I've railed against simplistic conservative misreadings of Adam Smith before, so Dustin Mineau's explanation of how economists duped us into attacking capitalism (by explicating the concept of economic rent) was a very intriguing read:
I admit, reading the term, "economic rent" can cause eyes to glaze over quickly. A more accurate description is "unearned income". It is people and companies who make money by doing zero work and risk little or none of their own assets.
Many conservative economists claim to be staunch followers of Adam Smith. They shout slogans such as "Supply and Demand!" "Capitalism"! " "Let the markets work!" However, for anyone who actually read Adam Smith, you would note that the "invisible hand" was not his only observation of the inner workings of capitalism. Adam Smith recognized that many in the economy were making gobs of money, but weren't contributing anything. He was referring to what was eventually called "economic rent".
"Adam Smith and future classical economists," he reminds us, "existed in a time where the noble families of medieval Europe were still the large landowners:"
The nobles had just turned into Rentiers. Because they owned the land, they were able to rent it out to capitalist and workers and claim a portion of their profits and wages by charging "rent". They were able to do this without ever working. It was unearned income.
Much of the work done by economists from Adam Smith until the late 19th century was all about finding and identifying "rent-seeking". These classical economists didn't want to overthrow capitalism, they wanted to free it from the "rent-seeking" parasites.
Because "many modern economists no longer make a distinction between land and capital," he continues, "therefore the concept of economic rent is no longer discussed in our politics:"
Rent-seeking is any income that is unearned. An alternative definition is "profit without a corresponding cost of production". "Economic Rent" can come from ownership of land and just "renting" it out for money. It can also come from collecting so much capital that a firm now has a monopoly and can set the price independent of supply demand considerations, It can be from government monopoly granting, control of other "land" like our rivers, broadband spectrum, or "mineral rights" of land. It can come from control of financial assets like capital gains, dividends, and interest on loans(especially usury). It can also come from political favors from the government.
A side effect of this is that "when progressives rail against the unearned income of the rentiers, we lack the vocabulary to properly express what is happening:"
Instead, conservatives try to make it look like liberals are railing against capitalism itself or against businesses in general. In some cases we may even come to believe it ourselves. Many times when we're fighting against the "excesses of capitalism", what we are actually fighting is parasitic rentiers that are hurting the true capitalists as much as the workers.
"One could argue, he concludes, that "history is repeating itself:"
200 years ago, the conservative vs. liberal mantra was that conservatives were fighting to keep the power of the nobles and large landlords intact. The liberals were the ones trying to free themselves politically and economically from their control. Today it's the same. Conservatives are fighting to maintain the privilege of the Rentiers by pretending to defend capitalism itself. And once again, us liberals are fighting to free the market from the parasitical Rentiers.