One of the most persistent left shibboleths is the notion that productive investment is giving way to unproductive speculation, leading to the “hollowing out” of the industrial economy and the decline of capitalism. After all, it seems obvious that capitalists would rather make a quick buck than undertake the arduous and risky process of actually producing something. Neo-feudalism is having a moment.

Such arguments have typically focused on the supposedly parasitic role of finance and “fictitious capital.” More recently, however, they have been extended to describe an emerging “rentier capitalism,” in which the extraction of rent through monopoly power and control over the state has displaced production as the primary means through which capitalists accumulate wealth. In reality, the dystopia unfolding around us is not the result of capitalism’s logic breaking down — it is the direct expression of that logic.

In a recent piece in Sidecar, for instance, Dylan Riley reiterates the important point often associated with his coauthor, Robert Brenner, that “all-round market dependence” is the basic foundation of capitalism. Which is to say that the defining characteristic of capitalism is that it is a system in which both the ruling class and the laboring masses depend on the market for their well-being. Among other things, this has pivotal implications for how we understand the transition to capitalism, briefly summarized by Riley in the piece. It leads us to focus on production relations within societies, rather than just their external trade connections to a “world system,” in determining the nature of its mode of production.

Riley insists that left critique should be directed not at particular capitalists and their specific histories of violence but at the logic of capitalism. Yet his subsequent claim that capitalists are today increasingly accumulating wealth through rent-seeking, political extraction, and plunder rather than “productive investment” is conceptually confused and unsupported by the evidence. Indeed, these assertions are predicated on precisely the failure to analyze “the dynamics of the system” and “its laws of motion” that he rightly decries.

For starters, one might ask, what is the source of the “rent” these capitalists are supposedly extracting? In order for value to be extracted in the form of rent, it must first be produced. The only way to sidestep this requirement would be to adopt the neoclassical view that firms’ pricing power creates value out of nothing. If we are operating from a framework that understands value as the result of actual material processes carried out by actual human beings, this is not a very satisfying account. Rent, along with profit and interest, must therefore be understood as a claim on a finite pool of surplus value produced across the economy, as Karl Marx shows.

This, in turn, implies specific — systemic — relationships between rent and profit. Rent is a deduction from the total output produced across the economy. This means it cannot expand without limit. It is constrained by what was actually produced. If rent is subtracted from profit, this could only go so far before production was no longer viable — thereby undermining the source of rent as well as the reproduction of the entire system. The “stimulus to gain” (in Marx’s terms) must be sufficient to impel capitalists to invest in productive activities, or rent itself becomes impossible.

If rentier activities were consistently more lucrative than productive investment, then all capitalists would try to become rentiers, as Riley implies. And if they did, the flood of capital into these sectors would intensify competition and push returns back toward the social average. That is the crux of the theory of competition in Marx and the same as what you would find in any business school: capital moves out of sectors with below-average returns and into those with above-average returns, resulting in a tendency toward the equalization of the profit rate. That doesn’t mean that profits can’t be higher in one sector than another. It only implies that investment will chase the highest returns and that this investment effects capacity and thus competition and profits.

Persistent above-average returns thus require the existence of some barrier to the competitive equalization of the profit rate. Some firms must be able to block other capitals from entering these sectors as a result of their control of some condition of production or circulation that others cannot reproduce or access — in other words, they must possess monopoly power. Indeed, this is precisely how Marx defines rent: income derived from specific market advantages that can’t be competed away.

If we abandon Marx’s link between rent and monopoly, then rent can come to refer to any income from ownership. But all capitalists own and control conditions of production and circulation: factories, warehouses, logistics systems, software, brands, customer networks, patents, payment systems, platforms, etc. If ownership alone is understood as generating rent, then profit as a distinct category tends to disappear into rent altogether.

Given all this, Riley’s analysis effectively suggests that capitalism is being replaced by some form of “neo-feudalism” as the accumulation of wealth through “plunder” undermines competition and leads to the suspension of capitalism’s “laws of motion.”

Yet this doesn’t work empirically. As Scott Aquanno and I showed in a recent paper in the Review of Radical Political Economics, the major tech firms that are typically the target of these arguments have not persistently earned above-average profits. Their profits have gravitated around the average. Nor is there evidence that capital mobility across the economy has been diminished in the way monopoly-capital or rentier-capitalism arguments would require.

This means that even if we assume these firms’ activities are wholly “unproductive” (which is not actually the case), their income is not rent. Rather, it would be what Marx calls “commercial profit,” or profit accruing to capitals that perform circulation and realization functions.

Google, Meta, Amazon, and the like are not simply leeching value from productive firms but building and operating infrastructures that other capitals use to circulate commodities, reduce turnover time, realize surplus value, and compete more effectively.

Merchant firms are competitively disciplined to continually improve — even revolutionize — the conditions of circulation. This includes telecommunications, warehousing, and logistical infrastructures as well as advertising. In this way, Marx’s analysis of capitalism continues to provide a powerful explanation for the rapid processes of technological and logistical development we are witnessing around us every day. Far from departing from capitalism’s laws of motion, these dynamics are crystal clear expressions of them.

As Riley suggests, capitalists certainly hate competition. They all want to destroy their rivals and gain monopoly power. But this is simply not possible. There is no way to stop what Anwar Shaikh calls the “war among firms” as they struggle to maximize their share of the total social surplus — especially when big finance can supply giant corporations with the firepower necessary to tear down any barriers to competition in search of above-average profits. Competition is not contingent but constitutive of the system.

Finally, the idea that corporations are not undertaking “productive investment” is simply a myth. The central firms in contemporary capitalism are investing massively in fixed capital, logistics, software, data centers, artificial intelligence, energy infrastructure, and global supply chains. Corporate investment remains high, research and development spending has grown, technological innovation has proceeded rapidly, and leading firms remain locked in ruthless price competition. Monopoly theories struggle to explain all of these dynamics.

We are not facing a capitalism that is falling apart or descending into rentierism but a strong, profitable, dynamic, and competitive system. And that is precisely the problem.