Housing crisis intensifies internationally: expropriate the speculators!

The crisis of capitalism has many expressions: new wars and inter-imperialist conflicts, environmental destruction, the growing chasm between rich and poor, the decline of science and culture, etc. One especially conspicuous symptom of capitalism's failure is its inability to provide the basic human need for adequate housing, even in the wealthiest countries.

According to a recent Gallup poll, over 50 percent of respondents in OECD countries are dissatisfied with the availability of affordable housing. This represents a sharp increase from around 30 percent before the pandemic. In some countries, such as the US, Spain, and the Netherlands, over 60 percent of respondents are dissatisfied, whereas in Portugal the number nears 80 percent.

According to this poll, housing has now become the greatest source of dissatisfaction in rich countries. This cuts across generational divides. For people in their twenties, leaving the parental home is becoming harder. If they manage to do so, they often land in overcrowded and overpriced accommodation.

Yet for those in their thirties or forties who might be thinking of buying a home, the situation is little better, as higher interest rates have driven mortgage costs through the roof. This makes it very hard to plan one’s life and set up a family.

For older generations, many of those who already have a mortgage have seen interest rates rise unexpectedly over the past years. In the words of a bourgeois commentator: “one reason Americans [and not only them] are so disenchanted with capitalism is that the national dream of home ownership is no longer within reach for much of the population”.

The sharp increase in the cost of rents and mortgages is hair-raising. In the UK, the cost of housing relative to the average wage has doubled over the past 25 years. In the US, monthly payments for a low-deposit mortgage have gone up from about $2,000 in 2021 to over $3,000 now.

The problem is not just the cost, but also the quality of housing. To face rental payments, workers cram into tiny apartments and often share rooms or even beds, in some cases with complete strangers. The most extreme expression of the housing crisis is homelessness, which has gone up sharply in all the advanced capitalist countries.

Last year, the number of homeless people went up by 12 percent internationally. In the US, the richest country in the world, there are over 650,000 people living on the street according to official statistics (though the real figure may be higher). In Portugal, the number of homeless people has grown by 78 percent since the pandemic.

But not everyone is dissatisfied. On the contrary, a tiny minority of wealthy parasites is overjoyed! In the words of an Italian banker, 2023 was “the best year ever”. Indeed, for a handful of capitalists the current situation could not be better. Banks, landlords, brokers, and investment management companies are making enormous profits.

In Spain, for instance, bank profits went up by almost 30 percent last year due to higher interest rates on mortgages and other loans. All the capitalists are tightening the screws on the working class: employers, the landlords, retailers, digital platform owners.

What is the reason for the housing crisis? “Basically we haven’t built enough”, answers a capitalist economist interviewed by the Financial Times. A simple answer, but one that seems to contradict the facts. A quick look at the figures shows that the construction industry is not sitting idle. Cement consumption in the US has grown consistently over the past decade. In the EU, the construction industry has also expanded vigorously over the past years (with a hiatus during the pandemic).

The Financial Times answers this paradox: “developers [are] often targetting wealthier households, exacerbating the strain on lower incomes”. To speak plainly, houses are being built, yes, but for the rich. The capitalists are building secondary residences for the rich, expensive hotels, or empty properties for speculation. In turn, landlords are moving to other, more profitable speculative activities.

This phenomenon is not new. In Engels’ words:

“The reason why the capitalists do not invest still more than they do in workers’ dwellings is that more expensive dwellings bring in still greater profits for their owners.”

The current crisis of capitalism has intensified the tendency towards speculation and wasteful luxury development. After the 2008 crisis, central banks pumped billions of dollars into the financial sector. But this hardly translated into productive investment, as real demand remained anaemic. This money rather found its way to all sorts of speculative activities, including real estate. At the same time, ever-growing inequality tilts the housing market even further towards the rich.

What are the authorities doing to tackle this problem? Under the pressure of mass protests and growing indignation, some governments have introduced subsidies and tax breaks for tenants and developers, but, scandalously, this has consistently been gobbled up by the banks, the construction industry, and the landlords without lowering prices. In effect their ‘measures’ for relieving the housing crisis transpose into more subsidies for the very parasites responsible for the crisis.

This practice, for instance, was recently revealed in Portugal, where fiscal incentives and subsidies have only pushed prices up. The right to housing is enshrined in most constitutions, but no state ever enforces this. But should ordinary people dare to stop paying their rent or mortgages, they would soon find the police knocking on their doors with eviction notices. Such is the character of the capitalist state: a special armed body for the defence of private property.

The right to housing is enshrined in most constitutions, but no state ever enforces this / Image: See ming Lee, Flickr

On the left, reformist governments in countries such as Spain have tried to stimulate affordable house construction and hinder speculative and tourism-oriented development. To little effect, however. In Barcelona’s local council, for example, Ada Colau’s left government in 2015-23 promised to address the housing crisis but, under her rule, housing prices literally doubled. This owes not to her personal dishonesty or corruption. In fact, she passed abundant legislation trying to mitigate the crisis.

The problem lay in her reformist approach, which tried to provide an answer within the limits of capitalism. But you can’t control what you don’t own. Capitalists will invest where there is more money to be made. Developers will choose to put their money into more profitable luxury estates or hotels rather than into affordable housing for the working class. Landlords, big and small, will choose Airbnb over renting out their properties, or sell them to an investment fund, if they can make more money that way. Well-meaning reforms will crash against these laws of capitalism.

There are plenty of houses for everyone, and the resources to build new ones. But as long as land and capital remain in the hands of a small clique of parasites, workers will continue to be choked by rents, mortgages, and evictions. To solve the housing crisis, the capitalists must be expropriated. Their wealth, which the working class created, must be put at the service of social need through rational economic planning.

As Engels said succinctly:

“[The housing crisis] cannot fail to be present in a society in which the great masses of the workers are exclusively dependent upon wages, that is to say, on the sum of foodstuffs necessary for their existence and for the propagation of their kind; in which improvements of the existing machinery continually throw masses of workers out of employment; in which violent and regularly recurring industrial vacillations determine on the one hand the existence of a large reserve army of unemployed workers, and on the other hand drive large masses of the workers temporarily unemployed onto the streets; in which the workers are crowded together in masses in the big towns, at a quicker rate than dwellings come into existence for them under existing conditions; in which, therefore, there must always be tenants even for the most infamous pigsties; and in which finally the house owner in his capacity as capitalist has not only the right, but, in view of the competition, to a certain extent also the duty of ruthlessly making as much out of his property in house rent as he possibly can. In such a society the housing shortage is no accident; it is a necessary institution and it can be abolished together with all its effects on health, etc., only if the whole social order from which it springs is fundamentally refashioned.”