Pugh 1986

International Journal of Social Economics
Housing Theory and Policy

Cedric Pugh
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Cedric Pugh, (1986),"Housing Theory and Policy", International Journal of Social Economics, Vol. 13
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3
Housing Theory and Policy

by Cedric Pugh
I. INTRODUCTION
It was not until the late 1960s that housing attracted much attention from academic
social scientists. Since that time the literature has expanded widely and diversified,
establishing housing with a specialised status in economics, sociology, politics, and
in related subjects. As we would expect, the new literature covers a technical, statistical,
theoretical, ideological, and historical range. Housing studies have not been conceiv-
ed and interpreted in a monolithic way, with generally accepted concepts and prin-
ciples, or with uniformly fixed and precise methodological approaches. Instead, some
studies have been derived selectively from diverse bases in conventional theories in
economics or sociology, or politics. Others have their origins in less conventional social
theory, including neo-Marxist theory which has had a wider intellectual following in
the modern democracies since the mid-1970s. With all this diversity, and in a context
where ideological positions compete, housing studies have consequently left in their
wake some significant controversies and some gaps in evaluative perspective. In short,
the new housing intellectuals have written from personal commitments to particular
cognitive, theoretical, ideological, and national positions and experiences. This pre-
sent piece of writing takes up the two main themes which have emerged in the recent
literature. These themes are first, questions relating to building and developing hous-
ing theory, and, second, the issue of how we are to conceptualise housing and relate
it to policy studies. We shall be arguing that the two themes are closely related: in
order to create a useful housing theory we must have awareness and understanding
of housing practice and the nature of housing.
Housing theory is important because it can be claimed that discussions of policy
will be without direction and coherence unless statements proceed from a clear
theoretical basis. For example, such things as egalitarianism and choice figure pro-
minently in discussion of housing policies. It is often assumed that in the develop-
ment of particular policies and their associated institutions which are used to resource,
to administer, and to finance housing, some ways of doing things will be superior
to others when viewed from perspectives of widening choice or egalitarian possibilities.
In order to know much about either choice or egalitarianism we would need to ex-
plore social and economic theories on the one hand, and, for relevance, the practice
of housing policy on the other.
4 IJSE 13,4/5
In the foregoing we have begun to define our scope and purpose in this piece of
writing. This is taken further in this introductory chapter where we take a preliminary
view of housing theory, and social conceptualisations of housing. Then in subsequent
chapters we deepen our understanding of such subjects as the theory of knowledge
in relation to social science in housing, and the ways policies have been developed
in such varied examples as Norway, Singapore and the People's Republic of China.
Finally we shall be able to draw conclusions relevant to the building up and develop-
ment of housing theory and to the creation of good housing policy.
Housing Theory: A Preliminary View

In this introductory discussion of housing theory we shall address ourselves to two
questions:
(1) How did the need for concerns about housing theory arise, and to what ques-
tions were they addressed?
(2) In what directions and into what sorts of issues will an interest in housing
theory lead us?
Friedmann[l, p. 233] takes a rather pessimistic view of the possibilities of building
and developing housing theory.
The practical questions of how to provide adequate shelter for those who need it has not
attracted a handful of theoretical minds.
A much larger number of experts have contributed to the analysis of housing policy—technical
libraries around the world are choking on low-income housing studies—but a theory of hous-
ing has not emerged from any of these efforts nor is it ever likely to do so. The housing
question is too intimately bound up with the realities of particular situations to lend itself
to more than very low-level generalizations.
These words were written at a time when the literature on housing was growing rapid-
ly. From one perspective Friedmann was clearly right: social science contributions
to the housing literature have not developed a specific theory of housing, indepen-
dent of either conventional or less conventional general theory in subjects such as
economics, sociology, politics and social theory. Theory there is, but housing has tended
to be treated as an extension of the "home" theories in social science subjects. But
this is not the whole story, because approaches by some social scientists seem to put
all claims to theory in the background. For example, some specialists in social ad-
ministration would want to argue that such subjects as housing should be properly
studied by examining them as "social problems" and then drawing upon various social
sciences in a cross-disciplinary way to find "solutions". Such an approach will
sometimes, nevertheless, remain somewhat dependent upon general "home" theories
in the social sciences, because the criteria for evaluating policy are more or less related
to the theories. Moreover, in a context where neo-Marxists and other social scientists
have been pressing harder on matters such as methodological foundations, those who
formerly took a generalised social administration view would become more
"theoretically" conscious. The problem then becomes one in which we see housing
studies largely remaining within the province of particularist "home" theories rather
Housing Theory and Policy 5
than cutting out a systematic body of knowledge in their own right. In short, to the
extent that theory has existed in housing studies, it has subordinated housing to "home"
theory in social science.
Should we be concerned that "home" theories dominate housing, allowing for the
fact that contention and controversy will arise among competing social sciences and
among theorists who write from conservative, moderately reformist, and radical policy
perspectives? We can become concerned if there are characteristics or conceptualisa-
tions of housing that do not fit any "home" theory in any adequate or complete mean-
ing. For example, let us assume that both orthodox and socialist economists concep-
tualise housing as an object of consumption, that is attracting expenditure for cur-
rent enjoyment rather than for productive use. By contrast, if alternative theories or
conceptualisations view housing as generating productive activity within the home—

that is, the value of domestic (unmarketed) activities which occur in, and are related
to, housing—then we have a sense in which "home" theories are inadequate. As we
shall see in subsequent chapters, that is exactly the case which has arisen, with new
"home" and "housing-related" theories bringing into question whether housing is
appropriately studied only from orthodox and socialist economics.
Marcuse[2] argues that without a satisfactory theory of housing, dilemmas arise
in dealing with housing issues and problems. He urges that housing theory be developed
so that housing studies go beyond the descriptive and the uncritical, thereby providing
a better basis for good policy development. This is all right as a general position state-
ment with useful explanation. However, Marcuse goes some steps further. He views
"liberal" and orthodox approaches in the recent literature as falling within the pur-
pose of facilitating "the benevolent state". Some neo-Marxist authors in social policy,
including Gough[3], would proclaim that we need theory so that social policies are
interpreted in an essentially wider societal context. This is also acceptable. Difficulties
can arise, however, if commentators then proceed to the view that only the Marxist
framework can supply a societal theory which is appropriate. Gough tends to follow
this line of interpretation. Marcuse does not argue in this way. He acknowledges that
neo-Marxist authors have been unable to reconcile housing satisfactorily with their
structuralist theories. These theories offer insights and interpretation, but housing
has something within its essential nature and in its relationship to societal processes
which prevents it from fitting precisely into either liberal or neo-Marxist theories of
political economy.
The timing of Marcuse's call for housing theory is significant. Recent literature in
housing has been marked by two key characteristics. First, housing practice has been
shown to have added to the inequalities in property, income and power in some in-
stitutional and national settings in both capitalism and socialism. The housing ine-
qualities are of concern either because in socialism they offend against the prescribed
values of the political system or because in capitalism they add to other significant
inequalities. Second, as was previously mentioned, housing studies have enjoined fer-
ment, contention and ideological controversy among neo-Marxist, liberal-utilitarian,
and institutionalist writers. Theoretical controversy has raged, without any develop-
ment of a genuine housing theory. Housing has been left in confusion and conten-
tion in both its policy and its theory. Marcuse tells us to re-examine the theory aspects
6 IJSE 13,4/5
as a prior task, before policy problems can be resolved. This is useful advice. But it
is also useful to look at comparative practice with a view to selecting housing systems
which either stand apart from the policy incoherence which is evident in many coun-
tries or which exemplify versions of socialist practice. Thus, an interest in housing
theory leads to policy in one direction, and to the theory of knowledge in another
direction. Also, we must pick up our theme that housing conceptualisations may not
be congruent with "home" theory in conventional and less conventional social science.
Conceptualisation in Housing and Housing Value

In any industrialised and urbanised society housing is a complex good. During the
last decade or so, housing is seen increasingly as requiring a simultaneous solution
to problems of shelter, social equity, building efficiency, builders' and occupiers' finan-
cial needs, and urban and regional networks with complicated relationships between
housing and other physical, social and economic services. Thus, to understand the
subject as the policy makers are nowadays required to understand it, the study of hous-
ing has to extend to the most general problems of economics, finance, social policy,
urban policy and urban administration. If we establish the foregoing as our basic con-
ceptualisation of housing, noting its eclectic and conglomerate nature, the cir-
cumstances become further complicated when we consider housing in the transfor-
mation process from "less developed" to "newly industrialised" country status. For
example, as we shall see in subsequent chapters, in countries such as Singapore and
the People's Republic of China, housing is at once a potential lead sector in the change
process, and a necessity implied by rapid urbanisation.
We can take our conceptualisation of housing further by setting out some statements
on housing value. In a social science context, statements about housing value will lie
close to principles of political economy. Housing value can be referred to both
theoretical and empirical dimensions of housing studies. At the theoretical level in
economics, housing can be related to the several theories of value in orthodox and
other streams of thought. Housing has utility value, it has exchange value, it has (Marx-
ist) value from the use of labour power and from the surplus value in its production,
and by its connection to markets, to finance and to various government policies it
has value from institutions which institutional economists see as imparting socially
derived value. Thus housing can enjoin value theory in orthodox (neo-classical), in
socialist, and in institutional economics.
At the empirical level, econometricians and sociologists have revealed precisely what
is "valued" in modern urban housing. Wilkinson[4] and Richardson[5] show that value
comes from the bricks and mortar, from the dwelling form (house-on-the-ground or
flat), from the internal spatial design, and mostly from accessibility to jobs, shops,
schools, health services, recreational facilities and so on. This reveals that housing
has mixed private and "public" or "externality" aspects which contribute to its value.
The externalities of the wider environment form the major components of aggregate
value. Sociologists have elaborated the attributes of value in variety and in relation
to stage in the life cycle, social class, and to dwelling form. The key findings run along
the following lines. Families with children aged two to 12 prefer house-with-a-garden
styles to facilitate the play activities and socialisation of children. Low-income
families perceive housing as a haven from a largely alienating external world. Middle-
income families see their housing as a personalised extension of their lifestyles. Families,
especially, find good use for back-garden space, using it for a whole variety of ac-
tivities connected to work, hobbies, storage, and so on. Beyond this, low-income
families and others "grieve for a lost home" when the bulldozer blades bring redevelop-
ment. Finally, in use-of-time studies among the children, the women and the men in
families, we see the home used for study, for work-related activities, for socialising,
and for other things which connect to economic production, leisure and the social
development of the community. All of this is discussed and detailed as to source of
research in my earlier writing[6].
Housing is highly politicised. It is politicised in the sense that in most countries
political parties have contending policies on housing. At a more fundamental level

it is politicised because competing schools of political economy adopt different prin-
ciples and concepts in their approach to housing. Although we shall be dealing with
these matters at greater depth in subsequent discussions, it is appropriate to obtain
a preliminary view in establishing a basic conceptualisation of housing.
Orthodox (neo-classical) economists start from the position that economics is about
choice in a context of scarcity. They therefore look at housing services as being trad-
ed in markets where individuals seek satisfactions of their wants by paying rents or
prices for purchase. However, housing intersects both markets and public sector
economics. Accordingly, neo-classical economists draw upon their theoretical view
of the public sector. As we have seen earlier, housing has "externality" value. Thus
the neo-classical economist can locate housing in his or her theoretical framework
by relating it to economic theories of externality and public goods. Although orthodox
economic theory has been somewhat apart from considerations of using something
like housing as a means of deliberately redistributing income, redistribution can scarcely
be avoided because, in reality, housing is politicised in this way. Facing this reality,
neo-classical economists will be drawn into housing as public policy. Their interests
will lead them to study housing as part of anti-poverty policies and as arbitrarily
redistributing income via the way occupancy costs are influenced by tenure, by Finan-
cial instruments and by other conditions which divide and fragment housing systems.
Essentially neo-classical economists tend to be more comfortable in using their
theoretical framework to explore principles of efficiency, incentive and maximisation
of utility or minimisation of costs. But in housing they are drawn into social and public
policy. Here they face considerable dilemmas. Their theoretical roots are in
"methodological individualism", but any useful theory of public policy must recon-
cile itself to notions of establishing binding social choices. Neo-classical economists
can either treat housing as an exceptional case, or seek some principles in their diverse
collection of theories which do accept social choice and consequently break with
"methodological individualism". If they treat housing as an exceptional case, it simp-
ly is added to education, health, social security and many other "exceptional" sub-
jects. On the other hand, if social choice is accepted they are constrained to argue
that housing is a "merit good". In merit goods individual choices can be overruled
by professional or political expertise because inherently the individual is regarded as
having distorted or irrational preferences, or, in examples like housing, it might
8 IJSE 13,4/5
be argued that there are distributional issues of a very special sort. In other words,
housing should be consumed to minimum standards; women and children in low-
income families should not be vulnerable to the inequalities in the market where their
breadwinners work; and the "externality" qualities of housing do influence life's
chances. Having reached those conclusions either explicitly or implicitly from the basis
of "merit goods" arguments, neo-classical economists feel uncomfortable for cross-
ing over the boundaries of economics into politics. As we shall presently see, they
have largely been inducted into the mistaken belief that economics can and should
be separated from politics.
Institutional economists are easily reconciled to politics. They believe that valua-
tion is socio-political and that public policies are necessarily expressed through in-
stitutional arrangements[7, 8]. Institutions express the way democratic choices in society
as a whole can revise market freedom, re-allocating resources and using the state to
restructure society. In effect, the institutionalist recognises that various devices can
be used to bring cohesion, including markets and the state's social, political, and
economic roles. In the absence of fair and democratic institutional arrangements, our
choices would be unsatisfactorily limited either to extreme market inequalities or to
authoritarianism. Institutionalists understand that public policy economics is necessari-
ly within a context of political power, conflicts of interest, and the broader social and
historical influences which affect the ways institutions are developed. Housing would
reside in this context of political economy. Moreover, institutionalists see the sphere
of political economy as widening and becoming increasingly relevant. Political
economy, with its broad interdisciplinary base, would address such issues as the en-
vironment, international stagflation, the oil crisis, and how to manage the welfare
state in societies experiencing severe economic difficulties in a post-Keynesian era.
Unlike the neo-Marxists (see below), the institutionalists do not look for a "final"
solution where conflicts disappear after the demise of capitalism. Rather, they perceive
a continuously evolving society with well designed institutional arrangements offer-
ing only temporary and tentative solutions. As society changes, so it becomes necessary
to revise institutional arrangements. Institutional arrangements must, therefore, be
objects of continual evaluation, and a good institutional economist will use skills from
science and from an artistic creative background to propose institutional reform. In
housing, the institutionalist feels comfortable in working with the "political" and in
drawing upon useful neo-classical techniques and empirical findings. Sometimes the
neo-classical economist will criticise the institutional approach for its rather free-
ranging characteristics and for its remoteness from purely deductive and prognostic
techniques and thinking. The neo-Marxists would tend to dismiss institutionalists as
dealing with symptoms and offering mere prescriptions of justice, without attention
to class conflicts and recurring internal contradictions in capitalism.
Neo-Marxists view housing as within the province of their "political economy of
the welfare state". They see housing as highly politicised, but cannot agree with middle-
ground theorists of the welfare state[9, 10, 11, 12] that government can successfully
reform economic institutions to achieve more equality and compatibilities among state
and market economic roles. Taking Gough[3] as a modern author who writes in a
neo-Marxist framework, we understand neo-Marxist political economy as follows.
H o u s i n g T h e o r y a n d Policy 9
First, the neo-Marxist sees the state as serving the functional needs of capitalist
development. In more specific terms, the state ensures some further continuity of
capitalism, but in so doing it is unable to overcome satisfactorily the internal con-
tradictions between social policy and the private interests of capitalists. In a welfare
state context, examples of internal contradictions would include problems of resourc-
ing and financing social policy, and the periodic political opposition to the welfare
state from conservative politicians and from business interests. However, the state "con-
cedes" housing and other social policies to society, perhaps because this is at once
a way of dealing with working-class political struggles and containing some opposi-
tion to capitalist inequality. In the language of neo-Marxists, the state has "relative
autonomy". That is to say, it can express the longer-term interests of capitalists and
organise those interests. Otherwise, without conceding some social policy, if the shorter-
term whims of capitalists prevailed, then quite probably socialist politics would be
more intensive and, perhaps, politically successful. In fact, neo-Marxists see social
policy as providing one further opportunity for social control, being used to disorganise
working-class interests.
As a second aspect of neo-Marxist political economy, Gough reveals that social
policy has instrumental purposes in "reproducing labour power". This means that social
policies add a "social wage" to ordinary wages, and both wage forms ensure workers'
fitness for work. The concept of the "reproduction of labour power" is useful for
general economic interpretation, quite apart from its place in neo-Marxist political
economy. It places significance upon the reality in modern economies that state roles
are interactive and intertwine with private enterprise. This is a more useful view than,
for example, the neo-classical split between separate justifications for private and public
sector activity. Housing has various interactive relationships with the economy, in-
cluding policies on inflation, unemployment, the rate of interest and the general pro-
fitability of the economy. Neo-Marxist thought has the advantage of bringing state
economic roles to the forefront of theory and of placing such things as housing in
a broad view of how the economy functions.
Summary
We have found a good explanation for concern among some housing intellectuals that
more attention needs to be placed upon developing housing theory. Theory would
provide interpretation and a good basis for making reasoned statements about policy.
Housing literature has grown since the mid-1960s, but many authors write from a posi-
tion of commitment to particular theoretical frameworks. This raises questions as to
whether housing in its essential nature can precisely fit any single theoretical framework,
be it neo-classical economic liberalism, institutionalism, or neo-Marxism. Our reason-
ing to this point is that housing may not fit neatly into any prevailing framework.
This is a point to be taken further once we have examined the theory of knowledge
in social science, and how we might realistically relate housing to that literature. At
this juncture we have reviewed how housing can be conceptualised from a social science
and policy perspective. One basic aspect of housing principles and concepts is to
establish the social and economic things which provide housing with social value. We
find housing is a complex bundle of economic and social services. Eclecticism is part
10 IJSE 13,4/5
of its very essence. However, neo-classical, institutional, and neo-Marxist economists

have tended to interpret housing from the way it can be fitted to their basic theoretical
frameworks. One general theme cutting across the essential eclecticism of housing
and its contending theoretical interpretation is that above all it is clearly in the sphere
of political economy. This adds some insights and expands housing knowledge, but
we are still left with the possibility that the "home" theories are dominating the inter-
pretation of housing rather than allowing the essential nature of housing to express
what is theoretically relevant to it for policy and for building up knowledge. We now
turn to take up the question of social science in the theory of knowledge.
II. THE THEORY OF KNOWLEDGE AND POLITICAL ECONOMY

Introduction
Any serious study of housing theory would involve some discussion of the theory of
knowledge which lies within philosophy, but with clear relevance to the natural sciences
and the social sciences in particular. Philosophers are ready to discuss such things
as positivism, ontology, questions of meaning, verification, truth and values. In the
1920s positivism dominated the theory of knowledge with its adherents arguing that
empirical verification is crucial for meaning. This led to a reaction against normative
values and metaphysics in some branches of knowledge. Orthodox (neo-classical)
economics was influenced by the notion that science should be "positive", not "nor-
mative" (see below). As we shall presently see, there is now far more circumspection
about positivism. Other philosophers have been less interested in positivist empiricism,
but put more significance upon the ontology of a theory—specifying the objects of
a theory, defining its universe, and stating what is real and unreal in a theory. In social
science the neo-Marxists have been interested in ontological matters, claiming that
their theory has superiority to orthodox economics because it deals with "real" con-
ditions in society. However, again in recent times, among some philosophers the more
simplistic ideas of ontology have been relegated, with more attention given to the in-
terpretation of theories in relation to each other rather than just to their objects. Fur-
thermore, modern authors look beyond empiricism and factual experience in their
treatment of verification, truth and the relationship between facts and values.
We have specific objectives in exploring the theory of knowledge and relating this
to the idea of building up housing theory. The discussions in chapter one indicated
what our objectives will be. Housing value comes from principles which variously
lie in sociology, economics and social theory. Hence, housing points us to an inter-
disciplinary context, with relationships in several social sciences. Housing concepts
indicate the relevance of politicisation and political economy. This adds further reason
for seeking grounds for interdisciplinary studies in the theory of knowledge. But we
cannot simply make a call for interdisciplinary studies. Our interdisciplinary perspec-
tive has to be based upon something which is theoretically substantive, for as
Caldwell[13, p.91] notes:
It is simple to proclaim that an interdisciplinary approach to the philosophy of science is
best; it is much harder to produce an interdisciplinary study that is not dilettantish.
From our earlier discussion of housing concepts we have seen that political economy
tends to be pursued in separated schools of thought, including neo-classical, institu-
tional and neo-Marxist economics. Thus, we seek information and evaluation which
assist us in choosing theory for housing where we have ideological and methodological
alternatives. A review of the modern theory of knowledge can establish some guidelines
for choice. Before we commence that review it would be useful to give meaning to
"political economy" and to find preliminary reasons why philosophers of science find
relevance in the question of choosing among competing theories.
Katouzian[14] has been concerned about two recent kinds of interpretation which
are attached to the term "political economy". First some orthodox neo-classical
economists want to argue that their versions of economics are "scientific" whereas
"political economy" is "non-scientific". Second, some schools of thought use the term
"political economy" as a general description of their approach as though it has
relevance only to their own school of thought. Some neo-Marxists adopt this posi-
tion. Katouzian shows that "political economy" has been used variously by orthodox
and less conventional schools of thought since the seventeenth century. No one school
has reason to claim exclusive use. Katouzian goes on to argue that the notion of dividing
out a "scientific" economics from a non-scientific "political economy" is misconceived.
In substance, political economy embraces methodological characteristics. The "political
economist" is one who is inclined to solve real world problems; who recognises non-
economic (interdisciplinary) matters as relevant; who retains a sense of history in ex-
planations of economics; and who uses appropriate techniques to solve real world
problems. In housing studies, we thus find good reasons for identifying some neo-
classical, some neo-Marxist, and some institutionalist research as "political economy".
As we shall presently see, philosophers of science offer many good reasons why
we should sometimes be prepared to choose among alternative theories. At this
preliminary stage we briefly state a few basic reasons. Scientific study reveals that
theories are under-determined. That is to say, the facts and the evidential grounds
which are available cannot show unambiguously and precisely which among competing
theories is superior. Empirical findings can confirm competing theories, and on the
face of it we have no obvious criterion to indicate the better theory. Not only is theory
under-determined; it is sometimes over-determined. Over-determination refers to
possibilities in explanation, rather than to evidential grounds of support. A theory
is over-determined when it purports to explain a field comprehensively, but the sphere
which is addressed requires more explanation than occurs within that single theory.
In other words, some spheres of study require explanation from more than one theory.
We can find under- and over-determination in housing research findings. For exam-
ple, even within just neo-classical economics, empirical evidence can be produced which
shows that home-ownership tends to equalise incomes or, alternatively, that it increases
inequality. The results will depend upon how extensively the researcher defines the
housing system and the distributional range of income to be assessed.1 One impor-
tant aspect of under- and over-determination in the theory of knowledge is that it
creates problems for logical positivists who dominated the philosophy of science from
the 1920s to the 1960s. It is now time to examine the theory of knowledge, beginning
with Quine, who made penetrating criticisms of logical positivism.
12 IJSE 13,4/5
Quine's Holistic Pragmatism and Cross-Theoretical Relativism

Quine[15, 16] places emphasis upon choice of theory in science, and upon accom-
modation and re-arrangement within existing theory when this theory is confronted
with new ideas, new findings and new ways of interpreting established wisdom. The
flavour of Quine's thinking is portrayed in the following selection of quotations:
What makes sense is to say not what the objects of a theory are, absolutely speaking, but
how one theory of objects is interpretable or reinterpretable into another[15, p. 50].
We cannot know what something is without knowing how it is marked off from other things.
Identity is thus of a piece with ontology[15, p. 55].
But what I am urging is that even in taking the statement as unit we have drawn our grid
too finely. The unit of empirical significance is the whole of science[16, p. 42].
...total science is like a field of force whose boundary conditions are experience[16, p. 42].
A conflict with experience at the periphery occasions re-adjustments in the interior of the
field[16, p. 42].
Truth values have to be distributed over some of our statements. Re-evaluation of some
statements entails re-evaluation of others, because of their logical interconnections—the logical
laws being in turn simply certain further elements of the field. Having re-evaluated one state-
ment we must re-evaluate some others, which may be statements logically connected with
the first or may be the statement of logical connections themselves. But the whole field is
so under-determined by its boundary conditions, experience, that there is much latitude of
choice as to what statements to re-evaluate in the light of any single contrary experience.
No particular experiences are linked with any particular statements in the interior of the
field, except indirectly through considerations of equilibrium affecting the field as a whole[16,
pp. 42-3].
Furthermore it becomes folly to seek a boundary between synthetic statements, which hold
contingently on experience, and analytic statements, which hold come what may. Any state-
ment can be held true come what may, if we make drastic enough adjustments elsewhere
in the system[16. p. 43].
...this difference (between analytic and synthetic statements) is only one of degree, and...it
turns upon our vaguely pragmatic inclination to adjust one strand of the fabric of science
rather than another in accommodation of some particular recalcitrant experience. Conser-
vatism figures in such choices, and so does the question for simplicity[16, p. 46].
I espouse a more thorough pragmatism. Each man is given a scientific heritage plus a conti-
nuing barrage of sensory stimulation; and the considerations which guide him in warping
his scientific heritage to fit his continuing sensory promptings are, where rational,
pragmatic[16, p. 46].
Boundaries between fields are not barriers. Given any two fields, it is conceivable that a
concept might be compounded of concepts from both fields[17, p. 130].
The essential features of Quine's holistic pragmatism are thus seen as a moderated
scepticism on positivism and as favouring relativism. On positivism, Quine
acknowledges that sciences or social sciences involve relating some part of theory to
factual experience and empiricism. However, this activity in verification is only a
part of interpretation and explanation, with large internal core areas of theory being
placed at some distance from experience and empirical testing. Moreover, the inter-
nal core areas may resist adjustment or they may be rearranged, with complex rela-
tions and choice in any accommodation between factual truth and logical-deductive
reasoning. This leads Quine to take a holistic view of empirical significance, with its
being more meaningful to take its reference in large areas of a science rather than
by just a simple attachment to a single statement set up as the hypothesis. In view
of the under-determination of theories, in some situations we might expect controversy
in ontological and ideological terms, and in many instances we can choose our ex-
planation and interpretation.
This opens up good grounds for a relativist position, whereby choice can range
through cross paradigm territory and space. Along with Thomas[18] we can
acknowledge that social sciences are largely defined by their subject matter, with the
result that several theoretical frameworks can be put to the same subject matter. Cross-
theoretical relativism has the potential to evolve new understandings of truth, with
a primary purpose to achieve some broad correspondence with the real world. The
crucial impacts of Quine's ideas point in the direction of moderated circumspection
on positivist positions, and to relativism, allowing choice from a number of theories,
each of which is likely to have a characteristic moral and political stance.
It is possible to approach exposition and commentary in cross-theoretical relativism
from various angles, with the choice being a matter of convenience. Since the basis
of cross-theoretical relativism can be found in Quine's work[15, 16] we shall find it
useful to take an approach which fits a well-reasoned interpretation of Quine in the
theory of knowledge, namely the view that Quine's work can be seen as a reaction
against positivism[19]. In a rather strict form, adherents of positivism would argue
that statements which cannot be verified empirically have no meaning or context. Non-
empirical statements are thus seen as purely metaphysical or as logically true or false
merely from the meanings of the terms they contain without reference to empirical
tests. A less strict position, and one which would have a wide acceptance, is a positivist
inclination to rely heavily upon factual experience to control what we scientifically
believe or say. In this way we avoid self-deception. Perhaps we would not wish to
challenge this less strict interpretation of positivism. However, even so, we could still
find plenty of issues to discuss in Quine's ideas and the theory of knowledge. For
example, it is a common assumption in economics that the primary role of theory
is to provide a body of substantive and empirically testable hypotheses, and then to
reject those which do not meet the positivist test[20]. However, if we review the ideas
of Quine[15, 16], Thomas[18], and Hahn and Hollis[20] we would find that alternative
views can be taken. Also, if economists really reflected upon their theories and the
uses to which they are put, they would recognise that uses go beyond the testing of
empirical verification. Theories are used to counter competing theories, to persuade,
to undermine some empirical work which "purists" regard as inadequate or threaten-
ing, and to open up new fields of study or new interpretations.
Hahn and Hollis[20, p. 16] argue that in conventional liberal economics, theory
is to be understood, whatever its empirical relevance, as political economy and as an
agency to improve our understanding of society. As an agency between a complex
social reality and the standpoint of the serious student of economic affairs, theory
14 IJSE 13,4/5
fills a gap in giving coherent understanding to social life. Furthermore, in subjects

like economics, it is seldom the case that rigid logical-deduction can be applied
simplistically and with absolute certainty to the real world. Rather, it is frequently
the case that subtle and imperfectly understood modifications occur in the interac-
tion between theory and reality. Chomsky[21] is more down to earth in his view. He
says that we should expect authors in science or social science to make statements
beyond their evidence in empirical work, because there will always be issues of in-
terest to be raised and theory is not monolithic, but varied, with competing
assumptions.
Quine[17] holds firm views on the actual relationship between large and important
areas of theoretical belief and the (always) limited amount of empirical observation
which is undertaken. He notes that often when observations are in conflict with theory,
theory will still persist. However, theory can be assessed in a wider sense. Quine goes
on to argue that the truths of science are not just deduced from their axioms, but
they are judged from the plausibility of their consequences. Assessment along these
lines is all the more relevant when theories are under-determined. Quine also recognises
that some truth lies beyond straightforward deduction and empirical testing. In a con-
text of political economy, and in assessing under-determined theories, we need recourse
to evaluation. Evaluation is necessary for deriving statements of what is good, what
is preferred, what is right and what is obligatory. This raises questions, about criteria
and the selection of criteria to be used where judgements on this are often interlinked
with judgements on the consequences of taking one course of action rather than
another.
Thomas[18] probes the notion that social science can be largely value-free. He argues
that in order for it to be presented as scientifically acceptable, the distinction and
the dichotomy between fact and value have been drawn too rigidly. Thomas presents
a number of points to show that the dichotomy is largely misleading, or even false.
(1) The use of social science raises moral questions.
(2) Values attach to the means of achieving objectives, as well as to the objec-
tives or ends.
(3) In many leading issues in social sciences, theoretical and empirical supports
are sometimes inadequate. Accordingly value choices frequently characterise
debates in leading issues.
(4) Social science includes the study of values.
(5) Social scientists exercise values in their selection of the subject or topics which
they study.
(6) Values and evaluations have some role in determining the identification of
facts. The facts sought will be relevant differently, according to theoretical
frameworks, and point of view.
(7) The question of what constitutes good evidence and sound methods raises
notions of value.
(8) Values will often arise in explanations and in the presentation of the conclu-
sions. As mentioned previously, Chomsky[21] regards this as virtually in-
evitable and not surprising.
In deliberating these points, Thomas comes to the same conclusions as

Myrdal[22]—social science is basically structured by evaluative considerations. Myr-
dal makes this clear with his considerable attention to historical and sociological
analyses of knowledge in the social sciences, especially in economics. Reviewing the
historical and sociological influences in orthodox liberal economic theory, Myrdal
points out the sources of cognitive and other biases. In economics, what has hap-
pened is that value judgements have been concealed, with theory containing protec-
tive devices to prevent value judgements being raised to full awareness. Accordingly,
we can add the point that an awareness of value judgements and the essential political
economy of theoretical economics is intrinsically one important aspect of knowing
one's system of knowledge in economics.
In the light of our earlier selected quotations from Quine and the extended discus-
sion, involving ideas from Myrdal, Hahn and Hollis, and Thomas, we can present
some summarised statements of Quine's position.
First, Quine maintains that many theories are under-determined. Two theories can
be equivalent if both are supported by the evidence. In such instances we have the
following choices. We can choose either theory where there are no grounds for deter-
mining which is best. Or, we can discourse in both theories, perhaps, making a cross-
theoretical selection of principles according to criteria we would wish to support. Final-
ly, we can reserve our ultimate position, pending the creation of new ideas and new
theories which might have superiority compared with the present state of knowledge.
Second, we should take a position of "ontological relativity", rather than confining
our attention narrowly to the objects of any particular theory—the objects being the
specified universe and what is real within it. Ontological relativity is to be understood
as interpreting or reinterpreting one theory into another. In Quine's terms, a theory
is not fully interpreted in its closed deductive set. Rather, questions and issues need
to be referred on to home theories in those instances where we are discussing subor-
dinate theories.
Third, we should be moderate and circumspect on positivist reasoning. We shall
always be able to find plenty to be circumspect about. The distinctions between em-
pirical statements and logical-analytical statements are often differences of degree
rather than being absolutist. Then, as we have discussed previously, it is only a por-
tion of theory which is empirically tested. That portion is usually at the periphery,
at some distance from the more abstract internal core. With much under-determination
in theory, it is always possible to re-arrange and to adjust statements in the centrally
positioned theories. Quine views this as pragmatism, and he says that verification in
the whole theory, or in large elements of it, is more realistic and important than in
terms of a single statement or rather isolated hypotheses. In his review of Quine's
holism, Hofstadter[23] gives a very clear interpretation in eight points.
(1) Theory contains an infinity of said or appropriately sayable phrases or
sentences.
(2) Sentences and phrases which are sayable are interlocked with related sentences
or phrases.
(3) Some parts of theory are keyed to factual experience, here and there.
16 IJSE 13,4/5
(4) The keying of some parts of theory to factual experience is not a one-to-one
correspondence between statement and empiricism.
(5) The boundary conditions (where empiricism occurs) do not determine the
system, because the interior theory is not closely linked to particular ex-
perience. Only the periphery of the field is squared directly to factual ex-
perience, with the rest of the field much less directly involved.
(6) Empirical findings can be either included or excluded in parts of the interior
of the field, and/or the interior can be re-arranged or adjusted.
(7) The significance of verification is entire and pervasive, not confined to
atomistic parts. One of the central problems in empirical testing is not to make
what is said theoretically and absolutely empirically realistic, but to fit and
re-arrange the rather disordered empirical fragments into the total science in
a satisfactory and pragmatic way.
Thomas[18] is more elaborate on the cross-paradigm relativist position than Quine.
He distinguishes empiricist from "post-empiricist" science, and extends the distinc-
tion to social science. The post-empiricist position in the theory of knowledge is derived
from Quine's argument that meaning in theory and, to some extent, the truth status
of subordinate theories, are determined by their relationships to home theories. A
cross-theoretical debate, going beyond intra-paradigm commitment, can be based upon
two relativisms. First, meaning in theory is to be taken from the internal relations
of a theory. To a large extent it then follows that competing theories are not so much
incompatible as incommensurable. Second, truth statements can be adjusted as theory
develops and reacts to empiricism and alternative theoretical challenge. Truth then
becomes a matter of warranted assertability within a theory. In post-empiricism all
terms and statements, including those from factual experience, are theory-laden. The
relativist can take a position where he or she can adopt explanations outside any single
theoretical framework in the sense that the role for explanation is not confined to
interpreting a commitment to a paradigm. A relativist can hold with several theories.
We find no reason why social science debates should be limited to intra-theoretical
explanations. General principles can be developed selectively from several theoretical
frameworks. We shall get a deeper appreciation of what is meant by a "theoretical
framework" in our discussions of work by Kuhn in the theory of knowledge.
Kuhn and the "Growth of Knowledge" Perspective

Although Quine had made important criticisms of the logical positivist position, it
was Kuhn's work [24] which achieved popularity and dispersion through many scien-
tific studies. Kuhn argued that science was as much a social as a logical process. He
distinguished normal from revolutionary science. Normal science proceeds in much
the same way envisaged by logical positivists; it includes empiricism, correction,
modification and gradual accumulation of knowledge within well understood rules,
tools and skills. It is mainly routine work within the bounds of an accepted general
theoretical framework, which Kuhn terms a paradigm. However, in the course of time
the normal paradigm will experience crisis. Crisis will be evident from significant
anomalies in the relationships among theory, empiricism and problem situations from
science itself and/or from society. New ideas and theories will emerge, but these will
be opposed by those who believe in the conventional wisdom.
Kuhn has been criticised for failing to define his "paradigm" idea with consistency
and clarity. Also, it has been pointed out that some continuities characterise the pro-
gress of knowledge: revolutions in ideas, or in anything else, do not rub out all things
from the past. However, notwithstanding the presence of some continuities, "growth
of knowledge" theorists such as Kuhn, reveal that science proceeds with discontinuities
and with important changes in direction: it is not just a straight line progress through
time. The implications are considerable.
(1) Much "revolutionary" and good science does not fully conform to deductive
and inductive models. Explanation comes from wider sources.
(2) As also emphasised by Quine, any correspondence with empirical findings
does not settle the question of truth. In themselves, empirical findings do
not entirely define the truth. Each paradigm defines its own sphere of em-
pirical investigation. Cross-theoretical evaluations of the structure and form
of theories are additionally necessary to obtain meaning and truth.
(3) Kuhn's work adds damaging criticism to the inductive approach: it is doubt-
ful whether we can infer a universal generalisation from the empirical truth
of a single statement, derived, as it were, from the facts.
(4) Revolutionary science is not developed merely from caution and from rigour
within set rules, procedures, and skills. We have room in science for the bold
conjecture, heavily persuasive criticisms and courage in facing opposition from
the conservatives of "normal" science.
(5) Historical reasoning is necessary to supplement logical analysis if we are to
obtain a wide understanding of science. History is needed to explain the
"crises", the "revolutions" and to make useful contrasts and comparisons.
(6) The criteria for the evaluation of scientific knowledge go beyond such con-
siderations as accuracy, simplicity, generality and scope. We also need to assess
changing standards of investigation, competing patterns of thought and ways
in which seemingly immutable truths are superseded.
"Growth of knowledge" themes are also contained in the writings of Popper[25, 26]
and Lakatos[27, 28]. Popper's ideas have been developed and modified over a period
of some 50 years or so. We are mainly interested in his more recent ideas, in particular
reviewing what he has to say about the epistemic worth of a theory and about ex-
planation in science.
Popper gives significance to the quality and epistemic value of theory; that is, it
is important to know what is the value of one's theory. Epistemic value is to be
distinguished from social-moral-political values. Theories will have diverse content,
different functions, and their uses will extend to explanation, correction and com-
petition with other theories. Accordingly, epistemic understanding involves evalua-
tions of the dynamics of the development of theory, the logical and historical reasons
why theories are accepted or rejected, and the extent to which observation and em-
piricism have been applied to theories. For Popper, science develops through evalua-
tion and openness to criticism; it is not a question of following uniquely acceptable
methodology. Methodological monism can lead to the retardation of science; plurali-
ty of method is to be preferred, with selection made according to the purposes at hand
in any given situation.
18 IJSE 13,4/5
Popper places significance upon explanation because explanatory power opens one's
eyes to hidden truth. Explanation is more than prediction. Prediction follows via in-
ference from assumed or specified conditions in a deductive theory or in an experi-
ment. Explanation would involve wider statements of context on why we should use
one theory rather than another, and appraisals of why any particular predictions have
relevance and significance. Science involves quests to increase understanding, to create
new patterns of thought, to direct our attention to new phenomena, and to integrate
and relate various parts of developed knowledge. Often the course of explanation and
the methods it follows will depend upon the purposes at hand. For example, in social
science it sometimes is the case that we need to discuss leading issues and to achieve
broad understanding, rather than using deductive models. A social scientist can take
a participant observer role to develop this broad understanding. Participant observa-
tion involves proximity to social institutions, to uses of authority, to administrative

methods and styles, and to reactions to problem situations. The researcher can observe
themes, problems and ways of dealing with recurrent issues. He or she can develop
a broad interpretation and explanation of these, linking important features and con-
siderations. The aim here is not to think in terms of universal categories for creating
deductive theory, but to bring reasonable explanation to diverse things. This is often
a useful way to pursue research in housing, as we shall see in our subsequent writing
on housing policies.
Lakatos synthesises ideas from Kuhn, Quine and Popper. He views science as com-
prising various theories which are related to their general theoretical framework or
paradigm. The whole system is dynamically changing, comprising states of flux in
"normal" science, in competing new ideas, and with changing patterns of modifica-
tion, problems at issue, evidence and hypotheses to be tested. Lakatos focuses upon
science as change, with interest in the consequent anomalies, competing theories and
the mutual accommodation of conventional and less conventional developments. One
problem from this is that the internal politics of the professions and the academic
oligarchies sometimes crush out novelty and the competition of new ideas.
Lakatos suggests that processes of change and flux in science be evaluated along
the following lines. First, significant evaluation can be targeted to those spheres where
significant change is occurring. Second, the assessor should look for "progressive"
and "degenerative" types of developments. A "progressive" developing is characteris-
ed by expanding empirical content, movement towards significant problem situations
(i.e., its role is to achieve a creative "problem shift" focus), and it has corroboration
from parallel theoretical and empirical work. Third, our evaluator will recognise that
some researchers will be concerned with holding the conventional theoretical edifice
together; these are termed by Lakatos as working in "negative heuristic" pursuits.
Others will be working in the "positive heuristic" mode, directing their efforts at how
to change, to modify and to create new ways of thinking.
For Lakatos, the historical and evolutionary aspects are important. We should not
expect instantaneous solutions. Change is a time process and some useful directions
and redirections are not logically predictable. Repercussions can occur extensively in
a theoretical framework as new ideas can be developed and adjusted in the light of
competition. However, ideas should not be subjected to quick rejection, but their
epistemic worth can be tested in reconstruction of theories and in the interface with
intellectual and social "problem shifts". Again we find Lakatos has much in common
with Quine: theories can be referred to comparison with other theories and through
time it can be discerned where they are either commensurable or compatible.
Summary
Well reasoned "growth of knowledge" ideas dominate the modern philosophy of
science. Where the logical positivism which previously dominated the philosophy of
science was concerned mainly with linking empiricism with deductive reasoning to
establish scientifically "acceptable" theories, growth of knowledge writers and Quine
take us into wider-ranging territory. In this wider territory we look for competing
theories, for modification of theories, for novel ideas not yet absorbed in a mainstream,
for historical and social relevance, and for good sense in choosing among alternatives.
We do not have to commit ourselves in any scientific or ideological sense to one
theoretical framework, but we may do so if this is a reasoned choice. A reasoned choice
means that we have considered the relative merits of competing ideas, not simply con-
tinuing a school of thought because that was how we originally learned a subject and
invested our time and effort in just one paradigm.
This gives us choice in the way we might consider the question of housing theory.
In considering this question it is useful to adopt the following strategy. First, we should
become aware of the competing paradigms in the modern research programmes, discer-
ning their strengths and weaknesses. Second, we would want to look for some creative
new theories and ascertain whether they are "progressive" and could be commensurate
or compatible with existing theories. Third, we begin from the basis that housing is
a subject which in social science lies within "political economy". But political economy
can be identified with various paradigms in economics, not just with the more radical
expressions. Fourth, we may find good reasons for looking at housing practice in com-
parative expressions of housing policy. We can abstract principles and operating
"theories" from good practice. Finally we need to maintain a distinction between two
kinds of values. Epistemic value is the worth of a theory as a theory, and social-moral-
political values are relevant to the normative aspects in a "political economy" of hous-
ing. Thus, we have defined the course of our discussion, having set out the grounds
from our review of the theory of knowledge.
III. SOCIAL SCIENCE THEORY AND HOUSING STUDIES

In this chapter we review social science studies in housing to show comparative
"paradigm" characteristics and give indicative examples of the content of modern hous-
ing research. As was mentioned earlier, housing studies have expanded rapidly during
the last two decades, most of them being related to "home" theories in general social
science. Most housing studies have been written from the viewpoint of intra-paradigm
interpretation, explanation and reviewing. We have few, if any, examples of Quine's
call for cross-paradigm debating and developments of ideas. Instead we find ideological
and theoretical separatism and controversy, with conventional, radical and other
perspectives vying for persuasive and professional-political dominance. Much of the
controversy is related to questions about inequality in housing and whether neo-Marxist
principles would provide a more egalitarian housing system and a better interpre-
20 IJSE 13,4/5
tation of housing in an advanced capitalist society. Apart from these features, some
of the new approaches in the new urban sociology and the new urban economics of
the 1965-75 period were used to correct misconceptions from previous paradigms which
once formed the conventional wisdom. Let us proceed by comparing the old urban
social paradigm, originating in the Chicago School of Human Ecologists in the 1920s,
with the new post-1965 urban sociology.
Old and New Paradigms in Urban Sociology

The Chicago School was active in the 1920s, seeking general explanations from its
codification of settlement patterns. The work was mainly description of settlement,
but it went a (theoretical) step further by explaining urban social circumstances from
an ecological and functional determinism. This meant that social characteristics were
seen to follow from natural factors in the urban environment. For example, the social
characteristics of slums were understood as stemming from bad housing conditions,
rather than from poverty and inequality which were rooted in economic and social
structure—improve housing conditions in their physical attributes, and slum problems
could be eradicated. This is a matter of inverted causation: the spatial structures were
seen to be the cause of social performance, rather than these structures being the ex-
pression of social and economic structure.
Essentially, the new paradigms reverse the position of cause and effect. Whereas
the Chicago School placed the physical environment and social proximities as the cause
of urban pathologies, the new paradigm viewed the physical environment as an enor-
mous range of economic investments which reflected basic structural conditions in
society. In short, spatial factors are socially determined, not socially determining. The
change was marked by the Seventh World Congress of Sociology at Varna in 1970,
where urban sociologists were determined to upgrade and reorientate urban social
research. The city was to be interpreted as the projection of society in space, with
attempts to connect urban studies to the central problems and theories in society.
The new urban sociology falls into two broad paradigms. One follows the neo-
Marxist view of society and the other stands in Weber's inheritance. Pahl[29, 30]
represents the Weberian inheritance, with an emphasis upon urban political power
being in the hands of "managers" and town planners. Bureaucracies, with their in-
clination to pursue their own interests, are seen to occupy centre stage. How the
resources get allocated depends upon the political economy of bureaucracies, with
inequalities explained by the distribution of life's chances. Such things as housing,
recreation, and transport are studied from particularist and specialist perspectives
without any real attempt to relate problems to the wider structure of society. For ex-
ample, in housing, Rex and Moore[31] explained life chances (in Birmingham, England)
as a question of access and exclusion in public rental, private rental and home owner-
ship tenures. In situations of inner urban housing scarcities, the poor, who formerly
had easier access to private rental housing, faced competition from the wealthier who
sought home ownership in an urban process of "gentrification". Rex and Moore spoke
of "housing classes", whereas a Marxist would be tying explanations of housing scar-
city to social relations and inequalities arising primarily and basically in the economic
mode of production with its capitalist-labour division.
During the post-1965 period, with the advent of more conflict in democratic coun-
tries and less stable economic conditions, there has been more intellectual interest in
the theory of the state. A spate of contending radical and updated liberal theories
has been forthcoming, and within the radical sphere there has been a differentiation
and an extension of Marxist theory. Castells[32, 33] has built bridges between one
of these radical expressions, namely Althusser's, and he set out some new and chang-
ing theory of urbanisation and housing.
Althusser[34, 35] adds to the Marxian theory of the state. The pure Marxian theory
holds that the basic contradiction in capitalist society is the capital-labour relation-
ship, from which the dominant capitalist class erects a state apparatus to assert its
interests and to disorganise (real) working-class interest. Althusser argues that this
basic contradiction is insufficient to bring about a major political rupture. Such a
rupture could, however, occur with an accumulation of circumstances and currents

of interest favouring a fundamental political change. Althusser suggests that it is possi-
ble to get these circumstances with a whole series of related and multiple contradic-
tions. Castells takes up this idea and relates it to urban circumstances with a whole
series of related and multiple contradictions. At the level of superficial appearance,
evidence for the presence of fundamental contradiction is seen in the form of conten-
tion among urban social movements, government urban/housing agencies, and the
town-planning profession. Beneath the surface, Castells and other authors argued,
there was a whole series of basic contradictions in urbanisation. These may be sum-
marised as follows.
(1) There is conflict between the profit impetus of the production sector, vis-à-
vis the unprofitable, but essential, infrastructure investment. The infrastruc-
ture sector provides education, health, recreation, transport and other ser-
vices. These are essential in the sense that such services create and reproduce
labour power in the private productive sector. However, the services do not
create their own financial returns, and are therefore dependent upon taxa-
tion and government resourcing. Conflicts consequently arise between
residents, firms and government agencies. Urban issues become highly
politicised, with focus upon finance, policy and use of urban land. This aspect
of neo-Marxist theory can be compared with neo-classical approaches to the
infrastructure sector. Neo-classical economics has been extended to public
goods, externalities and social choice whereas the neo-Marxist treatment re-
mains within its paradigm emphasising such things as class relations and social
conflict.
(2) As the urban issues become more politicised, further contradictions arise. State
power is split, with the splits representing contradictions between various
elements—capitalists, residents, workers, government agencies. This leads to
a more complex and a more "autonomous" state than that envisaged by Marx.
It is autonomous in the sense that its power influences the results in the basic
economic substructure and it can use authority to settle conflicts, interpreting
the interest of the ruling classes at some degrees removed from these classes.
Urban and regional planning then becomes a matter of administering and
regulating the relations between producers, consumers, residents and other
urban administrators. For example, contention will arise over questions of
22 IJSE 13,4/5
the use of some plots of land for producer interests, for recreation, and for
infrastructure.
(3) Spheres of profitable investment in the private sector will change. With some
difficulties in maintaining profit rates in the private sector, capitalists will
seek outlets in development work for government, in urban development (ur-
ban renewal and suburbanisation), and in economic policies which ensure
capitalist financial viability. This will add to the contradictions.
(4) Financial capital is liberated from space and time, being mobile. Production
(physical) capital is anchored in space and time. This leads to contradictions
within capital, adding to further contradictions between large-scale monopoly
capital and smaller-scale enterprises. The immobile physical capital also con-
strains urban change.

Castells sees the main urban problem—the way distributional, allocational and political
issues are to be conceived and understood—as revolving around the production-
consumption contradiction. He dismisses previous urban sociology (i.e., the Chicago
School and its offshoots) as being grounded upon description and misconception,
because urban space is not viewed as an expression of political economy. Castells'
view of the production-consumption process, and the role of housing in this process,
is shown in Figure 1.
Figure 1. Castells' View of Production-Consumption
In Figure 1, the production circuit follows the standard Marxian reasoning. Capital
appears in three forms—money, product/output and commodities. Surplus value is
extracted in the production process, thereby leading to great inequality between owners
and their hired workers. Capital reproduces itself, as does labour power. But labour
power is sustained and reproduced by consuming goods and services which originate
in the production circuit. As illustrated, workers' consumption can be divided into
"productive" consumption and "individual" consumption. Productive consumption
is conceived much like modern economic theory of human capital. That is, some
expenditures which appear as consumption, in fact, add to productivity and the genera-
tion and regeneration of income. What Castells has done is to add in "collective con-
sumption", originating in state activities. This has similar effects on the production
circuit as private productive consumption. The addition has substantive as well as
descriptive meaning. First, it emphasises the interdependence between private capital
and the economic role of the state. Second, it is the sphere through which the previously
mentioned (Althusserian) multiple contradictions can become evident. For housing
this takes the form of competition for capital, land and resources, especially between
capitalists, government agencies and residents. Thus, some contradiction occurs out-
side the capital-labour conflict in the factories, being present in the highly politicised
urban resource system. Housing is accordingly politicised. However, in the Castells'
theory, housing is not viewed as productive in its connection to the goods and ser-
vices produced in a household sector. It is left with the status of having a somewhat
vague and non-specific place in "collective consumption". Housing inequality for
Castells would be connected to the prior inequality in capitalist production and to
the surplus value in that production sector which subsequently "circulates" into housing
and other "non-production" sectors.
The Castells and other modern neo-Marxist paradigms have the advantage of viewing
housing in broad political economy—its relationship to production-consumption pro-
cesses, and to the large roles of government in housing and urban development.
However, the paradigm lacks detail in housing, the use of the term "collective con-
sumption" as applied to housing is too general, and it does not precisely match the
definitions and classifications used by neo-classicial economists in their public goods
theory. The paradigm was developed for general critical and intellectual purposes,
set against older and inadequate social theory in urban studies. It was not primarily
meant to say much about more fine-grained detail in housing and in specific housing
inequalities. Marxists are interested in practice, and the relationships between theory
and practice. In fact, neo-Marxist urban theory offers grounds for a critique of prac-
tice in socialist countries, as well as in capitalist countries. Socialism, in practice, is
supposed to transform social relations in the economy, to institute new allocations,
and to give priority to the social content or policy. Szelenyi and Konrad[36, 37] have
shown that socialist housing practice in Eastern Europe has substantial inequalities,
which, though distinct from capitalist inequalities, can be explained by structural con-
ditions from within socialism. Housing and infrastructure are under-allocated in the
total socialist economic system, relative to manufacturing; and the higher-standard
urban/housing provisions are allocated routinely to the technocratic elite, not to the
workers. The under-allocation occurs because priority is given to investment in
manufacturing and housing is regarded as non-productive.
A neo-Marxist view of society sees class divisions based upon the social relations
in production, with the basic cleavage between capitalists and workers. Housing systems
are characterised by sectoral division, largely along tenure lines. This raises the ques-
tion of whether tenure can itself become a basis of social and class interest[38]. The
economic and political evidence suggests that home ownership, private rental and public
rental tenures do create identifiable interests. As will be argued later, home ownership
is a means of accumulating wealth.
24 IJSE 13,4/5
In summarising the modern paradigms in urban sociology, whether from Weberian

or adapted Marxism, we can make the following points. First, these modern paradigms
view urbanisation as comprising an enormous range of economic investments. Se-
cond, the social, economic and locational access to varied urban investments has im-
portance for household well-being. Bring these two points together, and urban studies
become essentially matters of political economy, with central attention to the alloca-
tion and distribution of resources. This then adds concepts and principles of urban
income—otherwise stated as the distributed costs and benefits of urban travel, of hous-
ing, and of a range of accessibilities covering education, health, recreational and other
urban services—to the well recognised category of cash income from employment and
government social security provisions. Obviously, the new urban sociology lies close-
ly to things which interest urban economists and urban political scientists. However,
the new urban economics, dating from the mid-1960s, has not been written in terms
of paradigmatic reform or paradigmatic controversy. In short, the new urban economics
has not classified its concepts and the sources from which they are derived in terms
of broad theoretical paradigms.
Housing Studies in a Changing Neo-Classical Economics

Economic studies of housing and urbanisation have had diverse origins and purposes.
Some have simply added empirical information and elaborated some theoretical rela-
tionships in the post-1964 literature. Much of this sort of work can be interpreted as
an extension of mainstream orthodox (neo-classical) theory. The literature has grown
rapidly. However, especially in the 1970s, economic knowledge of urbanisation and
housing grew under the resource impact of contract research, with governments com-
missioning research as part of official policy reviews. The policy interest of govern-
ments frequently brought anti-poverty and egalitarian issues into significance. For ex-
ample, in the United States, the Federal Government financed research into housing-
transport, land use, and housing market simulation models, with further work into
various economic impacts of experimental housing allowances. Again, much of the
commissioned/contract research was done from orthodox theory, but it frequently
led to important consolidation of the relationships between applied work and
theoretical welfare economics. In continental Europe where subsidies in social hous-
ing had been deep and extensive, contract research was pointed towards getting a related
coherence among rents, subsidies, costs and social-distributional matters. Apart from
some economists working in urban land policy, few researchers directly interpreted
their work from general overarching theoretical paradigms. Generally, their work was
more pragmatic, or aimed at filling in gaps in information and establishing precisely
formulated technical relationships. Egalitarian matters were often things which
economists were paid to elaborate upon and report their results. We need to make
some connections between the useful pragmatic work and the more general overar-
ching theoretical positions which were always, at least implicitly, present.
For convenience, we can make the following classifications for revealing more clearly
the presence of egalitarian positions in housing policy. First, there are those housing
economists who continue the themes of Adam Smith's laissez-faire views, with limited
roles for the state2. Second, we have other housing economists who draw upon
H o u s i n g T h e o r y a n d Policy 25
various redistributional arguments which can be located in theoretical welfare

economics and in the modern theories of public goods and merit goods. We cannot
argue that most economists in this sphere are strong advocates for structural
egalitarianism in the same way that is followed by some authors in the new urban
sociology. Nevertheless, welfare economics and public sector economics have led
towards more interest in the theory of the state, and egalitarianism is often reviewed
within the theory of the state. Third, the very nature of land, including its non-
man-made origins and its fixed supply characteristic, has led some land specialists
to be more overt, in doubt or in circumspection, about relative market and state roles
in urban land. Often the ownership of urban land is concentrated; in rapidly expand-
ing cities land attracts speculation and regressive transfers of wealth; and questions
about the allocation and use of land are highly politicised.

Market Analyses and Housing Policy
The modern housing market economist can be related to Adam Smith's laissez-faire
only indirectly and by implication. Although Adam Smith had a theory of the state,
its scope was limited and he did not have much to say about housing. His view of
social justice revolved around reciprocity, "just deserts", and merited rewards, rather
than having any clear association with egalitarianism. Among modern housing market
economists, some have implicitly taken that same view of social justice, but others
have been concerned with the pragmatic realities of modern policy in which egalitarian
links with social justice have been assumed, or, in some cases, written into research
contracts. Let us look at a range of applications to see the variety of indirect ways
in which egalitarian issues have featured in market analysis.
At one end of the spectrum we have those economists like Olsen[39] who regard
any housing provision by social decision as merely substituting what the private market
would otherwise efficiently provide. He views housing as homogeneous in the sense
that it is all marketable, with consumers and producers able to trade it as a commodi-
ty or as a bundle of services. At the other end of the spectrum, contract researchers
have accepted housing allowances as an anti-poverty device, and from their research
shown what sort of feasibilities and market/cost impacts the allowance will "predic-
tably" have, using varied sorts of designs of allowance, and applying them to dif-
ferent locations, where markets were variably "loose" or "tight". The American Ex-
perimental Housing Allowance Program researchers found that, in the majority of
situations, housing allowances would benefit the recipients rather than transfer in-
come to landlords, but that in those allowances which were designed to give wider
choice, the recipients used this social income mainly to reduce their rent-income
burdens, not to increase their expenditure on housing.
Within the two ends of the spectrum, we can find various other positions taken
up by housing market economists. For example, from time to time the classic argu-
ment against rent controls is aired—covering disincentives to investment, lower stan-
dards of maintenance, slower modernisation, and inhibition of mobility, with
discriminatory effects on distribution. During the period 1950-70, some economists[40,
41, 42] argued that by increasing middle-class home ownership, via a chain of moves
(i.e., filtration), housing benefits would be indirectly provided to lower-income groups.
In fact, the evidence showed that only some 9.4 per cent of the housing moves
26 IJSE 13,4/5
precipitated for every 1,000 new dwellings tended to occur in the sub-markets occupied
by the poor. A final example is where economists advocated a notional setting of social
housing rents at market levels, with that taken as the benchmark for measuring the
subsidy, anticipating that this would target subsidies more selectively, and induce more
efficient management of the housing stock[43, 44]. However, this runs into difficulties
because there is no consistent or neutral way of defining subsidies, and any moves
in that direction tend to produce equity only in part of the housing system, often leading
to wider intersector inequalities[6].
Market-based economic studies in housing policy tend to have mixed relative merits
in the context of balancing economic and social values. A full or a moderated role
for the market has the advantage of signalling where the allocation of resources to
housing, among competition uses, shall cease. The market can be used as an indicator
of preferences and as a means of co-ordinating some relevant information. It will deter-
mine a cut-off point more clearly than some forms of subsidation, which have been
used in European countries to overcome housing shortages caused by the virtual cessa-
tion of building in wartime, the rapid decline in building during severe economic depres-
sions, and the rapid rate of household formation through migration and natural
population increases. Though these shortages can be overcome by subsidisation, the
process can ironically create its own "shortages". Because of social need, subsidised
housing has been provided at lower consumer price than non-subsidised housing and
sometimes the price difference is substantial. Under such circumstances there is a con-
tinuing excess demand for attractively priced housing. In other words, there is a housing
shortage.
On the other hand, inherent market processes often conceal results which are socially,
politically, and economically unacceptable. Some sections of the housing stock have
seen contagious diseases associated with dirty environments. Elimination of these
human and socially costly conditions has been a prime target of housing reformers.
These references are historical rather than modern, but reconciling the goal of pro-
viding standard housing to all households with the low-income group's ability to pay,
has both historical and modern relevance.
The foregoing might suggest to us that we accept the mixed roles of markets and
government. This raises the question of whether the advantages of the two sectors
might combine and blend. In continental Europe this is being attempted in new ren-
tal and subsidisation policies which create a para-market instrument. This is a blend-
ed market subsidy achieving tighter control in public expenditure and providing greater
selectivity in targeting assistance to groups in housing need [6, pp. 118-9].
Now turning to matters of theoretical and conceptual significance, with their im-
pact upon egalitarianism, we recall that orthodox market economics has inherited the
Utilitarian legacy. Utilitarianism does not handle questions of distributional justice
or welfare state rights as well as other social theories. Or, put in the terms of our
earlier discussion, the paradigm of neo-classicial economics centrally addresses ques-
tions of market efficiency, with distribution and social choice occupying a subordinate
or neglected place. To some extent we can select usefully from welfare economics, public
goods and merit goods theory, and from some contracted government housing research
to give point to relevance in housing poverty and housing inequality. Beyond
that, our later case study discussions of the Norwegian and Singaporean housing
systems will give more fundamental explanation of how government and financing
roles can be linked to social principles to achieve good supply and distribution of
housing. However, in order to fathom these and other distributional matters more
deeply, we need to examine some issues in urban land economics.
Land and Economic Analysis

Land has been an interesting and controversial object of social and economic theory.
It does not fit into the conventional arguments which justify private property. John
Stuart Mill wrote a tract [45] supporting the radical proposals of the Land Tenure
Reform Association. Although Mill can be generally regarded as a laissez-faire
economist, he advocated a tax levy on "unearned increments"—that is, on those (future)

increases in land value which were attributable to general economic and community
development, not to site improvements. As justification for the distinction, Mill argued
that improvements were the private "fruits of one's labour", but the unearned in-
crements could be regarded as an unjust "pecuniary privilege". In his book, Progress
and Poverty, Henry George[46] advocated a single tax, applying it to "unearned in-
crements", and thereby he hoped to solve virtually all aspects of "unjust distribution".
For Henry George, "the value of land is the price of monopoly". Land is thus at the
centre of ideological issues in political economy.
Land enters into production as a resource, but it is not produced as a resource. It
is also an object of interest as an asset, attracting speculative as well as productive
investment. One way of analysing the special aspects of land and the formation of
its price is through the concepts of rent and betterment. The economic concept of
rent contains the principle that there is a return for scarcity value of things like land
and mineral deposits, over and above their cost of production. That is to say, price
is above the level necessary to bring the resource into production. From the point of
view of an individual entrepreneur, land price is a cost of production, but from socie-
ty's point of view the price contains "rental" values which could, in principle, be a
legitimate object of taxation or other public policies aimed at keeping prices at lower
levels. Neutze[47] has demonstrated that the use of land commissions can be
economically justified in terms of allocational, price and distribution criteria.
Government involvement in land commissions can moderate price by adding to supp-
ly, and it can reduce speculation and wealth transfers to the rich. Land commission
supply can be regarded as a corrective to under-supply where there are zoning, develop-
ment and other planning regulations, established by intention to harmonise social and
individual/enterprise interests3.
Originally the term betterment referred to an increase in value attributable to govern-
ment investment in infrastructure—roads, bridges and the land-specific urban ser-
vices. The modern meaning is to include any increases in value which are attributable
to urban growth, community development infrastructure, and other off-site investments.
Betterment is sometimes specified as the source of explanation of "unearned in-
crements", and a suitable object of taxation so that it might be captured for general
social use or to pay for infrastructure. As an alternative to levying taxes, betterment
can be captured for social use rather than for private use, by creating such instruments
28 IJSE 13,4/5
as land acquisition law or, again, using land commissions to purchase and dispose
of land for future urban requirements.
We now turn to the question of co-ordinating urban investments, carrying with us
the understanding and appreciation of economic externality. Private enterprise in-
vestments can be based on formal analysis, assessment of risks and uncertainties, and
straightforward entrepreneurial hunches. Seldom are such decisions co-ordinated,
because this involves the exchange of information, consequently undermining impor-
tant conditions for competition. Private urban investments (i.e., capital construction
in physical urban assets) follow this general unco-ordinated pattern. In fact, owing
to the influence of administrative separatism in many of the modern democracies,
public urban investments have also been inadequately co-ordinated.
The very nature of the urban sphere and the way it is used by residents and pro-
ducers shows the need for achieving some area-based co-ordination. Centres for shop-
ping, commercial, cultural and social service functions have to be created. To some
degree, centering will occur spontaneously, particularly in the central business district.
However, the evidence in many developed capitalist countries shows that under laissez-
faire land development at low density, suburban expansion occurs without adequate
centering. Good centering creates useful externalities for residents who can economise
on travel and shopping time. For entrepreneurs and producers, centering provides
"pecuniary" or financial (external) benefits. But centering is not guaranteed by
regulatory planning, because a private operator will seek a location at a cheaper site
than any site designated for a shopping centre, to which speculative pricing is attach-
ed. It is in the new operator's interest to break the plan and locate elsewhere, resulting
in urban scattering. Government involvement in buying land, and in taking the in-
itative in infrastructure investment, can lead to useful centering. This is a develop-
ment or investment-lead type of planning, rather than a regulatory type of planning
where largely unsuccessful attempts are made to influence what other investors will
do by building regulations, zoning ordinances, and so on.
Economic arguments for government roles in capturing betterment, influencing price
formation in urban land, and in leading and co-ordinating urban investments have
all been made by orthodox neo-classical economists. However, it is to urban land that
some radical theorists are attracted, including the occasional economist who operates
both in neo-classical orthodox and in modern reformist or in Marxist paradigms. We
give two examples.
Ball[48, 49] outlines the Marxian view on differential rent. Marx took issue with
some aspects of Ricardo's theory, arguing that urban buildings are not like wheat,
the example which Ricardo used to illustrate differential rent. Differential rent arises
from the advantages of particular sites and circumstances. Aside from farming, the
manufacturer can seek to negate the advantages of particular circumstances by alter-
ing processes and by technological innovation. This qualifies differential rent, but does
not remove its existence. In Ball's eyes it is to be viewed not just as neutral explana-
tion, but as an (unequalising) factor in price formation, where land is seen as a cost
of production. Land and housing also has to be seen in terms of dialectical history.
It was made into an appropriate asset and used as a resource, pre-dating the advent
of capitalism. But capitalism has changed things by tying land to commodity produc-
tion and to the inequalities in the system. In housing, the pre-capitalist
production did not lead to surplus value; houses were produced by small-scale ar-
tisans who produced in a pattern of exchange from which they received the full value
of their products. With the advent of capitalism, private landlordism grew in a system
where money capital and land ownership came under the control of capitalists.
Speculative building and wage labour replaced the pre-capitalist social relations of
artisan work and full value received by the artisan in exchange. Capitalism involved
surplus value. The builders and the landowners became linked to the selling of houses
for private landlords, with basic and original surplus value arising in manufacturing
and its being represented as circulating surplus value in the real estate sales. In short,
the results were historically determined, not the result of nature or from first prin-
ciples of justice and economic theory. Differential rent was a post-transformation ex-
planation, fitting the consequences of the industrial revolution in Britain. Land studies
are clearly gathering paradigm controversy in economics, with varying sorts of analyses
and conclusions from within neo-classical theory and from competing theory. The
controversies centre around price formation and property relations.
Apps[50, 51, 52] has started a modern controversy on whether land/housing gives
or receives subsidy from the rest of the economy. On the one hand, there is a sense
in which most housing is subsidised, especially since the imputed rental value of owner-
occupied housing is untaxed, or taxed only at low values. However, on the other hand,
there is a sense in which all housing is penalised. This view emerges when we switch
attention from the way we tax different kinds of housing income or different kinds
of housing tenure, and give our attention to the way we tax different land uses.
In commercial and industrial use, the expenditure on land use is tax-deductible,
and business enterprises pay tax only on their profits. But some residential land uses
have to be paid for wholly or partly out of taxed income. This makes the residential
use of most urban land and buildings dearer in real terms to users than any business
use would be. The essential point can be viewed from another perspective. Let us sup-
pose the services of managing the home and child rearing are actually compensated
with income payments, and the consequent costs are deducted from that gross in-
come. This would leave a net income, which might, in principle, then be taxed at the
appropriate rates. On that basis, the running of business and housing "enterprises"
would be similar, with both being understood as production. If that means the redefini-
tion of rights to property and income in housing-related activities, then this should
not disturb us as housing economists. It is already clear to us that, in various ways,
the social and economic benefits and costs in housing are very much related to the
particular ways property and income rights are instituted in land and housing.
Land clearly has significance in housing, and it is deeply enmeshed in the theoretical
and egalitarian issues and controversies in social and economic theories. Matters of
distributional justice touch various issues—property rights in land, unearned surpluses,
price formation, the location-externality effects of urban services, and tax treatments.
Even with orthodox neo-classical economics questions of distributional justice are
prominently at issue in modern debates, and further relevance occurs when radical,
socialist and new theories (such as that of Apps) contend with orthodox interpreta-
tions. The modern discussions in social and economic theory lie close to cross-paradigm
perspectives. Some countries (e.g., Sweden and Norway) have been able to achieve
a policy development in land which places recognisably social and redistributional
30 IJSE 13,4/5
principles into price formulation and allocation for land use. Thus, as in the sphere
of social and economic theory, practice reveals a range of ways of dealing with
egalitarian matters. At one end of the range there is the application of laissez-faire
practices in commercial zones in such places as New York, London, Hong Kong and
Sydney; and, at the other end, land is acquired at rural values by public enterprise
agencies and allocated for social, recreational, housing, and commercial uses at low
urban land prices, with some redistribution favouring social and housing uses. Ex-
amples of this redistributional characteristic occur in British new towns, and in general
suburban development in Norway and Sweden. Land in advanced capitalist societies
can be variously seen as an asset, as a representation of great inequalities in wealth,
and as a resource which has allocational roles. The urban research programmes of
the last decade or so have elaborated the theory and the empiricism which enable
us to understand land in these relevant and multiple ways.
Summary and Evaluation

One way of discerning and building up housing theory is to appraise the nature and
content of prevailing paradigms in social science and in housing studies. As we argued
earlier, Quine's reasoning that this be done from a cross-theoretical perspective has
much to commend it. Cross-theoretical reasoning is superior to intra-paradigm inter-
pretation because we can range wider and make our selections more relevant to con-
cepts and principles in housing. Or, using Quine's words, we avoid the trap of believ-
ing that empiricism from one theoretical framework is sufficient to clinch choice among
theories, and we are sceptical that any single theory has comprehensive explanation.
That is to say, we expect any single theory to be under-determined in relation to the
evidential grounds and over-determined in its view of the issues or problems address-
ed. All of this is rather abstract, but from our review of competing paradigms in housing
we can offer some quite specific statements.
(1) Each of the theoretical frameworks—neo-classical economics, Weberian ur-
ban sociology, neo-Marxism, and institutionalism—enables us to derive a con-
cept of "urban income". Our welfare as urban citizens is enhanced or diminish-
ed by the economic processes which influence housing values, access to desired
and necessary services, and general economic conditions which influence ur-
ban change. "Urban income" is an addition to income from earnings or social
transfers. Housing and urban policies, including land policies especially, can
be designed and constructed to deliver either inequality or egalitarian tenden-
cies in urban income. Evidence for inequalities exists in both socialist and
advanced capitalist societies. The capitalist societies occassionally have ex-
amples of equalising tendencies in urban income.
(2) Neo-classical, Weberian and neo-Marxist paradigms—each offers some useful
urban and housing insights. Neo-classical economists are adept at diagnosis,
prognosis and interpretation in market economies. In housing, their recent
work has much to say about distributional matters as well as giving com-
mentary on market efficiency. Weberians emphasise the role of public
bureaucracies in policy formation and urban administration. This is relevant
to both capitalist and socialist societies. In socialist societies the aim of achiev-
ing social justice will not just happen spontaneously; it has to be appropriately
organised and managed. Neo-Marxists provide good examples of explanatory
power in housing and urban studies. Housing and social policy have roles
as "reproducing labour power", being integral rather than residual in modern
economic functioning. The state has to act as a "relatively autonomous" ar-
biter in dealing with the conflicts between the classes. In housing, one aspect
of this conflict will be the competition for capital and resources among
business enterprises, households and the state. Housing is a key object of the
"internal contradictions" and the political conflicts.
(3) With Quine again in mind, we can see relationships between general "home"
theory in social science and the more "specific" studies in such things as hous-
ing. "Housing theory" will thus be interpreted as subordinate to the home
theories. However, the empirical findings and the concepts used in housing
studies can have impacts in the process of flux and change in the inner reaches
of "home" theories. For example, in Weberian theory there is some conces-
sion to the importance of economic structural conditions pursued by neo-
Marxists and other schools of thought. Neo-classicists become more educated
on egalitarian and redistributional issues. Also, neo-Marxists begin to perceive
that their theory is over-determined and it cannot fully fit with the concrete
realities of the economic nature of housing. However, notwithstanding the
adjustments occurring within theories, Quine also argues that the inner core
of paradigms is somewhat inert and conservative. Pragmatism and change
will not be an easy process, especially where housing researchers are commit-
ted to intra-paradigm positions.
The cross-theoretical way of building up housing theory has both opportunity and
limitation. Opportunities come by way of adding to enriching the insights which can
be found if we look around for them. Limitations arise because paradigms have some
inertia and conservatism, and the necessary and relevant conceptualisation of hous-
ing may still include features which cannot be explained within any prevailing
theoretical framework. It is, therefore, necessary to look further, seeking new theory
which is more accommodative to housing. This is our quest in the next chapter.
IV. NEW THEORY AND HOUSING

From the discussions in the previous chapter we have seen that neo-classical and neo-
Marxist economics provide some useful insights for interpretation and explanation
in housing. However, as was suggested in the introductory chapter, housing can be
conceived in ways which does not give it a precise fit and harmony with the mainstream
theories. This has significance for both policy and the task of building up housing
theory. If we alter our way of looking at housing in basic principles, this would in-
fluence such things as the levels of resources we would allocate to housing and our
expectations in administration. Accordingly we place our attention upon new theory
either originating in basic social science or more specifically in housing studies. Our
selections come from authors who have begun to view housing as "production" rather
32 IJSE 13,4/5
than "consumption", and from economic reflection upon the post-1974 stagflation.
Stagflation has brought concurrently high levels of inflation and unemployment, con-
sequently deeply affecting housing finance and access to housing among low-income
groups and first-time purchasers.
Housing as Production
A consumption good is one from which a person obtains immediate and current
satisfaction with that good having little or no further implications in producing other
goods and future income streams. Production goods are used to produce other goods
and they yield future streams of income. It is sometimes difficult to give precise and
clear-cut classifications to some goods or services. For example, prior to the mid-1960s
economists tended to classify such things as education and health as consumption.

But with the advent of principles and concepts in human capital, education and health
are now seen, at least partly, in the nature of investment, with implications for
generating future additional income. Housing has not received much attention in terms
of its economic classification and its relationship to other goods and services. Although
housing can be regarded as an asset and as a means of increasing wealth, economists
have usually regarded its services as containing essentially consumption benefits.
However, some recent and less conventional work by modern researchers places hous-
ing as production. In other words, the productivity of housing goes beyond the rental
value of the dwelling, in much the same way as the output of a factory is not restricted
to the rental value of the building. The actual goods and services produced within
housing have economic and social value.
The neo-Marxist and the conventional neo-classical approaches to housing regard
it as consumption, not production. This is a major reason why housing and infrastruc-
ture have been under-allocated in socialist countries. But it is possible to conceptualise
housing as production. Stretton[53] views housing as the central social and economic
asset in the "domestic sector", which is defined as the part of the economy in which
capital, resources, time and energy are used for such things as housework, cooking,
gardening, hobbies, social meetings, neighbourhood social development and so on.
However, this productivity is not marketed, and economists have largely ignored it.
Economists recognise a public sector and a private enterprise sector, measuring out-
put in these and aggregating it into a GDP. According to Stretton, the omission of
the domestic sector leads to an understatement, and to a distortion, of economic ac-
tivity. It is as though we would measure the output of a factory as the rental value
of the building and land, ignoring the output produced by workers using machines
and intelligence. The conventional theoretical precepts used to allocate resources to
housing do not fit the domestic sector's true productivity, which does not enter market
exchange and cannot, therefore, raise finance from its own returns to resource it. In-
stead, finance has to come from wages and returns in the enterprise sector, and from
subsidisation in the public sector. In short, the argument that housing does not get
its due is one clear implication from Stretton's thematic criticism.
Becker[54] sees a household as a production unit, intent upon maximising satisfac-
tion or utility. As a production unit the household combines market goods (as in-
puts) and household labour to produce goods and services (as outputs) of ultimate
satisfaction or utility—child rearing, social interaction in the family, meals, recrea-

tion, and so on. Apps[52] though not writing specifically on housing, takes Becker's
ideas further, showing that a relatively depressed domestic sector is a basic cause of
inequality. We shall be able to discern housing-related results from Apps' theory.
What is the core of Patricia Apps' theory? Essentially we are presented with a two-
sector model of trade, comprising the household and the market sectors. Each sector
both produces and trades intra- and inter-socially. The household sector has a crowd-
ed labour supply, because social attitudes and immobilities assign mainly women to
house and home. Wage income is low in the household sector; it is "paid" by the
primary earner; and it is untaxed. Although the market sector has some low-wage
occupations, it also has restricted entry high-wage occupations where political power
is used to crowd the other sector and to control entry into its spheres. These statements
are given more precise and analytical meaning in Figure 2.
Figure 2. Two-Sector Crowding Effects

(Vide: Apps, [52], p. 27)
In Figure 2, sector 1 produces good X and sector 2 produces good Y. Without any
discrimination or restrictions, sector 1 has an output of X0 of X, and sector 2, Y0
of Y. Each sector has the same composition of skilled and less skilled labour, and
the prices and wages are at p and w. Now suppose that discrimination and restric-
tions limit labour supply in sector 1, so that consequently prices and wages rise to
p1 and w1, with output reduced to X1. The surplus labour is now deployed to sector
2, where prices and wages fall to p2 and w2, with output increased to Y1. Over longer
periods of time the discrimination will lead to capital intensification in sector 1 and
greater (embodied) human capital than in sector 2. In short, the institutional restric-
tions (i.e., the discrimination) favour those in sector 1, creating an inequality which
appears as the result of given characteristics—ability, educational attainment and higher
levels of responsibility. Sector 2 is representative of the low wage and the domestic
or household situations, with sector 1 approximating some professional and managerial
situations.
The comparative economics of the two sectors is characteristically asymmetrical,
with the consequence that the household sector cannot produce competitive substitute
34 IJSE 13,4/5
goods for those produced in the market sector. Market firms can achieve economies
of scale, with no substantial restrictions on size and organisation. However, households
have restricted size because social attitudes strongly favour relationships which are
sufficiently monogamous so that "own children" are identifiable. The market sector
is prevented from producing and trading children. Further asymmetry arises from dif-
ferences in the division of labour, and in the relative sector elasticities of demand and
supply (i.e., the degree of responsiveness between quantity and price changes).
In the market sector, division of labour occurs within and between firms, whereas
in the household the division of labour and trade is confined within the household.
The comparative sector elasticities are: demand for market sector goods tends to be
inelastic (i.e., low relative quantity responses consequent upon changes in price),
whereas that for household services is elastic; and the market supply tends to be elastic
(i.e., high relative quantity responses consequent upon changes in price), but the supply
from household services is limited by the small size of the household unit. Along with
the crowded aspect of the household sector, these comparative elasticities and the
realities of contrast in size-organisation, will influence sector prices, the terms of inter-
sector trade, and the ultimate burdens of income and sales taxes. We can scarcely in-
terpret the resulting relative price and wage structures in the two sectors as "natural"
or "apolitical". The economic disadvantages turn against the household sector, with
the people who are employed there receiving low wages, and using a less developed
technology. This has longitudinal and inter-generational consequences. Household
work gives few opportunities for increasing productivity from experience and there
is little incentive to invest in human capital. The housewife is not innately unproduc-
tive or less productive, but becomes comparatively so from immobilities and from
economically inferior experience. Children's opportunities are tied in with the struc-
tural inequality, except to the extent that external impacts from formal education can
provide some mobility.
Housing is affected by the Apps' theory of discrimination in various ways. High
technology housing will be produced in a sector where labour supply at professional
levels is institutionally restricted. Low technology housing will be supplied under con-
ditions of low skill labour abundance. More generally, since earnings in the domestic
sector are low, housing costs and outlays are frequently met from incomes derived
in the market sector. In other words, without discrimination, incomes in the household
sector would be higher, and more housing costs and outlays could be met from such
income. Quite possibly housing would receive greater allocation in a world without
discrimination.
Apps' theory, like that of neo-classical economics, proceeds from atomistic in-
dividualism, whereas neo-Marxist and institutionalist theory has broader societal
aspects underlying the theory. Her theory can be regarded as a new development in
basic social science or "home" theory. It offers some useful and relevant insights in
the context of developing housing theory. If we agree with Quine (see chapter II) that
we can think in terms of "home" and "subordinate" theories, then from Apps' develop-
ment of new "home" theory, some progress can be made in building and construc-
ting housing theory. As we have seen, it has been argued both by liberal critics[53]
and those who have reviewed socialist housing practice[37], that housing is under-
allocated owing to inappropriate theoretical and conceptual influence. Apps' theory
of discrimination explains some major inequalities, and the household sector is

significantly disadvantaged by these inequalities. This is useful theory for those who
are concerned about inequalities in housing, and about policy developments which
can turn in the direction of using housing as a (limited) equaliser.
Stagflation and Michal Kalecki
Stagflation became general in advanced capitalist societies with the coming of the
first OPEC crisis in 1973. This accelerated the break up of conventional Keynesian
economics, where for more than two decades economies were managed with low levels
of unemployment and mild rates of inflation. Monetarists opposed Keynesians, seek-
ing tighter controls on the supply of money and lower fiscal deficits, with a reduced
role for government in general. In response, conventional Keynesian theory and prac-
tice was revised to form a modern "post-Keynesianism". Post-Keynesianism was a more

overt political economy than Keynesianism which many economists had interpreted
as a largely technocratic means to steer an economy along a path of (near) full employ-
ment. Among the various ideas which were collected together and synthesised into
post-Keynesianism, those of the Polish contemporary of Keynes, Michal Kalecki, were
particularly significant.
Kalecki wrote theoretical explanations and critiques of both capitalism and socialism.
His theory has housing-related importance in both economic systems, and he was a
strong advocate for improving social housing systems in Poland and other socialist
countries[55, 56]. He criticised socialist practice for its over-emphasis upon invest-
ment and its consequent failure to maintain consumption at sufficient levels. He saw
social disturbances in Poland during the 1960s as a result of this failure in socialist
political economy. Prices of consumption goods were raised in a context of shortages
thereby compressing real wages. Kalecki advocated that consumption be maintained
at higher levels and, in particular, he pointed to the need to raise the quantities and
qualities of housing. Although Kalecki did not write directly about housing in capitalist
countries, the housing-related implications can easily be inferred from his theory of
an economy experiencing periods of boom and recession.
Like Keynes, Kalecki saw that recessions were largely caused by insufficient levels
of spending and the fluctuations in investment. However, Kalecki's theory had given
more attention to dynamic elements, to income distribution, and to monopolistic struc-
tural conditions than Keynes' theory. The essentials of Kalecki's theory of trade cycle
dynamism can be appreciated from the following points. First, investment depends
upon profitability, and profitability in its turn depends upon total spending, made
up of consumption by workers and capitalists, and upon investment in a recent period.
Second, workers tend to consume all their wages but capitalists can delay their invest-
ment. Third, sometimes investment will be delayed because there will be doubts about
profitability. Consequently the economy can experience booms and recessions because
total spending, and especially investment, varies. Fourth, the relative shares of GDP
to wages and capital will vary in a cycle of boom and recession. The wage share will
increase in a boom and decrease in a recession when there will be a "reserve army
of unemployed". Fifth, the boom has a characteristic political economy. On the
"economic" side, the enlarged number of firms forces down profitability among some
of them, and this leads to delays in investment, bringing on the economic downswing.
36 IJSE 13,4/5
On the "political" side, the capitalists will react against the growing relative power
of workers, desiring policies which restrict government spending, keep wages under
control, and generally ensure that their own dominance is maintained.
Kalecki's policy solutions to trade cycles are, with Keynes, to maintain fiscal deficits
in the recession as an anti-cyclical device, and, in addition to Keynes' prescriptions,
to redistribute income to the workers. The effectiveness of Kalecki's proposals for
redistribution depends upon his assumption that workers tend to consume a larger
proportion of their incomes than capitalists. Thus, this would mean that spending
power could be enhanced, weakening the destabilising tendencies. For housing, all
of this means that we should view it as a key sector in the overall economy. Housing
is reactive to both upswings and downswings in the general economy, and it is a con-
tributory force to destabilisation. In short, we need to discern the relationships bet-
ween housing, on the one hand, and inflation and unemployment on the other. Or,
in a period of stagflation we must examine the process changes which have economic
and social impacts upon housing.
Inflation has various impacts upon housing, primarily through the escalation of
interest rates and in the increases in construction costs. When housing construction
is relatively labour intensive, the increases in construction costs can sometimes be ex-
pected to outstrip the general price index. More significantly, the interest rate burden
raises the barriers to access in home ownership; it places pressure on some parts of
public expenditure (including some housing subsidies), and it imposes some flow-of-
funds problems among financial intermediaries which provide housing loans.
British experience with inflation during the 1970s is revealed in the following
statistics. Whereas in the years 1963-72, the cost of typical new private housing was
3.25 greater than average annual manual earnings and 2.55 greater than non-manual
earnings, in 1973 the ratios had risen respectively to 3.88 and 3.30. Also the increase
in interest rates heightened the difficulties with the result that the net payment among
average new borrowers increased from 12 per cent to 17.3 per cent of income from
1967 to 1973, and home ownership became accessible only to high-income or double-
income households. The deposit for first-time, average-income purchasers increased
from 55 to 66 per cent of their annual incomes. Or, to take another perspective, under
the conventional sort of mortgaging arrangements, an escalation of interest rates from
6 to 11 per cent reduces the borrowing power from 3.3 of annual income to only 2.1.
The key difficulties spring from the escalation of interest rates. Interest rates rise
with market forces and in order to compensate savers for the depreciation in the value
of loans, but interest rates do not adjust precisely to maintain real values of the loans
because future rates of inflation are uncertain. From the borrowers' viewpoint, under
the crédit foncier type of mortgage instrument (i.e., the typical fixed instalment loan),
the cost of finance is very high, thereby raising the barriers to entry and eliminating
all but high-income households. Under these circumstances, some housing economists
and policy makers have sought reforms to housing finance in the form of low-start
deferred payments schemes (and similar variants) to ease the burden of repayments
in the early years. In subsequent discussions we shall see how Norway adopted in-
novative schemes to deal with the inflationary impacts.
Essentially, inflationary interest rates disturb the balance of relative equity and the
risk-bearing among savers, borrowers and financial intermediaries. The gainers are
those who borrow before severe inflation takes hold and repay their loans at depreciated
values; and the losers are savers, new borrowers, and those potential borrowers who
are precluded from taking up loans because the costs are too high. Gaining and los-
ing can also be related to an inflationary cycle. Early speculative gains may occur,
but later speculation is cut off by the price increases which speculation induces and
by rising interest rates. Thus, an inflation can bear housing costs strongly upwards
on a spiral which then hits a ceiling and is followed by a rapidly slackening demand
and unemployment in the construction industry.
Inflation also disturbs the relative costs of home ownership and private rental hous-
ing. When inflation is absent and imputed rental values of home ownership housing
are not taxed, then home ownership is cheaper because the imputed rents are not tax-
ed whereas renters' incomes are fully taxed. However, with the advent of high rates
of inflation, capital gains become more significant and this can, theoretically, lower
the cost of providing rental housing because investors can obtain some of their return
from the capital gains and not just from anticipated rents. However, where the private
rental sector houses the poor and the unemployed, landlords may find it more pro-
fitable to sell their housing stock to those seeking home ownership. In this way they
achieve capital gain, but low-income groups find they face a diminishing set of hous-
ing opportunities in the private sector. Meanwhile inflation can also disturb a public
or "social" housing sector. The tenants in this sector have often been protected from
the full impacts of inflation by the device of pooling total revenues and costs in con-
solidated accounts, with cross-subsidisation of costs from older to more recently con-
structed housing. However, when inflation rates are particularly high, as they have
been since 1973, it becomes necessary to revise rent policies and to increase occupancy
costs among some tenants.
Governments will get caught up in all these housing-related aspects of inflation,
and the extent of their involvement will be diverse and full of conflict. On the one
hand, inflation will raise barriers to access, leading to a clamour for action to make
housing available for first-time buyers. Also, the government's housing assistance pro-
grammes will meet pressures from high costs. On the other hand, however, govern-
ments will have responsibilities for managing the overall economy. Sometimes this
will mean that public expenditure programmes, including housing assistance, are cut,
and, perhaps, interest rates raised further.
Historically, deflation and unemployment has had significant impacts upon hous-
ing. Governments have been dragged into housing by the partial collapse of housing
and housing finance markets, by social agitation on crowding and worsening condi-
tions in the slums, and by widespread foreclosures on mortgages. In more recent times,
with stagflation as the problem, the effects of unemployment and recession are more
varied, but with less conspicuous reactions than generating slums. Foreclosures on
mortgages can still arise, especially when real incomes decrease in an economic down-
swing and interest rates on housing credit remain high. Public and "social" housing
authorities can face problems of rental arrears among tenants, and, if rent rebates
are used, financial viabilities become more difficult to fulfil. Sometimes towns and
regions which were once prosperous in manufacturing decline in the processes of
technological change and international economic competition. A "social" or public
housing authority then has problems of maintaining its housing stock in a depressed
area.
38 IJSE 13,4/5
Stagflation has shown housing to be a key sector in the economy. Performances

in unemployment and inflation are themselves affected by economic conditions in
housing, and these general problems in the economy have multiple impacts upon hous-
ing. Some of these impacts are distributional, being related to broad structural changes
in an economy experiencing either successions of booms and slumps, or experiencing
inflation and unemployment simultaneously. For explanation and interpretation, it
is appropriate to use the theory of Michal Kalecki, with this theory now absorbed
within post-Keynesian economics. The theory has epistemic worth and relevance
because it synthesizes economic dynamics, emphases upon total spending and invest-
ment, structural conditions in the economy and distributional change. Its roots come
from neo-classical microeconomics, Keynesian and Kaleckian macroeconomics, and
Marxist political economy. The theory has housing relevance in advanced capitalist
economies because housing is at once related to markets, to saving and investment,

to public finance, and to economic structure and the distribution of income in that
structure.

It is explicit in Lakatos's arguments on the theory of knowledge that we pay special
attention to new theory. New theory is important precisely because it does not have
mainstream status. Mainstream theory has dominance and its practitioners are less
interested in innovation and change. Lakatos argues that new theory needs a "protec-
tive belt" where ideas can develop, mature and have sharpened relevance in the general
competition of ideas. Our purpose has been to seek new theories which have good
fits to conceptualisation in housing, compared with prevailing paradigms. We found
such theories. Stretton, Becker, and Apps, have seen housing as "production" rather
than as "consumption". This is significant in terms of such policy-related issues as
the level of resources we would commit to housing and the qualities we would expect
in developing housing institutions. Stretton is an egalitarian who favours institu-
tionalism in economics. Becker is a neo-classical economist who has specialised in
such spheres as human capital, discrimination theory and the reasons why many
modern parents are more interested in the "quality" (i.e., the human capital and up-
bringing aspects) of their children rather than in producing large quantities of children.
Apps is an intellectual feminist who has been interested in revising deductive theory
in economics so that it more adequately explains sexist inequality in a general theoretical
framework.
Housing as production has involved developing new housing theory. Examining the
ideas and purposes of Stretton, Becker and Apps we can discern a synthesis of key
elements in new and mainstream theory. The synthesis includes trade sector models,
human capital, (local) public goods theory, the domestic sector as producing outputs
which are not marketed, egalitarianism, and the bringing of the "social" in relation
to the "economics". Viewed in another way, the social policy aspects of the new syn-
thesis can be regarded as neglected social economics. Stating things in this way reveals
a relevance to housing.
In summary explanation, the neglected social economics of housing takes on the
following characteristics.
(1) Trade sector economics points out what happens in relative scarcities, in
relative economic rewards, and in economic developments when one sector
is separated from another. The separations arise from access to modern
technology, to capital, and to life's chances. Workers in the domestic sector
(mainly women) are bound to low earnings, to inferior acquisitions of human
capital, and to economic opportunities which are confined to the home and
to low-paid industrial or service jobs. By contrast, professionals (mainly men)
operate in a scarcity sector where earnings, technological changes, and working
conditions are vastly superior. The separation of the sectors is socially and
economically conditioned, rather than representing the neutral results of ef-
ficiency, innate abilities and perfectly competitive markets. Varied life chances
and inequalities are institutionalised and appear as differences in acquired
abilities.
(2) Public goods in their most general expression exhibit characteristics which
differ from private (marketed) goods. They are accessible to society; they are
unpriced either because pricing is infeasible or too costly; and their efficien-
cy does not depend upon making them exclusive for individual (private) use.
The home produces (local) public goods, available to members of the family.
Inputs are provided from marketed goods and the work effort of members
of the family (mainly women's). Again, these social arrangements for pro-
ducing economic goods and services are socially or institutionally determin-
ed. In other words, market exchange does not include all economic exchange
and all economic activity. Child rearing and running the home are economic
activities, with characteristic inequalities attached to them.
(3) The presence of inequality in the domestic sector raises questions about the
resourcing of housing. At one level, income from the market is very unequal-
ly distributed. This will affect the affordability of housing. More than this,
at another level, discrimination in the domestic sector adds further inequalities
and inefficiencies to society and to the marketplace. But housing is available
only from the marketplace and from the resourcing provisions made by govern-
ments. Egalitarian matters become doubly relevant. First, we would need to
know the pattern of market-related inequality and whether it is socially just.
Second, we can perceive that domestic inequality is unjust, and we then must
examine housing policies to see whether they might restore the balance towards
equality in socio-economic systems which produce unreasonable antecedent
inequalities.
Housing as production generates theory with both epistemic and social worth. It has
epistemic worth because mainstream paradigms have ignored the possibility that hous-
ing is production, but the possibility describes a concrete reality. Economically and
socially useful goods and services are produced in homes. This theory, then, has social-
moral-political worth because it raises such relevant policy issues as levels of resourc-
ing, explanations for inequalities which concern society, and ways in which we might
otherwise organise housing and housing-related economic activities.
40 IJSE 13,4/5
Further epistemic and social worth is added from Michal Kalecki's theory. The
epistemic worth is derived from the economic and political consequences of an
economy experiencing inflation and unemployment. More than most other sectors
of an advanced capitalist society housing is deeply interactive with the dynamics of
boom and recession. The interactions are with economic consequences in both cause
and effect relations between housing and the economy as a whole. Housing is one
of the first sectors to react to inflation and to unemployment. But the reactions can
themselves produce further causes in deflationary and inflationary tendencies. The
interactions are political as well as purely economic, largely because boom, recession
and stagflation dynamically alter the relative shares of GDP allocated to capital and
labour. This heightens allocational and distributional issues in housing. Kalecki also
has housing-related theoretical commentary for socialist economies. He argues that
in practice socialism has pushed allocations to investment too far at the expense of
current standards of living and consumption. He wants housing to receive more
resources and a different attitude among socialist policy makers. Again, his arguments
can be seen as epistemic with further social and political implications.
In these new or revived theories (Kalecki's is, more strictly speaking, a revived theory)
the conceptualisation of housing is deepened. Housing is genuinely "political
economy", and it fits theory when it is understood as interdisciplinary, bringing together
parts of several social sciences. However, by tying housing theory to the Stretton-Becker-
Apps and the Kalecki innovations we avoid the danger of dilettante approaches to
political economy and to interdisciplinary relevance. In building up housing theory
from new theory and from cross-theoretical reasoning we have related conceptualisa-
tion in housing to social science theory. Our position varies from that taken by Fried-
mann and Marcuse (see chapter one). They say that housing theory is thin and ig-
nored. We are saying that by looking around in various social science paradigms and
in new theories we can make connections between social science theory and housing.
But to do this, we first need to have an awareness of the philosophy of science and
"growth of knowledge" ideas. We cannot leave the matter there. Having shown that
housing is political economy, we must examine policy. As we shall see, by evaluating
policy we can draw conclusions on the shape of housing theory as operating program-
mes which have been comparatively successful. Policy and theory must be enjoined.
V. HOUSING POLICY
We have several good reasons for reviewing key issues in the nature and application
of housing policy. First, society itself changes in an interdependent mixture of evolu-
tionary political, social and economic forces. This means that few policy prescrip-
tions can be universal and general in the most abstract sense. In social sciences theory
has to be adapted or re-created so that its explanatory power better fits a changing
reality. Second, since housing is highly politicised and in practice it becomes a form
of political economy, it is logical to study policy. Experience in policy will influence
the administrative, the institutional and the theoretical view of housing. Third, hous-
ing policy has significant impacts on the welfare of people and society. It is impor-
tant to discern good policy and to use reasoned arguments for reform when welfare
can be improved. Finally, and of crucial importance for this piece of writing, it can be
argued that analyses and evaluations in social science are improved when we begin
with practice rather than with theory.
In reality it would be well nigh impossible to approach practice without some
understanding of, or experience with, principles, concepts and, perhaps, theory.
However, in terms of emphasis and good direction, it may, nevertheless, be useful to
begin with practice rather than with theory. This is the advice given by two currently
eminent social policy analysts. Wilensky[57] undertook an empirical and evaluative
study of the development of the welfare state in socialist and capitalist countries. He
found that ideological and philosophical issues were less significant in explaining levels
of social policy expenditure and progress with the welfare state than other matters.
Those countries with highly developed social policy tended to have longer historical
experience with welfare state reforms, relatively good performances in economic growth,
and contained organised groups which acted as advocates for state provisions in welfare.
Theory was, of course, important for use in justifying welfare state provisions, but
not for providing social science explanations for the level of social policy provisions.
Clearly we need to examine policy in practice to obtain fuller explanations of social
welfare.
Rein has a long-standing experience in social policy research during the last 25 years
or so. His several books[58, 59, 60, 61] discuss relationships between interdisciplinary
research, theory, methodology, practice and critical evaluation. In many ways he
pioneered interdisciplinary research, drawing upon theory in social economics,
sociology, politics and organisation studies. He suggests that when we act as practi-
tioners in critical evaluation and in interdisciplinary social science, we shall have to
become more aware of the nature of theory and of our choice of methodology in
research and in appraising. He further reasoned that we can find no single general
overarching and serviceable theory. Then, viewing theory and practice as mutually
interdependent, Rein says we can learn important things about criticism and about
designing social programmes if we start our research at the level of practice, working
back to theory where we can select for relevance, explanation and criticism. From the
context of Rein's reasoning we shall find it appropriate to discern and learn good hous-
ing theory by reviewing policy and practice.
Housing Policy Trends and Issues

Advanced Capitalist Countries
Since the mid-1970s housing policies in developed capitalist countries have been through
ferment, controversy and some reform. Until the mid-1970s, the emphasis had been
upon overcoming chronic shortages and achieving high targets in the volume of pro-
duction. By the early 1970s, in many countries the national housing stocks were in
approximate balance with the number of households. More attention was being given
to the distributional and qualitative aspects of housing. This included the endemic
low-income housing problem, the locational and economic access to employment,
shops, educational, recreational, health, social and other services. The role and use
of older housing was reviewed, with more significance to rehabilitation and conserva-
tion, and much less to slum clearance and redevelopment activity. Economic and
sociological research revealed some of the major problems associated with mass housing
42 IJSE 13,4/5
projects, developed in high rise blocks, and provided for low-and moderate-income
families. In 1973 severe structural inflation struck hard and persisted, then leading
to problems in housing finance, in rising occupancy costs, and in the capacity to pay
among low-income groups and first-time home purchasers. Tenure came to the
forefront, both in its own right and in connection with other things which were at
stake in the currency of ferment and reform.
Each country had developed its own particular methods of financing and providing
government assistance in housing. Typical sorts of government assistance prior to the
ferment and change included: government guarantees against default on housing loans;
government loans on easy repayment terms; subsidies towards the costs of interest
rates on private loans; home savings grants or tax deductions for home savings; capital
grants; and rent rebates in some housing sectors. Inflation heightened horizontal and
vertical inequity—a new housing jargon pointing to the presence of arbitrary ine-
qualities and economic inefficiencies. As housing policies came under scrutiny, some
housing intellectuals[62, 63] opened up the question of implicit (hidden) assistance
in the tax treatment of housing. In some countries home owners could deduct the
costs of interest rates from assessable income, and often the imputed rented value of
owner-occupied housing was untaxed. This was a factor influencing tenure choice and
in producing tenure- and income-related inequality. Inflation and tax treatments in
housing became important issues in the ferment and reforms.
In countries where there had been controlled rents (a general feature in Western
Europe), the issues surrounding tenure- and income-related inequities also became
attached to reforms in private sector rents. Rents were decontrolled, leading to rising
occupancy costs in that sector and pressing hardest upon the lowest income groups.
To counter this, many countries introduced or expanded housing allowances, the in-
struments designed to bridge the "housing gap" where housing costs were above the
capacity to pay. These cash payments to reduce living costs and/or to increase the
consumption of housing services were not used to replace other forms of assistance,
but rather they became part of a set of co-ordinated reforms in housing finance.
The severe inflation of 1973 persisted throughout the remainder of the 1970s, leading
to the "front loading" problem in the conventional equal instalment repayments in
housing loans. For example, in Britain an escalation of interest rates from six to 11
per cent reduced the borrowing power from 3.3 of average annual income to 2.1. As
was mentioned earlier, in response to that intellectual attention was given to redesign-
ing mortgage finance to ease access by deferred payments and low-start schemes. Some
countries introduced these schemes via public finance for housing, and others targeted
their subsidies to assist first-time entrants to the housing market, with provisions for
high subsidies in early years, but decreasing to zero over a period of ten to 20 years.
Housing assistance tended to become more selective, especially in Western Europe.
In some countries, notably Sweden, Norway, West Germany and the Netherlands,
it is possible to discern co-ordination in the reforms during the period 1965-80. Such
co-ordination covered rent policies, housing allowances, some re-design of subsidies,
and sometimes some changes to the loan instruments. Other countries (e.g., Britain)
found that any move to bring significant reform in one housing sector would raise
wider problems of inter-sector and social class conflicts, thus leaving the status quo
as offering the easiest political solution. In fact, most countries have experienced some
inter-sector conflicts; for example, although Sweden achieved some co-ordination, there
has been hesitancy and even some policy reversals related to uneasiness in resolving
interrelated aspects of tenure changes in housing finance. Facing strong inflationary
impulses, and imbued with monetarist theory, governments have generally pursued
cuts in public expenditure, consequently reducing the room for manoeuvre and reform.
Housing programmes were prime targets for cuts.
New trends in tenure developed alongside the general connections among changes
in housing finance and distributional issues. Home ownership policies became more
popular among governments in continental Europe, with their virtues being seen as
a means of unburdening public expenditure from the costs of administering and resour-
cing social housing. In Britain, in a very limited way, co-operative and co-ownership
tenure was revived for reasons of reducing inequality and for improving the living
conditions of low- and moderate-income residents in inner urban areas. Another in-
itiative, again in Britain, was to adopt a "half rent" and "half own" tenure, whereby
the occupants obtained some accumulation of wealth. The Netherlands created special
low-income home ownership programmes, and generally there was more interest in
developing forms of tenure falling between home ownership and rental.
One of the real dilemmas towards the end of the 1970s was that explicit policies
moved in one direction, towards home ownership, but spontaneous economic forces
ran in another direction. The continuing upward trend in interest rates and the economic
uncertainties held back middle-income home ownership. In some countries (e.g.,
Australia) some moves towards liberalising capital markets, together with some scar-
cities of capital for natural resource development, led to a more competitive edge bet-
ween housing and non-housing capital. For some countries in continental Europe,
beginning from relatively low rates of home ownership, this tenure choice nevertheless
increased despite high interest rates on housing credit. Preferences for single-family
and small houses in house-with-a-garden style increased with the trend to home owner-
ship. As chronic urban housing shortages were moderated or overcome, the constraints
of choice in tenure and dwelling form were loosened, compared with the situation
in the 1960s.
Our review of trends in modern housing policy shows that the questions of
egalitarianism and inequity have been dominant in all the major issues—tenure, reforms
to housing finance, occupancy costs, and inflation. These questions were by no means
associated only with the period of reformist politics in the late-1960s and early 1970s.
The conservative politics and monetarist economic policies of the late-1970s, along
with the relatively high levels of inflation and unemployment, have had conspicuous
effects on housing, with distributional matters having more significance, compared
with earlier needs for mass volume production in the 1960s. In the sphere of pragmatic
housing problems, egalitarian issues emerge significantly in any discussion of criteria
for evaluating policy.
Modernisation in Developing Countries

In less developed countries the overwhelming objective is to transform the social,
economic and political nature of society in economic growth and modernisation.
44 IJSE 13,4/5
Housing can be made contributory to that goal. Not all countries are successful in
the development objective, and still fewer of the success stories have used housing
to its potential in the transformation process. Our discussion will be highly selective,
stating the principles which can be used to achieve development, with housing being
integral in that change. Also, we shall outline the main principles which would be
particularly appropriate to development in socialist countries. These selections are
appropriate to our subsequent discussions of housing policies in Singapore and in
the People's Republic of China.
The economic literature on growth and development burgeoned in the 1950s and
1960s, largely responding to the need for raising living standards in developing coun-
tries. This literature has been contentious and controversial, with competing theory
and policy judgements. It was Keynesian adaptations which achieved early dominance
in growth theory, especially from the Harrod-Domar formulations[64, 65]. Although
the Harrod-Domar formulations were mainly conceived for applications to developed
countries, in what were sometimes quite thoughtless ways they were brought into rela-
tionship with development policies for the less developed countries.
The Harrod-Domar thinking placed key importance on levels of saving and invest-
ment. This is reasonable and enlightening, with the trust that policy makers should
ensure high levels of saving and investment. But the particular way investment was
theoretically related to growth subsequently became a matter of contention and con-
troversy. What the Harrod-Domar thinking did was to place central significance upon
the capital-output ratio, usually symbolised in the literature as the K:O ratio. The
justification and explanation for this key rationale was stated roughly as follows. First,
we are persuaded that investment capital is the really scarce resource in an undeveloped
country. It is also the means for increasing productive capacity. Second, capital is
a "stock" or "lump" of economic resources, and output is a flow of goods or services
in a given unit of time—for example, a per annum flow. Given enough time, the flow
of output will be sufficient to repay and justify the capital investment, unless the in-
vestment fails. Third, we can use an averaged or aggregate K:O ratio to estimate the
amount of investment needed to achieve a specified rate of growth.
This view of growth has been criticised by Myrdal[66] and Streeton[67]. In the hands
of neo-classical economists, the definitions of "capital" and "output" are frequently
quite narrowly based. For example, investment in education, health, and other human
capital investments are omitted. Also, in developing countries, some items ordinarily
regarded as consumption such as nutritious food, have economic effects which are
productive, like investment. Housing fares badly under narrow interpretations of K:O
ratios. Outputs are measured only as rents, and the capital is repaid from these rents
over comparatively long periods. Thus it has been argued that housing is a less pro-
ductive investment than those typically found in industry. On the basis of this argu-
ment it is given a low priority. However, if housing is regarded as productive along
the lines argued by Stretton-Becker-Apps (see chaper IV) its outputs are wider than
just the rents received. Also, it is productive by virtue of generating income and employ-
ment in the economy as a whole. Even if we were to view housing as "consumption",
in developing countries it might produce social benefits from improvements in health
and changes in social and economic motivations (see over). Apart from these housing-
specific points, the problem in developing countries is often to begin the process of
growth and change, not just to maintain it, as the Harrod-Domar thinking assumes.
It can be argued that the upgrading of organisational capacity and the development
of government agencies in such things as education, health and housing are necessary
conditions for growth. An exclusive emphasis upon K:O ratios amounts to "misplac-
ed isolation", a restricted "one factor" view, and over-simplified aggregation. In short,
the development process is complex and springs from varied social, economic and
political conditions. Theoretical growth which is projected fromK:Oratios often cannot
be reconciled with actual growth.
Some neo-classical economists favoured a more flexible theoretical approach than
is represented in the aggregations and in the "closed" deductive logic of the Harrod-
Domar formulations. They recognised that capital-output ratios vary widely from sec-
tor to sector. Growth becomes more dependent upon the signals from market prices
and the mobility of capital and labour from less to more productive uses. Although
this thinking is consonant with flexibility, Myrdal and Streeton still have some crucial
reservations. They are less ready to accept that growth would proceed "naturally" from
spontaneous economic conditions, including impacts from international trade. Social
structure, cultural factors and bad government can inhibit change and economic
development over long periods. Policies aimed at social change and related to economic
growth have importance in Myrdal's and Streeton's scheme of things. Mobilities and
the redeployments of resources are not assumed, but questioned against the social
facts prevailing. In some cases it will be necessary to steer a course of social reform
in education, health, government, social organisation and in social attitudes as a
precondition of growth.
The sorts of criticisms presented by Myrdal and Streeton have influenced the course
of development of the economic literature in growth and social change. Essentially
they provide a perspective of institutional economics to the subject of development.
This means placing more emphasis upon such matters as income distribution, public
policies, social change, the quality of public administration, and a whole social science,
or an interdisciplinary interpretation. Myrdal does not leave his thinking in mere general
criticisms of neo-classical and orthodox economics, or as loose ends. He contributes
theory in his own right, though the logical structure and form of his theory does not
follow conventional economic deduction. Conventional economists have tended to
theorise in terms of a few variables in a confined framework. Myrdal has a theory
of cumulative process development. It is more open and with a wider compass than
much orthodox theory. Myrdal identifies the forces that give momentum to cumulative
development. Then, he conceptualises development as proceeding from primary
changes (often a part of public policy), and leading to secondary changes. The secon-
dary changes reinforce the primary changes in a spiral of change. From his research
in less developed countries in Asia during the 1960s, Myrdal identified the following
forces that produce change:
(1) output and incomes,
(2) the conditions of production,
(3) levels of living,
46 IJSE 13,4/5
(4) attitudes towards life and work,

(5) the characteristics of social and public institutions,
(6) public policies.
The foregoing are conceived as a related set, with causal interdependence when mov-
ing in similar directions. Accordingly, it is a matter of their relationships to each other
and to the direction in which they can change together and cumulatively. Housing
and development are viewed as interrelated with each other and with other things.
Taking Myrdal and Harrod-Domar in cross-theoretical perspective, development is
largely a process of cumulative process change in society, and some of the economic
propulsion comes from raising savings ratios to GDP and scoring well in efficient
investment.
Socialist economic development would also proceed from cumulative process change
and from saving-investment. But it would be directed towards different societal ends
and the economy would be organised in some form of planning. Ideologically, socialism
would be aimed at raising the living standards of the masses. Pragmatically it would
not be easy to sustain this aim. Economic development takes time, and socialists divide
on ways to achieve development and to maintain integrity with socialist ideals.
Managers, bureaucrats and the political elite will have different perspectives. Within
the political elite tensions can arise among those who want to pursue technocratic
economic development, and those who prefer a political emphasis in changing the
hearts and minds of the masses with less efficient co-operative economic and social
arrangements. Managers will want some economic freedom and less bureaucratic
regulation. On the other hand, bureaucrats see their role as asserting authority wide-
ly in society. Sometimes—as occurred in the People's Republic of China—countries
will experience power struggles and distinctive historical periods of change with "con-
servatives", "radicals", and "ultra-leftists" having ascendancy from time to time.
Housing will be influenced by the changing course of socialist practice and by the
power struggles. Sometimes it will be connected to technocratic industrialisation, and
at other times it will be organised to express more "purist" co-operative or com-
munitarian ideals. More significantly, as we saw in earlier discussions, Kalecki pin-
pointed a key economic dilemma. Economic planners press consumption hard in order
to achieve a flow of resources into investment. However, housing is regarded as "un-
productive" and it is inadequately resourced and organised. This can lead to popular
disturbances and concerns, striking at the heart of ideals in socialism. It also con-
trasts with the first revolutionary phases of socialism. When socialists come to power
they tend to effect an early and one-shot redistribution of income in favour of work-
ing and low-income groups. This raises consumption standards, and it eradicates the
worst slums. But the real problem in socialist housing is that it is not adequately con-
ceptualised in Marxist political economy. Beyond the ideals of taking out the private
profit element in landlording and in land, conventional socialists have not contributed
much to the theory and practice of political economy in housing.
In the general view from political economy, we see socialism as having problems
in maintaining levels of resourcing to housing. Taking a comparative perspective, the
main problem in capitalist housing is the relationship of the housing system to the
substantial inequalities of income in capitalist societies. Accordingly, we should review

housing and inequality in order that we can discern countries which have been com-
paratively successful in meeting this problem.
Egalitarian Issues in Housing
Developed capitalist societies are characterised by very unequal distributions of in-
come and wealth, and this is prior and antecedent to the distribution of housing and
housing services. The major causes of these antecedent inequalities revolve around
the ownership of physical capital, access to human capital, the inequalities of pro-
ductivity generated in labour markets, and the institutional conditions and discrimina-
tion which impede movement to greater equality. Housing systems can endorse, ac-
centuate or moderate the antecedent equalities. They are never completely apart from
antecedent inequalities, and their potential to equalise is limited, though important.

We are, of course, primarily interested in the potential of housing systems to operate
as limited equalisers. At the outset we are faced with this rather limited potential,
making it necessary to distinguish between our preferences for better overall patterns
of income distribution, and the distributional direction of a "good" housing system.
In fact, from the basis of information which we present below on overall income
distribution, we shall conclude that the characteristic distributions are too inegalitarian.
But as students of housing systems, we cannot do anything about that, other than
to distinguish this as our judgement on the overall pattern of income distribution.
Now, restricting ourselves to housing systems, we can say that their distributional im-
pacts may potentially produce some good, or some improvement, if they equalise in
certain specific ways. For example, one distributional impact of a housing system can
be described as good if it enables those groups in income or "food" poverty from
the general antecedent distribution to have affordable access to reasonable quality
of housing. Or, a housing system can be described as distributionally good if
households on median incomes have access to housing on terms which absorb, say,
20 per cent or less of their incomes on housing expenditure. Basically there is a dif-
ference between the good or bad of an overall distributional pattern and a distribu-
tion which produces some good in some specific things. In our context, we shall often
be faced with antecedent patterns which are bad overall, and housing systems which
sometimes have some specific good in them. Let us look at the characteristics of antece-
dent distributions of income.
The antecedent distribution of income in developed capitalist countries has certain
characteristics, readily seen from statistical and graphical presentations. However, first
it is necessary to make some cautionary statements which will provide a context for
interpretation. Income has no single standardised definition for statistical work. Also,
the "income unit" can variously be the individual, the household, or the family, with
different specification being possible in the "household" and the "family". Statistical
data on inequality is ordinarily derived from survey sources or from income tax in-
formation. Consequently income which is not assessable for taxation purposes is omit-
ted, along with unreported assessable income. Surveys, and especially income, wealth,
and expenditure surveys, tend to contain biases—from small sample size, unrepresen-
tative data, lack of co-operation between interviewers and respondents, and erroneous
reporting.
48 IJSE 13,4/5
One very clear way of showing the pattern of unequal distribution of income in
capitalist societies is to use Jan Pen's "parade of dwarfs" [68]. We are to assume that
all of a nation's income units are lined up outside the room in which we are sitting.
The door is opened and they pass before our eyes, with each income unit having a
height in proportion to the size of its income. The shortest comes in first, and the
tallest last. This parade lasts about an hour. Pen calls it a parade of dwarfs because
the vast majority have below average levels of income, and the richest are so much
taller than the average height. The inequality is explained by differences in access and
ownership of physical and human capital, with the richest getting most of their in-
come from ownership of physical capital.
Another way of presenting the distribution of income is in terms of a relationship
between the percentage of families/individuals and their receipt, also in percentages,
of aggregate income. The distribution can be presented in any convenient percentile—

decile, quintile, or quartile. In developed capitalist countries the general and approx-
imate orders of comparison are: the bottom 10 per cent of families receive only about
2.5 per cent of aggregate income, whereas the top 10 per cent receive about 25 per
cent of total income. The pattern of inequality in wealth (assets) is even more concen-
trated than that in income.
The percentiles can be used in what are known as Lorenz curves, where the measure
of inequality can be formalised in the Gini index. A Lorenz curve is shown in Figure
3. A Lorenz curve shows cumulative percentages of aggregate income. The "egalitarian
line" is the hypothetical case where all income units receive the same amounts of in-
come. A Gini index measures the concentration of income; it is the ratio of the area
between the egalitarian line and the Lorenz curve to the area of the triangle below
the egalitarian line. Or, put another way, it is equal to one minus twice the area under
the Lorenz curve:
G = iYi
where:
G is the Gini index,
Yi is the proportional share of income of the ith family.
The Gini index will lie between 0 and 1, and high values represent comparatively high
degrees of inequality. The Gini index in developed capitalist countries tends to lie bet-
ween 0.3 and 0.5.
In principle, we should be able to use Lorenz curve techniques to make statements
about whether housing policy has been egalitarian, neutral or inegalitarian in direc-
tion. For example, we may assume that the Lorenz curve in Figure 3 represents the
situation before housing income or housing wealth is accounted. This could be com-
pared with hypothetical post-housing income, outlay and wealth Lorenz curves.
A lower Gini coefficient for post-housing net income, and/or for post-housing net
worth (wealth) would indicate policies running in the direction of egalitarianism. This
sort of work is not yet accomplished in housing literature. In fact, it would pose some
Figure 3. Lorenz Curve Distribution of Income

problems. Housing income is often implicit rather than explicit in home ownership
and similar tenures. "Urban income" is, as our earlier policy references indicate, an
important part of well-being in housing. Outlays will reflect mortgage repayments,
below market rents in some cases, and other forms which do not reflect economic
opportunity costs. However, it is financial outlays which are important in terms of
housing impacts on household budgeting. Housing outlays will absorb up to 40 per
cent of budgets for some low-income groups in many societies. Finally, we distinguish
between anti-poverty and egalitarian policies. Egalitarian policies will have impacts
from lowest incomes to those at average levels and somewhat higher, whereas anti-
poverty policies will mainly involve only the bottom 10 to 15 per cent of households.
The foregoing shows that antecedent income distribution is greatly unequal. From
the perspective of an egalitarian, the overall pattern is bad. However, as we suggested
earlier, a housing system can moderate some of the characteristic inequalities, by vir-
tue of its impact upon rent/repayment-income ratios, access to ownership or co-
ownership tenure, and by the locational and cost access to such urban services as educa-
tion, health, recreation and so on. We should conceive of a housing system as a set
of parts or fragments, with the divisions between the fragments having relevance at
key threshold points in the distribution of antecedent income. Figure 4 gives a broad
schematic outline of how a housing system can be related to an overall pattern of
income distribution.
50 IJSE 13,4/5
Figure 4 can be interpreted from our discussion of Lorenz curves. It is the lower
right-hand triangle from the Lorenz box, with the (horizontal) scaling of cumulated
households reduced from the earlier presentation in Figure 3. We can regard the housing
system as divided into parts A, B and C. If we approximate our relevance to the British
housing system, then part A is mainly home-ownership tenure providing for the
middle classes and the rich, part B is public housing providing mainly rental tenure
to the working classes, and part C is older private housing let to poorer groups. One
crucial aspect of a housing system seen in this way, is the height of the thresholds
at the boundaries between the parts. In a very fragmented system with limited mobilities
among the parts, the thresholds can be steeply heightened at the division areas, unlike
income which changes in small incremental steps. These steeply heightened thresholds
can be caused by a configuration of circumstances—terms and conditions of housing
finance being greatly varied, administrative controls cutting out eligibilities at key points
in public or social housing, and incapacity to save for access to home ownership tenure.
This exampling again reflects the characteristic British situation, much simplified, and
used here simply to provide graphic illustration of the relationships between overall
patterns of income distribution and housing systems. As we shall eventually see, a
more egalitarian housing system such as Norway's is not so fragmented and separated
in the lower- and middle-income ranges as the example we have given here. In other
words, housing systems which are very fragmented, with steepened thresholds, tend
to have more inegalitarian characteristics than alternatives which do not divide so
rigidly along lines of tenure, finance and administrative regulation.
Figure 4. Family Income Distribution and a Housing System

Our treatment of housing systems and their relationship to patterns of antecedent

income distribution has been from a total view of both housing and income, rather
than setting a focus on just a part, say, poverty. We shall find considerable advan-
tages in looking at egalitarianism and housing across the total pattern or, at least,
across large sections of the pattern. However, we shall need to get some priority and
some discernment into our discussions. As an obvious matter, we have to determine
our position on general poverty, on "absolute" poverty, and on "relative" poverty.
Clearly income and housing poverty stands out in egalitarian significance. Our view
of egalitarianism will contain a priority that there be a minimum standard or floor,
below which economic and human suffering is acute. Income poverty can be defined
in conventional treatment as a budgetary standard comprising specific nutritional and
other basic needs. Housing poverty is more complex, involving a number of things,
including high rent/repayment-income burdens, poor standard housing, bad landlord-

tenant relations, and very limited accessibility to such urban services as education,
health and recreation. Income and housing poverty overlap, but they do not coincide
precisely. The two major reasons why income and housing poverty do not coincide
precisely are life cycle factors in housing choice and housing immobilities. Some poor
will live in housing of most types of tenure, location, and so on. Over the course of
the life cycle an individual's or a household's relative income will vary relative to others,
and it is possible to be "trapped" in a given housing situation. Where the housing
system is very fragmented and the costs of change from one part to another are great,
then it is possible to be constrained or trapped, especially in the family formation
and the retirement sections of the life cycle. Food, furniture and child-rearing expenses
press upon newly formed families in low- or moderate-income groups, and the retired
sometimes experience a large relative decline in income. Further evaluation of life-
cycle factors, which are so important in housing, are taken up below. Attitudes to
mobility also influence some separation between income or food poverty and hous-
ing poverty. Some poor families are chronically poor, but for others it is a temporary
condition. However, housing choices tend to be made for periods of at least three
to five years duration, even when incomes rise above food poverty lines. The evidence
from housing allowance experiments in the United States indicates that some families
would remain fixed in their poor standard (housing poverty) conditions even when
financial incentives to move to another housing situation were quite substantial[6, p.
115].
If we were to restrict our attention to absolute poverty, whether that be income
or housing poverty, then we would run into a number of problems. First, in a growing
and developing economy, we would find reasonable grounds for preferring a princi-
ple of relative poverty rather than absolute poverty[69]. Social and economic changes
lead to reassessments of needs. For example, in modern society it can be argued that
for satisfactory social functioning, access to education, health, and other human capital
resources is essential[70]. Second, as our review of income inequality has shown, some
of the striking issues occur in the upper income ranges. A relatively few households
account for a large proportion of income, this being explained by the concentrated
ownership of capitalist societies. Housing problems and housing issues extend a long
way across the profile of income distribution, at least as far as a section of income
lying between median and average incomes. The housing issues which have been rele-
vant and significant in that section during the last decade or so are many and varied.
52 IJSE 13,4/5
They include impacts of inflation and unemployment, high interest rates on housing
credit, problems of access to home ownership among first-time buyers, and difficulties
in accumulating savings for the fulfilment of housing aspirations. All of this suggests
that both our egalitarian and our housing perspectives should cover a large range of
incomes, and if we are interested in comprehensive correctives for bad distributional
patterns we must also put our attention to the political economy of the rich as well
as to that of the poor.
Continuing our global view of distributional issues in housing, we now give more
attention to life-cycle factors. Our comments will be made in relation to Figure 5.
Figure 5. The Pattern of Life-Cycle Per Capita Income Profiles

The profile shows that life-cycle per capita incomes tend to fall below the community
average in childhood, in the early years of family formation, and in old age. Because
expenditure on housing absorbs a large proportion of family budgets, it is in these
troughs that many problems of housing access arise. For example, if during the period
of family formation a family is faced with a rise in the total costs of home purchase
at a greater rate than median earnings, it is possible that the family will be constrain-
ed to seek low-rent accommodation. Access to tenure is then tied in with relevant ranges
of housing choice, and, as we have shown earlier, home ownership tenure is one way
in which housing can moderate the inequality in the general ownership of productive
assets and wealth. A housing policy which is designed and constructed to achieve
egalitarianism would provide an adequate stock of low-cost housing, and maintain
a monitoring and evaluation perspective on access to home ownership. For some
families, as the per capita income profiles suggest, access to low-cost housing will
be a temporary need, but for the chronically poor it will be a long-term need.
One aspect of strong cases for egalitarianism occurs when it can be shown that
important inequalities arise from arbitrariness, and that, further, it is possible to change
conditions in such a way that arbitrariness is considerably reduced. That is precisely
the case in many housing systems. Housing systems in many countries are typically
fragmented into parts with heightened thresholds separating these parts. Separations
occur along lines of tenure, varied financial conditions, administrative regulation, and
so on—the precise configuration differing among countries. This leads to a situation
of horizontal and vertical inequity. Horizontal inequity occurs when, for arbitrary
reasons, households on similar incomes pay widely varying amounts for housing which
is of approximately similar standards. Vertical inequity arises when, again for arbitrary
reasons, households on lower incomes pay more for their (similar standard) housing
than others on higher incomes. It is not possible to eliminate all horizontal and ver-
tical inequity in housing. Some is attributable to time-based factors such as rates of
inflation, or rent levels, or availability and choice at the time of entry to the housing
market. These factors vary through time, and some aspects of housing choice are fix-
ed by life-cycle circumstance. However, much vertical and horizontal inequity is really
a structural characteristic of a housing system. For example, what tenures are available,
and to which income groups? How is capital and government finance channelled into
housing? What is the ease or rigidity of regulating access to social housing or to
building society loans? Cross-national comparisons of housing systems show that these
conditions vary greatly among countries[71, 72, 6]. It is possible to design housing
systems so that they have less vertical and horizontal inequity. A housing system with
less structural inequity will also ease the previously mentioned problems of time-based
inequity, because mobility will be improved.
Structural horizontal and vertical inequity also has implications for the economic
efficiency of housing systems. Many countries have efficient housing in the sense that
resources are drawn into housing in consistency with financial flows and expenditure,
and with reasonable competition in the building and construction industry. But there
is a wider sense in which structural horizontal and vertical inequity makes a system
inefficient. If we take efficiency to mean that households are able to fulfil their hous-
ing wants at reasonable cost and within their capacity to pay over relevant sections
of their life cycle, then we can perceive inefficiency in some housing systems. As we
mentioned above, households can be trapped or constrained in a housing situation
where options are severely limited. Reforms to housing systems in the direction of
reducing fragmentation and the height of thresholds which occur at the boundaries
between the fragments, will make housing more economically efficient in the sense
that we have defined efficiency. Choice in housing can thereby be less constrained,
and housing better resourced and organised. In short, more households will get the
sorts of housing they want at affordable outlays.
We can now turn to examine how some egalitarian issues in housing are posed in
the real world, giving us deeper insights into relevance and significance. Sometimes
at the level of general debate the egalitarian is faced with the view either that some
hypothetical middle-income household would not want one-half of a redistributed
mansion, or that if we redistributed housing resources generally each household which
receives additional allocations would not get very much. This sort of argument misses
two important points. First, egalitarians would not argue for an across-the-board
redistribution of the prevailing housing stock, except for ideologues in the aftermath
and in the context of a radical socialist revolution (as occurred in housing redistribu-
tion in the People's Republic of China in the 1950s). Egalitarians simply argue that
public policy can be shaped so that housing is supplied and allocated on terms which
moderate antecedent income distributions. It is largely a question of the adequacy
of the design of financial instruments and setting this within a comprehensive public
policy comprising elements of egalitarian resourcing, land policy and public finance.
54 IJSE 13,4/5
All of this will be clarified further when we discuss the Norwegian and Singaporean
housing systems. Second, housing egalitarians will be aware that the issues of the real
world housing situation are far sharper and have far greater political sensitivity than
in the general debating form of redistributing a mansion belonging to a wealthy family.
Let us look at some examples of real world issues.
In socialist Hungary, housing and urban infrastructure have been under-
allocated[37]. The political and egalitarian issue then becomes one of which social
groups will have access to better standard modern housing, conveniently located, and
at largely subsidised rents. Precepts of socialism suggest that the workers and those
in social need ought to get this housing. In fact, the better housing is allocated
systematically to the technocratic and managerial élite, with other groups dependent
upon residual and older housing. In this example, the sharpness of the issues revolves
around reasons for under-allocation to housing and the practised distribution of that
housing.
Capitalist countries have numerous examples of sharp and highly political egalitarian
issues in real world housing. In Britain, during the 1970s, older inner-urban housing
in London, formerly the preserve of working-class and poor families, became more
competitive with the new interest in renovation and home ownership by middle classes
in those locations. At the level of public policy, this spontaneous "gentrification" had
controversial impacts upon publicly financed urban rehabilitation, upon rent policies,
and upon low-income housing opportunities. More generally in many developed
capitalist countries there were sharp conflicts of interest in urban renewal projects
where low-income housing was under the threat of the bulldozer blades and increas-
ing scarcity. Egalitarian issues in housing policy became intensely political in real world
situations.
For another perspective on egalitarian issues in housing we can refer to the "hous-
ing gap" concept. The "housing gap" is the difference between a full rent or repay-
ment and an amount which low-income groups can reasonably afford to pay.
Historically, poverty studies have indicated that where housing outlays were greater
than about 20 per cent of working-class male earnings, then family budgets would
be severely pressed on food and other necessities. In other words, women and children
tended to experience inadequate nutritional standards and food poverty. As standards
of living rose, and concepts of relative poverty superseded absolute poverty, the 20
per cent allocation to housing outlays by low- and moderate-income families has re-
mained as a rough rule-of-thumb (notional) maximum. This implies some form of
public policy intervention to supply housing in sufficient amounts at low cost, or the
provision of a housing allowance. A housing allowance is designed to bridge the "hous-
ing gap"; it is a cash payment specific to housing, and usually conditioned by needs
standards, family size, and rent or repayment costs. These cash payments reduce liv-
ing costs and/or increase the consumption of housing services. During the 1970s coun-
tries in Western Europe and North America introduced or expanded housing
allowances [6].
Housing has important and basic influences upon a person's past, present and future
life's chances. In the nineteenth century and through to the mid-1960s this was mainly
interpreted for policy purposes as providing decent, sanitary and safe housing for low-
and moderate-income groups. Questions of building codes and standards were pro-
minent, with the idea that in this way life's chances would be improved by preventing
cholera, tuberculosis, other diseases, and the risks of fire and delapidation. Since the
mid-1960s, other housing-related issues have come to the fore in securing and fur-
thering life's chances. Many of these modern issues are connected with human
capital—access to education, health, social, recreational and other services. Sociological
surveys indicated the inadequacy of such services in new suburbs and in older areas
of large cities which served as the living areas of the poor. Locational disadvantages
were combining with restricted urban servicing and remoteness from employment op-
portunities to reduce life's chances among some groups. Another aspect of this life's
chances perspective was the intra-family distribution of opportunities. Accordingly,
some of the key concerns were the quantity and quality of opportunities available
to married women and children. These issues were connected to the extensive social
segregation which had been occurring in urban development in the period 1950-70.
In earlier discussions (see chapter III) we saw that tax treatments of housing and
land policies touch significantly upon egalitarian issues. Egalitarian issues in housing
cover a many-sided relevance—structural inequalities in housing systems, arbitrary
horizontal and vertical inequity, the housing gap, life-cycle poverty, income and class
competition for housing in socialism and capitalism, and the relationship of housing
to life's chances and intra-family welfare. The modern economics of public policy has
developed a theory of merit goods for application to things like housing where
egalitarian issues are various and complicated, and where individual and social/political
choices are intertwined. Merit goods theory has been elaborated by Head[73] with
relevance to spheres of social policy where goods or services are provided directly in
kind, rather than just by means of social cash income. The in kind aspects of housing
include local urban services such as education, recreational and other facilities, and
sometimes social housing is provided directly rather than by using only cash income
supports, like housing allowances.
Merit goods arguments involve critical scrutinies of individual-based choice and,
sometimes, the substitution of this for social preferences. It is unusual for orthodox
economic theory to subordinate individualism. In general principle, the merit goods
case is limited to a basis where:
(1) the knowledge of individuals is significantly imperfect;
(2) the nature of the good or service in question is very complicated;
(3) individuals' choices are distorted by the complexity and the diffuse "exter-
nality" nature of some of the benefits; and
(4) income distributional and poverty problems of a very special sort may be
present.
In housing, de Salvo[74]uses a merit goods argument to justify the transfer of hous-
ing specific income to the poor, even though the poor will often value the housing-
tied transfer rather less than its cost. But social value is imparted to grants from the
willingness of the better off to express their anti-poverty and pro-housing values in
political allocations of resources. That is de Salvo's view of housing as a merit good.
We take the position that housing is a merit good for the reasons given, and that its
56 IJSE 13,4/5
relevance stretches further up the income scale than the bottom 10 or 15 per cent in
poverty in developed capitalist countries. Its position as a merit good, given the scope
of arbitrary inequalities in the housing systems, reaches to income categories lying
between mean and average incomes. Most significantly, recalling our emphasis upon
new theory which conceptualises housing as production (see chapter IV), we can ex-
tend the merit goods argument to bring this into account. In practice, housing-related
productivity is not fully marketed, leading to constraints in the financing and resour-
cing of housing. Public policies aimed at raising the levels of resourcing and financ-
ing can be interpreted as merit goods provisions.
Summary
Our general view of policy issues in housing has identified trends and questions which
have been addressed in both advanced and developing countries. The key issues in-
clude the role of housing in economic development, the relationship of housing to
general inequality in society, and how economic and social institutions can be arranged
to compensate for resourcing difficulties in both socialist and capitalist housing. These
issues reinforce some of the matters from our earlier discussions of theory. They point
to the essential interdisciplinary and political economy nature of housing. From new
theory, housing can be viewed as "production", and, if viewed comprehensively in
relation to economies which experience inflation, recession and discontinuities in
development, housing can be used in a partially corrective or ameliorative way. These
matters point us in the direction of practice. As we noted, practice can provide us
with operating guidelines, which we can state as general principles and as a further
dimension of theory in housing. Thus, we now review successively, housing practice
in Norway, Singapore and the People's Republic of China.
VI. THE NORWEGIAN HOUSING SYSTEM

The economic situation in Norway during the 1970s compared favourably with that
in other developed capitalist countries[75]. Per capita income in 1980 stood at a relative
high of US$11,357; unemployment was less than one per cent; and the balance of
payments was in credit. Norway experienced steady economic growth up to the 1970s,
and during the 1970s its possession of oil and natural gas reserves enabled it to bridge
the worst stresses of structural unemployment, inflation, and change experienced world-
wide. Between 1974 and 1977 Norway's growth rate was double that for the average
in OECD countries. However, wage and price inflation occurred 1977-78, and in
response government tightened money supply and pursued a cooling off period in
wages and prices.
Egalitarian tendencies have operated in various spheres of economic policies—in
wage settlements, in government expenditure which reached 50 per cent of GDP in
1974, and interest rate policy. Some new directions were taken in policy in the capital
markets and in interest rates after 1978. Pre-1978, policy was to maintain low and stable
(nominal) interest rates in order to protect low-income groups, especially in housing,
and to stimulate investment. In 1978 policy turned in the direction of partial liberalisa-
tion, giving more flexibility and economic freedom in bank lending rates and in the
workings of the capital market. Nevertheless, the capital market is not completely
free, and the change reflected a loosening of some administrative regulations. This
has affected housing policy, where the proportion of Housing Bank lending in total
state banks' lending fell from 56.9 per cent in 1971 to 38.9 per cent in 1981. Also,
the share of state banks' lending in total domestic credit fell from 55 per cent in 1978
to 30 per cent in 1981. Government, nevertheless, ensured a firm flow of funds into
housing. As the private banks increased their supply of credit, a quota of total credit
was earmarked for housing. In short, housing has been co-ordinated with changes
in monetary and capital market policies. Housing has maintained a firm position in
relation to other indicators. From an indices base of 100 in 1978, by 1980 the building
and construction index had reached 216, being below the consumer price index of
223, but hourly earnings by adult males exceeded these other indicators, attaining
273. The average useful floor space in Housing Bank dwellings continued to increase,
from 75 square metres in 1973 to 83 square metres in 1980. Further housing indicators
are given in subsequent explanation.
In terms of political and cultural impetus, various political scientists, political
economists and social critics have drawn attention to the comparatively egalitarian
conditions in Norwegian society. Sieriestad[76] comments upon the egalitarian ideals
in the equalisation of some incomes and in the social control of business. Torgenson[77]
identifies a number of characteristics and examples, all tending towards a comparative
egalitarianism—Norway has no legacy of conservative aristocracy, and large business
is less dominant in domestic politics than in other countries. Public institutions
dominate the elite, and Norwegian conservatives tend to be more moderate and stand
further left on the political spectrum than conservatives in other European countries.
Society is less stratified and it has no formal barriers to check social mobility; but,
purely in terms of household income distribution, Norway's inequalities are only
marginally less than other developed capitalist societies. Politically, nevertheless,
privileges have been eroded, and social democratic politics have been dominant from
the 1930s until 1970. The welfare state has been firmly established in a context of
steady economic growth, comparative social and regional homogeneity, and the absence
of major political disturbance. In Norway, political crises tend to get resolved without
leaving irreparable wounds. Egalitarianism has not inhibited economic performance;
and in terms of widening human capital and security, it may have enhanced economic
performance.
Historical Perspective
Norway probably has housing policies which are the most effective among modern
democratic countries. The general characteristics include the expression of social
idealism infinancialinstruments, a relatively unbureaucratic administration, and keep-
ing the choice of tenure and dwelling type mainly within the client-developer rela-
tionship. The financial instrument, affordable loans with housing allowances for low-
and moderate-income households, is available generally to owner-occupiers, to co-
operators and co-owners, and to private landlords. Accordingly there is less sectoral
separatism than in other countries. At the 1980 take up of state Housing Bank loans,
which financed some 80 per cent of new housing loans, owner-occupiers absorbed
61 per cent, co-operators 23 per cent, and private enterprise landlords, 9 per cent. Some
58 IJSE 13,4/5
80 per cent of these housing loans were used to develop single and two-family houses,
and 14 per cent go to apartments.
From the perspective of coherence and continuity in policy document, a useful
package of co-ordinated elements was developed as early as 1916. The Norwegian
Labour Party had then articulated a policy covering support for home ownership,
municipal land acquisition, municipal housing for relieving chronic shortages, sup-
port for co-operative housing, and security for tenants. Furthermore, in modern times
there has been broad political agreement on the main principles of Norwegian hous-
ing policy. In summary form, the overriding objective is that every family and every
single-status person shall have access to a dwelling which is affordable and
non-stigmatising.
The principal agencies of central government housing policy are two state housing
banks. They have deep historical origins. In 1894 the Government created the Hous-
ing Loan Fund to provide housing credit for low-income families. This initiative has
produced, through successive stages, a modern housing policy dominated by central
government housing banks. The changes occurred by consolidating the role of cen-
tral housing banks, and since 1946 these instruments have been the Housing Bank
and the Smallholders Bank. These banks operate as financial and administrative
organisations, reviewing applications for funds and administering the mortgages. Hous-
ing credit is available to any adult Norwegian, regardless of income but with limits
on the size or standard of housing which can be permitted; and the allocation of
resources to housing has slotted into a system of national social and economic plann-
ing started in 1946. As noted, the banks support owner-occupier, co-operative and
rental tenure. Government has used its dominating economic role so that savings banks
buy government bonds and then channel the funds to the housing banks.
In response to the severe inflation of 1973, the Government introduced reforms to
housing finance aimed at easing repayment burdens and expanding housing allowances
(inherited from the 1950s) so that low-income access was easier. Under the revised
housing allowances, those on the lowest incomes paid no more than 15 per cent of
their incomes on housing. For those with higher incomes, the scale of assistance was
reduced to cover 20 per cent of housing costs. The scheme was designed to reach those
income groups just below the average.
Housing allowances were available to owner-occupiers, co-operators, and renters.
By 1978 they covered 112,000 households and cost N.kr.289 million. Essentially,
Norwegian housing allowances are designed to cover 65 per cent of the difference bet-
ween "calculated" housing expenses and amounts considered reasonable to be borne
privately. The "calculated" expenses are referred from actual costs and related to a
scale which rises modestly with increases in family income.
The extended housing allowance scheme was co-ordinated with simultaneous revi-
sions to the banks' loans, where applicants could choose between gearing repayments
to annual average earnings ("levelling" loans) or repaying a ratio of the principal of
the loan ("nominal" loans). The deferred payments "levelling" loans have been more
popular than "nominal" loans. The repayments on levelling loans were calculated an-
nually, by relating them to the average banks' loans in that year, and they were fixed
in relation to 20 per cent of average male blue-collar earnings, and were assessed
independently of interest. The loan accumulated debt in the early years when
repayments did not cover interest charges. This scheme operated in the years 1973-78.
It was revised in 1978 because the Housing Bank loan conditions had become very
favourable compared with the private loans. However, although repayment conditons
became tougher, they maintained the principles of broad affordability and of deferr-
ing payments to later years of the loan. The basic loans extend over a 26-year credit
period, with easy-start conditions on payments of interest and instalments. Interest
payments increase incrementally each year for seven years, beginning at five per cent
and reaching the bond rate of 10.5 per cent in the seventh year. The principal (instal-
ment) repayments commence in the seventh year at two per cent of total loan and
escalate in steps up to seven per cent in the last two years.
Norway had achieved reform in response to considerations of inflation and distribu-

tional equity in just one step in 1973 by simultaneously altering housing allowances
and the structure of the banks' loans. Subsequent revisions have reflected the basic
1973 principles. This indicates the direct, uncomplicated, and effective approach in
Norwegian housing. Home ownership has continued to grow, but on grounds of tenure-
related equity it is taxed. Imputed rental value is taxed at 2.5 per cent on 30 per cent
of the value of the dwelling; other assets are subject to the same tax rate, but full
value, not just 30 per cent of value, is taxed.
We can now take our review of Norwegian housing policies one step further by
describing and explaining it in terms of basic structural conditions, drawing upon ideas
and evaluations in the discussions on sociological and economic paradigms.
The Norwegian Housing System in Structural Perspective

Figure 6 provides an outline of the broad economic workings of the Norwegian hous-
ing system. We are not directing our attention to market impacts, but rather to how
housing is resourced and financed from the overall economic system. Our portrayal
in Figure 6 does not show any housing production flows returning to the rest of the
economic system. Nevertheless, housing is production in the sense that women and
men work in domestic activities, they sometimes rear children, and various activities
enhance intra-generational and inter-generational human capital. They also achieve
many things at home which are, perhaps, the ultimate satisfactions in life.
The economy is viewed as operating from the basis of the production-consumption
sector where goods, factor services, incomes and spending flow circularly through con-
sumption and production. The production sphere builds, renovates and provides ser-
vices to the housing system, and it has inflow and outflow relationships with the govern-
ment sector. It produces its own capital goods, and funds for new private capital for-
mation originate in household savings and in credit creation in the capital market.
The government sector has some influence on the capital market and on its relation-
ship to the housing system. First, its monetary policy will have impacts upon the levels
of credit available, upon the rate of interest and other terms on which credit is available,
and upon the degree of liquidity (i.e., the facility with which funds can be used to
purchase real resources). Second, government has the potential to influence the rela-
tionship between housing capital and the wider capital market. This can be done in
various ways. For example, in Norway it has been done primarily through the
60 IJSE 13,4/5
Figure 6. The Norwegian Housing System, 1980

Housing Bank, as previously described. Beyond the key role of the Housing Bank,
Norwegian governments have been able to influence private sector finance into hous-
ing. For example, for housing which is close to the spatial and cost standards provid-
ed under Housing Bank auspices, the Norwegian Government (1982) has been able
to persuade private banks and financiers to provide loans over a 25-year credit period,
at 12 per cent interest, and with redemption on repayment during the first five years.
Thus the "deferred" payments characteristic has been extended into privately financ-
ed housing. Some 50 per cent of privately financed housing operates in this way, with
the remaining 50 per cent having a 20-year credit period, no period of redemption,
and interest rates, similarly, at about 12 per cent.
The most useful way of viewing the Norwegian housing system as shown in Figure
6, is to place the focus upon the role of government and the Housing Bank as in-
termediaries. These two instruments shift resources from the general production-
consumption system into the housing system. The Housing Bank has performed this
intermediary role since the 1890s, adding supply year by year to the housing stock.
In comparative terms the rate of production in Norway is consistently high. For ex-
ample, in 1978 Norway completed 9.4 dwellings per 1,000 population, relative to 8.6
in the United States, 8.0 in the Soviet Union, 6.0 in West Germany, and 6.5 in Sweden.
The policy pursued by Norwegian governments has been to maintain a reasonably
steady flow of new housing supply, and in more recent years, also, in renovations.
During the 1970s the annual average flow of new housing was just over 40,000, com-
pared with 31,600 in the 1960s. In economic and financial essentials, what happens
is that a flow of saving from the general community is channelled into housing; and,
especially in its connection to home ownership and co-operative (i.e., co-owned) tenure,
wealth is spread to some extent (see Table I, and the later discussions in this chapter).
Figure 7. Home Ownership in the Housing Stock of Selected Countries

Sources: Schriftenreihe Wohnungsmarkt und Wohnungspolitik, Wohneigentiumsquote (07.005),

Bundesminister fur Raumordnung, Bauwesen und Stadtebau, Bonn, 1979; United Nations (ECE), A Statistical
Survey of the Housing Situation in the ECE Countries Around 1970, New York, 1978, pp. 80-90; and An-
nual Bulletin of Housing and Building Statistics for Europe, 1979, pp. 37-41. Personal communications:
Den Norske Stats Husbank; Riksbyggen; and Jan van der Schaar, Technische Hogeschool, Delft.
Notes: The Norwegian and Swedish statistical representation includes co-operative (co-ownership) tenure,
which is 14 per cent for Sweden and 17 per cent for Norway.
To some extent, the saving of the rich flows into housing asset formation, available
to a wider range of income groups. The rich continue to own and to reproduce capital
through the production process, but via financial instruments and resource flows, some
wealth (assets) and housing income flows are spread to the not-so-rich, to middle-
and to moderate-income groups, and to some working-class families. Norway's com-
parative position in home ownership and co-operative tenures is shown in Figure 7,
with some 67 per cent of the stock being in these tenures.
The variations in home ownership among countries arise from a whole configura-
tion of circumstances, including cultural, ideological, and historical factors. However,
the major explanation is to be found in accessibility via the way financial instruments
are designed and constructed. The specifics involve duration of loans, patterns of repay-
ment, amount of own capital or savings deposit, and the loan-to-building cost ratio.
Access is difficult where we have short-term loans, high requirements for own capital,
and low loan-to-building cost ratios. Some comparative data is represented in Figures
8 and 9.
All the representations should be interpreted cautiously. They are based upon ex-
amples taken in the years 1974-80, and with the aim of reflecting "typical" housing
costs and tenure "cost"/price (via "typical" instituted financing). This, of course, means
that a "typical" pattern of production and tenure price/cost should be compared with
variations and the extent of "untypical" conditions—dwelling form, city-rural con-
text, eligibilities for over-subsidies, waiting time for easier access schemes and so on.
However, the representations do have some use for making very general comparative
evaluations and relating tenure proportions to financial structures. Furthermore, they
point towards ways in which tenure can be used as a partial equaliser in some income
ranges between the top decile and the bottom three deciles of family income
distribution.
62 IJSE 13,4/5
Figure 8. Own Capital and Capital Costs Typical Financial Structures for
Mortgage-Financed New One-Family Homes, 1974-80
Sources: See the listing in Figure 7.

Notes: Be-Belgium, 54 per cent owner-occupied stock in 1976.
Br-Britain, 51 per cent owner-occupied stock in 1976.
D-Denmark, 53 per cent owner-occupied stock in 1976.
F-France, 45 per cent owner-occupied stock in 1976.
USA, 64 per cent owner-occupied stock in 1976.
WG-West Germany, 34 per cent owner-occupied stock in 1976.
N-Norway (Housing Bank housing).
Under income-conditioned subsidy schemes in Belgium and France the percentage of own-capital is reduc-
ed to some 30 per cent and 25 per cent of buying price, respectively.
Some basic initial concepts and definitions are as follows:
(1) Own-capital: capital contribution from the individual required to cover that
part of the value of housing not covered by the loan. This is expressed as
a percentage of the total financing.
(2) Income: own capital ratios; "income" is net annual average income.
(3) Capital costs: the annual interest and principal repayments. These are express-
ed variously as a percentage of "income", and as a percentage of total
financing.
The representations shown in Figures 8 and 9 indicate that Norway has comparative-
ly good access to home ownership/co-operative tenure, though access has become more
difficult from 1975 to 1980. In fact, most of the points fixed for other countries refer
only to earlier 1974-77 data, and access has become more difficult with increasing
interest rates and higher prices since 1977. In 1980, a Norwegian family buying a new
cottage of some 85 square metres in a large city such as Oslo, would pay N.Kr
Figure 9. Income-own Capital and Capital Costs-Income

Sources: See the listing for Figure 7.

Notes: Be-Belgium; Be1 -white-collar worker; BE2 blue-collar worker.
Br-Britain.
D-Denmark; D1, D2, D3, D4, -according to rural and urban housing cost and income differences.
D3 and D4 represent urban and metropolitan housing costs and incomes.
F-France.
USA
WG-West Germany; WG1, professional income, WG2, blue-collar worker income.
N-Norway (Housing Bank housing).
France and West Germany support saving for home ownership with grants/premiums and/or tax credits.
330,000 (US$53,140). Median and average annual (individual) incomes were in the
range N.Kr 80,000 to N.Kr 100,000 (US$12,880 to US$16,105).
Norway has a social land policy, derived from the well-tried and effective Swedish
land banking practices. The Swedish central government provides long-term loans to
local governments in order that they can make advanced purchase of rural land which
is planned for further development. As demonstrated theoretically and empirically
in the relevant literature[6], prices are otherwise raised by speculation in the transfor-
mation from rural to urban use, whenever urban growth is rapid. In Norway, the Bank
of Norway issues land acquisition bonds, and owners who accept the bonds when
the land is purchased by local authorities are not liable for capital gains tax if the
bonds are retained to the expiry date. Local authorities can also buy land for cash
or by arranging for a "land acquisition bond loan" from the Municipal Bank. This
Municipal Bank has a wider urban role, providing loans to local authorities for develop-
ing urban infrastructure investment. Accordingly local authorities have the legislative
power to achieve good standard town planning, and the access to resources whereby
they can take leading roles in associating housing programmes with town plans, and
in co-ordinating urban investments. This fulfils those useful principles of economic
efficiency and broader social goals which we elaborated in our discussion of the
economics of land policy (chapter IV).
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The Norwegian housing system can be related to the profile of Norwegian family
income distribution, schematically shown in Figure 10. This figure can be interpreted
from our earlier discussions of Lorenz curves. It is the lower right-hand triangle from
the Lorenz box, with the (horizontal) scaling of accumulating households reduced
from the earlier presentation.
Figure 10. Family Income Distribution and the Norwegian Housing System
We can make some general comparative statements about the distribution of family
income in Norway. First, in terms of percentage distribution, the bottom quintile of
households receives some 5.6 per cent of total income, compared with the top quin-
tile which receives some 40 per cent. Second, in his comparisons of Gini coefficients,
Sieriestad[76] found from 1950-70 data that Norway had a coefficient of 0.386, with
West Germany at 0.473, Sweden at 0.399, the United States at 0.397, and Britain at
0.366. Clearly all these societies have coefficients which are similar, reflecting their
common capitalist foundations. However, Norway is slightly more egalitarian than
most of the other countries cited, and, as we shall see, its housing is more egalitarian.
With reference to Figure 10, we divide the housing system into two categories, A
and B. Households in category A will live mainly in larger, non-Housing Bank dwell-
ings, compared with those in category B. They finance their dwellings directly from
the regular capital market, at greater expense than those in category B, who get hous-
ing through the Housing Bank system. As we have seen in the discussion above, some
privately financed housing (category A) has been influenced by the reforms in Hous-
ing Bank financing, 1973-80. Loans are up to periods of 25 years, with some deferred
payments principles applying to the conditions of the loans, and with interest rates
at about 12 per cent (1982). Moreover, since there are no income eligibility limitations
on cheaper and more flexible Housing Bank credit, the richest can have access to easier
finance. Their option for non-Housing Bank credit or for outright purchase is a
preference for larger and more expensive houses. The Housing Bank housing is con-
trolled on the basis of spatial and cost standards (but not bureaucratically so), not
on income eligibilities or on rigid design types.
The housing built or financed in association with the Housing Bank serves the ma-
jority of Norwegian households. It is capacious and of more varied design compared
with housing in both the capitalist and socialist countries of Europe. As mentioned
earlier, since 1973 Housing Bank finance has been geared to a capacity to pay, taking
as its benchmark some 20 per cent of average male blue-collar earnings, but with some
subsequent revisions which make the loans closer to private sector conditions. It is
a deferred payments design and construction, available in co-operative (co-owned)
tenure, and in private rental. Eligibilities for housing allowances are widespread through
low- and moderate-income households; again, they go across tenure lines. The
eligibilities are fixed in relation to family income, family size, and housing outlays.
Housing allowances are designed to reach up the income profile to the range between
median and average incomes. Other egalitarian aspects of Norwegian housing policy
include (low) rates of tax on imputed rental values of owner-occupied housing and
a capital tax. Imputed rental is taxed at 2.5 per cent on 30 per cent of the value of
the dwelling. Interest payments are tax deductible in home ownership and co-operative
tenure. In summary, the tax treatments favour housing compared with other assets,
but the tax collector gets relatively more revenue from higher value dwellings than
from lower value dwellings.
We can extend our appreciation of the egalitarian direction of Norwegian housing,
by looking at the effects on the distribution of wealth, and at the allocation of hous-
ing allowances to households. Table I gives some indications of the effects on the
distribution of wealth.
Table I. Wealth and Housing Real Estate

Wealth group Housing and real estate as a
(net worth) percentage of wealth
Kronor
Negative and zero 55.20%
1 - 9,999 (US$ 1,610) 48.30
10,000 - 24,999 (US$ 4,025) 47.19
25,000 - 49,999 (US$ 8,051) 53.90
50,000 - 99,999 (US$16,103) 48.62
100,000 - 199,999 (US$32,206) 37.20
200,000 - 499,999 (US$80,515) 33.77
Above 500,000 (US$80,515) 32.59
Source: These are 1976 data, calculated from Table 373, Central Bureau of Statistics, Statistical Yearbook,
1980, Central Bureau of Statistics, Oslo, 1980[78].
66 IJSE 13,4/5
The data show that home ownership and co-operative tenure tend to deconcentrate
the distribution of wealth to a limited extent. Housing wealth is more significant in
the wealth of lower and moderate asset groups. The richest will often have home owner-
ship, but stocks, shares and business ownership are more important in their total ac-
cumulation of assets. Home ownership or co-operative tenure does not extend fully
down the income profile, with the earlier presentation of Figure 7 indicating that over
25 per cent of households are in rental tenure. This will include some of the poorest,
who, although supported with various social income provisions, have been unable to
save the deposits necessary for access to home ownership. Housing allowances will
have reduced their rent-income burdens, and in some instances eased access into home
ownership or co-operative tenure.
The data in Table II show the allocation of housing allowances. It indicates that
the allowances reach to Kr. 90,000 (US$14,492), being just below average individual
incomes, and that in the higher income ranges the main factor giving eligibility is
the higher housing expenses. Most allowances are clustered in the low-income range
Kr. 15,000 per annum to Kr. 45,000 per annum (US$2,415—US$7,246), where
housing outlays range from Kr.5,000 per annum to Kr.15,000 per annum
(US$805—US$1,169. The redistributional impact is clearly mainly for anti-poverty
purposes, with some modest egalitarian associations beyond anti-poverty purposes.
The Norwegian housing system works in egalitarian directions in several respects.
It tends to deconcentrate wealth by adding asset value to middle- moderate-, and some
low-income households. The housing allowances target assistance through a wide range
of income groups across the poor and the mean income sections in the profile. Land
pricing and urban investment is influenced by social principles in land policy. At a
more general level, the Housing Bank acts as an intermediary between the production-
consumption process and the capital market on the one hand, and the housing system
on the other. The Norwegian system expresses social goals through the design and
construction of housing finance. Compared with other countries, supply has been
maintained at high levels over a long period of time, and the housing system contains
less rigid separatism along the lines of tenure, dwelling type, and housing which is
stigmatising and/or identifiably "government" housing in some countries. In its general
economic framework, Norway has maintained better growth rates than many of the
modern democracies; levels of employment have been high; and interest rates have
risen less steeply than, for example, in the United States or Australia during the years
1978-81.
Egalitarian directions in housing are at best limited, but useful. Inequality remains
basically in the production process and in the ownership of productive capital in
capitalist societies. As we have seen, socialist societies have their own structural ine-
qualities in general, and the inequalities show up in housing allocations and in under-
allocation of resources to housing. The Norwegians have some housing egalitarianism,
to be interpreted as a moderating influence on basic and fundamental inequalities
in the economic system. At least, housing in Norway does not entirely endorse and
accentuate prior inequalities. To go further, would mean that other things would have
to be contemplated. The possibilities would include: (1) accounting housing-related
activities as production, with financial flows attached to services and to costs, (2)
spreading the ownership of capital in manufacturing and commercial activities, and
(3) pushing up home ownership and co-operative tenure rates among the low-income
Table II. Allocation of Housing Allowances by Family Income and by Housing Outlays (April 1982, in Kr. 1,000)
Income per annum
Housing 10 10-15 15-20 20-25 25-30 30-35 35-40 40-45 45-50 50-55 55-60 60-65 65-70 70-75 75-80 80-85 85-90 > 9 0 Total
Outlays (US$3,543) (US$7,085) (US$10,628) (US$14,171)
5 36 25 81 535 18 695
5-6 52 35 117 1,254 288 14 1,760
6-7 166 75 326 2,597 823 410 38 4,435
7-8 242 124 595 2,964 1,320 953 533 36 1 6,768
8-9 281 131 702 3,112 1,501 1,162 847 371 34 7 8,148
9-10 419 210 891 3,263 1,629 1,273 965 738 260 42 4 9,694
(US$1,610)
10-11 391 193 875 3,047 1,514 1,269 1,001 833 521 176 35 9,855
11-12 424 212 744 2,403 1,259 1.090 930 812 613 438 159 24 1 9,109
12-13 420 203 576 1,514 995 1.014 861 771 626 535 462 239 17 8,233
13-14 423 222 510 1,091 785 872 740 712 644 640 653 552 166 6 8,016
14-15 486 225 589 1,235 821 738 716 714 610 779 825 851 523 62 1 9,175
(US$2,415)
15-16 282 99 163 288 311 357 370 400 436 553 636 702 671 199 19 1 5,487
16-17 426 171 244 455 464 525 586 651 698 871 872 932 758 414 58 6 2
17-18 151 61 61 90 103 110 152 187 239 288 386 449 448 354 95 19 1 3,194
18-19 213 72 96 142 183 186 188 184 196 266 334 383 411 422 121 21 3 3,421
19-20 52 10 15 21 19 32 33 35 47 56 97 102 131 135 117 33 8 1 944
(US$3,220)
20-21 104 22 39 45 55 57 71 77 108 147 220 285 356 420 438 135 7 2,586
21-22 4 1 3 4 3 1 5 1 3 9 3 6 4 47
22 13 3 6 3 2 4 7 7 12 5 12 18 15 7 13 20 11 158
(US$3,543)
Total 4,585 2,090 6,627 24,062 12,090 10,067 8,039 6,531 5,040 4,811 4,693 4,532 3,503 2,036 2,036 859 234 42 99,858
Source: Personal communication with Norwegian Housing Bank.
68 IJSE 13,4/5
groups and/or raising their relative incomes. These matters touch upon institutional
matters and upon the access of housewives, house-husbands and children to financial
income and to property rights, more than they make a general call for the advent of
socialism.
Not everything in the Norwegian housing system is entirely egalitarian. We recall
that the low-income households cannot always save enough to gain access to home
ownership. Also, the low-interest rate policy may exhibit some perversities. Although
low interest rates ease access, and, via privileged circuiting, housing is firmly resourc-
ed, some low-income savers, and especially the aged, are not sophisticated in deploy-
ing their funds where the returns are highest. Some of their saving is accordingly caught
and trapped in low-interest channels, with higher income groups increasing their wealth
via cheap housing credit. This is not to argue categorically that housing money should
be at the same cost as non-housing capital; what is needed is an evaluation of the

incidence of costs and benefits overall. In most countries, housing capital and the
financial instruments attached to it, were created explicitly and institutionally. These
things did not grow spontaneously in the design of abstract economic theories. Both
theoretical and institutional perspectives are relevant to housing. It is when we look
at institutional perspectives that we are able to go beyond the economic issues to the
social and political matters which also determine qualities of life and the degree to
which democratic characteristics are present.
The Norwegian housing system is democratic and participatory to a very large degree
compared with that in other countries. Choice, self-fulfilment, and the social idealism
of co-operation are strongly present in Norwegian housing institutions. Norwegian
families can choose between taking their housing developer and their tenure through
self-initiative, a co-operative housing society, or via a private limited company. No
matter which choice is taken, the easy-loan system and housing allowances are similarly
available from the Government's Housing Banks and public finance. But if the fami-
ly wants a larger house and can afford it, the finance from private sector mortgaging
can support this through a range, running from proximity to the characteristics of
Housing Bank housing to luxury housing. Similarly, dwelling design has open choice,
and it is notable that Norwegians choose high-rise flats only at some 4.8 per cent
of new building (1982). Choices in other countries (e.g., Singapore—see the following
chapter) are more constrained under bureaucratic and producer controls, with higher
proportions of high-rise dwellings.
Some of the choice, self-fulfilment and participation can be seen through the ex-
pression of the co-operative housing movement in Norway. The co-operative move-
ment claimed attention when, following high rents and escalations of rents in the 1920s,
trade unions and tenants took initiatives to develop non-profit housing. In 1919 the
Oslo Savings and Housing Society (OBOS) was founded as a tenants' co-operative.
It adopted the successful Swedish model for the development and estates manage-
ment of housing. OBOS has been a significant participant in Oslo City Council's hous-
ing programmes; the Council is a member of OBOS, and in 1946 it transferred some
of its housing into co-operative tenure.
The Norwegian co-operative movement has organised its interests on a national scale
and the larger societies have been both enterprising and adaptable to social and
economic change. In 1946, the Norwegian National Federation of Housing Societies
(NBBL) was founded to promote the co-operative housing movement. It is closely

involved with the wider co-operative housing movement in Sweden, Denmark, West
Germany, and in other countries. The European co-operative housing movement has
a dense network of informal and formal professional interaction. Norway's govern-
ment has, under the Housing Societies Act, 1960 and the Housing Groups Act, 1960,
given legal protection to co-operators. In 1976 it prepared an amendment to ensure
that individual co-operators had greater participatory rights in the development side
of the housing business. Co-operative developers, along with other developers, have
had problems of getting resident participation in planning, despite the fact that
members have democratic voting rights to elect delegates and committees. The in-
dividual co-operator is the last one to appear in the planning and development pro-
cess. The development side of the organisation has to negotiate with local govern-
ment on land development and housing policy. This part of the operation also assumes
the risks of supervising contractors and fulfilling the contract, thus protecting the
final consumer from slippages in the complicated processes, and from run-away prices;
but the development has to be planned somewhat bureaucratically, and some con-
flicts can arise from this. The individual co-operator gets the keys to the house after
the development process is complete and when the housing estate is formed into an
"estates management co-operative".
The co-operative housing movement has been influenced by a spate of residents'
action and the demands for more participation. For example, at the co-operative hous-
ing estate at Furuset, Oslo, open meetings were held before planning began. The estate
provided a host whose job it was to ensure that social development was realised. As
the general concern in housing broadened from the dwelling to the wider urban en-
vironment, OBOS and other societies expanded their involvements to include com-
mercial, industrial and social development enterprise and investment. This, in co-
operative housing, the institutionalisation process which began with a mixture of social
theory, a need for self-fulfilment, and the urgency of getting a "roof over the head",
adapted to social and economic change, and to demands for greater participation by
residents in urban development.
A co-operative housing organisation enables members to participate in the follow-
ing rights in Norway. Individual operators get a co-owned share in the property.
Membership is open regardless of income, political affiliations or religion. Access to
housing is achieved from the co-operative society's waiting list, and the waiting time
depends upon the preference for size and location of dwelling. Membership of the
society confers voting rights and eligibility to candidature for positions in the socie-
ty's organisation. Once a member is allocated a house he/she also becomes a member
of the estates management co-operative which is responsible for the dwelling. Members
can exchange dwellings, can transfer membership to a son/daughter, and can remain
on the waiting list for a house in a particular location. Housing costs comprise loan
repayments (via the society to the government's Housing Bank), estate management
costs and personal costs on interior maintenance. The society owns the dwelling, but
the member has a legally protected equity share in the property which can be sold
to the society at a value determined by a local government valuation committee.
Self-fulfilment for the individual ends up as a complicated package of rights and
responsibilities. However, many social and economic needs are met in this system
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which is voluntary. Members can get access to housing outside the society, so the society
has to be competitive in costs, dwelling design, and consumer satisfaction. As life-
cycle needs change, a member can change house and location according to preference
and the period on the waiting list. The society is organised democratically, and in
the modern world it has had to become more participatory, not just relying upon elec-
tions. Also, because the society has to be competitive, it has to be reasonably enter-
prising and adaptable to social and economic change. In short, co-operative housing
in Norway represents the institutionalisation of social idealism, self-fulfilment, ad-
ministrative enterprise and experience, and it is integrated into the pattern of com-
munity power in politics, finance, industry and public support.
This institutionalisation is not the epitome of perfection and complete harmony.
Housing is too full of conflict and administrative dilemmas for that. The main point
is that social ideals and motivations have to be real, and they have to be institutionalis-
ed, if they are to be productive and useful. The Norwegian co-operative housing system
is a comparatively good example of what can be achieved by institutionalisation and
a distinctively social means of making property in housing accessible to individuals,
some of whom will be from low- and moderate-income groups. Norway has a hous-
ing system which simultaneously expresses some economic egalitarianism, and
democratic and participatory values.
Summary and Perspective

Rawls[79] places priority upon obtaining benefit to the least advantaged in his
egalitarian theory. The Norwegian housing system achieves clear anti-poverty pur-
poses most clearly in its housing allowances scheme. But anti-poverty and egalitarian
purposes are supported in a whole package of measures which are co-ordinated to
achieve social objectives. In housing credit, the Housing Bank creates affordable long-
term loans, and beyond this in private loaning, under government influence, some
credit has characteristics which approximate to Housing Bank conditions. Within the
Housing Bank provisions, tenure and dwelling design have open choice, and these
housing variations are all accommodated within similar financial terms. Home owner-
ship and co-operative tenure result in some deconcentration of wealth, though the
poorest would find it scarcely feasible to save sufficient for access to these tenures.
Land policy ensures that pricing is kept at cost, and speculation which otherwise would
occur is largely avoided. Infrastructure investment "leads" town planning provisions,
and this makes the external economic benefits (i.e., access to urban services) broadly
available throughout urban committee.
Although some theorists[53] have argued that housing should be interpreted as pro-
duction, not consumption, modern capitalist and socialist economies are not actual-
ly operated as though housing is production. Consequently housing is paid for from
income generated in the production-consumption flows—that is from wages, profits,
rents and payments in primary, manufacturing and tertiary industry. What the
Norwegians have done is to use the Housing Bank and public finance to draw resources
into the production and maintenance of housing.
The practice of good housing in Norway can be written as theory, if we style this
theory as operating guidelines. Here is how such theory would read. Supplies have
been forthcoming on larger comparative scales than other countries at similar stages
of development, and policy has been comprehensive and purposefully directed. In Nor-
way housing has been less vulnerable to economic trade cycles and political reversals
than in many other countries. Unlike the housing systems in other developed capitalist
countries, Norway has a system which is not so deeply fragmented and separated along
lines of tenure, financial sources, social segregation, and so on. Consequently, Nor-
way does not have such emphatic and constraining vertical and horizontal inequity.
Other countries are constrained in the sense that any move to reduce some inequities
in some part of the housing system, creates further inequities in other parts. For ex-
ample, in Britain, any proposal to extend home ownership in the (mainly) rental housing
sector of government provision, raises objections that this public housing would be
split into more affluent and more stigmatised sub-sectors.
In Norway, the financial instruments express the social idealism, not the sectoral
organisation of housing, and tenure choice is more open and flexible. Egalitarian
possibilities also spread across a greater range of Norwegian housing, extending from
the poor to those households just above median incomes.
The egalitarian Tawney[ll] was appreciative that social performance should be
evaluated by examining public and social institutions. He argued that power should
be used to serve public, not sectional, interests, and that authority should rest upon
a basis of consent and rule of law provisions. In short, a reasonable degree of freedom
should prevail, in a context where it is necessary to exercise power for social purposes,
and power is often abused. We have seen that Norway has been able to maintain volun-
tarism, participation and choice in its housing system. Its housing is affordable and
the overwhelming majority of Norwegian families opt for Housing Bank-supported
housing. The Norwegian housing system is efficient in the sense that housing wants
are fulfilled within a blended private and political willingness to pay, and it is socially
effective in the sense that governments have used housing to express community-wide
goals, including the use of housing as a limited equaliser.
VII. HOUSING IN SINGAPORE

We have argued that in developed countries during the last decade or so, housing is
seen increasingly as requiring a simultaneous solution to problems of shelter, social
equity, building efficiency, builders' financial needs and occupiers' financial needs,
and urban and regional networks with complex relationships between housing and
other physical, social and economic services. Singapore provides a remarkable exam-
ple of a country which has transformed from a "less developed" to a "newly in-
dustrialised" status from 1959 to the 1980s, having operated a housing policy based
upon the comprehensive conceptualisation of housing stated in the previous sentence.
In fact, housing has been used as one of several means by which Singapore modernis-
ed. Economic growth and modernisation became the overwhelmingly important ob-
jective among policy makers. In the political economy of the growth and develop-
ment, purpose housing became at once a lead sector in the change process and a necessi-
ty implied by rapid urbanisation.
Growth processes carry some important emotional relationships bound up with na-
tion building, senses of accomplishment, pride and the intensities which are called
72 IJSE 13,4/5
forth in dealing with such social urgencies as slums, unemployment and the political
vulnerability of those who fail to meet the challenges. This increases the politicisa-
tion of housing, and it is this characteristic which is the major feature for the inter-
pretation of housing policies in Singapore. Housing performance has been a key ele-
ment in what has been a phenomenal success in economic development and social
change. In Singapore, housing is a symbol of pride, of nationhood, of the political
achievement of the People's Action Party (PAP), and of government benevolence for
the public interest. In housing, this benevolence is expressed through the public hous-
ing activities of the Housing and Development Board (HDB). HDB is set in a context
where the PAP, which has held government since 1959, has monopolised political power
and somewhat restricted some freedoms. This obviously influences the implicit
understandings and the relationships between government, HDB, housing intellectuals,
and Singapore's citizens, including some 70 per cent of the population—men, women,
and children—who experience much of their life in HDB flats.
HDB operates at the most sensitive of interfaces in the social, political and economic
modernisation of Singaporean society. That modernisation is multicultural, where the
former ethnic divisions of Chinese, Indians and Malays are residentially mixed in HDB
estates; it is expressed in massive urban investments in planned new towns with related
housing, industry, shops, educational and social facilities; and it is all politically related
to PAP power, to organised and official channels of communication between residents
and politicians, and to an extreme sensitivity to the politics of housing. As we shall
presently see, these conditions act both as facilitators and as constraints in the rela-
tionships between general housing policy and operational housing practice which has
enormous welfare and social impact upon Singaporeans.
Singapore has a justified reputation for a high-growth economy and a remarkably
competent system of public administration. Even in a context of international stagfla-
tion and world-wide recession in 1981-83, Singapore has maintained a growth rate of
eight per cent on average in the 1974-82 period. Unemployment has declined con-
tinuously throughout the 1970s and the early-1980s, and inflation has been held to
the comparatively low average of 6.5 per cent in the years of severe international stagfla-
tion. In terms of economic "comparative advantage" Singapore was poised in the early
1960s to become a developing industrialising country. Singapore had labour supplies
where it did not have natural resources, and it could attract international foreign capital
in a regional-international context of expanding markets. However, policy makers in
Singapore have not relied only upon the economic abstractions of "comparative ad-
vantage". They have formulated policies on education, industrialisation, demography,
housing, technology and public investment that stimulate and propel economic growth.
In terms of our earlier discussions on the theory of economic development,
Singaporean policy makers have effected what Myrdal would call "cumulative pro-
cess change". Primary changes in, for example, housing, reinforce other changes and
progress in education, health and industrialisation. Thus, the basis of Singapore's
economic success has been an interactive system of private enterprise and government
public policies aimed towards economic growth and social development. In more
specific terms, rates of saving and investment have been high, consumption has in-
creased with income and induced further investment, and the relationships among
saving, investment, incomes, consumption, and profits have been coherent. Housing
has been a key structural element in the overall economic framework.
Political Development and Housing Policy

Political power in Singapore is exercised in a "pre-democratic" characteristic. Pre-
democratic politics arise when, for functional reasons, power is monopolised with
greater restrictions upon liberty and the organisation of political opposition than would
occur in the Western democracies. In Singapore, power has been thus monopolised
and its "functional" justifications have been in terms of economic development and
avoidance of communal and ethnically-based divisions. Radical and socialist elements
were suppressed within the PAP, within the trade union movement, and in society
generally, especially in the decade beginning in 1963. The wider repercussions have
meant that the PAP has dominated society, though with some sensitivity to permit-
ting a more open society evident in the early 1980s. Political power has also been used
strongly to prevent ethnic tensions and divisions becoming institutionalised in political
parties and in the general political characteristic of Singapore. Institutions, including
those in housing, cannot be completely cut adrift from the societies in which they
operate. In housing we might expect some strong lines of wider political development
purposes in such expressions as landlord-tenant relations, social and community
development, and urban renewal. Much of Singaporean "pre-democratic" housing
will follow top-down uses of authority rather than participatory movements growing
spontaneously to check centralised authority.
The 1950s mark the transition of Singapore from colonial status towards full in-
dependence. Obviously this had importance in political development and, more par-
ticularly, it gave impetus to the political will to do something about the housing pro-
blem as it stood in the 1950s. At that time Singapore had all the indicators of mass
and deep housing poverty: rents for reasonable standard housing with good per capita
spatial standards were too high for the overwhelming majority of the population;
population was increasing at a high 4.4 per cent per annum; overcrowding was com-
mon; the central city area was noted for its slums; and the poorest were "housed"
by renting cubicle space in a daily roster. These conditions were the direct result of
mass (pre-development) poverty, rapid urban growth, and chronic housing shortages.
However, we should not interpret this as the essential negligence of colonialism. As
far as housing was concerned, the British had followed the same course of housing
reform as had occurred in Britain, but with less administrative and economic resources
in the Singaporean situation.
The broad course of housing reform in Britain had been: stage one, with impact
upon environmental health (i.e., drains, sewers, and building standards) in the years
1850-1900; stage two, with focus upon slum clearance and opening up or "ventilating"
densely packed structures in the years 1880-1910; and stage three, consequent upon
the rehousing problems of redevelopment, the state was drawn into direct provision
of public housing[6]. Singapore experienced the same stage-by-stage development, with
a lag of some 25 years or so at the third, and key stage. In Singapore, official reports
and subsequent actions began to deal with the sanitation problem in 1907 and 1918.
Then, in 1927, the Singapore Improvement Trust (SIT) was created to "ventilate" some
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slum areas and to make other physical improvements. Soon afterwards, in 1932 and
1937, SIT's powers were extended to providing public housing. By the time the PAP
came to power SIT had accomplished a few minor projects and deliberated some plans
for larger-scale development. The PAP was to make no bones about it: the problem
of housing poverty was to be tackled head on with strong political will and substan-
tial competence. The best legacies which the British left behind in housing were: (1)
a small administrative structure and experience; and (2) the realisation that slum
clearance, in itself, could provide no real solution to problems associated with hous-
ing poverty. I have elaborated the reasons for the inadequacy of the slum clearance
(only) approach elsewhere[6]. Basically it leads to bad economics, bad sociology and
many administrative dilemmas.
In 1959 the PAP had a three-pronged approach to housing poverty and the slums
in Singapore. First, in the context of the politics of the time, with its competition among
leftist-radicals and moderate groups, housing was a people's issue. The PAP sought
the support of the politically activated masses, with higher expectations following upon
the move to independence and the impetus to manage things better than the British.
Second, the PAP leaders could draw upon their (then) recent proximities to the Fa-
bian politics of the post-Second World War British Labour Party. Housing was one
plank in a manifesto for a five-year plan to go strongly for positive social policy, also
embracing education, social assistance and employment. It was a programme for social
justice and equality. Third, the PAP was ready to place social housing purposes into
its system of government which overtly looks as though there is no plan, but which
is more appropriately thought of as operating very effective societal planning. The
instrument was to be the use of a statutory corporation with extensive powers in land
acquisition, town planning, building, development and management of urban fixed
investments of various sorts—housing, shops, industry and some social infrastruc-
ture. Government would provide the legislative authority, the finance, the resources
and the framework in which administration could take shape and develop. Govern-
ment's expectations were that the corporation would act executively and set about doing
a solid and competent job, with no corruption on contracts, and on buying and sell-
ing. The corporation would have to "plan" its operations within this framework and
from the expectations of higher political authority and of the wider community. This
was the context of key circumstances surrounding the creation of HDB under the Hous-
ing and Development Act, 1960. HDB has used its political and resource power to
fulfil expectations in a quite remarkable way.
Yap[80] gives figures and social reasoning to show how HDB has performed. In
terms of output of dwelling units and main policy developments, the story goes
something like this. First, HDB has operated in terms of five-year targets and plans,
most of which were easily realised except in the late-1970s when a mixture of infla-
tion, government reductions in revenue grants to HDB, and keen private-public sec-
tor competition for resources led to economic and political problems in public hous-
ing. Second, the five-year building performance was:
1960-65 55,430 units
1966-70 66,239 units
1971-75 108,392 units
1976-80 130,432 units.
Further statistical detail is given in the appendix at the end of the chapter. Third,
Yap, along with Yeh[81], describes how standards of equipment and internal circula-
tion and space have improved over the years. Amenities and infrastructure in the estates
and in the new towns have improved, with some post-1979 refurbishing of older HDB
housing brought into the regular housing programmes. Generally, as high-rise hous-
ing, and as a commitment to the town planning principles for new town development,
HDB has built to qualities and standards commensurate with good expressions in
Western Europe.
Some important policy developments occurred during the years 1960-80. In the
mid-1960s, HDB extended its range of dwellings from one- two- and three-roomed
units to four- andfive-roomedunits. This also reflected an early urgency to deal with
the housing problems of low-income groups initially, and then to spread the range
of provision up the scale of income distribution. By the mid-1980s some 75 per cent
of Singaporeans live in HDB dwellings. Home ownership was added to the earlier
general rental programmes in 1964, but was not boosted until households could use
their compulsory Central Provident Fund (CPF) credits as downpayment and/or to
repay instalments. This occurred in 1968, and has made home ownership affordable
to many, so much so that by 1980 some 63 per cent of HDB units had been sold to
occupants and purchasers. Government ensured that HDB and other public develop-
ment authorities could purchase their land at reasonable economic prices, not inflated
by speculation and the transfer of publicly generated wealth to private profiteering.
This was achieved under the Land Acquisition Act, 1966, and in Parliament on 10
June 1984, Prime Minister, Lee Kuan Yew, reasoned:
Land is a fixed commodity, and with mounting pressure on land as a result of population
expansion and development, land values will inevitably rise.
His purpose was to prevent unearned windfall gains accruing by "lottery" to private
owners and speculators. The Act has been enormously important to the success of
the Singaporean public housing programme.
As we would circumspectly expect, the housing programme has not flowed smoothly
and without problems. George[82, p. 101] observes that in the early years the pragmatic
urgencies were to get the buildings up, with not much attention to social conditions
and to the way people perceived the problems of rehousing. He also notes[82, p. 102]
that, as political conditions in Singapore were stabilised and authority centralised,
HDB's redevelopment of squatting areas was accelerated by what he terms "fires of
convenience". These were fires in squatter areas which the fire fighting services were
unable to cope with for various reasons.
Problems of potentially greater political significance occurred in the late-1970s and
the early-1980s. Yap[80] refers to price and cost increases in the years 1979 to 1982,
ranging from 15 per cent to a high of 38 per cent in 1981. The causes can be related
to the spontaneous economic forces of building sector inflation in the late 1970s, and
to the political decisions of the PAP Government to restrict the levels of expenditure
grants to HDB. The data on expenditure grants are displayed in the appendix at the
end of the chapter, and we note that the grants fell from S$68.5 million in 1977-78
to S$32.9 million in 1979-80. In the Western democracies during the 1970s, govern-
ments reacted to stagflation by shifting financial costs in housing from their budgets
76 IJSE 13,4/5
to households. But this occurred within a context of monetarist economic ideas and
restrictions on public expenditure. In Singapore, the reasons from political economy
are different. As Tan[83] shows, the ideology and policy of the PAP had vastly chang-
ed from the 1950s and the 1960s characteristics, described above.
Since the mid-1970s, the PAP has been persuading Singaporeans into what it sees
as the virtues of self-reliance and self-discipline. At the rhetorical level, PAP spokes-
persons speak of the disincentive effects of state welfare upon attitudes and work ef-
forts, proclaiming that "state welfarism has no place" in Singapore (Straits Times,
10 September 1983). However, at the delivery of actual policy, we should interpret
circumspectly. On the one hand the PAP Government has expanded job opportunities,
and some of its early created framework for government roles in social policy, including
housing, have been retained. On the other hand, within the government budget, since
the early 1970s, proportionate allocations of resources to social policy areas have
decreased, with increased expenditure on defence. However, following an electoral set-
back (see below), the Government has had second thoughts on allocations to hous-
ing. The key literature on the welfare state can suggest to us how we might interpret
this. First, as Wilensky[57] shows in his cross-national research of allocations to social
policy, as countries increase relative expenditure on defence, those on welfare state
purposes decrease. Second, we can note that the Government's rhetoric about, and
belief in, the disincentive effects of the welfare state do not really have much basis
in international economics research4.
As for recent Government policy on housing, Tan[83] and Yap[80] offer the follow-
ing sorts of comment. In 1979 the PAP Government became less willing to meet the
rising costs of public housing, consequently reducing the grant payments, as men-
tioned previously. Housing outlays were shifted to occupiers in terms of increases in
rents and prices. At the by-election for Anson in October 1981, J.B. Jeyaratnam of
the Workers' Party defeated a PAP candidate, thus becoming the sole non-PAP Member
of Parliament. The Prime Minister, Lee Kuan Yew, attributed the PAP setback to hous-
ing issues. Consequently the PAP strengthened its operations in grassroots communi-
ty development. In housing resources, the Government has used the mildly recessionary
years in the early-1980s to increase capital expenditure on housing, and it has increas-
ed the expenditure grants to HDB (see the appendix).
In Singapore, political power is not so fragmented, dispersed, and at the disposal
of so many to take significant initiatives, compared with the modern democracies.
Housing issues do get mediated and discussed politically, but within the framework
that they occur in politically legitimised channels and by reference to controlled cen-
tral acceptance or initiative. The legitimised channels for mediating and communicating
politically sensitive housing issues are the Citizens' Consultative Councils (CCCs) and
the Residents' Committees (RCs). Ostensibly, the CCCs and the RCs have roles in
community and social development, with the CCCs operating at constituency level
and involving exchanges between Members of Parliament and local community leaders,
and the RCs organised at a smaller zonal level within the constituencies.
Social development is always connected to politics and especially so in a country
which is modernising itself. In Singapore socialisation and social development have
been used for general development purposes, operating largely, but not wholly, within
the (near) monopoly of political power. Housing issues have status, taking a large
share of informal political agendas. Such issues will include things like HDB alloca-
tions, rents, estate management performance in clearing garbage from corridors, semi-
public areas, and so on. Members of Parliament in Singapore will probably have more
saturation on housing matters than parliamentarians in other countries. They are the
"gateways" between residents, the central organs of PAP, Government and HDB.
The political interactions are fluid with the aims of mutual influence among the
Minister of National Development, HDB, parliamentarians, and Cabinet. Occasionally
the public has the opportunity to see the process in action. For example, on 15 January
1983, the Minister, Tey Cheang Wan, announced the results of his meetings with com-
munity leaders and the RCs. His message was that the HDB was taking steps to over-
come manpower shortages to facilitate an expanded housing production, that residents
themselves should take more responsibilities in the maintenance of semi-public areas
in blocks of flats and around estates, and that social development was important to
avoid "soulless monstrosities" in Singaporean housing. Taking a circumspectly
speculative assessment, we could interpret as follows. First, the PAP has rethought
its allocations to public housing, and will maintain commitment to public housing
for social and political reasons. Second, high-rise estates have management and cost
problems in maintenance, and HDB has taken the view that there is a limit to what
it can do about garbage, noise and other problems. Third, social problems are present
underneath the phraseology of "soulless monstrosities".
The foregoing shows that housing information and response from administrators
and Government largely depend upon political relationships. HDB will have as much
sociological knowledge as other housing authorities. But its sociologists will have to
operate within the constraints of internal power within HDB and HDB's roles in the
top-down and pre-democratic political styles of Singaporean politics. This means that
sometimes political considerations will supersede sociological intelligence. Examples
of this in Singapore include: (a) the failure to discuss housing poverty in general and
in HDB estates, (b) adhesion to the mistaken belief that medium-density housing has
to be in the form of high-rise blocks, and (c) pressing the notion that Asian "filial
piety" is to be consolidated in HDB's incentives to house a three-generation family
in the same dwelling. Singapore's housing politics prevents social reasoning from flow-
ing spontaneously from the relevant professions, from housing intellectuals, and from
independently organised people's movements. On the other hand, societies which are
more democratic and pluralistic have had great difficulty in resourcing housing on
a community-wide basis. Singapore has had no such difficulty. Multiple involvements
by competing interest groups can make it difficult to develop coherent resourcing
frameworks and medium-term housing performance. The centrally significant aspect
of Singaporean housing is that the politico-bureaucratic system has developed an ef-
fective financing and resourcing framework.
Economic Issues in the Singaporean Housing System
At the risk of over-generalising, we can say that the welfare state housing experience
in developed capitalist countries (with a few notable exceptions in Western Europe)
indicates that resourcing for social housing is frequently inadequate in supply and
insufficiently egalitarian if left to the private market. Also social housing problems
have frequently been riddled with economic dilemmas on reconciling costs, subsidies
78 IJSE 13,4/5
and the capacity of low-income groups to pay for housing. Likewise, developed socialist
countries in Eastern Europe and the Soviet Union have experienced inadequacy of
supply and inegalitarian distributions of housing, mainly because industrial invest-
ment has received priority, and the technocratic-managerial class has distributed hous-
ing and urban benefits in favour of the members of its own class[37]. Singapore has
created structural elements in its economic system whereby strong and effective resour-
cing is allocated to housing, and some resources have been redistributed downwards
in limited ways to favour low-income groups. Essentially, the main point about
Singapore's economic approach to housing has been an avoidance of the sorts of dilem-
mas and conflicts between private capital and social capital for housing which have
characterised housing policy in other countries.
Figure 11. The Singaporean Housing System, 1982
The Singaporean housing system and its general relationship to the economy is
displayed in Figure 11. In particular we should note the key role of the state and its
instrument the Central Provident Fund (CPF), acting as financing and resourcing in-
termediaries, and thereby titling economic resources in favour of a total housing system.
The CPF originated in 1955 as a means of provision for old age, with compulsory
contributions from employees and employers. The PAP governments have extended
the role of the CPF in housing and in financing hospitalisation costs. In effect, the
CPF is a means of obtaining forced savings, set in a context where the saving ratio
to GDP in Singapore was some 40 per cent in 1984. The CPF contributes some 30
per cent of the nation's savings. As our statistics in the appendix indicate, in 1980
some 23 per cent of the CPF contributions for that year were withdrawn by contributors
for home ownership purposes. Our statistics also show us that in 1975-82, housing
absorbed some 1.8 to 2.7 per cent of GDP, and some 11.6 to 22.0 per cent of gross
capital formation. These percentages of housing in GDP would increase some
twofold if we included housing equipment and fittings, and then expand again substan-
tially if we were to add in some urban infrastructure. Public housing amounted to
some 86.2 per cent of total residential construction. These statistics and the structure
depicted in Figure 11 make Singapore's effort in social housing quite remarkable and,
along with Norwegian housing, most impressive by international standards.
HDB housing is financed from government loans (10 years at six per cent for home
ownership housing, and 60 years at 7¾ per cent for rental housing), from govern-
ment grants, and from revenue from grants and sales. Housing, urban development
and land policies are co-ordinated. Government and its agencies have engaged in a
large land purchase programme using powers of compulsory acquisition, and paying
at values which subtract "betterment" value from public and general community in-
vestment. Consequently acquisition is at less than "market" values, but, as we shall

presently see, this does not mean that the housing reflects inefficient subsidy. By refer-
ring to Figure 12, which relates the housing system to the distribution of household
income, we can obtain further understanding of the Singaporean housing system.
Like other capitalist countries, Singapore's household income distribution is
characterised by large inequalities. The richest ten per cent of households take about
30 per cent of total income and the poorest ten per cent have only two or three per
cent of income. In relating household income distribution to housing, a number of
points have to be borne in mind. First, although income proceeds continuously through
the distribution in small marginal changes, the housing system has step-like thresholds
Figure 12. Household Income Distribution and the Singaporean Housing System
80 IJSE 13,4/5
affecting access and mobility. Second, it is income which is antecedent in every sense,
consequently leaving such things as housing with only limited potential as equalisers.
Third, notwithstanding the second point, egalitarian objectives in housing can be im-
portant. Finally, for Singapore, as we have noted, the rhetorical politics of the 1960s
was in favour of social justice and equality, whereas in the 1980s it was pointed towards
inegalitarian meritocracy and individual self-reliance. Regardless of the rhetoric, in
reality we must note that the statistical and social science evidence on poverty in
Singapore is rather fragmentary and discontinuous. However, as we shall presently
see, we have enough evidence to suggest that housing poverty is significant in Singapore,
mainly concealed in HDB one-roomed flats, in some older and delapidated shophouses,
and in some pre-modern dwellings (i.e., self-made dwellings of timber, galvanised iron,
and other materials).

Figure 12 divides households into three categories A, B and C. Households in
category A live in luxury-expensive housing by type, by location, and sometimes by
size. Their housing is variously in condominiums, in cottage-in-its-own-grounds styles,
and in other types ranging from S$250,000 and upwards to very high values of
S$l,500,000 and more. It is financed from Singaporean capital markets and from in-
ternational business corporations which provide housing as fringe benefits in senior
appointments. Households in this housing are rich in wealth, or at the top levels in
the businesses and professions. Some of the housing is at low density, but unlike some
housing in category C, the occupants seldom face the threat of redevelopment from
government housing and urban investment programmes. Stated in another way, if the
creation of higher densities were the only housing objective per se, then we would
see more redevelopment of high-income housing areas than of low-income housing
areas.
Households in category B (middle-middle class) have faced some housing problems
owing to the large cleavage and step between luxury housing and HDB rental and
home ownership programmes which have some income limitations (see below). The
Government created the Housing and Urban Development Company (HUDC) in 1973
to develop and sell housing in this income range, and since 1982 HUDC has been
re-organised within the nexus of HDB, though the original purposes are largely re-
tained. The allocation and pricing policies in HUDC housing attract much attention
and political sensitivity in Singapore. Supplies of this housing are limited, and, as
was mentioned, households in this income range face restricted opportunities, with
HUDC housing presenting good-cheap value in relation to alternatives, but with new
private market housing fluctuating in price and in more or less competition with HUDC
housing. HUDC flats and maisonettes sell in the price range S$174,000 to S$283,000,
an increase of 143 per cent in 1982 when the Government changed its policy, osten-
sibly to prevent profiteering and speculation by purchasers. The housing is to serve
income groups in the range S$42,000 per annum to S$72,000 per annum, and the price
of HUDC housing is some 30 to 40 per cent cheaper than private sector housing of
similar qualities. Households in these income groups can also have access to CPF
finance under the Approved Residential Properties Scheme (ARPS)—see the appen-
dix), enabling some enhanced access to private housing.
Households in category C have been absorbed rapidly into the HDB programmes,
1960-83, with only some 200,000 Singaporeans remaining in pre-modern housing—
rural squatting and city slums/shophouses. HDB has a resettlement programme, coupl-
ed with Government policy, to resettle the squatters and shophouse dwellers at a rate
of over 20,000 per annum, and completing the programme by 1990. Most squatter
housing in Singapore is sanitary, well serviced by public utilities, and the occupants
are fully urbanised in life styles. It is mostly good housing.
Some 60 per cent of HDB allocations go to families in income levels below S$16,830
per annum, with some 20 per cent to families with income levels below S$5,616 per
annum. However, the HDB provides housing to a large range of income groups,
reaching to the middle income ranges of S$41,000perannum. The allocations separate
households into HDB housing by size of dwelling and income group. The poorest
live in one-roomed flats (with occupant-provided partitions) and the better-off groups
are allocated five-roomed flats, with further graded size-income separations within
the one- to five-roomed range. For renters, the "subsidised" rents range from nine
per cent of family income for one-roomed flats, where income eligibility is to a max-
imum of S$9,599 per annum, to 18 per cent for three-roomed flats. Home ownership
units, in three-, four-, andfive-roomedflats range in price ("subsidised") from S$21,000
to S$123,000. The HDB dwellings are mainly in mass project housing flatted blocks,
with design and environmental variations according to policy at the time of building.
Reviewing the housing system and income distribution as a whole in Singapore,
we can see some features which lessen segregation and others which could potentially
divide people. Government and HDB have pursued policies of racial-ethnic mixing
in housing, and modern HDB estates are planned to house people from a fairly wide
range of (public housing) income groups. Nevertheless, dwelling size and tenure separate
the income groups in their residential expressions. These are differences which do enter
social consciousness, and which could become matters for political competition if
Singapore moves from a one-party pre-democratic country to a more pluralistic society.
Housing-related issues, and tenure in particular, can become political spheres which
divide people into "housing classes". Certainly, housing in Singapore will remain more
political and more discussed in public debates than in many other countries.
Economists and others are interested in the "subsidy" element in public housing,
though as we have seen in earlier discussions, in housing, "subsidisation" is not
amenable to clear cut and politically neutral definition and measurement. However,
confining ourselves to differences between the annual "costs" and rents of rental hous-
ing, we can draw upon statements in the Singapore Parliament to give very broad and
rough estimates. The following figures were cited on 17 March 1977, and they relate
to averages for one-, two-, and three-roomed rental flats in the years 1974-77. Thus,
we have S$780 per annum, S$720 per annum and S$660 per annum respectively for
the one-, two-, three-roomed units. We are cautioned that variations occur from loca-
tion to location and from different dates of construction. Basically rents are fixed
in relation to the state of HDB's revenue account, the willingness of the Government
to supply grants, and a range of social and political considerations. Historical cost
and the possibilities for internal cross-subsidisation within the HDB will have some
influence on rents. Generally, the effect is to redistribute income downwards in a limited
way, and, more significantly, to keep rents reasonably affordable and below many
82 IJSE 13,4/5
private sector rents. Nevertheless, as was mentioned previously, housing poverty is a

reality in Singapore life, and, of course, Singapore is not alone in having this social
problem.
During the last years of colonial government in Singapore, Goh Keng Swee, then
Director of Social Welfare (Social Research) at the Department of Social Welfare, and
later a leader in the PAP Government, undertook a social survey of housing and poverty
conditions[84]. Using the well-tried methods from the nineteenth-century British Booth
and Rowntree studies, Goh defined his "poverty line" in terms of subsistence needs
standards, with associated budget costs for representative families. This method leads
to an austere definition of poverty. Goh found that the city area which he surveyed
had some 73 per cent living in overcrowded conditions. Calculating minor variations
to needs standards in different families, he estimated that some 30 per cent of the
population fell below the poverty line, that is, some 21.2 to 23.5 per cent of households.
Those most vulnerable to poverty were women and children in single-parent families,
the sick and the unemployed.
Cheah[85] followed Goh's methods and basically adopted Goh's poverty line con-
cepts. He relied upon aggregate household income data, contacts with the poor, a
small social survey of the poor in Toa Payoh, an HDB new town, and a willingness
to make assumptions in estimating aggregate poverty. Cheah's basic methodological
problem was in connecting his disaggregated survey data to some official aggregated
statistics. With caution in mind, we report his findings. Poverty levels had increased
from some 25 per cent in the mid-1950s to some 35 per cent in the mid-1970s. Although
the average figures for economic growth in Singapore were indeed impressive, poverty
persisted as a problem. In terms of housing, some conditions worsened when the poor
were rehoused from squatter dwellings and shophouses to HDB flats. They had lower
room occupancy ratios in some pre-modern housing of some 3.6 persons, increasing
to 5.0 persons in HDB flats. Some poor families have budgets that are so tightly pressed
on food, bills for public utility services, and transport costs that they default on HDB
rents, consequently adding to problems of housing administration. The poverty has
severely constrained the life chances of children, some of whom prematurely left the
education system to take low-paid jobs. Also, the poverty meant that for this section
of the population, home ownership was not a realistic opportunity. They could not
accumulate assets via home ownership, an important means of deconcentrating wealth
in capitalist countries.
Singapore's public housing programmes are productive and efficient in some specific
respects. First, the high volume of production and the long-term continuity of the
construction programmes leads to economies of scale and competitive tendering for
HDB housing. Second, as Wong and Wong[86] show in a very good contribution to
housing economics, HDB housing multiplies income and employment by S$1.28 for
every S$1.0 expended. The housing programmes have been contributory to Singapore's
economic growth in various ways. They have also added to the absorption of
unemployed labour, to the differentiation of skills and management experience, and
to technological change. Not everything about Singaporean public housing has been
economically reasonable. For example, HDB has emphasised redevelopment rather
than rehabilitation in its urban renewal activities. The question of whether redevelop-
ment is more efficient than rehabilitation turns upon a number of considerations.
Intensification of use and density raises the balance to favour development. Rehabilita-
tion can be undertaken to various standards, and higher standards reduce future
maintenance costs. Economic comparisons can be made in terms of formal procedures
and relevant equations. My own research in Australia shows that in most circumstances
rehabilitation is more efficient, and it often has complementary social advantages[6].
In Singapore, HDB rehabilitates its own housing, but, with the Urban Redevelopment
Authority, it redevelops non-HDB housing. This is done mainly on the basis of town
planning criteria which were applied in the planning profession to the late 1960s; but,
in other places, these have since been superseded. Generally, we would be on secure
ground in suggesting that rehabilitation has not been used in Singapore to the extent
which is justified by economic and social considerations.
In summing up our evaluations of economic issues in Singaporean housing, we can

state the following. The basic resourcing and financing system, with the Government
and the CPF as intermediaries between the economic and housing systems, uniquely
provides adequate supplies of housing without the sorts of economic dilemmas which
appear in many capitalist and socialist countries. HDB housing has some important
downward redistribution of income, but housing poverty, nevertheless, continues to
exist. Some of this housing poverty could be reduced with some relatively minor
reforms. Housing has been important in the Singaporean method of strong cumulative
process development.
Perspectives from Sociology and Town Planning

Hassan[87] has conducted some careful and useful sociological analyses of low-income
families in HDB housing. His research shows that HDB has managed its estates and
Singaporeans have managed their lives with useful success in the direction of multi-
racial acceptance. This comes from a clear sense of national direction and priority,
emanating from PAP leadership. The PAP has been determined to prevent social and
politicalfissuresalong lines of race and ethnicity. Hassan's intensive sociological study
also found evidence of (1) poverty, (2) worry, stress and weakened parental control
over children (especially in their play activities) in high-rise dwellings, and (3) some
very cautious and fatalistically resigned respondents among those interviewed. Apart
from this, in Hassan's and in other surveys, HDB residents have by and large express-
ed "satisfaction" with their housing. This, of course, tells us very little about what
their satisfaction would be if they were offered alternative types of housing and if
they had more experience in expressing their wants in controversial social and political
processes. What sort of housing alternatives would be conceivably made available?
One approach to this question is to consider densities and dwelling forms.
In a careful comparative study of urban shophouse neighbourhoods and new HDB
estates at Toa Payoh, Fonseca[88] showed that in the Singaporean context at the "micro"
level, HDB-style, high-rise forms (like high-rise forms in most countries) waste space
between buildings. Low-profiled dwellings can provide a better use of space and in
some circumstances they can give us acceptable medium to high densities. Singapore
accepted the town planning ideology of high-rise building from overseas at the time
of its initial technological feasibilities and under the urgency of housing shortages
in the 1960s. As I have shown in the width of social science reasoning and in
84 IJSE 13,4/5
statistical economic research elsewhere[6], the ideology is mostly a synthesis of

misconceived ideas. It is wholly satisfactory to achieve medium to high densities in
mixtures of terraced, low-rise (four-storey) housing, with some occasional high-rise
forms. Low-rise housing is cheaper than high-rise housing; it is better in its function-
ing for low-income families; and, quite probably, it could be achieved on a larger scale
than at present in Singaporean public housing.
Conclusions
It would be all too easy to focus upon some problems in Singaporean housing—the
pre-democratic housing politics, the presence of some housing poverty, and a
dominance of high-rise dwellings. However, the Singaporean housing system by its
very effectiveness conceals some important intellectual insights into how a good housing
system can be organised and resourced. The practice suggests the theory. If we were
to set about writing good housing theory as operating guidelines it would look
something like this. First, ensure a flow of resources and finance into housing from
the savings of the community. If necessary, make some of this saving compulsory,
with political decisions on the way it is to be re-allocated. Arrange this resourcing
to avoid conflicts between private capital for commercial and industrial purposes, on
the one hand, and housing capital for low- and moderate-income groups, on the other.
Secondly, create administrative institutions in finance and development, complete with
powers and resources to plan and build social housing. Thirdly, relate the access to
that housing to a wide range of income groups, starting with the poor who live in
the slums. Fourthly, use home ownership for general social, economic and political
purposes, with a useful effect in deconcentrating wealth in limited, but important,
ways. Fifthly, do not be too perturbed if some orthodox (neo-classical) economists
argue that housing is over-allocated by "subsidy". Explain to them that "subsidy"
is not a concept which can be easily fitted to housing, and argue that housing is pro-
duction, as well as consumption. But the "production" aspects are not marketed and
they do not yield financial revenue from which housing costs can be met. Sixthly,
ensure an adequate supply of low-priced land in growing urban areas. Finally, and
especially for developing countries, conceive and operate housing policy and other
social policies as an integral part of development. Then, for pride in nation building,
in quiet and modest ways let the international community know that this is the theory
which is practised in Singapore and Norway, and scarcely anywhere else at all.
Is this theory and practice available to less developed countries in general? It can
be argued that Singapore is favoured because it has no massive rural-to-urban migra-
tion from an agricultural hinterland, and it has had good economic growth. But we
should remind ourselves that Singapore ran a public policy on population and birth
control as part of its social and economic planning for development. As for economic
performance, this has been achieved partly from the principles of comparative ad-
vantage and partly from public policies. A city-state with a high population in rela-
tion to natural resources can have a comparative advantage in manufacturing. Good
government can enhance the comparative advantage with policies in industrialisation,
in education, in high technology, and in taxation, but housing would also need to
come within the development programme. Other countries may not develop as rapid-
ly. However, even with self-help and sites-and-services approaches to cheaper housing,
other countries can still learn from Singapore. It will still largely be a matter of creating
policies in the supply of land, in relating savings to housing, and in designing a hous-
ing system which is compatible with income distribution (with some redistribution)
and with economic capacity. Housing failure in other countries has been largely related
to having inadequate housing policies. Although Singapore's ways cannot be replicated
in other places, it is, nevertheless, possible to follow similar principles in resourcing
a housing system.
Appendix to Chapter VII.
Table III. HDB: Dwellings Completed

1960 1,682 1973 23,224
1961 7,320 1974 26,169
1962 12,230 1975 28,027
1963 10,085 1976 30,024
1964 13,028 1977 30,406
1965 10,085 1978 30,176
1966 12,659 1979 27,189
1967 12,098 1980 18,311
1968 14,135 1981 12,576
1969 13,096 1982 18,648
1970 14,251
1971 16,147
1972 20,252
Sources: HDB annual reports and personal communications from the Department of Statistics.
86 IJSE 13,4/5
Table IV. Capital Expenditure and Government Expenditure Grants to HDB

Year Capital expenditure Government expenditure
$ grant to HDB
$
1960 9,976,802 2,113,250
(11 months)
1961 30,182,549 2,101,004
1962 40,496,504 2,884,423
1963 50,594,708 4,373,677
1964 34,930,397 4,532,537
1965 31,392,010 2,142,046
1966 50,442,553 3,649,639
1967 59,353,604 755,664

1968 72,223,559 2,712,781
1969 71,897,593 10,349,130
1970 91,140,699 (1,536,339)
1971 136,372,280 9,852,611
1972/73 300,614,141 19,151,188
(15 months)
1973/74 377,926,261 28,293,592
1974/75 480,109,831 34,973,309
1975/76 625,161,799 44,481,365
1976/77 765,856,828 61,061,101
1977/78 813,917,663 68,524,108
1978/79 674,317,570 58,914,472
1979/80 791,592,758 32,886,395
1980/81 1,061,371,398 41,026,753
1981/82 1,580,547,201 6,540,576
1982/83 2,651,265,403 91,788,790
Source: Personal communications, HDB.
Table V (a). Withdrawals of CPF Savings under the Approved

Public Housing Schemes (1975-81)
Contri-
butions
HDB JTC HUDC MINDEF ARPS received Columns
(1) (2) (3) (4) (5) (6) (l)-(5) as
Year $ $ $ $ $ $ % of (6)
1975 115,462,215 14,111,902 5,241,893 — — 886,606,933 15.2
1976 224,607,196 19,995,087 30,643,244 — — 1,007,959,106 27.3
1977 330,025,392 28,363,056 21,158,810 3,923,826 — 1,114,688,472 34.4
1978 439,337,121 29,013,981 18,295,004 1,766,551 — 1,351,970,000 36.1
1979 383,672,270 18,886,176 34,815,407 1,212,627 — 1,753,118,412 25.0
1980 480,950,588 12,086,794 26,867,719 1,038,296 — 2,295,998,034 22.7
1981 511,377,773 23,031,975 116,238,810 1,311,239 39,094,016 3,007,168,546 23.3
Source: Personal communication, CPF.

Notes: HDB is Housing and Development Board, JTC is Jurong Town Corporation, HUDC is Housing
and Urban Development Company, MINDEF is Ministry of Defence, ARPS is Approved Residential Pro-
perties Scheme.
Table V (b). Approved Residential Properties Scheme, CPF,

for the Period 1.6.81 to 30.10.82
Number of Amount Number Amount paid
applications applied of cases to nearest
received for paid million $
(million $)
From 1.6.81 to 30.10.82

Phase I (full redemption of
loan) 1,207 57.50 1,118 56.24
Phase I (partial redemption of
loan) 2,884 518.41 1,832 99.19
4,091 575.91 2,950 155.43
From 1.1.82 to 30.10.82

Phase II (lump sum payment to
vendor) 168 19.52 88 8.64
Phase II (lump sum payment to
vendor and repayment of loan) 1,545 493.35 843 74.76
1,713 512.87 931 83.40
Grand total 5,804 1,088.78 3,881 238.83
Source: Personal communication, CPF.
Table VI. Housing Statistics and the Economy, 1975-82

Unit 1975 1976 1977 1978 1979 1980 1981 1982
Percentage contribution of
residential construction to
(a) GDP (at current market
prices) per cent 2.5 2.6 2.5 1.8 1.5 1.5 1.7 2.7
(b) Gross Capital Formation
(at current market prices) per cent 20.1 20.2 21.9 15.2 11.6 12.7 15.3 22.0
Employed persons in the con-
struction industry 1 thousand 39.2 42.0 42.0 51.5 54.3 72.3 66.4 72.0
Total completed dwellings number 31,571 34,371 32,240 34,246 29,038 21,002 14,844 21,623
HDB and HUDC completed
dwellings number 29,053 31,966 30,267 30,875 26,638 18,31 1 1 2 , 576 18, 648
Wholesale Price Index of
building materials (1974= 100) 91.1 93.8 94.7 99.0 111.1 127.7 136.0 130.4
Labour Force Survey data, except 1980 which was based on 1980 Census of Population.
Source: Personal communication, Department of Statistics.
88 IJSE 13,4/5
VIII. HOUSING IN THE PEOPLE'S REPUBLIC OF CHINA

Introduction
Norway and Singapore have been inventive and creative in designing and construc-
ting policies and institutions for housing in capitalist societies. Essentially these coun-
tries have found ways of directing finance and resources into housing, avoiding some
dilemmas of competition between housing and non-housing capital. In limited, but
important, ways, housing has been an equaliser in these societies which are inherently
inegalitarian. By contrast, China has been socialist since 1949, with ideological inten-
tions to be egalitarian. However, as was mentioned in earlier chapters, socialist societies
have some inequality, and this will influence housing practice. More significantly, Marx-
ist and neo-Marxist theory does not provide adequate and complete ideas on how
socialist political economy and housing are to be reconciled. Housing has been regarded
as "consumption", not production, and consequently it has received lower economic
priority than industrial investment. Also, in practice, housing in China has been much
influenced by both ideology and historical change on the one hand, and the special
nature of development problems on the other. The various problems are developmen-
tal, demographic, economic and ideological.
The long-term developmental problem of China has been its increasing population
combined with a relatively stagnant technological performance. This was a problem
inherited by the Communist regime. Things might have been more straightforward
for the Communists if they could have set a single-minded goal for economic develop-
ment. However, the Communists had other aims which could not always be har-
moniously reconciled with economic development. They wanted the masses to learn
"correct" socialist attitudes. Sometimes these political aims ran counter to setting a
course for continuous and well-ordered development. A well-ordered development
comes with a system of authority whereby managers of enterprises and government
bureaucrats maintain control. But the managers and the bureaucrats then develop self-
serving attitudes, inviting a "socialist" challenge to disturb their system of authority
and to reform industrial and bureaucratic structures. Since 1949 China has periodically
experienced challenges and disruptions centring around the conflicts between "true"
socialist expressions and the push for technocratic economic development.
The exigencies of China's social and economic situation have, in themselves, press-
ed the claims for well-ordered economic development. Pao[89] outlines the demographic
realities. Population is expected to grow from over 770,000 million in 1970 to over
1,000,000 million in 1990. Some 24 per cent of the population is urbanised, having
doubled during the last 30 years or so. The present growth rate of the population is
some 1.3 per cent per annum, being lower than that in many developing countries.
However, it is the sheer size of the population and the economic backwardness from
the last century or so which defines the magnitude of problems in development and
industrialisation. Since the late-1970s China has set twin policy targets of zero popula-
tion growth by the year 2000 and a rapid increase in modernisation. As this policy
has clear-cut urban implications, housing policy has become more significant and
received more attention since 1978.
As we have seen in reference to Singapore, the achievement of economic growth
is largely a matter of having coherent relationships among investment, saving,
consumption and incomes, on the one hand, and creating growth-oriented social and
government policies on the other. In Singapore, emphasis was placed upon high sav-
ing and investment ratios, with consumption increasing as GDP grew. The simultaneous
growth of investment and consumption in turn ensured a high rate of utilisation of
capital plant, and, along with strong exports, led to further investment opportunities.
Furthermore, government roles in education, health, housing and other social policies
ensured good supplies of productive and trained labour. China has not experienced
the same coherence. Political instability and periodic policy reversals have cut across
the continuous development of social policies and their relationship to economic
growth. Also, China has not had a strategic consistency in investment, saving, con-
sumption and incomes. We can discern some dimensions of China's economic per-
formance under its social political economy. Perkins[90] reviews the period 1952-71,
and finds that capital formation was some 30 per cent of GDP. This is higher than
typical patterns in developing capitalist countries, but somewhat lower than
Singaporean investment. Socialist countries can achieve investment ratios of 20 per
cent and higher by restricting consumption and tightly controlling wages. However,
this leaves open the question of whether "productive" and "efficient" patterns of in-
vestment will emerge where resources are largely steered by political-administrative
guidance, without reference to international markets. In China in the period 1952-71,
per capita GDP grew by some three per cent per annum, which is typical for develop-
ing countries as a whole, but well below Singaporean performances.
Prybylla[91] provides further useful information on the economic performance of
China during socialist political economy. When the Communists came to power liv-
ing standards rose among wide sections of the community, consequent upon a one-
shot downward redistribution of income. After the one-shot redistribution, further
increases in the standard of living would become dependent upon productivity and
the effectiveness of economic policies. As was mentioned, Chinese performance in
productivity has been average, rather than extraordinary. But socialism also makes
ideological and practical claims for egalitarianism. In terms of practical performance,
wages tended to be organised into an eight-step scale, with a ratio of one to three
between the lowest and highest levels. For technical workers, wages generally have been
five times those of the lowest grades of unskilled workers.
How might incomes and economic change be related to housing systems under
socialism? In socialism, housing allocations and rents can be centrally controlled in
terms of administrative control. Socialist housing does not have to be allocated on
the capacity to pay more or less rent according to individual choice and levels of in-
come among individuals. Housing can be made affordable by low rent policy. However,
this does not in itself ensure that housing conditions under socialism will be "ade-
quate" or "satisfactory". Much will depend upon two further conditions. First, there
is the question of whether supplies will be maintained at levels which ensure good
standards of space and access to housing equipment and services. If supplies are pressed
down, crowding and sharing of facilities will result. Second, socialism still faces
distributional dilemmas. Those workers who are absorbed into the modernising sec-
tors of the economy, along with managers, bureaucrats, and technocrats, will have
higher incomes. The allocation of new, higher-quality housing may reinforce these
inequalities. In other words, socialist housing can become privileged housing, with
90 IJSE 13,4/5
the less privileged not having the economic freedom to find any better housing than
that which is allocated to them.
These housing dilemmas reflect more general and fundamental issues in managing
the political economy of socialism in a country like China. As a social theory, socialism
is universal; but in practice its ideological expressions change. We must look to prac-
tice to discern the principles at work. Moreover, Marx did not describe any blueprint
for socialist practice. From this general point, we thus find that socialist housing is
also more readily understood if we observe and review practice. Schurmann[92] cen-
tres his review of socialism in China by recourse to a focus on the way that socialism
is organised. The practice and organisation of socialism (and its housing) has chang-
ed from time to time in China. The point about the organisational perspective is that
it is organisation which defines authority. Organisation stands between power and
action. Housing is essentially an "action", and in socialism this will reflect the prin-
ciples in the use of power over resources and in the allocation of housing among various
groups in society—rural peasantry, urban workers in new industry, managers, and so
on.
In circumstances where information is incomplete and often used for ideological
purposes to express and to change socialist practice, we need some clear guidelines
to interpret accessible information. Central policy makers will sometimes issue public
statements about housing. Sometimes their purposes will be to demonstrate examples
to be followed throughout cities and regions. This is a context where the new "favoured"
practice is not always followed at decentralised levels of administration. Such top-
down persuasion is common in authoritarian regimes. Another common characteristic
is to make general statements about housing policy (and other things), setting out
idealised versions of aims and achievements. Intellectual commentators have to be
aware in both socialism and in capitalism that there are often gaps between the prescrip-
tive ideals and the descriptive practice. Fortunately in Chinese housing we have access
to some research studies, and in particular we have Pao's recent research in Beijing[89],
which tells us a great deal about the reality of practice (see below). Not all housing
information in socialist ways of doing things comes in top-down communication. Im-
portant information also comes from the bottom to the top. Occasionally the mass
media will publish critical information on failures and errors in policy and practice.
This reflects general social and political concern to improve performance. The pur-
poses of publishing such criticisms are largely to improve the organisation of practice
and to close gaps between centralised policy making and the (justified) complaints
of the masses. Also, because all social and economic actions are so "political" in
socialism, sometimes the "political" will dominate operations, with consequent loss
of control over the quality of end products. With housing generally under-allocated
and with its inherent problems of co-ordination in building and managing, we would
expect housing to be the conspicuous object of some bottom-to-top criticism. Again,
this is revealed in Pao's and in other studies of Chinese housing.
Housing in China is influenced by the shifting conflict situations in the general
political economy of the nation. Some of the key conflict situations include the relative
emphases among opposites:
— industry versus agriculture,
— coastal development versus inland development,
— state provisions versus individual provisions,

— economic development versus relief of poverty,
— better to be "Red" versus better to be expert.
At times when the emphases are placed upon industry, economic development and
expert organisation, urban housing becomes a significant necessity. By comparison
when Chinese political economy is redirected towards radicalism, mass participation,
and the dominance of the political over economic development, then housing is
disrupted. We now turn to assess the impacts of history upon socialist housing in China.
History and Housing History

As was mentioned, history under Communism in China has followed a zig-zag course,
especially in the opposing and intermittent expressions of bureaucratic and mass move-
ment dominance. For convenience we can divide the history into the following periods:
(1) pre-1948, before the Communists came to power;
(2) the years 1948-52, when the primary political objective was to consolidate
power and to organise society;
(3) the 1953-57 period, when the economy was run along the lines of the Soviet
Union;
(4) the time of discontinuing the Soviet model, 1955-57, and the expression of
a Chinese route to socialism under the Great Leap Forward, 1958-61 (a period
of mass movement dominance);
(5) the return to ordered "management" in 1962 until 1966;
(6) the period of the Cultural Revolution, 1966-76, with anti-technocratic expres-
sions (another period of mass movement dominance);
(7) the return to "management" in 1976, with a revitalised interest in the im-
perative of modernisation.
Each historical period provides its characteristic impacts upon the political economy
of housing.
In socialist theory, revolution and political change is associated with the urban work-
ing class. Although Chinese socialism began in Shanghai and other cities it did not
develop effectively into an urban revolutionary movement. Authorities could readily
suppress a city-based movement in China. Thus, Chinese Communism took its roots
and development in the interior in the period 1935-46. Communist leaders recruited
young people from poor families and trained them in leadership and organisation.
These cadres were prepared for the future tasks of destroying the old social system,
and organising the masses into a cohesive ideological force for socialism. When the
Communists came to power, housing problems in the cities would have their own urgen-
cies. The housing stock was depleted from the devastation of the Sino-Japanese War,
and housing poverty was extensive in Shanghai and other cities[93]. Hinder describes
the conditions in Shanghai's slums in the 1930s. Rent burdens were high relative to
income; typically over 24 people would live together in small houses, with four families
per house; the houses would be partitioned into small cubicle spaces; and such diseases
92 IJSE 13,4/5
as typhus, cholera and tuberculosis afflicted the population. Opium dens and beg-
gars added to the dismal urban social environment.
When the Communists gained power in 1948 they set about bringing authority and
organisation in the cities. The slum areas were cleaned, with immediate improvements
in public health and living standards among the poor. Controls were introduced on
private rental housing, with requirements for registration of property. Administratively,
the cities each had a Bureau of Housing Administration to manage housing and a
Real Estate Company to develop new public housing. Chung[94] comments that
although new housing was meant to express principles of "utility, beauty and economy",
in practice the emphasis was placed upon low-cost economy. The housing tasks were
considerable, with shortages from the eight-year Sino-Japanese War, delapidated struc-
tures and mass urban poverty. In rural areas, local administrations were encouraged
to develop brick and tile works, with provisions for the peasantry to self-build and/or
pay for their housing from two-year loans.
Once the Communists had consolidated their political power in a vast and diverse
country they adopted Soviet (technocratic) economic planning models in the years
1953-57. The' economy was organised in a pattern of centralised and bureaucratic plan-
ning for industrialisation. Government monopolised the rental housing, leaving only
some 20 per cent of housing in private ownership, with controls on rents and alloca-
tion. New housing and its architecture followed a scaled-down version of Soviet housing
units. Units were built to a spatial standard of four square metres, compared with
nine square metres in the Soviet Union, and they were developed in three- or four-
storey walk-up flatted blocks. Housing was in short supply. The Soviet-style economic
planning emphasised investment in industry rather than in housing. Meanwhile the
population was increasing, and housing was crowded (see below). Some attempt was
made to improve supplies by drawing upon individual initiatives and providing hous-
ing loans. However, this policy did not succeed because housing loans were condi-
tioned upon a (high) 50 per cent down payment, with repayments absorbing over one-
third of incomes which were tightly pressed in budgeting for food and other necessities.
Also, with the "planned" direction of resources, supplies of housing materials were
inadequate. The consumption patterns of the working population were pressed in order
that investment could proceed. Typically, household budgets were allocated to some
35 to 45 per cent for very basic foodstuffs. Official policy kept rents low. They were
designed to cover only the maintenance costs of housing, not the capital costs. Capital
costs were "subsidised". With severely tightened housing supply, policy makers found
good sense in rehabilitating older housing to prolong its useful life.
Chinese political leaders became disenchanted with the Soviet model of economic
planning in 1958 and embarked upon their "Great Leap Forward". The general idea
of the Great Leap Forward was to radicalise the masses and to move from centralised
technocratic planning to communal living and economic production. In their idealis-
ed forms the communes were meant to integrate agriculture, industry and residential
life. However, in practice, the Great Leap Forward disrupted industry and led to some
inefficiency and disorganisation. Housing was affected in various ways. Attempts were
made to express communitarian ideals in dwelling form, with eight-storey blocks built
with communal kitchens. Once the communitarian movement was abandoned it
was difficult to adapt these dwellings for. family living. Housing was built to reflect
"low standard and small space". More significantly, housing supply was cut with a
pause in urban development as the Great Leap Forward emphasised rural self-
sufficiency. Communitarian ideas did leave one enduring and useful legacy: urban
housing was developed in "self-contained" estates, with close locational relations bet-
ween residence and work. When the Great Leap Forward was abandoned in 1962, the
economy returned to a more ordered and managed framework, and urban housing
again came into significance.
The onset of the Cultural Revolution in 1966 again brought anti-bureaucratic
elements to the fore and a continuous disruption of the economy for a decade. In
housing there was a suspension of regular standards and supplies remained inade-
quate. Although some technological standards were lowered, urban housing in China
began to include ten- to twelve-storey high-rise blocks. In 1976, Chinese economic
policy returned to modernisation and technocracy. However, this time more economic
significance was given to raising consumption and increasing the supplies of housing.
In 1978 a housing plan was announced for the period to 1984. The target production
for five years was to build more than had been developed in the previous three decades.
Housing was linked to the programmes for accelerating industrialisation.
The swinging political pendulum in Chinese socialism has clearly had direct and
pervasive impacts upon housing. In the late 1970s China became more open to visitors,
including some housing intellectuals from the West. Pao[89] describes the urban hous-
ing conditions in major Chinese cities. The cities are clean and the slums have been
cleared. Compared with other developing countries there are no vast squatter settle-
ments on the urban peripheries of cities. But in reaction to housing shortages some
older housing has illegal and informal extensions and constructions. Older housing
is in the form of one or two storeys arranged in groups around courtyards, in rows
and in terraces. New housing is in the form of flats in buildings between two and
ten storeys. The general and overall observation from Pao and other commentators
focuses upon the shortages of supplies. In these circumstances, the allocation of new
housing reinforces the general inequalities of modernisation, with workers and
bureaucrats from the new factories and offices having the new housing.
The Housing System: Structure and Operation

Pao was able to study housing in China in considerably more detail than earlier resear-
chers. He was able to visit Beijing to fulfil a programme which involved question-
naire surveys among residents, interviews with officials and housing managers, and
access to primary data and other information. He was also able to corroborate his
findings in interviews among refugees in Hong Kong. During the late 1970s China
became more open to foreign intellectuals, and Pao[89] took advantage of this, com-
pared to earlier authors who had to rely upon less accessible and only fragmented
information. From Pao's work, we are able to indicate the supply problems in Chinese
urban housing, the main characteristics of the housing system, and the operational
problems in the management of housing.
In Table VII we show the essential information on the supply of urban housing.
Although China has been increasing its housing stock—at an annual rate of 17.6
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million square metres per annum in the years 1949 to 1978—this has not kept pace
with the increase in population. Per capita living space decreased in the first 30 years
of socialism in China, and housing investment decreased as a proportion of total in-
vestment. All of this is consistent with our theme that housing has not fitted into
socialist theory in any clear and appropriate way. This raises the question of how the
Chinese housing system has been related to the economy as a whole. Figure 13 displays
the main features.
Table VII. Supply Conditions in Chinese Housing

A. Per Capita Living Space
Average for
Year Beijing 192 cities
1949 4.29m2 4.5m2
1956 3.02m2
1979 2.81m2 3.6m2
B. Housing as a Ratio of Capital Construction
Capital:Housing
Year ratio
1953-57 1 : 1.4
1976 1 : 0.8
C. Housing Investment as Percentage of

Government Capital Expenditure
Housing in
Year total capital
1953-57 9.1
1961-65 4.0
1977 6.9
1979 10.0
Source: Pao[89].
In Figure 13 we show that transfers of resources in socialist planning are arranged
by the pricing of consumption goods. Social surpluses are derived from the
consumption-production process by setting marked up prices, which is tantamount
to taxation. This is the source of capital funds for government (public) housing.
However, some housing is built by firms and enterprises, under government approval.
Accordingly, the dominant mainstream of Chinese housing comprises public rental
housing and rental housing supplied by firms and enterprises for their employees. Both
sorts of rental housing come within the socialist rent principles that rents are design-
ed just to cover maintenance and management expenditure. A small private sector
in the housing system permits expatriate Chinese to build their own housing, and some
(controlled) privately-owned housing remains from pre-Communist periods. What our
Figure 13 does not show is the primary significance, which has been given to invest-
Figure 13. The Chinese Housing System

ment in industry, rather than in housing. This was, of course, reflected in our descrip-
tion of, and commentary on, housing supply conditions in China.
Pao's study of housing in Beijing[89] enables us to know what the housing system
is like in operation. Urban housing shortages have constrained young couples to
postpone marriages or to live with their parents. Basic facilities are shared among
families and much housing is crowded. Citizens have been dissatisfied with govern-
ment policy in housing and with their housing conditions. The sources of the
dissatisfaction included shortages, general living conditions, and the privileged alloca-
tions to technocrats and managers. Levels of expressed dissatisfaction reached 70 per
cent and more in Pao's interviews among residents. Housing expenses among residents
were in the range of two to 13 per cent of incomes for rent, with an average of 3.5
per cent. Once utility and service costs were added, housing took up an average of
7.25 per cent of income. Average annual incomes were at US$1,577 in the late 1970s.
From his interviews with officials and his reading of critical reports in the Chinese
media, Pao was able to identify a number of problems. Housing experienced difficulties
of co-ordination in development and management. For example, even though land
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was supplied cheaply, it was not always serviced and managed in proper relationship
to building programmes. Delays arose in building programmes because materials were
in short supply, and management techniques lagged behind those in other countries.
Also, in housing administration the idea of resident participation was neglected.

We shall focus upon basic issues of theory and principle in political economy. In chapter
III we elaborated neo-Marxist theory and its application to urbanisation. Neo-Marxist
authors in the 1970s added some new dimensions and some amended interpretations
of nineteenth-century Marxist theory. The new theory has epistemic value. It elaborates
political and economic roles of the state in modern capitalism. Housing is viewed as
"collective consumption" in the sense that government becomes deeply involved in
housing for social policy reasons and for ensuring that labour power is "reproduced".
In short housing adds to economic welfare and it is necessary for maintaining the
quality and productivity of workers in capitalist enterprises. However, the politicisa-
tion of housing is seen to be full of contradictions. Private enterprises must accumulate
capital and power, but enterprises are somewhat fickle and ambivalent about supply-
ing taxes and other transfers to resource collective consumption. Accordingly, neo-
Marxist authors find their theory has epistemic value in its power of explanation of
housing problems in capitalist societies. Examples include the speculation and pro-
fiteering in land, the extent and nature of housing poverty in private rental tenure,
political problems in maintaining public expenditure in housing, and the gaps bet-
ween the price of housing and affordability among large sections of the community.
This explanatory power is made relevant to conditions in many advanced capitalist
countries. Although the point is seldom explicitly stated, neo-Marxist authors assume
that problems of resourcing and inequality in housing would disappear under socialism.
As we have seen, socialism in China has under-allocated to housing. Although as
expressions of socialist practice, rents are low, land is provided at low cost, and
ideologically, housing is viewed as socially necessary, in practice housing has experienc-
ed significant problems in socialist political economy. Stated in Marxist language,
Chinese housing has been detrimentally affected by contradictions between industrial
and housing investment. Priority has gone to industrial investment, leaving housing
in short supply and to standards which fall short of socialist ideals to raise substan-
tially the living conditions of the masses. Or, to put the matter differently and more
provocatively, socialist housing practice reveals an ideology about housing which con-
trasts with the humanitarian and egalitarian rhetoric of neo-Marxist advocacy. The
coming of socialism does not solve all the important contradictions in housing. In
order to move closer to solutions, we can find two lines of argument. First, in theory,
new ideas which view housing as production, not consumption are useful. Housing
would then get its resource due, and it may be used as a limited equaliser. This is
as significant for socialist as it is for capitalist housing. Secondly, in practice, we can
find two countries which have arranged their political economy of housing so that
supplies are adequate and there is some egalitarian expression in housing. The earlier
discussions on Norwegian and Singaporean housing show precisely how a resourcing
and policy framework can be designed to develop satisfactory housing systems. Govern-
ments can use their own public finance and their power to influence flows of saving
and investment to ensure that housing is well resourced. Moreover, as economic per-
formance has been revealed in Norway and Singapore during the last 20 years, hous-
ing can enhance economic growth, not reduce it. In theory and practice housing can
be something more than "residual welfare" in capitalism or "socially necessary" in
socialism.
IX. CONCLUSIONS
We have pursued two related themes in this study. First, from the currency of recent
criticisms some authors[l, 2]have lamented the failure of housing intellectuals to build
up a distinctive housing theory. Marcuse, in particular, called for general theory in

housing so that policy might be improved. Second, we have linked the matter of policy
to the appropriate conceptualisation of modern urban housing. Policy is the com-
mon link. Conceptualisation becomes relevant because from that basis we can review
the extent to which social science reflections on housing are insightful or limited.
However, an approach which centred only upon theoretical reflection and abstract
ideas would be insufficient in a subject such as housing. Housing is action in policy
and it is a practised political economy. Much can be learned from studying the com-
parative practice of housing policy. We can discern issues and problems and, above
all, where we find good practice, we can review principles to make statements about
housing theory as operating guidelines in housing programmes.
Our study has focused upon the links between theory, practice, conceptualisation
of housing and housing practice. In this approach we have made some position
statements on each of the key elements. Drawing these elements together, we have
the following key position statements.
Housing and Theory
Good theories have epistemic value. That is to say, they provide insights, explanation,
and develop empiricalfindingsand information. Theory has social value if it establishes
principles from which policy can be designed and operated. Social science studies in
housing have grown and diversified during the last decade or so. Although many studies
have not been explicitly theoretical, it is not this fact alone which expresses the really
important relationships between housing and theory. The more important relation-
ships and the facts from research studies in housing run along the following lines.
First, as neo-Marxist and other critics have noted, some social science applications
to housing have been narrow and technocratic, rather than societal and (usefully)
general. When a field of study becomes dominated by technical work, it often looks
as though general principles are neglected. Technical work is necessary, but it should
have some relationship to wider matters in theory and policy. Second, where resear-
chers have shown an interest in general principles and theory, this interest has been
derived from a commitment to a particular theoretical paradigm. Thus, "theory" in
housing has been developed largely within separate compartments—neo-classical
economics, neo-Marxism, and institutional economics. Theory there has been, but
from contending ideological and methodological perspectives. This leaves the ques-
tion open as to the nature, the quality and the adequacy of the theory contributed.
98 IJSE 13,4/5
Meaning and interpretation can be given to this question in our further statements,
below.
Housing and the Theory of Knowledge
Logical positivism has been superseded by "growth of knowledge" ideas in the
philosophy of science and the theory of knowledge. This means that science and social
science are seen as consisting of broader dimensions than deductive theory and em-
pirical testing. Social science will grow in a path of uneven development, with conten-
ding paradigms, continual adjustment of central propositions and interpretation from
empiricalfindings.Two points become especially significant for social science in hous-
ing. First, accepting Quine's reasoning[15, 16, 17] we can sometimes make progress
by accepting cross-paradigm comparisons and developments. In other words, empirical
findings and ideological commitments do not provide grounds for universal and general
acceptance of just one school of thought, be it neo-classical economics, neo-Marxism,
or institutional economics. Second, along with Lakatos[27, 28] we see progress in
knowledge in some new and developing ideas in social science, not just in the established
conventional wisdoms. In housing, we have shown that in a context of contention
and ferment, useful theoretical contributions are emerging in viewing housing as pro-
duction rather than as consumption, and in relating the economics of housing to con-
ditions of inflation, recession and stagflation. Again, we can see that, contrary to
recent criticisms, housing is being developed in a theoretical way. However, to achieve
this perception we must first have an appreciation of social science as it can be related
to "growth of knowledge" ideas in the philosophy of science.
Conceptualisation in Housing
It is from a reasonable conceptualisation of housing that we see the limitations of
various theoretical approaches to housing. The analysis of housing raises important
issues in finance; legislation; resource allocation; inter-governmental relations; pro-
fessional and administrative practices; and planning. Housing requires a simultaneous
solution to problems of shelter, social equity, building efficiency, builders' and oc-
cupiers' financial needs, and urban and regional networks with complex relationships
between housing and other physical, social and economic services. The extent to which
the several social science approaches to housing provide insights is quite limited. Among
neo-classical economists, some focus upon market aspects, some upon subsidies, and
some upon egalitarian issues. Limitations arise because neo-classical economics has
insufficient interdisciplinary perspectives, it is not societal in the same (fuller) sense
that neo-Marxism and institutionalism are societal, and its scope in egalitarianism
is contentious and uncertain among its practitioners. Neo-Marxists cannot fit hous-
ing adequately to their political economy. It tends to be under-allocated because it
has residual significance compared with the priority given to industrial investment.
Institutional economists can adequately handle housing as political economy, and in
the need to achieve balance and institutional devices in blending individual and social
initiatives. However, they have not given much attention to the analysis of housing
in a broad societal and political economy framework. Even within development
economics, housing has received little attention in its potential contributions to
economic growth and social change. Among developing countries, it is Singapore which
has provided solutions to the integration of housing with development. Singapore has
developed a policy and resourcing framework which controls the competition between
housing and non-housing capital, and which can be used flexibly in relation to growth
and macroeconomic policy. Only in new theory provided by Stretton[53] Becker[54]
and Apps[52] do we see housing conceptualised as production, not consumption. From
the conceptualisation of housing as production, it can be argued that market and
socialist economies under-allocate to housing. Thus, at the level of theory, reasoning
needs adjustment. This would be consistent with Quine's ideas on the growth of
knowledge. In practice, we see Norway and Singapore operating comparatively suc-
cessful housing programmes, using housing in economic development as a limited but
important equaliser. Neither Norway nor Singapore has followed market-related or
socialist dogma in housing. The problem with theory in housing is not its absence,
but its widespread inappropriateness in relation to reasonable concepts of housing.
Housing as Political Economy

A political economist is concerned with real world problems, with broadening
economics in an interdisciplinary way, in revealing a sense of history in research, and
in selecting appropriate techniques for analysis and evaluation. Housing is an expres-
sion of political economy, and accordingly its study should have an interest in prac-
tice and the principles represented in practice. This is the approach we have taken in
this study. For significance and relevance, the poitical economy has included the
epistemic value of theory, discerning features of housing research which bear useful
or critical relationships to the modern philosophy of science, and starting from a posi-
tion where housing concepts are stated and discussed. Then, for reasons of principle
and to add knowledge, the political economy of housing reviewed comparative practice.
Housing as Practice
Social science studies which begin with practice and policy as their point of departure
have the promise of identifying issues and problems. When this is done in a com-
parative perspective we may discover the conditions under which good policy works.
If we cut across capitalist, socialist, and developing countries in our selected com-
parisons, we have the prospect of identifying some of the essential principles in the
political economy of housing. From these various perspectives we can attempt to write
housing theory as a programme of operating guidelines.
Prescriptive theory then takes shape as follows. Ensure a strong flow of savings
in the economy, and direct some of this into housing. Maintain strong and necessary
flows of resources into housing, using the capital market and public finance as the
intermediaries. Design and construct the resourcing system to avoid large conflicts
between housing and non-housing capital, and use the housing sector in complemen-
tary and corrective roles in fluctuating economic conditions. Use public policy in-
struments to ensure adequate flows of low-priced land to urban housing. Have a regard
for housing as production, with productivity going socially and economically beyond
rental values of dwellings. Discern the limited but useful egalitarian possibilities in
housing. In the light of Norwegian experience, acknowledge that egalitarian housing
is compatible with large measures of economic and political freedom, and with strong
economic growth. Home ownership, housing allowances and housing credit instruments
can be designed for use as egalitarian purposes. From the Singaporean
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experience, use housing within a set of social and economic policies to propel and
enhance economic development.
Once these operating guidelines are set down, we can find specific points of criticism
in mainstream theoretical studies. Neither neo-classical nor neo-Marxist economics
understands housing as production thereby leading to dilemmas and distortions in
allocation. Also, neither of these theoretical frameworks establishes the structural role
of housing in economic growth and in a macroeconomic framework. Such a struc-
tural role can be discerned from the success of Singaporean housing policy, the failures
of housing policy in the People's Republic of China, and the creative theory of
Kalecki[56].
Housing has to be interpreted. We have interpreted it as operational theory, as hav-
ing relationships to general theory in social science, as political economy, and from
conceptualisation which is appropriate to modern policy. We disagree with the pro-
position that modern social science literature in housing is devoid of useful housing
theory. Rather, much of the problem lies with social scientists. They become commit-
ted to one paradigm to the exclusion of others, and often only argue their case against
other paradigms. Along with Quine we would argue for cross-paradigm relevance for
interpretation, for explanation, and for building up housing theory. Additionally, we
would take Lakatos's advice seriously, suggesting that we seek out new theories and
ideas in the young and changing spheres of research. For housing we would look for
new interdisciplinary research. In ideas from Becker and Apps the deductive economic
theory is synthesised with institutional and social insights, and housing is seen in novel
ways as production. From Kalecki's ideas we perceive housing as a structural element
in economic growth and macroeconomic dynamics. Kalecki's theories are syntheses
of deduction in economics and insights into the political economy of socialism and
capitalism. Finally we do not have to be entirely pessimistic about housing practice:
Norway and Singapore have operated good housing policies and we can show precisely
why they have been comparatively successful. Norway and Singapore can be cast as
exceptional, largely because their policies are not dogmatically capitalist or socialist,
but rather blend individualism and societal causes in their political economy of hous-
ing. Theirs is a practice of Quine's call for cross-paradigm creativity in developing
good theoretical principles.
Notes
1. A researcher who focuses only upon the lowest four to five deciles of an income distribution and
upon access to home ownership in typical OECD countries will find that home ownership creates
inequality of wealth and occupancy costs. However, a researcher who examines the whole of the
income distribution and relates the housing system to this full range could reasonably argue that
by pushing home ownership rates further down the income distribution, some tendency towards
equality will result.
2. Adam Smith is generally associated with laissez-faire market economics. However, he did have a
collection of reasons for justifying government roles in defence, the administration of justice, public
works, and education. Although Adam Smith had not elaborated principles of externality and public
goods, those are implicit within his examples for state roles.
3. In practice, the types of regulatory planning referred to here seldom achieve a harmonisation of
private and social interests. The reconciliation of conflicting land use interests is achieved more readily
through land acquisition by the state[6].
4. During the last decade or so, social policy specialists and social economists have engaged in
sophisticated empirical and research studies to examine the relationships between economic growth,
work, and saving incentives and other matters, within a framework of social assistance and social
policy provisions. We should acknowledge that this research relates essentially to capitalist society,
telling us nothing about incentive effects in socialist societies. The key findings run along the following
lines. Cash support schemes for intact families scarcely affect work incentives and labour supply[95].
The analysis of the savings effects of state pensions and social security has led to controversial in-
terpretation, but generally opinion shows that the disincentive effects are negligible [96, 97, 98].
Finally, the cross-national comparisons show no consistent relationship between the size of the welfare
state and economic growth, though it is a popular belief that a larger size of welfare provisions
leads to lower economic growth[99].
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International Journal of Social Economics

Housing Theory and Policy

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Housing Theory and Policy

Housing Theory: A Preliminary View

conceptualisations view housing as generating productive activity within the home—

Conceptualisation in Housing and Housing Value

political parties have contending policies on housing. At a more fundamental level

of its very essence. However, neo-classical, institutional, and neo-Marxist economists

II. THE THEORY OF KNOWLEDGE AND POLITICAL ECONOMY

Quine's Holistic Pragmatism and Cross-Theoretical Relativism

fills a gap in giving coherent understanding to social life. Furthermore, in subjects

In deliberating these points, Thomas comes to the same conclusions as

Kuhn and the "Growth of Knowledge" Perspective

tion involves proximity to social institutions, to uses of authority, to administrative

III. SOCIAL SCIENCE THEORY AND HOUSING STUDIES

Old and New Paradigms in Urban Sociology

rupture could, however, occur with an accumulation of circumstances and currents

strains urban change.

In summarising the modern paradigms in urban sociology, whether from Weberian

Housing Studies in a Changing Neo-Classical Economics

various redistributional arguments which can be located in theoretical welfare

about the allocation and use of land are highly politicised.

Land and Economic Analysis

economist, he advocated a tax levy on "unearned increments"—that is, on those (future)

us to understand land in these relevant and multiple ways.

Summary and Evaluation

IV. NEW THEORY AND HOUSING

economists tended to classify such things as education and health as consumption.

satisfaction or utility—child rearing, social interaction in the family, meals, recrea-

are given more precise and analytical meaning in Figure 2.

Figure 2. Two-Sector Crowding Effects

of discrimination explains some major inequalities, and the household sector is

tice was revised to form a modern "post-Keynesianism". Post-Keynesianism was a more

Stagflation has shown housing to be a key sector in the economy. Performances

economies because housing is at once related to markets, to saving and investment,

Summary and Evaluation

Housing Policy Trends and Issues

Modernisation in Developing Countries

(4) attitudes towards life and work,

substantial inequalities of income in capitalist societies. Accordingly, we should review

antecedent inequalities, and their potential to equalise is limited, though important.

of aggregate income. The distribution can be presented in any convenient percentile—

Figure 3. Lorenz Curve Distribution of Income

Figure 4. Family Income Distribution and a Housing System

Our treatment of housing systems and their relationship to patterns of antecedent

including high rent/repayment-income burdens, poor standard housing, bad landlord-

Figure 5. The Pattern of Life-Cycle Per Capita Income Profiles

VI. THE NORWEGIAN HOUSING SYSTEM

Norway had achieved reform in response to considerations of inflation and distribu-

The Norwegian Housing System in Structural Perspective

Figure 6. The Norwegian Housing System, 1980

Figure 7. Home Ownership in the Housing Stock of Selected Countries

Sources: Schriftenreihe Wohnungsmarkt und Wohnungspolitik, Wohneigentiumsquote (07.005),

Sources: See the listing in Figure 7.

Figure 9. Income-own Capital and Capital Costs-Income

Sources: See the listing for Figure 7.

Table I. Wealth and Housing Real Estate

be at the same cost as non-housing capital; what is needed is an evaluation of the

(NBBL) was founded to promote the co-operative housing movement. It is closely

Summary and Perspective

VII. HOUSING IN SINGAPORE