Revolution #150, December 14, 2008
The Housing Crisis, the Capitalist System, and the Better—Communist—Way
Part 1
Even during times of relative prosperity within the U.S., millions of people have no homes. They live in shelters or on the street, they sleep on couches or floors or in their cars. Tens of millions more are just a paycheck, or a serious health problem, away from homelessness. Worldwide, this is far worse—with hundreds of millions of people in Africa, Asia and Latin America living in indescribably wretched conditions in this globalized capitalist economy.
Now there is a serious crisis racking the capitalist economy. The head of the Federal Deposit Insurance Corporation in New York City recently predicted that at least 4.5 million houses will be foreclosed in the U.S. 1
Meanwhile, houses sit empty, and construction workers—as well as many others who could work in construction—go unemployed.
Why is this so? What does it have to do with capitalism? And how would a socialist state handle this differently?
Getting Down to Basics
To understand this, we have to dig down and scientifically examine some things that are normally taken for granted.
First, what is a society? Looking at the surface, we see many institutions—schools, armies, churches, families, etc. We see certain ways that people relate to each other and certain common—and contending—ideas that most people in a given society have. But at its most fundamental level, society is a way that people come together to produce and reproduce the necessities of life. That production enables people to survive, and that is what actually takes up most of people’s time. But people don’t produce in just any old way—they are organized to enter into production in certain set ways.
In the DVD of the speech Revolution: Why It’s Necessary, Why It’s Possible, and What It’s All About, Bob Avakian makes the point that if there were only six people in society, it would be very apparent that these six people were dividing between themselves the labor needed to gather or produce the food, construct the shelter, etc. that they needed, and that this would be the basis of their ongoing ability to live. Their connections to each other in doing this would be plain. On a planet of over six billion people, with tremendous complexity, this basic fact about “what is society” is covered over.2
Two things immediately stand out when you look at modern society with this in mind. First, the means through which we produce our needs are technologically very developed. While literally billions of people are still forced to live in mud huts and shanties, it is now possible to house people in buildings which protect against the weather, provide plumbing facilities and fresh water, electricity, and so on. This is the modern standard, which everyone aspires to and which could, if things were set up differently, be provided to everyone.
Second, to build such housing requires many people doing many different kinds of labor in a very coordinated way. If you look at a construction site for any length of time, you see people doing all kinds of work. And these people are only the tip of the iceberg. In order for them to even function, there have to be other people working to build construction machinery, to make steel, to harvest and treat lumber, etc. So just to build a house or apartment building requires bringing together the labor of different people doing different things in many far-flung places. The days of a handful of people chopping down trees and building a log cabin, or a thatched hut, etc. have long been surpassed.
Capital Is Not a Thing—
It Is an Exploitative Relation Between People
So why can’t society just bring this labor together to provide housing for people? This simple question gets to the fundamental problem: in this society none of this labor can be brought together and unleashed without capital. Capital in this society takes the outward form of money, whether cold cash or credit. But money just sitting there is not in itself capital.
Capital is fundamentally a social relation between people. It is a social relation in which one person or small group of people (perhaps organized into a corporation) uses money to purchase machinery and raw materials and to pay wages in order to extract profit through the sale of the product of this process. In short, capital is not a thing, though it can take the outward appearance of money; it is a social relation in which the labor of many is exploited for the profit of a handful.
The basic reality of capitalist society is that nothing can be produced—no social need can be met—unless money first undergoes what Marx called “a preliminary transformation into capital.” That is, it must become a form of value that commands the labor of others in order to expand itself.
The Rules of
the—Capitalist—Game
Capital obeys but one commandment—it must seek to expand itself, through making profit, to the greatest possible extent. Capital is invested where it yields the most profit—for the capitalist. It is worth repeating: the ONLY way that houses can be built in capitalist society is if that machinery, raw materials, real estate and workers can first be turned into capital—that is, into a means for taking value (money) and expanding it into more value (profits). 3
Housing is a need, and that is why it can be sold. But people’s need for shelter and other facilities does not determine what actually gets built. If more profit can be extracted by building luxury condos than by constructing good, basic housing for masses of people, then it is luxury condos that will be built. If more profit can be extracted for capital by building gold-plated office buildings rather than schools or hospitals in the inner city, then gold-plated office buildings will consume the labor of society. If it will turn more profit to ignore the ways in which a particular construction project may damage the environment, then pollution will go on unabated. And if it will NOT turn a profit to build houses any longer, and if the demands of profit require a capitalist to lay off workers and to cease building…then that is what will be done.
If you upbraid the capitalist for ignoring social need, he or she will argue back to you, “What can I do? If I do not go for the highest profit, then I will not get credit from the banks. If I don’t get credit from the banks, I will have no capital and I will have to go out of business.” And he will have a point—it is not mainly about the greed of this or that capitalist (though greed, as Gordon Gekko character said in the movie Wall Street, is surely good under capitalism, where it is treated as a virtue and the chief motivator of human beings in this society). It is about a system.
Capitalist Anarchy:
Expand or Die
This leads to another important point about capitalism. Capitalists compete with other capitalists. They must sell as much as they possibly can, on pain of going under. So they produce as much as they can, as cheaply as possible, and flood the market with their goods. But there is no guarantee that they will sell anything that they bring to market.
As more and more is produced in this anarchic competition, capital ends up running into its own built-in barrier: the fact that these commodities (like houses) must be sold, and at a profit, for the initial investment to be profitably realized.
You can see this now in the auto industry. Huge amounts of cars now sit in lots, unsold. The “Big 3” auto companies could very well go bankrupt by the end of the year. Why? Because they had to produce as much as they could and hope that they could realize a profit in the market. There is no social plan, based on what people need, guiding this; it is just a helter-skelter rush.
In regard to housing, in recent years the biggest capitalists expanded credit to “stimulate the market.” The banks, the mortgage companies, the big blocs of capital like “hedge funds” all jumped into the mad race. If they hadn’t, as they now explain, they would have been driven under by someone who did. Now, this credit has begun to come due—people can no longer, under the terms of capitalism, pay for their houses, even though they still need those houses—and so people are being thrown out of their homes. Construction is grinding to a halt. And major blocs of capital are threatened with going under.
The actual causes of the current crisis are bound up with the way in which the imperialist state defends and intervenes in the process on behalf of capital; and, related to that, the whole international web of oppressive relations in which the U.S. and other imperialist powers (Europe, Japan, etc.) suck super-profits out of labor in Asia, Africa and Latin America. In addition, with the structure of white supremacy in America reaching into all realms of society, in ways both open and concealed, this crisis has hit Black and Latino people especially hard—with the recent wave of foreclosures amounting to the greatest loss of wealth for people of color in U.S. history. But at the root of it all is the fundamental relations of capital that we have outlined in a basic way here.
The State Enforces
the Interests and Relations
of Capital
So now people in their millions can no longer pay the loan-sharking terms of their mortgage. Many have lost jobs in the capitalist crisis, adding to the ranks of those who face foreclosure. And what has happened in the face of all this? Has the state sent out its police to make sure that these victims of capitalism are at least not turned out into the streets? Do the police make sure that the masses can stay in their homes since, after all, they need housing and housing exists? Is it deemed a crime for a bank or lender to force children to live in the street, or in prison-like shelters?
To ask the question is to answer it. In actual fact, capital wields the state—the courts, the police, the armed forces generally—to enforce its production relations. So if people should be too slow in moving out of their foreclosed houses…if they cannot find a place to stay…then the force of the state is brought to bear. Sheriffs come to move their stuff to the curb…and the sheriffs come armed, ready to kill, if they deem it necessary, anyone who resists eviction. And meanwhile, the government bails out the biggest blocs of capital and rewards the architects of all this with high posts in the Obama administration.
Next: Part 2—How All This Can and Will Be Done Differently in a Revolutionary Society
1. Edmund L. Andrews, “Officials Vow to Act Amid Signs of Long Recession,” New York Times, December 2, 2008. [back]
2. See “What Is Capitalism,” Disc 2, Revolution: Why It’s Necessary, Why It’s Possible, and What It’s All About, Three Q Productions, Chicago, 2004. [back]
3. It is true that some charities like Habitat for Humanity build houses for people, and that some people “live off the grid” and build their own housing; and at different times in this country, government has built housing projects in which masses of people are housed. But these account for a minuscule proportion and are themselves embedded in the overall capitalist relations of society. For instance, the money that goes to charities that build houses for people ultimately comes from the profits extracted from capitalist production (“corporate underwriters”) and fulfills a social function of diverting people’s desire to cure this problem into an activity that does not threaten the source of the problem—which is capitalism itself. The money that went into housing projects enabled the capitalists to shift what looked to be an unprofitable venture—housing the masses—to taxes, which come from wages as well as the profits of all society, and in that way enable them to have the workers they needed to exploit available to them. As the needs of capital shifted, those projects have in many cities been torn down. The masses who had lived in them have been dispersed, and the land given over to more profitable real estate ventures. [back]
We don’t Need to “Rescue” this Capitalist System— |
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