UCL Institute for Innovation and Public Purpose


Mapping Modern Economic Rents

About the project

Today there is an increasing consensus that capitalist systems are suffering from excessive rent and value. A large part of society’s surplus in capitalist economies is extracted in the form of rent payments, in particular to the financial, insurance and real estate sector (FIRE sector) but also to large non-financial corporations, which are becoming increasingly adept at extracting value from citizens, gaming regulations, and engaging in rent-seeking lobbying. Notable in recent years has been the fact that the enormous growth of digital technology firms – Amazon, Google, Facebook, Apple – is at least in part based on network externalities that create monopolistic positions across vast sectors of the economy. These firms’ control over the data, algorithms, and architecture that determine which products consumers will be able to choose from give them huge rent extraction opportunities.

The consequence of large rents in the capitalist system is that the cost structure of the economy is elevated to an artificially high level. This undermines productive investment and innovation and, paradoxically, the creation of the Schumpeterian, entrepreneurial rents that are so important to economic growth. It also represses demand in the household sector with knock on effects on consumption, whilst firms increasingly compete on the basis of their short-term share price rather than innovation. Unfortunately, the dynamics of rent accumulation would appear to be self-fulfilling. Rent accumulation encourages further rent-seeking or ‘conspicuous consumption’ rather than productive investment. The result is rising income and wealth inequality, flat-lining productivity, and financial instability. 

But why – notwithstanding the increasingly accepted critiques (around short-termism, financialisation, etc) – is so little changing in terms of policy? Our project claims that change will only come when rent becomes central once again to economic analysis. Modern national accounting, regulation, and fiscal and monetary policy largely ignore the role of rent. This is at least in part due to mainstream economic theory viewing rent not as a fundamental dynamic of modern capitalist economies but as due to a temporary imperfection in an otherwise efficient market system which can be competed away through supply-side reforms.

This project will involve three stages:

1. We will first review existing theories of rent, including neoclassical and heterodox economics approaches, and examine how useful they are inhelping to understand modern rents. We will then begin the development of a modern theory of rent that distinguishes between socially useful or entrepreneurial rents that accrue to new innovations – a form of value creation – and exploitative rents deriving from market power or positional advantages.   

2. We will then identify and map economic rent in the modern capitalist system in a range of different – currently hidden – forms, including: 

  • The capture of collective investment from land ownership
  • Credit and money creation by the banking system and the circulation of financial assets (and related forms of wealth)
  • The creation of network monopolies in the digital economy
  • Pricing strategies of products with inelastic demand (like drugs, or water)

This empirical work will enable us to further refine our definition of modern economic rent, so there will be some iteration between the first two phases.

3. The final phase of the project will develop policy interventions to prevent these forms of value extraction and thus to promote productive and sustainable wealth creation. In particular, we will focus on reforms to national accounting, regulatory, fiscal, and monetary policy frameworks.


Working papers


This project is supported by the Thirty Percy Foundation.

Principal Investigators 

Mariana Mazzucato
Founder and Director
View Mariana's profile


Josh Ryan-Collins
Head of Finance and Macroeconomics
View Josh's profile


Giorgos Gouzoulis
Research Fellow
View Giorgos' profile