Seventeen Contradictions and the End of Capitalism Read Online Free PDF Page B

‘not in my back yard’ politics, exclusions of unwanted populations and activities, and neighbourhood organisations whose missions are almost exclusively oriented to the maintenance and improvement of neighbourhood housing values (good neighbourhood schools have a big effect, for example). People act to protect the value of their savings. But people can also lose their savings when the state or investors take over housing in a neighbourhood destined for redevelopment and let that housing deteriorate, thus destroying the market value of the housing that remains.
    If I do invest in improvements, then I might want to be careful to do only those that clearly add to the house’s exchange value. There are lots of ‘advice books’ for homeowners on this topic (building a new state-of-the-art kitchen adds value but mirrors on all the ceilings or an aviary in the back yard does not).
    Home ownership has become important for larger and larger segments of the population in many parts of the world. The maintenance and improvement of housing asset values have become important political objectives for larger and larger segments of the population and a major political issue because the exchange value for consumers is as important as the exchange value earned by producers.
    But over the last thirty years or so, housing has become an object of speculation. I buy a house for $300,000 and three years later its value has appreciated to $400,000. I can then capitalise upon the extra value by refinancing for $400,000 and walk away with the extra $100,000, which I can use as I wish. The enhanced exchange value of housing becomes a hot item. The house becomes a convenient cash cow, a personal ATM machine, thus boosting aggregate demand, including, of course, the further demand for housing. Michael Lewis in
The Big Short
explains the sort of thing that happened during the run-up to the crash of 2008. The childminder of one of his lead informants ended up owning, with her sister, six houses in Queens in New York City. ‘After they bought the first one, and its value rose,the lenders came and suggested they refinance and take out $250,000 – which they used to buy another.’ Then the price of that one rose too and they repeated the experiment. ‘By the time they were done they owned five of them and the market was falling and they couldn’t make any of the payments.’ 2
    Speculation in housing market asset values became rife. But speculation of this sort always has a ‘Ponzi’ element attached. I buy a house on borrowed money and the prices go up. More people are then attracted to the idea of buying into housing because of rising property values. They borrow even more money (easy to do when lenders are flush with money) to buy into a good thing. Housing prices go up even more, so even more people and institutions get into the game. The result is a ‘property bubble’ which eventually pops. How and why such bubbles in asset values like housing form, how big or small they are and what happens when they pop depends on the configurations of different conditions and forces. For the moment all we have to accept, on the evidence of the historical record (from the property market crashes of 1928, 1973, 1987 and 2008 in the United States, for example), is that such manias and bubbles are part and parcel of what capitalist history is about. As China has moved closer to adopting the ways of capital, so it has also become increasingly subject to speculative booms and bubbles in its housing markets. We will revisit the question why in what follows.
    In the recent property market crash in the United States, about 4 million people lost their homes through foreclosure. For them, the pursuit of exchange value destroyed access to housing as a use value. An untold number of people are still ‘under water’ in their mortgage finance. This refers to a situation in which someone who purchased a house at the height of the boom now owes a financial