few particular sectors where monopoly is considered necessary and even functional, rentierism – understood in this tradition as the extraction of excess profits – will ineluctably be eroded away.

Yet the reality of the early twenty-first century clearly belies all three – Marx, Keynes, and the mainstream. Land rents have not faded away. Nor have financial rents. And nor – contra the mainstream – have rents in general. Rentierism has proven itself to be incredibly stubborn. As a host of studies published in the past decade, and led by Thomas Piketty’s Capital in the Twenty-First Century, have shown, rent is a much more important phenomenon to contemporary capitalism than Marx or Keynes could ever have imagined and than mainstream economics allows.1 Indeed, in countries such as the UK, where arguably rent and the rentier have latterly achieved a depth and – certainly – breadth of dominance unparalleled since the late nineteenth century, it is not going too far to suggest that we live in a new age of rentier capitalism.2

If commentators are largely agreed that rentierism has revived with a vengeance, they also generally acknowledge that the intensification of the rentier character of capitalism requires us to rethink inherited concepts of class and inequality. But in what ways and to what extent? Here there is much less consensus, and it is in this specific scholarly context that the present article is situated. It has three principal aims, corresponding to its three main sections. The first is to review influential recent lines of argument regarding rent, class and inequality, which, it suggests, while illuminating, overlook one of rentier capitalism’s most fundamental characteristics: the ownership of the bulk of society’s rent-generating assets not by individuals or households but rather by companies. The second aim is to consider how such company ownership shapes relations between class, assets and work, hypothesising that a key feature in terms of contemporary class positions and patterns of inequality is the hierarchical structuring of workforces around differentiated relations to the assets that employers themselves own and endeavour to generate income from. The third aim is to consider some of the potential implications of these observations for Marxist theory.

Before proceeding, a word on definition is necessary. The concept of ‘rent’ has been invested with all manner of different meanings at different times and within different schools of thought.3 As mentioned, in mainstream economics rent represents excess profits: specifically, the excess attributable to the fact that a market lacks competition; the greater the lack, the larger the rent. As also mentioned, rent in Marx is something else altogether – namely, the income received by a landowner for letting her property – that is, ground rent. In what follows, rent is understood as income derived from the ownership, possession or control of scarce assets and under conditions of limited or no competition. This understanding represents an extension of the original Marxian formulation in two senses.4 First, it entails a generalisation of asset type: the asset on which rent is earned need not be land – it might instead be intellectual property (e.g. a pharmaceutical patent), or a digital platform, or, à la Keynes, interest-bearing loan capital. Second, this extended understanding incorporates recognition of the importance of the market conditions under which such income is realised.5

1 From Employment to Assets?

Traditionally, social theories of class stratification, including of a Marxian cast, have been strongly tied to the realm of employment, wherein income inequalities reflect underlying, categorical inequalities in occupational status and, more fundamentally still, different relations to what are usually referred to as the means of production – which is to say, raw materials, factory facilities, machinery, tools and so forth. In Erik Olin Wright’s influential work, for example, the primary axis of class differentiation is between owners and workers.6 Workers are then further sub-divided along class lines depending on their relation to scarce skills – are they ‘experts’, skilled or nonskilled? – and to authority – are they managers, supervisors or neither? Nonskilled workers with no authority are the furthest removed from owners in class terms; expert managers are the closest.

Much less consideration has been given to the ownership of assets other than the means of production, such as land, financial assets, intellectual property and infrastructure – or to the wealth that such other assets frequently bear and the income that they frequently produce.7 To the extent that traditional theories of class have recognised these other assets, values and incomes, they have tended to layer them over, or graft them onto, understandings that remain fundamentally tethered to relations of employment. Early-twentieth-century Marxists, for example, certainly acknowledged the existence in a country such as the UK of a class fraction for whom the ownership of land was far more important than the ownership of, say, factories or machinery, or indeed than income from employment; but this recognition was never integrated into the marrow of Marxian class concepts. Nor did such integration meaningfully occur when, in the late 1970s and early 1980s, rates of homeownership increased rapidly in many Western societies, not least as a result of programmes of privatisation of social housing of which Margaret Thatcher’s UK ‘Right to Buy’ policy was the most famous example, and commentators judged accordingly that the ‘democratisation’ of ownership of residential property was serving to muddy employment-based class divisions. It was indicative, for instance, that Peter Saunders, one of the key voices in that debate, ultimately abandoned his initial attempt to theorise homeownership as an explicit determinant of class structuration.8

Only in the relatively recent past have assets and asset-ownership begun consistently to figure more centrally in the conceptualisation of class and inequality. Piketty’s work is undoubtedly seminal in this regard. Published in 2014, Capital in the Twenty-First Century is not typically thought of as a book about class. But that, as Piketty himself noted in a response to a suite of reviews, is in good part what it is.9 Not only, moreover, is it a book about how class is shaped by inequalities of individual and household asset ownership as well as inequalities of employment income. But, in one way at least, it gives a starring role to the former, focusing analytically on the surge in wealth inequality in recent decades that has resulted from the inferiority of rates of income growth to rates of return on existing assets.

If the return of rentier capitalism has precipitated the re-emergence in Western countries of a rentier society, it is, Piketty says, a markedly different rentier society from the one that pertained in the late nineteenth century. For one thing, the assets on which rentier households ‘earn’ rents look very different today: in place of agricultural land, the key rent-generating assets for households now are typically housing and financial assets. Intimately connected to this change in key asset classes is the significantly higher proportion of households that are rentiers today than was the case a hundred or more years ago. Private pensions – the main form in which contemporary households own financial wealth – generally did not exist; nor did ‘homeownership societies’.

The spreading-out or relative democratisation of household rentierism is well illustrated by a statistic that Piketty cited for France. He estimated that the share of the French population inheriting a greater amount than the poorest 50 per cent earn on average in lifetime wages will have increased from just 2 per cent for the cohort born between 1910 and 1920 to approximately 12 per cent for those born between 1970 and 1980.10 Piketty captures this sea-change with his concept of ‘a society of petits rentiers’. Contemporary Western capitalism, he argues, is merely ‘patrimonial’, in contrast to the more egregious ‘hyperpatrimonialism’ of the nineteenth century. We have, in short, ‘a less extreme form of rentier society [that has] moved from a society with a small number of very wealthy rentiers to one with a much larger number of less wealthy rentiers’.11

Another important book about class, inequality and the augmented role of individual or household-owned assets, following swiftly on Piketty’s heels, is Guy Standing’s 2016 The Corruption of Capitalism.12 Standing posits a new class segmentation consisting of seven class fractions distinguished not only by occupational status but also by the assets that they do or do not own. He groups these seven fractions into two sets, of four and three fractions respectively. The first set comprises the ‘plutocracy’, ‘elite’, ‘salariat’ (‘in relatively secure salaried jobs’) and ‘proficians’ (freelance professionals). The second comprises the ‘proletariat’ (‘in stable, mostly full-time jobs, with schooling that matches the skills their jobs require’), ‘precariat’ (‘people obliged to accept a life of unstable labour and living’) and ‘lumpen-precariat’ (‘an underclass of social victims relying on charity, often homeless and destitute’). What separates the first from the second set? Asset ownership and income does:

The plutocracy, elite, salariat and proficians enjoy not just higher incomes but gain most (or an increasing part) of their income from capital and rental income, rather than from labour. It is not the level of income that defines their class position, but how they gain it and what form it takes. The three groups below them gain nothing in rent. Indeed, increasingly they pay rent in some form to the classes above them.13

And, yet more recently, Lisa Adkins and her co-authors Melinda Cooper and Martijn Konings have taken such arguments further still.14 Interested in discerning the ‘effects of asset inflation on the structure of inequality’, particularly in what they describe as ‘large Western cities’, and surveying this changing world from the empirical vantage-point of Sydney, Australia, which serves as their case study, the authors argue that the combination of new patterns of asset ownership, rapid asset price inflation, and entrenched wage moderation has created ‘new, complex dynamics of stratification’ that sit uneasily with a ‘continued focus on employment as the main determinant of class’. How, they ask rhetorically, can work-based class schema hope to accommodate a scenario in which ‘mid-size homes in large Western cities often appreciate by far more in a given year than it is possible for middle-class wage earners to save from wages’?15 Their answer is that such schema cannot accommodate that scenario.

Instead, therefore, Adkins, Cooper and Konings propose a framework for class analysis that foregrounds asset ownership as opposed to grafting it on to a model that is still structurally based around labour and occupational status. Specifically, where both Piketty and Standing submit that class today is irrevocably about employment hierarchies and hierarchies of individual and household asset ownership, Adkins, Cooper and Konings assert that class is now about asset ownership more than – in one place they even say ‘rather than’ – one’s position in the division of labour. Asset ownership is, in their own words, ‘eclipsing the significance of employment and employment relations in the shaping of class positions’; it has become ‘the key distributor and driver of life chances’.16 Class positions are predominantly positions within a social hierarchy of asset ownership.

Three aspects of this framework are noteworthy. First, the framework is heavily weighted towards residential property – for Adkins, Cooper and Konings, this is the asset whose ownership substantively problematises employment-based class models. Second, it is not as simple as just differentiating a class of asset owners from a class of non-owners; they write, ‘important class differences exist within the population of asset holders, with owner-occupiers distinct from owners of investment properties and outright owners distinct from prospective, indebted owners’. And third, to the extent that employment position and asset-based class position interact, the latter has primacy, actively shaping the former (as well as being senior to it) in more than one way: ‘positions within the hierarchy of asset ownership overdetermine the wage relationship’.17

All of these interventions – Piketty’s, Standing’s and Adkins et al.’s – represent important contributions. But the latter two perhaps push too far the case for the significance of individual and household asset ownership. Standing, as we have seen, says that his four higher class fractions gain ‘most (or an increasing part)’ of their income not from employment but from assets. Meanwhile, Adkins, Cooper and Konings say that asset ownership is now more important than employment to class position and life chances. Pertinent data, however, continue to suggest otherwise. In the US, for example, the proportion of the adult population for whom income from assets actually exceeds income from labour is, in reality, miniscule – just the top 0.1 per cent of the income distribution, or the top 0.01 per cent if capital gains are excluded.18 It is similarly small in the UK.19 The notion that asset ownership has supplanted employment does not square with the reality that across the entire income distribution, employment income dwarfs other income.

Adkins, Cooper and Konings’s downgrading of occupational status – Standing, for all his highlighting of the importance of asset ownership, nonetheless insists on the ongoing importance of employment relations – seems especially hasty. Here, the relationship between asset ownership and position in the division of labour is a key issue. Adkins, Cooper and Konings note that, in Australia, the two are highly correlated – that is, those individuals with the highest income from employment also tend to enjoy higher levels of asset ownership and capital income; the same applies in, for example, the UK. Assuming that the two are connected, this raises the questions: how exactly do they interact, and which is the principal direction of influence? Adkins, Cooper and Konings, as noted, make the strong claim that ‘positions within the hierarchy of asset ownership overdetermine the wage relationship’.

Now, it is clearly the case that homeownership can help mitigate labour-market insecurity. It is also true that in many places, employment, even on a middle-class salary, does not guarantee the ability to buy a home. Both factors speak to a certain relational significance of asset ownership vis-à-vis employment. Yet, accounting for the close correlation of employment income with asset ownership would be very difficult without still recognising the deep influence of the former on the latter. Employment indeed may not be a sufficient condition for attaining homeownership; but it is typically a necessary one.

Then there is the question of the specificity or representativeness of the place – Sydney – that Adkins, Cooper and Konings have theorised from. While they caution that they are not making strong claims as to the extent of generalisability of their model of asset-based stratification, they say nevertheless that they ‘expect’ it will be relevant to a number of other cases, and that what has happened in Sydney is ‘exemplary of a dynamic that has unfolded across the Anglo-American economies’.20 Yet, Adkins, Cooper and Konings arguably could not have found a less representative case – certainly for Western capitalist societies in general, and even, more narrowly, for those societies whose major urban centres have similarly experienced strong rates of house-price inflation. The outsized local role of investor-buyers is especially significant in this regard. In 2015–16, for example, the proportion of overall mortgage credit going to landlord investors was apparently 35 per cent Australia-wide, or ‘about three times higher than the USA, UK and Canada’. In Sydney specifically, it was ‘a phenomenal 50 percent’.21 Extrapolating from such an obviously atypical local market seems fraught with risks.

None of these are the issues that this article will focus upon, however. Rather, it grapples with the elephant in the room not just of Adkins, Cooper and Konings’s analysis but of Piketty and Standing’s, too. These analyses, as we have seen, all seek to rethink class and inequality in the light of the fact that assets other than the means of production, largely neglected by traditional understandings of class, seemingly have become increasingly material to holdings of wealth and flows of income. In doing so, they focus in particular on residential property assets – even if in Piketty’s case this focus was implicit rather than explicit, and had to be drawn out by his interlocutors. But contemporary capitalism features all sorts of other valuable assets, too. And, crucially, few of these are predominantly owned by individuals or households; they are held mainly by companies. How, then, if at all, does the corporate ownership and exploitation of income-producing assets shape patterns of class and inequality? How might we conceptualise class and inequality in relation to assets held not by individuals, outside the sphere of work, but rather by the companies for whom they work? These are the questions we turn to now.

2 Class, Assets and Work in Rentier Capitalism

In contemporary Western capitalism, there are seven main categories of assets that generate income – rent – for the rentiers who control them.22 The first, we have already encountered: property assets, which we can generalise to land and its various appurtenances, including both residential and commercial buildings. The second category is financial assets. The third is intellectual-property assets – patents, trademarks, designs and copyright. The fourth is natural resources, such as hydrocarbons and precious metals. The fifth is platform assets, and in particular digital platforms, whose primary value derives from intermediating – controlling trade – between buyers and sellers. The sixth is long-term service contracts. The seventh and last comprises infrastructures for the delivery of telecommunication, energy, transportation and similar services.

In two of these categories there is a substantial component of individual or household ownership: land and finance. Clearly, in many Western countries, land and buildings, especially for housing, are widely held by individuals, and the same is true of financial assets – principally, though not exclusively, in the form of personal pension holdings. Nonetheless, it is also the case that large volumes of property and financial assets are not held by households. Commercial property, for instance, is almost always owned by companies, especially above a relatively low value threshold, while in gross terms, at least, household holdings of financial assets are eclipsed by those held by financial companies. And beyond the realms of property and finance, income-generating assets are almost always owned by companies.

In other words, companies can be rentiers, too. This is not to say that all of a corporate rentier’s income necessarily takes the form of rent. Often, a company’s income will derive both from control of an asset and from work undertaken in the delivery of a product or service underwritten by that asset. Consider the example of a medicine protected by a patent. How much of the income earned from that medicine is payment occasioned by the monopoly control embedded in the patent, and how much is payment for the work involved in the medicine’s manufacture and distribution? Ultimately, it is impossible to say for sure. A corporate rentier is a company whose income substantially, if not in its entirety, comprises rent.

None of the three studies discussed in the previous section considered corporate assets. But, insofar as those studies are concerned with how asset ownership and exploitation shapes patterns of class and inequality, they arguably should have. Finance represents a useful example to help illustrate the pertinent issues here. Consider the fact that many of the highest income earners in Western countries are financial-sector workers. Consider also the fact that the growth in such workers’ incomes in recent times represents a significant component of the wider phenomenon of increasing income inequality. In the decade between 1998–9 and 2007–8, for instance, during which period the UK’s top income percentile increased its share of the national income pie by three percentage points, some 60 per cent of that increase in income share went to finance-sector workers, with this entire rise occurring in the form of bonuses rather than salary.23

In terms of class and inequality, is this a story of assets (and rent), or of work? Piketty, Standing and Adkins et al. would all say: work. By their common framing, this has nothing to do with assets: the income in question is remuneration for work undertaken by employed financiers, not rent on financial assets they personally own. But of course, in reality this is a story of work and of assets and rent. What, after all, is the revenue generated by the UK financial sector, and out of which the aforementioned financier salaries and bonuses are paid, if not, in large part, rent – of various forms – on the assets held by companies in that sector – assets whose value had by the end of 2008 swelled to over £7 trillion?24 A conceptual framework of class and inequality that factors in assets owned by individuals but neglects assets owned by the companies for which those individuals work is, this example shows, an incomplete framework. The lesson of the finance-sector example is that individuals can benefit greatly from asset control, and thereby enjoy class advancement, even if they do not control those assets themselves; the rents flow first to their employers, and then, in the recycled form of salary and bonuses, onwards to them.

Generalising from this particular case, the premise of the present article is that in capitalist economies increasingly structured around the seven abovementioned categories of rent-generating asset, employees’ ability to share in the rents generated by company-owned assets is perhaps just as important to their class position as is their status as independent asset owners and rentiers – or not – themselves. If, as Standing says, a wage labourer enjoys a higher class status if she owns financial or residential-property assets than if she does not, then her class status also depends on the extent of her participation in any employer-generated rents.

The article tentatively proposes one way of thinking structurally about such participation. Its suggestion is that what particularly matters in this regard is the nature of an employee’s working relationship to company-owned assets. This working relationship to rent-generating assets, and its implication for class status, can be thought of as a corollary of the relationship to scarce skills in Erik Olin Wright’s previously-discussed class schema; the skill is, if you like, the ability to perform work of a certain perceived value vis-à-vis the asset.

How valuable, in short, is a worker’s work on or in relation to the asset considered to be? To the degree that this relation influences the extent to which different categories of worker are able to participate financially in company-earned rents, it is a key determinant of a worker’s class status and her positioning in evolving patterns of inequality. In what follows, the article identifies four generic worker roles in relation to company assets that in each case appear to engender class privilege; it then briefly explores the range of work undertaken by those lacking such privilege.

It bears emphasising that in all cases, these roles and their putative significance to relations of class and inequality are very much speculative hypotheses to be further investigated, empirically as much as conceptually. One of the key issues here relates to the nature of the link, such as it is, between the working relationship to assets on the one hand and remuneration and class status on the other. The fact that a particular role – like a certain skill – is perceived to be especially valuable does not mean that in practice it necessarily always is. Nor, of course, do perceptions of value translate into material status in a social vacuum. Much depends on the relative bargaining power of different groups. That rentier capitalism in places such as the UK has relegated large numbers of workers to a lowly class position is obviously due as much, or more, to the decades-long decimation of organised labour as it is to the nature of their working relationships to company-owned assets and rentier companies’ perceptions of the value of this work.

Nevertheless, if the argument developed here has any merit, it implies that class is still substantially about the division of labour. Only, what increasingly divides workers in rentier capitalism is their respective relations to rent-generating assets rather than to the means of production.

2.1 Creating Assets

It is a truism that companies in the business of earning rents on proprietary assets – that is, rentier companies – need to be in the possession of such assets in order to make money. But while it is a truism, it is also terrifically important: creating assets is a rentier’s lifeblood. For if there is no asset, there is no rent, and ultimately no rentier. As such, those individuals at rentier-type companies who contribute to creating the assets on which rents are subsequently earned are invariably among the most highly remunerated; they sit at the top of the workforce hierarchy.

Take, as an example, major oil and gas companies such as BP and Shell. In more or less all countries, rights to hydrocarbon resources are owned by the state or, less commonly, by the owner of the surface land (where that is not the state). BP and Shell cannot simply lay claim to actual or potential oil and gas deposits, and treat them as their own. They only come to possess an asset with value once they have reached agreement with the rights owner that they can extract the fuel in question and retain a share of the earnings derived from selling that fuel. One example: in 2016, BP acquired a 10 per cent stake, valued at more than $2 billion, in one of Abu Dhabi’s largest onshore oil concessions, with a duration of 40 years.25 The acquisition promised BP an additional 160,000 barrels a day of output. Those that negotiate and secure such deals represent rentier corporations’ most prized human capital. In the BP–Abu Dhabi case, it was the BP chief executive, Bob Dudley.

Another illuminating example is land. How are corporations’ land assets ‘created’? The land must be bought (or received as a gift), and property companies therefore reward particularly generously employees who contribute significantly to growing their land banks. In the UK in recent decades, to consider just one example, having connections in central and/or local government has been especially important in this regard. The public sector as a whole has sold off huge swathes of land, primarily to property companies, developers and financial institutions, many of which have grown substantially as a result.26 Within such firms, personal involvement in the acquisition of ex-public land, which has often occurred at significant discounts to market value, has been a dependable route to employment success.

To the extent, then, that contemporary, rentier capitalism is more about having something valuable (the asset) than it is about doing something valuable, it rewards getting – creating the asset – accordingly. One last example will suffice to illustrate the point. Long-term service contracts, handed out by private and public-sector actors alike, have become a substantial source of rents during the neoliberal period, as the outsourcing of non-core functions has developed into an axiom of strategic wisdom. Companies that bid for and execute such contracts represent a peculiar corporate species, whose own core business, to the degree they have one, is, as Colin Crouch has remarked, not ‘a particular field of activity in which they have expertise’ so much as simply knowing how to win contracts.27 (Fulfilling them sometimes appears to be more of an afterthought.) The ‘rainmakers’ who bring in new contracts, or who manage to recreate contract assets by securing renewals at the end of the original contract term, are seen as such businesses’ key individuals, often being remunerated directly in proportion to the value of the assets they successfully (re)create.

2.2 Performing Asset Value

Capitalism is fundamentally future-oriented. Investors provide capital to companies not primarily on account of anything those companies have achieved in the past, or even on the basis of what they are doing in the present. They invest in them with a view to what they will do in the future – earn enough profit to be able to pay interest and repay principal, in the case of bond investors; earn enough profit to be able to pay dividends and attract other investors at a higher subsequent share price, in the case of equity investors. What provides investors with the confidence that the future will conform to these rosy expectations?

The answer is partly to do with market conditions, of course. Is there an expectation that there will be sufficiently robust demand for whatever product or service it is that the company provides? Is the competitive landscape relatively obliging or forbidding? And what of the political landscape? But the answer also has to do with the company in question. Does it appear to have what it takes to succeed? Here, assets figure prominently. To invest with confidence, investors require evidence, or as close to evidence as it is possible to get, that the assets owned by a company will enable it to generate income. More succinctly, we can say that they require evidence that a company’s assets have value, inasmuch as ‘value’ in this context is precisely the ability to generate future rents. In short, they require evidence that ostensible assets – ‘items of value owned’, according to the dictionary definition – are indeed assets.

Where does this evidence come from? Who provides it? Let us return to the example of oil and gas companies. What are their key assets, promising future profits? It is not the natural resources per se. BP could have exploration and development rights over billions of barrels of oil but those rights might nonetheless be valueless: the oil might not be of sufficient quality; it might not be economically recoverable; and so on. Investors in companies like BP, therefore, are interested not in what resources such companies have rights to – these resources might be assets, but equally well might not be – so much as in licensed resources that definitively do have value: their quality is proven, as is the feasibility of profitable extraction. Such resources have a special name – reserves – and the annual reports of oil and gas companies contain pages and pages of reserve statements. It is these statements that give investors the confidence to invest; and the authors and certifiers of these statements are, naturally, highly valued and well remunerated individuals. They are the ones that make the key pledge: these assets, and hence this company, possess value.

This pledging – or ‘performance’, as it is indeed always a performance of some kind – of asset value plays a fundamental role in capitalism, and especially in rentier capitalism. It underwrites all investment in rentier-capitalist institutions. If oil and gas companies and other companies focused on the exploitation of natural resources have specialist, accredited ‘performers’ to create their reserve statements, capital more generally has a generic such performer. This is, of course, the accountant. No investor is going to invest in a company unless she can see a legitimate set of accounts including, most importantly, the balance sheet, which documents the company’s proprietary assets alongside its outstanding liabilities. Insofar as she is the one who not only certifies that an asset exists but also ascribes a monetary value to it, the performing accountant plays a seminal, and arguably much-underappreciated, role in the drama of rentier capitalism. To an investor, after all, an asset only exists and has value if an accountant says it exists and has value; and thus the certifier of this existence and value is perhaps as important as the individual who created the asset in the first place.

Indeed, the latter-day rise of rentier capitalism in a country such as the UK is perhaps the most credible explanation that we have for the fact that, as David Graeber observed, accountants account for ‘an extraordinarily high percentage of the working population’ in that country, numbering over 300,000.28 If capitalism in the UK were not dominated by rentiers and rent, the demand for individuals whose job it is to identify and value the sources of future rents – that is, assets – would likely be substantially lower than it evidently is.

2.3 Protecting Assets

It is not only accountants that, according to Graeber, account for a disproportionately high proportion of the UK working population; it is also lawyers. This, too, is entirely comprehensible in relation to the advance of rentier capitalism. It is all very well creating and assigning a value to income-generating assets, but if those assets subsequently suffer impairment of one form or another – the sovereign that licensed BP or Shell to extract its hydrocarbons might renege on the original agreement, for instance – their value, and even potentially their existence, is thrown into doubt. Lawyers, among others, are necessary to protect and safeguard assets and their value during their economic life. As such, they are among the highest-paid individuals at rentier-type companies.

The example of intellectual property (IP) assets is especially instructive here. Take a patent, which confers ownership of a product or process that a company or individual has invented. Needless to say, the inventor of the product or process in question is a key individual. But, unless that product or process can in some way be protected from replication by rivals, the ability of a company to profit from production of the product or from use of the process may well be impaired. Intellectual-property law exists to impart private-property rights to such creations of the mind – to assert, in the case of a patent, that the product or process belongs to a particular entity. Those – lawyers – who successfully secure robust patent protection for a company’s product or process are arguably no less significant to the company’s fortunes than the individual who originally created that asset. Their remuneration, and class position, reflects this importance.

The practice of IP law by company jurists is not only about securing and enforcing asset protection during the asset’s economic lifetime, either; it is also, where possible, about extending the duration of that protected life. The word typically used to describe such extension, which is especially notable in the pharmaceutical sector, is ‘evergreening’. Sandeep Rathod defines evergreening, generically, as a strategy by which IP owners ‘keep their product sales protected for longer periods of time than would normally be permissible under the law’; and, specifically in the pharmaceutical context, as a strategy by which ‘a drug patent holding company protects the product sales/royalties flowing beyond the original patent covering the active pharmaceutical substance’.29 Evergreening protects rents by expanding the temporal domain of asset protection.

And there are, of course, other, less lawyerly ways to safeguard assets and their value. As numerous writers on assets and rentierism have pointed out, arguably the crucial quality that enables an asset to generate income is scarcity – it must be limited in some fundamental respect. The law is one way to maintain scarcity, but not the only one. For instance, the world annually extracts much less oil and gas for commercial exploitation than it could feasibly extract. The main explanation lies with the Organization of the Petroleum Exporting Countries (OPEC), a cartel that sets production quotas for its 13 member nations at a level designed to maintain scarcity and hence buttress both oil and gas prices and producer profitability. Pivotal to protecting the value of vast international stocks of natural-resource reserves, OPEC’s decision-making is the province of politics and economics as much as it is of law.

2.4 Maximising Asset Rents

Alongside creating assets, performing their value, and protecting them, one other significant category of working relationship to company-owned assets tends also to guarantee a lofty wage and class position. We can identify this category deductively. If an asset exists and is well protected from market competition, ensuring its ongoing scarcity, what else, if anything, could potentially deny its corporate owner commercial success? The obvious answer is: any form of constraint imposed from outside the market on the level of income the company is able to generate and retain from commercial exploitation of the asset.

Here a good example is rent control in the housing sector. Many countries, and many regions within countries, have, or at some point have had, rent controls of one kind or another, whereby the amount that landlords can charge in rent is subject to some form of regulation. It is politicians, or sometimes voters, that make decisions about rent control, but those decisions are typically made within the context of active lobbying by major owners of rental stock. Lobbyists are key individuals at rentier-type institutions. If, in the case of rent controls, they can help persuade decision-makers to loosen existing controls or to not introduce more stringent ones, they are considered worth their weight in gold. Their value was highlighted for instance in California in 2018, when firstly state legislators and then the electorate voted against proposals to revoke 1995’s Costa-Hawkins Rental Housing Act, a state statute that substantially constrains the ability of Californian municipalities to actively regulate rents. Many municipalities had been planning to introduce tougher rent controls if Costa-Hawkins had been revoked; yet they were thwarted by a ‘No’ campaign funded to the tune of around $70 million by industry interests and spearheaded by property-company lobbyists who no doubt were rewarded handsomely for persuading the legislature and Californian voting population to keep Costa-Hawkins in place.

Probably the single most important form of general external constraint on the ability of rentiers to generate and retain income from their assets is taxation. However sizeable at the point of generation, asset-based rents are for nothing if the spoils must in large measure then be handed over to the tax authorities. Employees who successfully enable companies to keep rents out of the hands of the tax authorities are therefore enormously valued, and equally well paid, by their employers. Lobbyists play a pivotal role here, too, namely in frequently ‘capturing’, to one extent or another, the governmental bodies responsible for designing tax regimes for specific industry sectors. In the UK, for example, two of the most powerful and efficacious industry lobbies are found in the oil and gas and pharmaceutical sectors. Only in the light of their forceful influence can we understand the exceptionally accommodating fiscal regime that has applied to North Sea oil and gas production since the mid-1980s, and the equally accommodating taxation system – most notably the so-called Patent Box relief – from which UK-based pharmaceutical companies have benefitted in recent years.

But if lobbyists play an important and well-remunerated role in enabling rentier institutions to widely avoid significant taxation burdens, tax lawyers and tax accountants are arguably more significant still. Cases are legion of well-known, asset-rich multinational companies allocating reported revenues, costs and, therefore, taxable profits between countries with different tax rates in such a way as to minimise their overall effective tax charges. Businesses operating in the digital world, with digital assets, often have particularly wide scope to ‘move’ profits around in this way, much more than many companies operating in the ‘real’ world do; as Martin Sandbu notes, ‘the intangible nature of internet services makes it particularly easy for them to avoid taxation through jurisdiction-hopping’.30 Lawyers and accountants are the ones that plot and execute such territorial tax arbitrage.

2.5 Sweating Assets

At most rentier-type, asset-intensive companies, the individuals whose roles we have considered thus far – creating assets, performing their value, protecting them, and repelling attempts to impose limits on rent generation and retention from outside – represent only a small, if well paid, subset of the workforce. Most workers engage in what are, or at least are considered by their employers to be, much less heroic and more mundane tasks. Specifically, they have a very different kind of working relationship to assets. They are there to make sure that the day-to-day tasks necessary to ensure that the companies’ assets continue to throw off cash are undertaken. They are there, in short, to laboriously sweat the assets that others have brought into being, cultivated and honed. Their remuneration is typically a fraction of that enjoyed by those with more esteemed roles; and their class position is far removed.

This, needless to say, is a capacious employment category. It includes, essentially, everyone other than individuals engaged in the abovementioned tasks. At a minimum, then, and from the standpoint specifically of UK rentier capitalism, all of the following would number among its ranks: the letting agent arranging viewings, tenant access and monthly rent payments for residential rental properties held within the 40,000-strong UK portfolio owned by Annington Homes; the call-centre agent in India fielding queries about loan rates from UK-based customers of Barclays Bank; the driller pumping the oil ‘owned’ by BP through its North Sea concessions; the individual screening the content uploaded to a UK-based digital platform such as Moneysupermarket or Rightmove. All of these individuals perform important, indeed essential, tasks; but, in sweating their employers’ assets, they enjoy very different working relationships to those assets than their abovementioned colleagues, and ones valued much less highly by their employers.

That there is a gulf in wages and class position between those who ‘merely’ sweat company-owned assets and those with privileged working relationships to those assets is evident in pay data. Each year, for example, the UK’s Chartered Institute of Personnel and Development (CIPD) analyses pay scales at the 100 most valuable companies listed on the London Stock Exchange, focusing in particular on the so-called ‘pay ratio’ – the multiple of chief executive pay to average employee pay. To be sure, this is an imperfect measure of the more broadly-defined wage differential – between asset ‘sweaters’ and others – that we are interested in. Nonetheless, the CIPD report contains valuable indicators.31 Many of the highest pay ratios in 2019 were reported by quintessential asset-oriented rentier corporations: for instance, the financial-asset-rich bank Barclays, with a ratio of 140; the copyright-rich publishing company RELX, at 149; the contract-rich outsourcer Rentokil, at 173; the natural resource-rich oil and gas company BP, at 188; the patent-rich pharmaceutical company AstraZeneca, at 190; and the trademark-rich drinks manufacturer Diageo, at 199. Average pay ratios across all 100 companies were lower: the mean figure was 128, the median ‘just’ 84.

If, as Piketty, Standing, and Adkins, Cooper and Konings all assert, class and inequality today are intimately bound up with asset ownership, it is clear that rent-generating assets owned by companies rather than by individuals themselves are a vital part of the jigsaw. How one’s occupation positions one relative to such assets goes a considerable way to determining one’s wages and life chances.

3 Class, Assets and Work in Marx

What does Marx have to say about the types of work we have been considering: that is, work carried out on assets other than the means of production, for rentier-type companies? He certainly recognised that landowners and banks – the two main types of corporate rentier in his day – hired workers to enable land and interest-bearing capital, respectively, to ‘earn’ income. But Marx saw this as being labour of a very particular kind: it was, he said, unproductive labour; it did not produce value, or surplus value.

Instead, only labour-power consumed by capitalists in possession of the means of production and creating products or services for market exchange was considered productive. If landowners and banks came to participate in the surplus value generated by such productive workers (landowners in the form of ground rent and banks in the form of interest), it was purely by virtue of their control of land and financial assets, and as subtractions from the profits of the aforementioned capitalists. Their workers, whether involved in creating, protecting or sweating the assets in question, did not contribute to creating the value that such asset owners managed to skim off. As Marx wrote in Theories of Surplus Value, unproductive labour ‘is labour which is not exchanged with capital, but directly with revenue, that is wages or profits (including of course the various categories of those who share as co-partners in the capitalist profit, such as interest and [ground] rent).’32

To avoid being misunderstood, two clarifications are important here. The first picks up on a point established earlier: namely, that a corporate rentier’s income often derives both from control of an asset – such as a pharmaceutical patent – and from work undertaken in the delivery of a product or service underwritten by that asset – such as a patented medicine. In such cases, at least some of the labour employed by the rentier is productive in Marx’s terms. It is only the labour exchanged with rent – payment to the rentier occasioned specifically by her control of an asset – and applied to the asset per se that is unproductive.

Second, not all of what Marx termed unproductive labour is about rent; the unproductive labour employed by the rentier is only a subset of a wider Marxian category. Perhaps most notably, there is what Marx called the ‘commercial labourer’, who takes the product created by the productive labourer and sells it on the market. Commercial labour, Marx said in Capital, is, like productive labour, exchanged with capital. But like the labour exchanged with rent, it is unproductive, insofar as it does not create value so much as realise it, converting it from one form (the commodity) to another (money) in the sphere of circulation rather than production.33

Nevertheless, if we stick faithfully to Marx’s categories, we would necessarily conclude that under contemporary rentier capitalism, where much – maybe even most – work is demonstrably about enabling assets other than the means of production to generate income (i.e., rent), much/most work is, in Marx’s terms, unproductive.

To recognise this is to raise at least two important sets of questions in relation to Marx’s arguments. The first relates to fundamental issues of economic vitality and viability. If productive labour is required to create value and thus ensure economic reproduction, the expansion at productive labour’s relative expense of unproductive labour exchanged with rent would, ceteris paribus, imperil vigorous economic circulation. A coincidence of ongoing economic growth on the one hand with a substantive expansion of rentier activities and of labours applied to rent-generating assets on the other might therefore lead one to query the designation of the latter labours as unproductive. Bluntly stated: can classical Marxist concepts pertaining to value and different forms of value-producing and non-producing labour accommodate rentier capitalism – a capitalism where rent is centre stage rather than an appendage of industrialism?

The apparent paradox of more-or-less harmonious economic reproduction coexisting with an intensification of rentierism can arguably be relatively easily resolved within the Marxian framework if the scale of consideration is a particular national economy. By this way of thinking, an economy, such as the UK’s today, in which rentier sectors and institutions play a particularly significant role would be understood to be substantially parasitical on the rest of the global economy – its banks, landlords, intellectual-property owners and oil and gas companies paying their staff largely out of rents deducted from the value and profit created elsewhere by other, productive, workers. Such a framing harks back to the classical Leninist conceptualisation of imperialism, which posited a ‘stratum of rentiers’ in the metropole which ‘lives by exploiting the labour of several overseas countries and colonies’.34 This is certainly the way, for instance, that some commentators characterise the modern City of London – as, in Doreen Massey’s words, ‘picking up the threads of old Empire to build a new one through which financial tribute could once again be collected’.35 Accounting within the Marxian framework of productive and unproductive labour for the flourishing of rentier capitalism on a more generalised basis would, however, be considerably more challenging.

The second set of questions raised by Marx’s categorisation of labour exchanged with rent as unproductive is the more pertinent in the present context, pertaining as it does to Marx’s theory of class. Empirically and superficially, this theory was extremely simple: the capitalist class owned the means of production; the working class, lacking such ownership, sold its labour-power to capitalists for wages. But what gave Marx’s theory its novelty and force – politically as much as theoretically – was its coupling of working-class status with exploitation. To be a worker under capitalism was to be exploited.

It is precisely here that Marx’s understanding of productive labour acquired its primary significance and departed most meaningfully from the understanding of Adam Smith. As Marx said, Smith saw productive labouring – producing value – as something noble. Marx, however, scorned Smith’s ‘tenderness for and illusion about the productive labourer’. Far from being a privilege, it was, Marx insisted, ‘a misfortune to be a productive labourer’. Why? Because it is the productive labourer that capitalism exploits through the appropriation of surplus labour and thus surplus value: ‘A productive labourer is a labourer who produces wealth for another. His existence only has meaning as such an instrument of production for the wealth of others’.36 If Marx’s theory of class is a theory (and politics) of exploitation, the productive labourer is the specific subject of that theory.

What, then, of the unproductive worker? If a worker does not produce value and surplus value, does it follow that that worker is not subject to exploitation (and is not part of the working class)? A fair amount of ink has been spilled on this question in Marxian scholarship. As Ian Gough noted a half-century ago, there are two main opposed positions among those who continue to root class concepts in Marxian value analysis.37 One holds that the working class – and the population of the exploited – does indeed comprise only productive workers. Not only, it is argued, are unproductive workers not exploited, but their interests align more closely with the capitalist exploiters. Here Marx himself can be cited. ‘For the [productive] worker it is equally consoling’, he wrote in a passage dripping with sarcasm, ‘that because of the growth in the net product, more spheres are opened up for unproductive workers, who live on his product and whose interest in his exploitation coincides more or less with that of the directly exploiting classes’.38

The opposite position rejects the narrow identification of the working class with productive workers. Such a narrow identification, it is observed, jars with the objective reality that among populations of workers of all types – ‘productive’ or otherwise – are found under capitalism large numbers living in deleterious conditions on breadline wages. The abovementioned commercial labourer, working for example in the retail sector, is often invoked as an example in support of this thesis. And as Gough pointed out, advocates of this position, pointing to (in Gough’s words) ‘the mass of poorer-paid commercial wage workers’, can, like their opponents, also find support in Marx. ‘To deny any simple identification of the proletariat with productive workers’, Gough wrote, ‘one has only to return to Marx’s analysis of commercial workers in Capital’, where Marx posited that ‘a commercial employee of this kind is a wage-labourer like any other’.39

The case of workers for rentier capitalists, whose labours enable corporate assets to generate rents, has not specifically been discussed in regard to Marxian class theory.40 But similar questions and comparable potential standpoints apply. One might argue – with our earlier examples perhaps in mind of individuals who create assets, or protect them from competition, or ‘perform’ their value – that such workers are distinct from the working class and even have interests coinciding, after Marx, ‘with that of the directly exploiting classes’. Alternatively, one might take the position that such workers, like commercial labourers, are in many cases seemingly no less exploited than ‘productive’ labourers. After all, for every £1 million-earning financier, banks employ literally dozens of cashiers, tellers, clerks, collection agents and customer-service representatives earning £15–20,000; for every asset creator or protector, there are dozens of ‘sweaters’.

Yet there is a difficulty here. If, as Gough noted, opponents of the strict identification of the working class with productive labour can find support for their position in Marx in the case of commercial wage-workers, the same is notably not true in the case of workers for rentier capitalists. As Gough explained, the Marxian ‘authority’ for considering commercial labourers as being exploited (despite their unproductive status) was relatively strong. Gough cited various passages from the second and third volumes of Capital to make the point:

[a commercial worker’s] labour-power is bought with the variable capital of the merchant, not with money expended as revenue, and consequently it is not bought for private service, but for the purpose of expanding the value of the capital advanced for it … Whatever [the commercial worker’s] pay, as a wage-labourer he works part of his time for nothing … The unpaid labour of these clerks, while it does not create surplus-value, enables [the merchant capitalist] to appropriate surplus-value.41

In short, because commercial wage-labourers share with productive workers the fact that their labour is exchanged with capital, they also share the fact that they perform surplus labour.

By contrast, much of the labour of workers for rentier capitalists is not exchanged with capital – it is exchanged with revenue in the form of rent. In the case of such work, there is no obvious basis in Marx for considering that the workers in question might be deemed subject to exploitation, and that their interests might be aligned more with those of productive workers than of the exploiting classes. And given the contemporary actually-existing rentier-capitalist reality of a legion of employees sweating rent-generating assets on low wages, one can therefore conclude that such workers represent a considerable challenge to Marx’s class theory, at least to the extent that such a theory relies on his writings on productive and unproductive labour – more of a challenge, at any rate, than Gough’s commercial workers.

The broader question here is of course whether and to what extent Marx’s theorisation of capitalism in general, and of class under capitalism in particular, can bear the weight of ongoing structural changes in capitalism’s political economy. Needless to say, the question is a longstanding and recurring one. It has been asked, for instance, in relation to the shift from manufacturing to services. It has been asked in relation to the growth of finance, and of financial rents. Now, arguably, it needs to be asked in relation to the proliferation and expansion of rents and rentierism more broadly.

4 Conclusion

The aim of this article has been to highlight, provisionally, certain apparent trends in rent generation and in the consequences for social stratification, and to suggest some of the issues that those developments might raise for Marxian analysis if such developments are indeed substantive ones broadly accurately described. Clearly, considerable further work is required both empirically – to draw a more complete and reliable picture of corporate rentierism and attendant socioeconomic inequalities – and theoretically – to explore and understand the worlds of rentier capitalism and of Marxian analysis strictly in relation to one another.

When so much of what is significant in capitalism today is evidently about who owns what as well as who does what, it is surely essential that understandings of class pay greater heed to where and by whom different types of assets are owned, and to the ways in which such assets are mobilised to generate income for different constituencies. Limiting our understanding only to assets owned by individuals and households and not also those owned by companies, as is the case in the Adkins, Cooper and Konings schema, is not adequate.42 But perhaps neither, by the same token, is an understanding of class in which the only truly significant company-owned assets – significant in the sense of directly material to value creation and thus also in turn to the relation between exploited and exploiter, surplus creator and appropriator – are considered to be the means of production.

Where, for example, for Marx, the working class comprises those individuals who do not own the means of production and whose labour-power is exchanged with productive capital for wages, one might today more meaningfully conceptualise the same class in terms also of whether – à la Adkins, Cooper and Konings – those individuals own housing or other valuable assets themselves, and in terms of whether any working relationship they enjoy to employer-owned, rent-generating assets such as land or natural-resource reserves or intellectual property is one of sweating on the one hand or of, say, creating or protecting on the other. As capital twists, mutates, and assumes forms of deepening complexity, so, arguably, must the concepts brought to bear to apprehend the social lives it crystallizes.

Acknowledgements

I want to offer a huge and heartfelt thanks to Mary Robertson for reading an earlier draft of this article and highlighting its many inadequacies. Those that remain, together with the arguments developed here, are of course entirely my own responsibility.

References

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1

Piketty 2014; Sayer 2015; Standing 2016.

2

Christophers 2020.

3

Christophers 2019.

4

See Christophers 2020, pp. xx–xxvi.

5

See Harvey 2014, chapters 7 and 10.

6

Wright 1985.

7

It is these other types of asset that are being referred to in this article when the generic word ‘asset’ is used.

8

Saunders 1978, 1984.

9

Piketty 2015.

10

Piketty 2014, pp. 420–1.

11

Piketty 2014, pp. 278, 420.

12

Standing 2016.

13

Standing 2016, p. 26.

14

Adkins, Cooper and Konings 2019.

15

Adkins, Cooper and Konings 2019, pp. 2–4.

16

Adkins, Cooper and Konings 2019, pp. 17–19.

17

Adkins, Cooper and Konings 2019, pp. 17–18.

18

Piketty 2014, pp. 378–9.

19

Christophers 2020, pp. 90–1.

20

Adkins, Cooper and Konings 2019, pp. 1, 4.

21

Adkins, Cooper and Konings 2019, p. 11.

22

See Christophers 2020 for a fuller discussion. Note that in the case of natural resources, what is a rent-generating asset for a rentier can also be part of the means of production – a raw material – for an industrial capitalist.

23

Bell and Van Reenen 2013.

24

Christophers 2020, p. 53.

25

Habboush, Alloway and Katakey 2016.

26

Christophers 2018.

27

Crouch 2015, p. 162.

28

Graeber 2020.

29

Rathod 2010, p. 227.

30

Sandbu 2018.

31

CIPD 2020.

32

Marx 1963, p. 157; original emphasis.

33

See the helpful discussion in Gough 1972, pp. 69–70. Marx’s assertion in Capital that some unproductive labour is in fact exchanged with capital appears to contradict the above-cited statement in Theories of Surplus Value that unproductive labour is labour exchanged with revenue. It may be that in categorising labour exchanged with capital as productive in the latter text, Marx was referring solely to industrial capital, thus excluding the merchant’s capital with which commercial labour is exchanged.

34

Lenin 1999, p. 101.

35

Massey 2007, p. 214. See also Norfield 2016.

36

Marx 1963, p. 225; original emphasis.

37

Others have sought to elaborate broadly Marxian, exploitation-centred concepts of class without reference to value theory. Erik Olin Wright – whose class analysis posited exploitation as the appropriation not of surplus labour and surplus value but simply of a generic ‘labour effort’ – was one influential example. In what follows, however, the question of value remains front and centre.

38

Marx 1968, p. 571.

39

Respectively, Gough 1972, pp. 71, 69; Marx 1991, p. 406.

40

Aage Sørensen did offer a quasi-Marxian theory of class exploitation based on rent; but his understanding of rent was in fact the neoclassical one (i.e., rent as excess profit), and in any event he only considered personal rather than corporate asset ownership (Sørensen 2000).

41

Gough 1972, p. 70.

42

Adkins, Cooper and Konings 2019.

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