I ended my last piece with Gurminder Bhambra’s conclusion that confronting capitalism’s colonial roots forces us to think beyond the labour relation. In her words: “A distributive justice directed at the surplus generated by labour and misappropriated by capital … neglects other forms of misappropriation.” She is talking here specifically about the need for reparative justice for colonialism. But the dynamics she unpacks – of the seizure of land, natural resources and people by colonial powers – have wider implications too. And so does an understanding of asset ownership today.

As many grapple with the question of how we should understand today’s financialised, rentier-ised capitalist economy, this is becoming a live debate. How central does wage-labour remain to understanding class, value and exploitation in the modern economy? This is a complex question with many types of answer: historical or theoretical analyses of how capitalism functions, and practical or political claims about how class relations play out in the UK economy today. And it matters, because – whether implicitly or explicitly – entire political projects and modes of organising are built on people’s answers to these questions. In this piece, I’ll try to unpack some of these debates.

A range of authors, from Keir Milburn to Lisa Adkins and her colleagues, have argued in different ways that we can’t understand class today without taking asset ownership into account. Classifications based solely on occupation, they suggest, obscure important divides between those who own assets and those who don’t – particularly around home ownership. Because these inequalities have increasingly come to follow generational lines, they offer a partial explanation of how age has become a key determinant of recent UK voting behaviour.

However, Adkins et al. nevertheless stress that these asset inequalities are first and foremost an issue of class, not age. As time goes by, inheritance is likely to increasingly determine people’s life chances (essentially, some young people will inherit housing wealth and others will not), and the solidarity of ‘Generation Left’ could fracture along new class lines. Of course, the extent to which this actually happens will depend on other factors – such as how much of their parents’ wealth is eaten up paying for social care. But the basic point still stands: we can’t understand these new class faultlines through the prism of age alone.

Adkins et al. therefore propose an entirely new classification system based on people’s relationship to asset ownership – ranging from ‘investors’ and ‘outright homeowners’ at the top, to homeless people with no assets at the bottom. Of course, this is complicated still further by the rise of private pension saving, which makes most of us ‘investors’ to some degree. The authors would say that this is symptomatic of the asset economy: “the household exists no longer primarily as a unit of subsistence or consumption, but as a balance sheet of assets and liabilities that must be managed.”

They emphasise that they are not suggesting income from work – or inequalities and injustices related to work – are no longer important. Rather, the point is that a ‘middle class’ job is no longer the gateway to a ‘middle class’ lifestyle, except insofar as it affects one’s ability to buy a house – something that is increasingly far from guaranteed. It is therefore misleading to equate the distinction between ‘middle class’ and ‘working class’ people with the distinction between white collar and blue collar jobs. One could also add that class relations based on asset ownership intersect strongly with racial and gender identities. As we saw in my last piece, there is a huge wealth gap between black and white British people – while women are also less likely to own a home and have less in savings than men.

A failure to understand these dynamics continues to feed misleading narratives that pit blue-collar voters in the Red Wall against educated city-dwelling millennials, implying that only the former qualify as authentically ‘working class’. These analyses are popular in a variety of quarters. On the one hand, Labour left MPs such as those behind the ‘No Holding Back’ report weave a story in which Brexit – overwhelmingly supported by the ‘working class’ element of Labour’s base – was thwarted by the liberal sensibilities of its ‘middle class’ supporters. On the other, critics of Corbynism like Jon Cruddas argue that Labour has become disconnected from a “politics of work”, with the left embracing a tech-utopianism driven by educated millennials – who he even goes so far as to label the economy’s “winners”, or the “meritocratic elite”. To put all this another way: one response to the fact that class (as conventionally measured) no longer determines voting behaviour is to say that Labour has ‘lost the working class’. The alternative is to contend that class itself is changing. Of course, both can be true – but the two claims have radically different political implications.

Again, it’s important to stress that taking account of asset ownership doesn’t mean saying that work is no longer important in determining class position: rather, we need to understand how the two intertwine. In 2017, Labour actually won amongst working people, while the Conservative vote relied heavily on retirees (who were also more likely to turn out). Of course, these retirees may well be ‘working class’ in the sense that they spent their working lives in blue-collar occupations. But in the here and now, their livelihoods depend on their asset wealth (pensions and home ownership), and not on work. Their interests are fundamentally different from those of a young student who relies on part-time bar work, or a recent graduate who knows they will never earn enough to afford a home. To fetishise the former as ‘working class’ while dismissing the latter as ‘middle class’ does nothing to aid our understanding of contemporary society. The under-35s also account for 80% of pandemic job losses, which does not sit easily with the idea that the young people who overwhelmingly voted for Corbyn’s Labour are the economy’s “winners”. Whatever is going on here, it isn’t a workers’ revolt against the left.

So much for the politics. What about the economics? Of course, there’s another way to think about class altogether – one rooted in Marxist theory, that’s less about occupational distinctions than about relations of production. Many orthodox Marxists are, not surprisingly, sceptical of analyses that focus on rent extraction and asset ownership. They argue that this is a distraction from the fundamental source of capitalist exploitation: wage-labour. According to this view, value can only be created (and ‘surplus value’ extracted) through the labour process. ‘Rent’ is therefore a second-order phenomenon, an outgrowth of this basic process. It doesn’t create or extract new value, it just moves it around the system. To simplify, factory owners may be forced to ‘share’ the profits they extract with landlords, but the ultimate source of those profits is still labour exploitation.

I don’t want to go down a theoretical rabbit hole of debating the finer points of the labour theory of value – not least because the more I read, the less well-equipped I feel to do so. Instead, I want to apply a more pragmatic yardstick: does this framework help us to understand what’s actually going on in the modern capitalist economy, and how we should respond? Or are there things it doesn’t explain, where we need to add a different perspective?

The classical Marxist understanding of capitalism focuses on commodity production as the place where value is created by the worker and extracted by the capitalist. In line with this, many left analyses of capitalism’s ills focus on the ‘commodification’ of daily life: the process by which things like ‘nature’ or ‘care’ are turned into commodities to be bought and sold. But some recent thinkers have suggested that this misses the centrality of assets in modern capitalism, and the ways in which they behave differently to commodities. An asset is a piece of property that yields an ongoing income – which can either be captured as a stream of rents into the future, or ‘capitalised’ today by monetising the expected future value of these rents. A banana is a commodity. A banana plant, and the land it grows on, is an asset. Or, to give an example from economic geographer Kean Birch: a downloadable song is a commodity. The copyright on that song is an asset.

Birch’s research focuses on the biotech sector, where he argues: “Commodification is important, certainly, but it is a sideshow to the implications of assets to an understanding of value and valuation.” This might seem like a technical distinction, but it is fundamental to understanding the way the sector behaves. Biotech firms can achieve spectacular valuations despite never having turned a profit and never having produced anything. A similar dynamic applies to many tech and platform companies: Uber, for instance, is still loss-making, yet its stock is worth over $100bn. The valuable asset they control is their intellectual property, which they can milk either by licensing it to a big pharmaceutical firm, or by selling up altogether. Company valuations “may not relate to any form of commodity production but reflect financial judgements about future income from, and future rises in, the value of a firm’s assets.”

Crucially, these judgements are highly subjective: valuation is an inherently uncertain, future-oriented process, refracted through social conventions such as accounting standards. While Keynes deplored speculation and strove for a world where investments would be driven by the long-term ‘fundamental value’ of assets, Adkins et al. argue that any such search for a final, ‘objective’ yardstick of value is a chimera. The speculative nature of value and valuation is inherent to capitalism – it’s a feature, not a bug. Increasingly, firms’ business models rest on the active management of the value of their asset portfolio. In turn, the more one’s assets rise in value, the more one is able to borrow and make new investments. This is a fundamental part of the process of capital accumulation – and one that we can’t understand solely through the lens of commodity production.

Moreover, these different strategies for extracting value have always been intertwined. Mainstream narratives about financialisation and rent have one thing in common with the counter-arguments made by some orthodox Marxists. They both try to draw a neat dividing line between ‘productive’ and ‘unproductive’ activities; between the factory boss and the banker; between the ‘profit’ extracted from the labour process, and the ‘rent’ extracted from controlling land and other monopolised assets. In reality, as economist JW Mason argues, the dividing line never was so neat. As we saw in my last piece, industrial capitalism was driven by the seizure of land, people and resources through colonialism, and their conversion into financial assets (not just commodities) in places like the City of London. Mason cites historian Gavin Wright, who argues that public investment in canals, roads and other infrastructure in the American North was partly driven by the interests of land speculators who stood to gain from the resulting appreciation of their asset.

In today’s economy – which is both highly financialised and increasingly based on intangible assets, like knowledge – it is increasingly difficult to disentangle ‘profit’ from ‘rent’. Meanwhile, as Annie Quick and Alice Martin note in their book ‘Unions Renewed’, corporate strategies based on financial engineering often bypass the labour process altogether – reducing the leverage of tactics like strike action, and requiring unions to bring other methods to bear. In the UK, the dominance of finance and real estate produces self-reinforcing circuits of wealth which have almost nothing to do with work: money is created by private banks, backed by assets like housing, and lent to private developers and landlords who in turn profit from the appreciation of those assets (as well as from actual streams of rental income). The actors involved in this dance are among the most powerful and successful capitalists in the country. In this context, does it make sense to insist that the labour process is still the core foundation of the capitalist system, and is logically prior or more ‘fundamental’ than these other dynamics? I’m not sure.

Once again: nobody is saying that labour exploitation is no longer important (although this is sometimes used as a straw man with which to attack writers on financialisation and rent). From tech firms like Amazon to outsourcers like Serco to the private equity owners of care homes and nurseries, it’s obvious that squeezing workers is still a major plank of corporate strategies and a major source of injustice. The point is that this is inextricably intertwined with other types of exploitation and value extraction – including the appropriation of natural resources and ecological space. At the same time, financialisation and asset valuation are critical to understanding how this control over nature and labour is converted into monetary wealth, and the economic and political power that goes with it, on such a breathtaking scale.

Simply put, we cannot understand class inequality in the modern economy solely through the lens of workers and bosses. When we try, we risk falling into serious political errors. ‘Working class’ people are being exploited not just as workers, but as tenants, as debtors, as patients (e.g. through lack of access to patented medicines) and as consumers (e.g. through mis-selling of financial products or high energy prices). The common thread here is the exploitation of those who do not control assets by those who do.

So what does this mean for the kind of politics we need in order to create a more just and sustainable economy? What does it look like to democratise power and ownership in this context? And do we need to think beyond ‘the means of production’? These are the questions I’ll explore in my next piece.  

Christine Berry is an Autonomy Writer in Residence. She is a freelance researcher and writer based in Manchester. She is a Trustee of Rethinking Economics, a Fellow of the Democracy Collaborative and a Contributing Editor of Renewal journal. Previously she was Director of Policy and Government at the New Economics Foundation. She is currently writing a book on democratic ownership as part of the answer to rentier capitalism (Verso, 2022).