Home ownership and privatization

Home ownership and privatization

by Jim Kemeny

It is often asserted that owner-occupation contributes to the social stability of capitalist societies. Politicians and finance institutions, in particular. point to the conservatizing effects of owner-occupation, both as part of the more general encouragement of social institutions based on private property and more specifically as a deterrent to social and industrial unrest (Ball, 1976; Community Development Project, 1976; Kemeny, 1g77a; Saunders, 1978). However, even among critical observers there is considerable agreement that owner-occupation constitutes a stabilizing factor in capitalist societies. Harvey, for example, maintains that ‘a worker mortgaged up to the hilt is, for the most part, a pillar of social stability, and schemes to promote home ownership within the working class have long recognized this basic fact’ (Harvey, 1976, 272-73). Castells argues that owner-occupation gives workers a stake in the system and that ‘. . . chronic indebtedness ties individuals into the job market and into society in general in a most repressive way’ (Castells, 1977, 185). Others argue that owner-occupation divides the working class and gives owner-occupiers a vested interest in the system (Community Development Project, 1976,41-2; Ball, 1976, 29) or that owner-occupation strengthens sectional divisions among workers and has been a key factor in the creation ofthe middle class (Saunders, 1978).

The basic assumption underlying these arguments is that owner- occupation gives households a stake in the capitalist system because it is based on the individual ownership of property, even though such property is a type of non-productive capital (Clarke and Ginsburg, 1976; Berry, 1978). This normative emphasis is convincing as far as it goes and it is clear that general ideological characteristics of owner-occupation are important in contributing to an overall conservative ideology in capitalist societies. However, beyond this, the argument often becomes less convincing. ’Thus, for example, it is not at all clear why heavily indebted mortgagoi-occupiers are any more ‘tied into thejob market’ and enmeshed in capitalist relationships than rack-rented tenants. To take such a position would be to argue that owner-occupation has a conservatizing effect both because heavy indebtedness forces households to conform to the demands of the system and because the freehold ownership of property gives households a stake in the system. If we are to apply the logic of this argument to tenants, then we

Jim Kemeny 373

would have to say that rack-rented tenants conform because they have nooption if they are to survive economically, while tenants paying very low rents (for example in some rent-controlled private property, or sometimes in public housing) have thereby been coopted into supporting the system. Either way, the argument applied to owner-occupation permits the conclusion that owner-occupation is ‘good for capitalism’ whether its costs bear on households heavily or lightly, and moreover in a manner which does not apply to other tenures.

Any argument that owner-occupation has peculiarly conservatizing influences must therefore go beyond such general observations and show exactly what is the central characteristic of owner-occupation as a housing tenure which distinguishes it from other modes of organizing the consumption of housing. If owner-occupation does have a conservatizing influence, markedly more so than other forms of tenure, then it must be possible to point to the characteristics of the tenure which result in this influence. There must therefore be some kind of relationship between the nature of owner- occupation and social structure which can be shown to have conservatizing consequences.

I t will be argued here that the central characteristic of owner-occupation is that it is founded upon the privatization ofhousing consumption. As such it is anti-collectivistic and is structured in such a way that it discourages cooperation and the communal organization of social security.

I Privatized versus collectivized housing

We may begin by defining housing tenure in purely economic terms; in particular, that owning and renting represent different ways of paying for housing, and different ways in which housing can be exploited for profit. All other characteristics of tenure: security of tenure, autonomy and rights of disposal over the dwelling, management and participation, the nature of credit arrangements, etc., represent socio-legal characteristics of housing tenure which, while they may decisively determine the relative attractiveness of different forms of tenure, are subject to considerable variation and may be considered second-order characteristics.

The economic logic behind differences in housing tenure is relatively simple. Essentially, housing may be paid for in one of two ways: by the householders individually, as in owner-occupation or private (profit-oriented) renting, or by a number of householders collectively (as in public or cost renting). In the former, each household pays for its housing as it is consumed, just as it would pay for any other commodity, either by cash or by means of a loan. In the latter, a number of households pool resources and pay for their housing collectively, cross-subsidizing each other so that those in older cheaper houses pay marginally more for their housing in order to reduce the costs for those living in newer, and so more expensive, housing.

374 Home ownership and privatization

There are, of* course, important implications of this difference for the exploitation of housing for profit, which will be returned to shortly. For the moment, we may note that in terms of the manner in which housing is paid for, the difference between owner-occupation and cost-renting is that in the former payment for housing is privatized, with each household paying its own housing costs, individually disposing of any accrued assets, and individually benefiting from low historic costs. In cost-renting, by contrast, housing costs are collectivized, capital gains accrue not to individuals but to the cost-rental system as a whole (i.e. they are socialized), and the benefits of low historic costs are spread more or less evenly among the participating householders.

After a long period of neglect in the housing literature of the phenomenon of ‘pooled historic costs’ and ‘rent-averaging’ in public rental housing (see, for example, Cullingworth, 1966; Donnison, 1967; Needleman, 1965; Nevitt, 1966) this whole aspect of public housing is beginning to receive considerable attention (see, for example, Clarke and Ginsburg, 1975; Community Development Project, 1976; Merrett, 1975; Webster, 1975; 1979). For purposes of this discussion, this is the single most important distinguishing characteristic of cost-renting from owner-occupation.

However, on closer examination, the apparently clear-cut distinction between privatized and collectivised housing is merely a polarization out of a continuum. In a completely socialized cost-rental sector the entire housing costs are socialized and the dwellings removed from exploitation for profit. However, besides such ‘pure’ forms of tenure there also exist a wide range of different forms of housing which involve degrees of collectivization: cooperative tenure being a good example, where the householder puts up a proportion of the equity but the remainder of costs are socialized. In addition, housing costs in public renting may be more or less collectivized: for example, where tenants may be held individually responsible for maintenance and repairs, or have the right to privatize some assets by being given rights of disposal over the value of improvements they have carried out on the dwellings.

I t is clear, therefore, that rigidly structured and institutionalized forms of tenure with their constellations of socio-legal characteristics-‘owner’- occupation as against ‘public renting’, for example--only represent particular manifestations of the privatization and collectivization of housing. I want to argue in the remainder of this paper that it is not coincidental that owner-occupation tends to predominate in certain types of capitalist countries rather than others. Just as there is a continuum of privatization/ collectivization in housing tenures, so a similar continuum can be distinguished in other areas of social structure. Privatization in housing is therefore not something which exists in uaccuo, but is intimately related to privatization in other areas and is influenced, and in turn influences, the degree of privatization in society as a whole.

11 Privatization and profit

Owner-occupation has SO far been described as a privatized equivalent of cost-renting, the implication being that pmfit-making in different tenures is the same and that the net cost of different tenures is essentially identical. In practice this assumption is highly favourable to owner-occupation, and there are four major reasons why owner-occupation is a more profitable (and hence for households more expensive) form of tenure than cost-renting.

The first is that because houses are sold over and over again at a market price which is largely determined by rhe cost of new housing, housing capital is freed for reinvestment at current prices. In cost-renting, capital invested is permanently frozen since houses are never sold. In owner-occupation every time a household moves home a dwelling is sold and another bought. This means that the housing capital is revalued at current prices and becomes available for refinancing with mortgages determined by current values rather than original construction costs (Kilroy, 1979, 40).

In a continuum of profitability, owner-occupation occupies a position between private (profit-oriented) renting and cost-renting. In cost-renting capital exploitation is limited to the value of the dwellings at the time they were first built. In uncontrolled private renting the current market value always determined profitability. That is. rents rise (and less commonly fall) more or less in line with current market prices of property. In owner- occupation, housing property only becomes revalued at its current market price when a household moves home and so profitability is tied to the rate of residential mobility.

In practice, part of this increased cost of housing simply represents owner- occupier equity which is being transferred from one dwelling to another. However, to the extent that owner-occupiers realize housing capital: through inheritance, trading down, or more rarely trading out of owner-occupation altogether, such capital has to be replaced. As Clarke and Ginsburg (1975) point out, it is the first-time owner-occupier who pays for the last-time owner-occupier being able to make a capital gain in later life. More specifically, it is the first-time buyer who is, forced to top up the owner- occupier market which is being constantly drained of housing capital by longer established owner-occupiers, either by having to raise a larger mortgage or by having to make a larger cash deposit.

This drain of housing capital from owner-occupation is in practice not as great a t might be thought. Working on Australian data (where, it should be noted, the owner-occupied housing: stock is relatively new compared to European countries) it would appear that only about I % of the total market value of the owner-occupied stock is extracted each year in the form of realized equity (Kemeny, 1978a). Although this is a tiny amount in relation to the amount of capital frozen in the housing stock it represents a considerable sum of money: about $A 1 OOO OOO OOO or $A 400 per owner-occupied dwelling per year. Since all this ‘capital gain’ must be paid for by someone,

376 Home o m s h i p and ptivatit.ation

that sum represents the approximate annual cost of owner-occupation: a cost which does not occur in a cost-rental system.

Second, there is considerable evidence that owner-occupation exacerbates the maldistribution of housing which results from social inequality (Duncan, 1977, 389; King, 1973, 5-6), and in so doing maximizes housing consump tion. This results from the phenomenon of ‘trading up’ whereby owner- occupiers are encouraged to buy larger and more expensive houses as their families increase in size. At the same time there is considerably less incentive for owner-occupiers to trade down when in late middle age the need for housing space declines. The low cost of housing makes any marginal reduction in housing costs which trading down would result in, relatively unattractive, and this is particularly so if capital disinvested from housing as a result of trading down is not required and must be invested elsewhere. The net result is that the total amount of trading down is insufficient to balance out the total amount of trading up and, as the data on national average dwelling size show, even relatively poor countries with high owner- occupation rates tend to have large houses. Thus house size and amenity are increasd without in any way reducing housing shortages.

Third, houses in owner-occupation may be converted into private renting-in theory at least a more profitable tenur-ither through sale, or conversion of use. The intimate relationship between private landlords and owner-occupation has been discussed elsewhere (for example, Kemeny, forthcoming, chapter 4). For purposes of this discussion we may note that a considerable proportion of small-scale private landlordism is recruited from among owner-occupiers, notably fi-om older households who have savings to invest or surplus housing space to dispose of.

Finally, the importance of property transfer to the owner-occupation system generates considerable amounts of activity among ‘transfer professionals’. The most important of these are estate agents and solicitors, but in addition a host of other specialized activities are needed, such as surveying, valuing, insuring, the provision of bridging finance, and the raising and terminating of mortgages.

All of these costs of owner-occupation derive from the privatized nature of the tenure: the ability of owner-occupiers to extract housing capital from the market, thereby forcing those who remain to pay more for their housing, the skewing of demand for housing space by the phenomenon of ‘trading up’, the ability of owners to switch their dwellings into and out of the owner-occupier market to suit their own capital needs, and the tremendous inefficiencies which result from having to transfer property every time a household moves home. In summary, the extra costs of owner-occupation as a highly commodified form of housing and its greater profitability than cost-renting derive from the privatized nature of the tenure. The absence of cooperation between owner-occupiers, the fragmented, competitive housing market which results with its inefficiencies and duplications, represent the economic cost o f the privatized nature of owner-occupation. The intimate relationship

between privatization and profit-making is therefore clear. This brings us to a more general question regarding profit-making and

owner-occupation. In theory and in purely capital terms, owner-occupation is less profitable than private renting, since the recirculation of housing capital is tied to residential mobility: that is, as already stressed, the price paid for housing is tied to how often a household moves home. This contrasts with private renting where, in theory at least, rents are much more sensitive to changes in the value of housing capital and may adjust on a weekly, monthly, quarterly, or other short-term basis. Owner-occupation is therefore less profitable than private renting in terms of capital investment and the household can benefit, to some extent at least, from historic costs.

This being so, in terms of the objective interests of capital, owner- occupation is less profitable than private renting but more profitable than cost-renting, where, of course, housing capital is never recirculated. What, then, makes owner-occupation such a powerfully supported housing tenure in capitalist societies? Part of this must be that the main economic beneficiaries of private renting are largely limited to private landlords, while the economic beneficiaries of owner-occupation are the major finance institutions, plus a host of important vested interests who stand to benefit from owner-occupation: the building industry with the expansion of private housing space which owner-occupation stimulates both through ‘trading up’ and ‘improvements’; the numerous exchange professionals, notably the legal profession and real estate businesses, not to mention surveyors, valuers, land agents, mortgage brokers and fringe finance lenders. These interests, which capitalise on the privatized and fragmented owner-occupation market, together with a preference for owner-occupation among highly privatized professional and other white collar workers, have combined into an almost irrestable force for the sponsorship of owner-occupation.

I will argue later in this paper that it has been the existence of a well-organized labour movement which has been the main factor preventing the total dominance of owner-occupation, and that countries with strong labour movements have succeeded in developing larger and more attractive cost-rental sectors as an alternative to owner-occupation. Before such a discussion, however, it is necessary to turn to a more fundamental factor which underlies the working of an owner-occupier sector and its relationship to other elements of social structure, particularly the welfare state: the effect of the family cycle of relative poverty upon housing costs in owner- occupation.

I11 Privatization and the cycle of poverty

The privatization of housing costs which owner-occupation accomplishes is of crucial significance both because housing is a very large item of expenditure out of income and because owner-occupation severely distorts

378 H m ownershi# and p‘vatization

the life-time cost of’ housing: being very high in the early years of the family life cycle and very low in later years. This means that the housing costs of a cross-section of the population will show enormous differences in the percentage of income spent on housing: ranging from 80% or more of the main earner’s income for heavily mortgaged households (on Australia, see Katz, 1978,40) to virtually nsthing for the debt-free owners ofnew houses. It has been pointed out that this factor alone must act as a divisive force against any solidarity developing among owner-occupiers as a housing class: reflected by the fact that while rent strikes are not uncommon, mortgage strikes are extremely rare (Forrest and Lloyd, 1978, 41; Saunders, 1978).

However, there are more far-reaching implications of this basic economic fact, deriving from the intimate relationship between variable housing costs of owner-occupiers and the cycle of poverty (or among higher income- owners, more accurately ‘the cycle of relative afffuence’). The relationship between the skewed lifetime housing costs of owner-occupation and the family life cycle of relative poverty has been neglected both in the sociology of housing and the sociology of the family. Its most important effect is to radically alter the cycle of relative poverty. For tenants who pay a similar proportion of their incomes in housing costs over the family life cycle there are two major peaks of prosperity: in the pre-child bearing years (single person households and two income childless households) and in middle age when the children have left home, with corresponding troughs of poverty in the childbearing years and old age. Because owner-occupation transfers wealth from the young to the old its most important consequence is to reduce or eliminate prosperity in the pre-childbearing years and deepen poverty in the early childbearing years, while increasing prosperity in middle age and ameliorating poverty in old age. Owner-occupation therefore converts a four phase cycle of relative poverty with two peaks and two troughs into a three phase cycle with I ) one deep trough in the early years of the family cycle, when households are either renting and saving for a deposit or burdened with heavy mortgage repayments, I) one accentuated peak of relative prosperity during middle-age when the mortgage has been paid off, and 3) one relatively shallow trough of poverty in old age, due to the cushioning effect of debt-free owner-occupation upon low-income pension recipients.

The exact implications of this effect have yet to be explored in any detail. I t is clear that as the owner-occupation rate rises and more and more working-class families become owner-occupiers ;here will be a tendency towards increased diversity among working-class households in their housing costs a t different stages of the family cycle: primarily between poorer ‘aspiring owner-occupiers’ and debt-encumbered young workers on the one hand and older, low debt mortgagor-occupiers and debt-free owner- occupiers on the other. The fragmentary effect of owner-occupation which has been noted among white collar workers will therefore extend to more and more manual workers until perhaps a majority of the working class are owner-occupiers.

Jim Kemeny 379

However, perhaps more important than this, the spread of owner- occupation to a majority of the population can be expected to have major consequences for support for adequate provision of social security. Since owner-occupation redistributes the cost of housing over the family life-cycle, from the old to the young. i t operates as a sort of private insurance against future poverty or mishap. TO that extent, i t has similarities with private insurance schemes ( e . g . for retirement. unemployment, or sickness). In all of these, contributors pay more in earlier stages of their lives in order to build up credit for, or gain entitlement to, support when it may be needed in later life. T h e main difyerence is that in owner-occupation there is no cross- subsidization betwren the households, as there is in many in5uranc.e schemes (for example, between the healthy and the sick, the employed and unemployed). Owner-occupation therefore performs insurance functions of a privatized nature, whereby households individually insure themselves against the time when they may be unable to atford to pay very much for housing, by concentrating the payment for the dwelling into 25 years or less near the beginning of the life cycle.

I want to argue here that this manifestation of privatization in owner- occupation is a t least as important as the more general observation that owner-occupation reduces communality of interest among householders. The fragmentary effect of variable housing costs over the family life-cycle is rendered structural by the fact that such variability is not random but rather modifies the cy cle of poverty in characteristic ways and that this effect closely relates to the amount of support which may exist in society for universal social security and the drvclopmerit of the welfare state.

IV

As a privatized housing tenure, owner-occupation necessarily has a major impact upon consumption patterns over the family cycle, due primarily to the considerable importance of housing as a cost-element in the average worker’s budget. If housing can be privatized, then a considerable proportion of the spending power of ordinary families is alrrady allocated to the private sector. Privatization in housing must therefore be seen in a wider context of the balance between private and collective facilities in society as a whole.

This can best be illustrated by the relationship between housing and health insurance in Australia. Following the overthrow of the Labor gcjvernment in 1975, the consenative coalition government moved to abolish the newly-introduced universal health insurance system which had been in operation for only a year or so. The first step was to abolish the universality of the system by allowing higher income-earners to opt out by taking private insurance while introducing a specific health tax, or ‘levy’, on lower-income earners who remained in the system. During this transition phase which

Owner-occupation and the welfare state

380 Home ownership and Privatization

ended in 1978 with the total abolition ofthe public health insurance system, the burden of paying for health insurance was shifted from general revenue to personal cover and amounted to an increase in cost to the individual household of between $A 300 to $A 500 a year. At a stroke, the saving power ofhouseholds who were attempting to save for a deposit was reduced by that amount per annum. Thus, over the five years or so it might take to save a deposit the amount of savings was reduced by between $A 1500 and $A 2500. Given average house prices of around $A30 ooo a year (Eyers Report, 1978, volume I ) and a 25% deposit of about $A 7300, this interim government measure considerably reduced the ability of young families to save for a deposit.

T h e point about a voluntary private system of health insurance is that households can deliberately choose to minimize their expenditure in that area by underinsuring or not insuring at all, in order to be able first to amass a deposit and later to maintain often cripplingly high mortgage repayments during the early years of owner-occupation. Of course, the fact that young healthy people can opt out of health insurance necessarily increases the cost of health provision to the less healthy and also minimizes any cross- subsidization of the poor by the rich. However, given the desparate need to buy accommodation in a society where public cost-rental dwellings only account for 5% of the total housing stock, such a price is clearly one which many Australians are prepared to pay.

T h e pressure on young families to buy accommodation therefore has major implications for support for adequate welfare provision by the state. h'hat is true of health insurance is also true of unemployment benefits (where, at least until recently, unemployment had been heavily concentrated among older people), education (where the cost of child-rearing in schools is borne more directly by those with children of school age), retirement pensions, or indeed, of any system of universal insurance or provision against mishap. Where owner-occupation is the only or main alternative to private renting, the pressure among young families to maintain private control over patterns of expenditure in order to manipulate their budgets to fit in with their individual family cycle housing costs is likely to be high. Owner-occupation, then, acts as a powerful force to maintain or increase privatization in other spheres of life.

Nor is this principle applicable only to the welfare state as conceived in narrow terms of social insurance. Much the same pressure operates in terms of all government expenditure: notably public as against private transport, and the provision of a high standard of public urban infrastructural facilities as against maximizing private space and amenity at home. The latter will be furthered by owner-occupation even more because of the tendency of owner-occupation to increase housing consumption and to encourage households to generate surplus private space.

Unfortunately, detailed data on the hypothesized relationship between owner-occupation and non-housing privatization are difficult to establish.

Jim Kemeny 381

Changing rates of owner-occupation over time are paralleled by so many wider structural changes that holding variables constant is extremely difficult. At the most general level, however, there is some suggestion that countries with high owner-occupation rates tend also to have relatively poorly developed welfare states, while countries with low owner-occupation rates tend to have highly developed welfare states. Although these data are only tentative and suggestive for further exploration, it is worth considering here by way of introduction to a potentially fruitful line of inquiry.

Table I summarizes some aggregate indices of the welfare state for eight capitalist societies with very different owner-occupation rates. The differences between the owner-occupation rates of these countries are considerable and are largely explicable in terms of the manner in which the rental sector has developed. Sweden, West Germany and the Netherlands are societies where private landlords have been prevented from realizing most, if not all, capital gains from rental property. In these societies public renting has been allowed to expand to meet demand and to compete directly with private renting and a mixed cost-rental sector characterized by low rents and high security of tenure has developed (for data on Sweden, see Kenemy, 1977b, and forthcoming, and on West Germany, see Hallett, 1978). In the other societies public renting has been strictly segregated from the private rental market where private landlords realize most, if not all, capital gains through market-related rents, and the supply of public housing has been prevented from expanding to meet demand: allocation being by means of waiting lists. The UK and France possess much larger public rental sectors than the USA, Canada and Australia where public renting accounts for less than 5% of dwellings.

It can be seen from Table I that there is a very rough correlation between low rates of owner-occupation and high levels of government expenditure and revenue, and this is further supported by a closer examination of three societies which represent the extremes and middle of the range of owner- occupation rates (see Table 2). Firm conclusions regarding the inter- relationship between owner-occupation and the welfare state must be left for further research. In particular there are at least two important exceptions to the hypothesized correlation: Switzerland where the owner-occupation rate is under 30% (as a result of possessing a cost-rental sector) but where the welfare state is poorly developed, and New Zealand with an owner- occupation rate of 66% but possessing a relatively well developed welfare state.

In spite of this, a relationship between high rates ofowner-occupation and low levels of government involvement in the provision of social security is intuitively logical. The commodification of housing which owner- occupation involves, together with the preservation of a private rental market where capital gains are extracted from tenants by landlords, represents the housing equivalent of privatization in other spheres of the economy. Societies where housing has been privatized are therefore likely to be privatized in

Tab

le 1

O

wne

r-oc

cupa

tion

and

agg

rega

te in

dice

s of

the

wel

fare

sta

te: s

elec

ted

capi

talis

t cou

ntri

es

Cou

ntry

O

wne

r-occ

upat

ion

Cur

rent

gov

ernm

ent

Tota

l tax

atio

n Yo

of i

ncom

e pa

id

rate

ex

pend

iture

as YO

(incl

udin

g so

cial

in

dire

ct ta

xes

afte

r 19

50

1973

of

GN

P (1

976)

' se

curit

y) a

s %

of

decl

arat

ion

(1 97

8)3

GN

P (1

968-

70)2

Sw

eden

W

est G

erm

any

The

Net

herla

nds

UK

Fr

ance

U

SA

C

anad

a A

ustr

alia

~

45

42

30

26

35

50

60

45

40

35

33

52

45

62

60

66

49.8

41

.7

52.2

41

.5

40.0

33

.0

36.4

28

.6

43.0

34.0

39.7

36

.6

36.3

27

.9

30.2

24

.4

34.4

27

.8

not a

vaila

ble

21.5

19

.8

19.3

20

.1

15.9

~

Sour

ces:

1 O

EC

D O

bser

ver

no. 9

1, M

arch

197

8, p

p. 2

0-21

. 2

OEC

D O

bser

ver

no. 6

1, D

ecem

ber 1

972,

p. 1

7.

3 R

oyal

Com

mis

sion

on th

e D

istri

butio

n of

Inco

me

and

Wea

lth 1

977:

The

disr

ribur

ion

of in

com

e in

eig

ht c

ount

ries

(by

Thom

as Stark). B

ackg

roun

d P

aper

no.

4,

Lond

on: H

er M

ajes

ty's

Sta

tione

ry O

ffice

.

Tab

le f

Ow

ner-

occu

patio

n ra

tes

and

soci

al s

ecur

ity in

Aus

tral

ia. B

rita

in a

nd S

wed

en

Cou

ntry

H

ome

owne

rshi

p %

of h

ouse

hold

s G

ovt.

final

Pe

r cap

ita

Gov

t. m

arrie

d U

nem

ploy

men

t ra

te 1

970/

71

in p

ublic

or

cons

umpt

ion

tota

l gov

t. re

tirem

ent

bene

fits

as

% o

f tot

al

soci

al w

elfa

re

of a

v. in

com

e av

. wee

kly

final

con

sum

ptio

n an

d he

alth

($)

earn

ings

cost

-rent

ing

expe

nditu

re a

s ex

pend

iture

on

pens

ions

as

%

a YO of

expe

nditu

re

Aus

tralia

68

Brit

ain

55

Swed

en

35

~ ~

~~

6 24

340

25

23

33

33

500

30

38

50

47

650

66

82


other respects too. At a more detailed level, we have seen that owner- occupation may act as a major influence on the consumption patterns of households due to the variable effect which the cost of owner- occupation imposes upon the long-term pattern of household expenditure of families.

This privatization effect is likely to operate in both directions. For example, insecurity in old age which results from inadequate retirement provision will be an incentive for households to buy accommodation, and in turn where a large proportion of retired persons are owner-occupiers the political pressure for more adequate retirement provision may be weakened. Equally, in a society where there is a high level of social security for the aged there will be both less incentive to become owner-occupiers in order to stave off poverty in old age and more pressure for higher levels of pension provision in a population where many aged are renting.

V Conclusions

The relationship between owner-occupation and social security points to the need to understand processes of privatization in housing in relation to processes of privatization or collectivization in the remainder of society. It is almost certainly not coincidental that, in general, in societies where the commodification of housing is less developed the labour movement has been stronger and better organized and social democratic forces have been able to socialize a larger percentage of the cost of reproducing labour power. The most effective means of limiting the commodification ofhousing has been to set up a unified cost-rental sector in which private landlords are only allowed to make profits which reflect the historical cost of rental property. Where this has occurred-and there have clearly been specific historical reasons why it occurred in particular societies-the mass exodus of middle-income families out of private renting and into owner-occupation which had taken place in most capitalist societies over the postwar period has been prevented. Data on Sweden show clearly that while the richer Swedes inevitably occupy the best housing, socioeconomic differences in terms of tenure are almost absent (Headey, 1978; Kemeny, 1978b). This contrasts strongly with societies where housing policy has been to minimize tenure choice by limiting cost-renting and providing regressive housing subsidies, the result of which has been that those best able to afford to buy accommodation have done so.

The flight of the middle classes out of renting and into owner-occupation in most capitalist societies contrasts even more strongly with what has occurred in state socialist societies of Eastern Europe. In Hungary, where rental housing has been completely decommodified, it would appear that concentrating housing subsidies on renting has meant that white collar workers have in general chosen to rent an inner-city flat, while manual workers have been forced to buy a house in the suburbs (Szelenyi, 1978). The

Jim Kemtny 385

flight of upper and middle income-earners to owner-occupied suburban houses in most capitalist societies must therefore be seen as one of the correlates of privatization which owner-occupation has involved, and relates to the ‘inner-city problem’ or ‘urban fiscal crisis’ of older cities in home- owning societies (Paris, 1979): a ‘problem’ which has not arisen in Sweden, where inner-city rental property has remained in the hands of higher income earners and, if anything, has become ‘gentrified’ as urban sprawl has increased the scarcity value of inner-city rental flats.

The close relationship between owner-occupation and privatized suburban life-styles (see Rose, 1979) has been noted particularly in the USA (Fischer, 1976,2 12-13) and Australia (Rowse, 1978; Kemeney, rg78c), where owner-occupation rates have been high for some time. The maximization of private space and the relative paucity of public urban infrastructural facilities (transport, parks, day-care centres, sports facilities, etc.) clearly relate closely to the privatization of housing and its consequences. This makes even more necessary a wider view of the relationship between housing and the wider social structure.

I t has been argued in this paper that the rise of owner-occupation during the postwar period in most capitalist societies has been closely associated with processes of privatization both in housing and in other areas, notably the welfare state and urban structure. The dangers of ethnocentricity in urban sociology which result from defining problems through the perspective of the Chicago school have been expressed (Castells, 1977) and well taken, but there remains the danger that one form of ethnocentricity may simply be replaced by another (Gillespie, 1976). We cannot assume that capitalist societies are necessarily moving towards greater involvement by the state in the economy. It may well be that ‘collective consumption’ (however defined) may decline in importance in some societies as commodification increases in selected but important areas such as housing. The expansion of owner- occupation represents one major area where just such a process has been occurring, at least in some societies. That a number of capitalist societies have managed to resist this process only points to the great diversity of paths of development even among the small group of industrialized capitalist societies. Because of the economic importance of housing, the privatizing effects of owner-occupation are clearly of central importance in under- standing such differences.

Department of Sociology, University of Adelaide, Australia

386 Home o m r s h i p and privatization

VI References

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Berry, M. 1978: Housing as an element in the reproduction of labour power. In Mullins, P., editor, Papers giuen at the Annual Conference of the Sociological Association of Australia and New Zealand, Brisbane: University of Queensland.

Castells, M. 1977: T h urban question: a marxist approach. London: Edward Arnold.

Clarke, S. and Ginsburg, N. 1976: The political economy of housing. Kapitalistate no. 4.5, -9.

Community Development Project I 976: Projits against houses: an altematiue guide to housingjmnce. London: CDP Information and Intelligence Unit.

Cullingworth, J. B. 1966: Housing and local gouenunmt in England and Wales. London: Allen and Unwin.

Donnison, D. V. 1967: Thegouemment of housing. Harmondsworth: Penguin. Duncan, S. S. 1977: The housing question and the structure of the housing

market. Journal of Social Policy 6, 385-412. Eyers Report 1978: 5% cost of housing: report of the committee of inquiry into

housing costs, Volume I : report. Canberra: Australian Government Publishing Service.

Fischer, C. S. 1976: T h urban experience. New York: Harcourt Brace J ovanovich.

Forrest, R. and Lloyd, J. 1978: Theories of the capitalist state: the implications for policy research. Papers in Urban and Regional Studies no. 2,

Gillespie, J. 1976: ‘Theories of urbanism: from Chicago to Paris. Intervention no. 7, 41-59.

Hallett, G. 1978: Housing and landpolicies in West Germany and Britain: a record of success and failure. London: Macmillan.

Harvey, D. 1976: Labor, capital and class struggle around the built environment in advanced capitalist societies. Politics and Society 6,

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approach. University of Adelaide (mirneo.) . 1978b: Urban home ownership in Sweden. Urban Studies 15,3 13-20. 1978c: Australia’s privatized cities: detached house ownership and urban

exploitation. In Burke, T., editor, Housing problems and housing policy, Centre for Urban Studies, Swinburne College of Technology, Melbourne, 39-49.

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5, 5!9-68.

L’argument concernant le rtflexe conservateur declenchi par I’accrssion des locataires A la propriCtC itait jusqu’a present limit6 P des dimensions idtologiques. L‘autrur alfirmc ici qu‘il est possible de relier la conservatisation aux consiquences economiques de I’achat de leur rtsidencr par les foyers en termes de relation entre une occupation hautrment ronsumPristr et la privatisation d e la consommation. En particulier, la differenciation des menages due B I’achat de leur residence P diffgrents stades du cycle familial rntrafnr A la lois des divisions en termes d’interfts en jeu et une privatisation au point de vuc dr srs diets sur lrs types dc consommation. L‘auteur soutient qu’il pourrait bien y avoir une relation mtrc la privatisation drs logemrnts ct


la privatisation dans d’autres dornaines, qui a des repercussions sur Ie developpement de la securiti sociale. Dans les sociPtCs OD de nornbreux menages sont proprietaires de leur logement, on aura de fortes pressions en vue du contr8le privi de la consornrnation de maniere A perrnettre aux menages de gCrer leur budget de maniPre A faciliter I’achat de leur residence. De r n h e . dans les societts oh les prestations sociales sont peu dCveloppCes, i t y a une plus grande incitation i I’achat d e sa residence. L’Ciude prelirninaire d’un certain nombre de sociites de proprittaires et de locataires au prix coictant suggere que cette hypothtsr vaut la peine d’Ctre approfondie.

Das Argument bezuglich des konservatisierenden Effekts des Eigenheimbesitzes blieb bishrr immer auf ideologische Dimensionen beschrankt. Hier wird argumentiert, daR es rnoglich sei, die Konservatisierung rnit den wirtsrhaftlichen Folgen des Eigenheimbesitzes fur den Haushalt in Zusammenhang zu hringen, und zwar in bezug auf das Verhaltnis zwischen einern uberdus guterbezogenen Besitz und der Privatisierung des Verbrauchs. Besonders die unterschiedlichen Auswirkungen, die der Eigenheirnhesitz in verschiedenen Stadien des Familienzykluses hat. ist in bezug auf die lnteressen scheidend und in bezug aufseine Auswirkungen aufdie Struktur drs Verbrauchs privatisierend. Es wird argumentiert, dafi zwischrn der Privatisierung des Wohnungswesens und der Privatisierung auf anderen Gebieten-erkennbar am Grad drr Entwicklung des Wohlfahrtsstaats-sehr wohl ein Zusammenhang bestehen kann. I n Gesellschaften mit hoher Eigenheirnrate wird sehr auf private Kontrolle des Konsums gedrangt. damit die einzelnen Haushalte ihren Etat so rnanipulieren konnen. daR dcr Ligrnheirnerwerb erleichtert wird. In Gesellschaften mit einern schlecht entwickelten M‘ohlfahrtsstaat besteht hingegen mehr Anreiz zum Erwerb eines Eigenheirns. Aufgrund vorlaufigrr Daten uber mehrere Gesellschaften, in denen zum Teil der Eigenheirnbesitz, zurn Tril das Mietwesen vorherrscht. scheint sich eine ausfuhrlichere Untersuchung dieser Hypothese zu lohnen.

El argument0 sobre el efecto de ronsematizacibn de la ocupaci6n por el propietario se ha limitado hasta ahora a dimensiones ideol6gicas. Aqui se arguye que es posible relacionar la conservatizaci6n a las irnplicaciones econ6rnicas de la ocupaci6n por Ins propietarios en terminos de la relacion entre una tenencia altarnente cornodificada y la privatizaci6n del consumo. Especialmente, el efecto diferencial de la ocupaci6n por el propietario sobre farnilias en etapas distintas del cirlo familiar es tanto devisivo en tirminos de intereses y privatizante en terminos de su efecto en 10s sisternas de consumo. Se arguye que hien puede haber una relaci6n entre la privatizaci6n de la vivienda y la privatizaci6n en otras esferas seg6n se reflrja en el grado hasta el cual se haya desarrollado el estado benefartor. En sociedades donde existan niveles elevados de propiedad de la vivirnda, habri una fuerte presi6n para el control privado del consumo, con el fin de permitir a las familias a rnanipular sus presupuestos v farilitar el paso a la ocupaci6n por el propietario. A su vez, en sociedades con un estado benelactor poco desarrollado, existe un incentivo mayor para pasar a la ocupaci6n por el propietario. Los datos preliminares sobre un nurnero de soriedades de casas pertenecientes a sus ocupantes y de casas alquiladas al cost0 sugieren que esta hip6tesis rnerece la pena ser explorada en mayor detalle.

Home ownership and privatization

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