Marxism Lives: Thoughts on the housing crisis

Decent, affordable housing is critical to working families. Many now pay more than half their wages just for rent. Most workers are just a layoff or serious illness away from eviction, whether they rent or are paying on a mortgage.

Rent predates capitalism. The basic price exacted by the landowner from whoever uses the land is called “ground rent.” It is a hidden part of the monthly cost of living space.

But more is involved: Engels observed in his essay, “The Housing Question”: “The worker faces the rent agreement as one of the thousand forms of bourgeois cheating…but this form is also subject to economic regulation. When cheating reaches a certain level, it raises the cost of maintaining labour power, and results either in attempts at government regulation, or a general rise in wages.”

Housing costs in our day are a powerful stimulus to the movements for a living wage, to raise the overall minimum wage and for union contract wage increases.

Some gains have been made by struggles for greater federal/state/city funds to be invested in affordable housing, and for subsidy programs for low-income workers, seniors, etc. to help with the high rents.

Engels goes on to explain that if an average house rents out for 100 years, its use [and exchange] value is sold piecemeal over that time. Because the owner doesn’t get the full value at once, he receives an increased price as “interest” – the rate of which is determined by the workings of the economy over that time. In 100 years, the house is used up. The tenant has no house, but neither does the owner, who has only the lot, if he owns it. “If we then deduct from the total rent paid the ground rent plus increases over the period and the cost of repairs – we shall find that the remainder is composed on average of 1) the original capital invested to build the house 2) the profits on this and 3) the interest on the capital and profit.” The house may have brought in an income 5 or 10 times [or more] than the original cost, “which is solely due to an increase in ground rent.”

Housing income, however, is not the source of the profits of the capitalist class. Engels explains: “The pivot on which the exploitation of the worker turns is the sale of his labour power to the capitalist and the use which the capitalist makes of this transaction.”

The worker is compelled to produce far more value for the capitalist than he is paid in wages which, on average, equal the cost of maintaining his ability to work, his labour power. This is the source of surplus value, divided up later as “ground rent, commercial profit, interest, taxes, etc., among the diverse varieties of capitalists and their servitors.”

Every gain for workers in wages, equal pay, health benefits, etc., comes out of the capitalist’s profits (surplus value). But workers will never get off the seesaw of a benefit won here, another taken away there, as long as a small class of people own the means of production. Similarly, solving the housing shortage means ending private ownership of land used to make profits.

The crowding of the working population into big cities increases the ground rent; thereby a huge increase in housing rent, overcrowded housing, and “for some, the impossibility of finding a place to live at all.” Another result is that workers are forced to the outskirts, often far from their places of work. Engels says, “The expansion of the big modern cities gives the land … which [is] centrally situated, an artificial and often enormously increasing value … the older buildings on this land actually depress its value because they no longer correspond to the changed circumstances.” They are demolished so that luxury housing, hotels, upscale shops, stadiums, etc., can take their place.

Engels cites several examples to show that “slum clearance” under capitalism results only in a new “slum” being formed, often adjacent to the one just “improved.” Workers have no choice but to crowd into whatever housing is available to them.

The contradictions of the housing problem are more and more obvious. Recently a letter to The New York Times Magazine commented on two items in the same issue: one described the tragedy of homeless New York City children being shuffled from shelters to temporary quarters and back again, while the ads a few pages on featured million-dollar apartments. The reader concluded that these two examples were enough “to make anyone understand the logic behind socialism.”

Betty Smith is the president of International Publishers and a member of the Communist Party USA’s Education Commission. She can be reached at service@intpubnyc.com