BRITISH HOUSING POLICY AND THE

HOUSE-BUILDING INDUSTRY

Michael Ball

INTRODUCTION

Over the past hundred years the state has become closely involved in the provision
of housing . It has manipulated the system of housing tenures, become a maior
landlord . and spent vast sums perpetuating the current structure of housing
finance . State intervention has not however solved the housing crisis but only
partially transformed its nature . The recent Housing Policy government green
paper (Housing Policy 1977) highlights yet again the current housing crisis and the
attacks that are being made on working class housing standards . This paper will
argue that the process . of production of housing is as important for an under-
standing of the development of state housing policy as is the analysis of housing
tenures . And it will suggest that the class struggle within housing, and its resultant
effect on state housing policy, can be examined only within the context of the
relationship between the contradictions for capitalism produced by the house-
building industry and the effects of specific housing tenures .
Emphasis will be placed on the role of housing at the economic level . This is
not to deny the importance of the other levels, not is it to suggest that a simple
economic determinism will explain all . Even when considering the economic level
political and ideological factors must be included .

2 . HOUSING AND THE ACCUMULATION Of CAPITAL

Central to an understanding of the role of housing at the economic level is the

influence of the value of housing on the value of labour-power and its consequen-
tial effect on the rate of surplus value . The value of a "physical unit" of housing is
determined by the socially necessary labour time required for its production . This
obviously does not correspond to the direct housing costs faced by households .
Apart from the necessity to transform values into prices of production, the final
cost faced by the consumer is also determined by land costs, monopoly pricing
and by the structure of housing finance . The latter elements however concern the
distribution of surplus value and will be considered laterlll .
Housing in addition need not be provided as a commodity under capitalism .

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 The absence of the commodity form could exist in two instances : in production
when a dwelling is produced only for its use-value, and at the point of consump-
tion when an agency (e .g . the state) purchases housing in the commodity form but
provides it free to households . In a specific social formation the actual relations of
production of housing, and the forms in which housing is consumed, depend on
the state of class struggle and the historical development of capitalism . In Britain,
however, housing is mainly produced as a commodity under capitalist relations of
production(2) and it is provided for consumption in the commodity form : either
through private renting or purchase, or through renting from the state . Considera-
tion of non-commodity provision therefore need not complicate this particular
discussion .
The value of labour-power is determined by the value of the necessaries of life
habitually required by the average labourer . There are two sides to the determina-
tion of the value of labour-power : the composition of the physical bundle of
commodities which constitutes it, and the value of those commodities . The size
and composition of the physical bundle will be determined by the historical
situation and the state of the class struggle . The value of that physical bundle will
be determined by the prevailing abstract labour time required for its production .
The value of labour-power does not represent a fixed quantity but will rise with an
increase in the physical amount of commodities which constitute it and will fall
within a fall in the value of those commodities . This latter aspect is particularly
important as the decline in the value of labour-power over time, which results
from a fall in the value of those commodities, represents one of the central
dynamics of the capitalist mode of production . In order to understand the role of
housing in a capitalist society, it is necessary therefore to consider its position at
the economic level in relation to the production of relative surplus value .
There is considerable evidence that productivity in the house-building
industry has increased at a much slower rate than in other sectors of industry . This
means that the fall in the labour time necessary to produce housing has lagged
behind that for other commodities . As a result the value of housing will not have
fallen to the same extent as many of the commodities contributing to the
reproduction of labour-power . Now any such commodity, whose value does not
fall, limits the ability to lower the value of labour-power and will therefore act as a
restriction on increases in the rate of surplus value . The rate of accumulation will
be slowed and counteracting tendencies to the falling rate of profit weakened . The
extent to which this occurs depends, of course, on the importance of the
commodity in the value of labour-power, and housing is a significant element in
that value . So the low growth of productivity in the house-building industry
becomes a crucial problem for capitalism . It is also a problem that cannot be
solved by a redistribution of surplus value . It affects the total mass of surplus value
produced and cannot therefore be seen simply as a distributional question . Its
solution for capital as, a whole lies solely in raising the productivity of the house-
building industry .
Within Marxist value theory the productivity of labour expresses a physical
relation : the physical amount of products produced by a given amount of socially
necessary labour time(3I . This relation determines the value of a commodity and is
itself determined by the labour process used to produce that commodity . The
assertion that the rate of productivity growth in the British house-building industry

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80 CAPITAL & CLASS

has been slow, compared to that in other industries, is thus to assert that the
labour process has been relatively static in that industry . The development of the
labour process is structured by the dominance of the relations of production over
the forces ot production(4) The existence of a slow rate of growth of labour
productivity in the production of a necessary element in the reproduction of
labour-power consequently does not impose a technical determinism on the
ability to extract surplus value .
Before presenting evidence which illustrates the slow growth of productivity
in house-building, the major implications of it for the role of housing in the British
social formation will now be drawn out .
1 . Given that the value of housing has fallen comparatively slowly over time,
the costs of housing the working class , at any given standard becomes pro-
gressively more onerous for capital in general, unless ways are found of allevi
ating those costs . Economic pressures for state intervention into the sphere of
housing intensify, not simply to ensure adequate provision of working class
housing but in an attempt to reduce the burden for capital of its cost .
2 . The inability to reduce the value of housing is not necessarily detrimental to
capitals operating in the building industry . Even with a slow change in the
labour process in house-building, building capitals will still extract surplus
value from their work force and will therefore still tend to earn the average
rate of profit . With a relatively static labour process, however, accumulation
in the industry will tend to take the form of a quantitative expansion of a
given labour process rather than the form of revolutionising that process
through changes in the technical composition of capital . As a result improve-
ments in technical efficiency will not be a major source of surplus profits for
individual capitals in building as it is in other industries . Instead such sources
as land speculation will constitute the areas in which surplus profits can be
earned and the rapid expansion of capital achieved .
3 . If decreases in the values of consumption goods occur, it is possible for the
living standards of the working class to rise even though the rate of exploita-
tion is increased . Gains in housing standards for the working class cannot,
however, be achieved so painlessly for capital if the value of housing does not
fall to the same extent as that of other items of consumption . Acquiescence
to working class demands for improved housing will be more costly for
capital in terms of its effect on the value of labour-power than will conces-
sions over many other commodities . Housing is consequently an area of
working class consumption over which there is intensified class struggle .
4 . State intervention in the form of subsidies which do not alter the value of
housing will not be a solution to the problem for capital of the relatively
high value of housing as such subsidies can only have a distributional effect .
Nevertheless, this distributional effect can have a significant impact during
specific periods (e .g ., during the demise of the private rented sector)
temporarily alleviating the economic problem for capital, if the redistribution
is at the expense of non-capitalist classes . Such redistributions can only be
short-lived, however, as long-term distributional advantage for capital can
be only at the expense of the working class, thus intensifying the class
struggle .
5. The house-building industry has not been the only industry in Britain with a

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 low rate of growth in productivity ; a number of other activities necessary to
reproduce labour-power have had similar small changes in their labour
processes . The importance of housing as an item of household expenditure is
substantial, however, and many other activities have been taken out of the
commodity form by state intervention (e .g ., education and health) . Yet the
private capitalist production of housing still remains, and its production as a
commodity ensures its continued influence on the value of labour-power .
The object of this analysis is not to suggest that housing is the most important
problem for capital in the cost of reproducing labour-power . Instead it is to
examine the effect of housing on the process of accumulation . The analysis of the
effect of housing on the production of surplus value is nevertheless not a sufficient
answer to the question of the role of housing provision at the economic level . The
distribution of surplus value must also be considered and with it the role of the
state . Before proceeding to these issues, the assertion that the labour process in
the British house-building industry has changed comparatively slowly must be
substantiated .

3 . PRODUCTIVITY IN THE HOUSE-BUILDING INDUSTRY

House-building is an integral part of the construction industry, and it has represen-

ted between 25 and 30 per cent of total annual construction industry output over
the past decade . Many firms within the industry tend to work in several areas of
construction at the same time ; housebuilding being complementary to activities in
other types of work . For this reason, and because of data limitations, there is a
need to consider the construction industry as a whole . This is unlikely to lead to an
underestimate of productivity changes in the house-building sector which has
probably not experienced the productivity increases of, say, civil engineering .
The industrial revolution and its aftermath did not fundamentally transform
house-building techniques as it did the production of other goods . Cooperation
and manufacture still predominate in the process of constructing dwellings .
Changes in technique in the industry over the past two hundred years have been
only gradual, with the most significant changes taking place in the materials used
rather than the labour process itself . Jones suggested that the major development
in the latter half of the nineteenth century was the introduction of machinery into
the woodworking trades (he estimated that productivity in the building trades rose
by a mere 17% from 1850 to 1910) (Jones 1933) . The inter-war period also saw only
gradual technical developments, although these were augmented by innovations
in building materials (Richardson and Aldcroft, 1958 . Bowley, 1960) . Since 1945
there have been additional developments in building materials, and mechaniza-
tion has substantially affected certain on-site activities especially earth-moving,
materials handling and concrete mixing . Off-site prefabrication also has become
well established for certain components . Nevertheless, fundamental changes in
the building process have not occurred, in part due to the failure of the attempt at
widespread introduction of industrialized building methods[5J .
Changes in the production process do not however necessarily imply funda-
mental changes in technique ; considerable improvements in efficiency can be
achieved by reorganization and integration of traditional methods . In this context

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82 CAPITAL & CLASS

it is of note that the building industry has not fully utilised such possibilities
(Turin, 1975) . The absence of mechanisms which force builders to improve
efficiency or strive for new production techniques, which, as Marx demonstrated,
is characteristic of large-scale capitalist industry, is readily apparent . It is not
surprising, therefore, that wide disparities occur in efficiencies between builders
at any one point in time (Reiners and Broughton, 1973 1orbes, 1969) .
The general picture of relatively slow development is corroborated by
comparative data on productivity and costs . The usual qualifications about such
data need to be made before presenting the evidence . Long term studies of costs
and productivity are difficult as they face, on the input side, the problem of
separating changes in the costs of inputs from changes in their use and, with
regard to output, changes over time in the quality and nature of the commodity
produced . These difficulties are compounded for both construction as a whole,
and for house-building, by the heterogenequs nature of the goods produced and
by the problems of measuring construction output and employment . The magni-
tude of the differences between this industry and other sectors of the economy is
therefore the most useful indicator of relative changes .
Particular problems are presented by the existence of a large number of self-
employed workers (the "lump") as this leads to an under-recording of output and
employment . Much of this labour is used in sub-contracting work, and is therefore
likely to affect the labour-force figures to a much greater extent than the output
series . The Department of the Environment . for example . has estimated that the
"old form" of contractors census, used prior to 1973, "missed" 389,000 of the
industry's labour-force, (i .e ., 20% of total employment)(6) This has been rectified
to a certain extent in recent years, and estimates are made of unrecorded workers ;
however, the employment series have to be treated with caution . Self-employ-
ment in construction has been growing since the last war but the most rapid
growth occurred between 1966 and 1973(7) . Tightening legislation and the slump
in the industry has since then led to a decline in their number . When lump labour
is rising, estimates of changes in total employment will be low; leading to an
overestimate of productivity increases . These factors need to be borne in mind
when considering productivity data for this industry .
Lomax has produced the most comprehensive series on productivity in the
building industry . He presents estimates of output per operative hour for a series
of industry categories from 1907-1955 : Table 1 reproduces some of his findings .
His estimates show that productivity in building and contracting rose between the
years 1907 and 1955 at an average annual rate of only 0 2% compared with a 2 .1%
annual increase for manufacturing industry . The low productivity growth of
construction was not shared by the building materials industry which, unlike
construction, is classified within manufacturing industry . Its annual productivity
increase exacttly equalled that of manufacturing as a whole (2 .1%) . Much of that
growth can be attributed to changed techniques in the building materials industry ;
changes which coincided with an increased monopolisation of the sector (Bowley,
1960) . Increases in productivity in the building materials industry, unless accom-
panied by rising input costs for that industry, will reduce the value of the constant
capital used in the house-building industry and thereby lower the value of the
housing built by it . This will partially offset the effects of the relatively static
process of producing housing .

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 Table 1
Average rate of productivity increase in the U.K. per cent, per annum, 1907-1955

1907-24 1924-35 1935-49 1949-55 1907-55

Total manufacturing 2 .0 2 .0 2 .0 3 .1 2 .1
Building materials 1 .9 2 .1 2.3 2 .5 2 .1
Building and contracting 1 .7 1 .2 -3 .6 3 .6 0 .2
Source : Lomax 1959, Table 8 .

Both world war! caused substantial falls in building productivity . Carter

estimated that productivity had fallen by a third between 1939 and 1947 (Carter
1958) ; the estimates of Lomax given in Table 1 indicate that the fall could have
been even higher . Recovery to pre-war productivity levels was slow, during the
1960's more optimistic reports on construction industry productivity appeared ;
official reports were talking of actual annual rates of increase of around 4% (e .g .
the estimates for the late 50's/early 60'5 given in the National Plan of 1965) . Stone
produced estimates from 1958 to 1965 of average annual increases ranging from
2 .3% to 4 .4% ; he decided that a figure between 3 .0% and 3 .5% was most likely
(Stone 1970) . (The range of estimates highlights the sensitivity of productivity data
to the price index used to deflate the gross output series and to the estimates of
labour-only subcontracting .) This optimism about productivity, however, could
have merely reflected underestimates of the growth of self-employed fabour . This
would explain the discrepancy between these more optimistic estimates and
recent data published by NIESR, given in Table 2 . which show a much lower
productivity increase of 1 .2% for 1960-65 .

Table 2
Trends in output per employee, 1955-73 (per cent changes per annum)

1955-60 1960-65 1966-71 1971-73

Manufacture 2 .2 2.8 3 .6 6 .7
Bricks, pottery, etc n.a. 4.0 4 .8 8 .7
Construction ` 2.2 1,2 7 .0 -2 .2
Source : National institute Economic Review, February, 1975

Even for this later data, though, the National Institute Economic Review points out
that the spectacular increases shown for 1966-71 could be attributable to the rise
in self-employment . The view of the National Institute is corroborated by the
estimates of Sugden who concludes that, allowing for self-employment, the rate of
increase in output per head in construction was considerably lower than in manu-
facturing for the period 1954-70 (Sugden 1975) .
In summary, the available evidence would seem on the whole to justify the
belief that the rate of growth in productivity of the construction industry in Britain
has lagged behind that of manufacturing industry over a long period of time . The
recent slump in construction activity gives no indication that the trend of 1971-73
has been reversed . In addition, the magnitude of the difference between

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84 CAPITAL & CLASS

construction and those sectors classified as manufacturing industry is such that it

is difficult to attribute it solely to the specific measurement problems of the con-
struction industry .
In view of the data presented above it is perhaps not surprising that construc-
tion costs have tended to rise faster than the general price level . (Fleming, 1966 .
feinstein, 1972) . Feinstein's estimates show that the retail price index rose fivefold
between 1913 and 1965 whereas the "buildings" price index rose eightfold . They
also show that the cost of constructing dwellings rose faster than the cost of other
construction activities . Since 1965, D .O .E . data show that construction costs have
continued to rise at a faster rate : between 1965 and 1975, local authority con-
struction costs rose 33% relative to the retail price index and new owner-
occupier dwellings (including land costs) by 42% .
Unfortunately no adequate explanation exists of the comparatively slow
development of the forces of production either in the construction industry as a
whole or in house-building . Most explanations that do exist have been provided
from outside the problematic of historical materialism . Needleman places
emphasis on the physical nature of the building process which, he argues,
determines the structure of the industry inhibiting the adoption of new techniques
(Needleman 1965) . This raises the question of why these physical constraints have
not been overcome . Technical change itself implies a reconstitution of the
physical aspect of the production process . Capitalist relations of production
transform pre-existing technical constraints on production by reconstituting the
labour process and changing the nature of the commodity produced . But this has
not happened in house-building to any great extent . Capitalist relations of produc-
tion exist but production methods are predominantly traditional, based on those
which existed before the emergence of capitalist relations .
Bowley, when discussing the building industry as a whole, argues that the
main barrier to technical change is the separation of the functions involved in the
building process, particularly those of the "professions" (e .g . architects, quantity
surveyors, structural engineers) from each other and from the actual builders . This
separation has led to the development of a building "Establishment" with an
inherent conservatism in technique (Bowley 1966) . Once again this raises the
question of why this structure has remained ; why competition from new, more
efficient techniques has not broken this Establishment down as has happened in
other industries . This aspect of the structure of the building industry must be seen
as much as an effect as it is a cause .
Other writers have placed emphasis on the role of land . Colclough argues that
the speculative nature of private house-building is not conducive to cost
efficiency, as the speculative builders profit is made out of the increase in land
values upon development . Actual construction costs are therefore secondary to
speed of construction . and consequent tealisation of the profit on land (Colclough
1965) . This, however, raises questions about the operation of the land market for
which no answer is given . For example, why the initial land owner does not raise
the selling price and acquire the builders profit on land . french Marxist writers
have also placed emphasis on the role of land rent : by arguing that absolute rent
has acted as a barrier to investment in the building industry, thereby restricting the
development of more productive techniques with a higher organic composition of
capital (Ascher, 1974 . Lipietz, 1974) . Absolute rent exists because the low organic

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 composition of capital in building enables the land-owner to extract this type of
rent from the surplus value produced in building, which would otherwise be
redistributed to higher organic composition sectors in order to equalise the rate of
profit between industries . Absolute rent is therefore both a cause and an effect of
the low organic composition of capital in the building industry . For Marx,
however, in the chapter on absolute rent in Capital a low organic composition was
a necessary condition for the existence of absolute rent but not a cause . The cause
was the monopoly ownership of land which (in agriculture) resulted in a demand
for rent on land which would otherwise pay no (differential) rent Marx conse-
quently theorised the conditions under which the monopoly ownership of land
would generate absolute rent in agriculture . Unfortunately this has not been done
for the existence of absolute rent on building land, so its role for the building
industry must remain an assertion .
There is one other way of cheapening the cost of producing housing, apart
from reductions in the values of either variable or constant capital, which does not
require fundamental changes in the methods of production . This is to after the
nature of the commodity produced . This happens to many commodities produced
s
under capitalism and represents an integral part of changes in methods of produc-
tion which result in increases in productivity . In housing, the size of new
dwellings, for example, is reduced in response to higher land prices, and low
building productivity can be circumvented to an extent by putting increasing
emphasis on internal facilities which tend to be factory produced and conse-
quently not subject to the conditions of production in the building industry .

4 . PRODUCTION AND REALISATION

The sphere of production has been sited as an area which generates contradictions
for capital in its continual attempt to produce additional surplus value . This was
revealed by the effect of production on changes in the value of housing . Most
discussions of housing in Britain have tended to ignore the sphere of production :
the problems of the building industry are treated as a separate question . In parti-
cular, much academic discussion of housing has concentrated on the process of
realisation and consumption, concerning itself with differences in cost and con-
sumption which result from the structure of the housing realisation process . This
deflects discussion into questions of "need" and "equality" between individual
"citizens" and away from the structural role in a capitalist society played by social
relations in housing. Emphasis is placed on the "gatekeeping" role of certain
agents in the realisation process, for example by the housing landlord or the
building society, whilst the role of housing in the production of surplus value is
ignored . ,
Housing does have ; however, a specific realisation process . One that is more
complex than for most commodities, especially those commodities primarily
destined for the reproduction of labour-power . There are different forms that this
realisation process can take ; each of these forms having a separate juridical
definition of tenure . Tenures represent the legal recognition of the separate sets of
social relations which intervene between the production of housing and its con-
sumption as a use-value . But why does housing have this complex structure of
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86 CAPITAL & CLASS

realisation and consumption? The simple fact that housing lasts for a considerable
length of time will not suffice . In any case, the same fact is true for many con-
sumer durables(8I . The reason for the existence of the complex structure of realisa-
tion and consumption arises instead from the high value of housing . The
statement that housing requires forms of finance over and above that derived from
wages because housing is expensive to build is obviously a truism . But it is a truism
which sites the reason for the necessity in the sphere of production and not in the
sphere of circulation .
This is, nevertheless, a complex set of interrelations between the spheres of
production, realisation and consumption . The actual forms of realisation and
consumption will be determined by the particular tenures in existence, and those
tenures cannot be directly deduced from the sphere of production . Specific
tenures will also have effects on the production process itself, for example,
industrialised building systems have been developed only in the local authority
housing sector . Finance and land show up these interrelations in a similar way .
Loan capital will be required both to finance the construction of a dwelling and for
its purchase on completion . The need for a source of finance provides an avenue
through which surplus value can be appropriated, as does the price of land . Land
has to be acquired by the builder but it does not represent a part of the value of the
dwelling built, its cost is a deduction from surplus value . Both finance and land
will influence the structure of the building industry and consequently the
organisation and form of the [about process . They will therefore indirectly affect
the value of housing as they constitute two of the elements that determine the
nature, in the house-building industry, of the process of production and the ways
in which that process can change(9] .
Production should consequently not be seen as an isolated cause of major
housing problems . But an analysis of the development of British housing policy
must consider the effects caused by the production process . If certain forms of
housing provision come into contradiction with the overall process of capital
accumulation, changes in tenure forms which do not alter the value of housing
will still perpetuate a fundamental problem for capitalism in housing the working
class . (In Section 5 below, the example of the decline of the privately rented sector
at the beginning of the twentieth century will be discussed in this context) .
Consideration of the determinants of the value of housing will also highlight
the ways in which the various factors in the sphere of circulation should be
analysed . In housing, the sphere of circulation produces its own specific effects :
political and ideological as well as economic : for example, the idiosyncrasies of
the British building society movement are well known . The importance of these
effects on the general provision of housing, however, and the very reasons lot
their existence, cannot be deduced from an isolated analysis of any particular
institution or of a form of realisation and consumption . It can be deduced only
frorn the overall structure of housing provision and the state of the class struggle .
In the absence of such an analysis, the mere empirical recognition of an effect
produced by loan capital can for example lead to the assertion of the dominance
of "finance capital", a position held in Harvey (1974) . Even if loan capital never
operated in housing, a central contradiction of housing for capital would remain if
the value of housing was unchanged . Only revolutionising the process of
producing housing will affect that contradiction . So unless the removal of loan

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capital can alter the process of production and, therefore, the value of housing,
the result of its removal will only be distributional(101 .
The surplus value appropriated through the financing of the housing realisa-
tion/consumption processes, and through housing land costs . i s a distribution of
surplus value away from other sectors of capital to unproductive capitals
providing loan capital or land . This redistribution is effected through wages and
taxation : the total direct cost of housing to individual households, including
interest charges, will have a determinant influence on the level of wages ; and the
mass of state subsidies used to finance a part of these appropriations of surplus
value will determine the level of taxation required . The working class is not
however a bystander unaffected by these struggles over the distribution of surplus
value . Instead these struggles might result in either a lowering of the value of
labour-power or in a reduction in the provision of working class housing . The
outcome at any point in time will depend on the state of the class struggle, and an
important aspect of struggles over housing will be the forms of housing tenure .

5 . THE STATE AND HOUSING POLICY

5 .1 Housing and the role of the state

The state intervenes in the sphere of housing in an attempt to overcome the
contradictions for capitalism inherent in the production of housing in the
commodity form . But these contradictions cannot be overcome simply by state
intervention, as the state itself has contradictory functions which arise from its
dominant role as the factor of cohesion in a capitalist social formation . This means
that no simple explanation can be given of the state's role, and that its role cannot
be treated as invariant . What will be attempted here will be the elaboration of
certain elements which should form the basis of a comprehensive analysis of the
role of the state in British housing, rather than that comprehensive analysis itself .
The contradictory role of the state arises because it is a site of class struggle .
Such contradictions include for instance :
1. It has been argued that housing costs limit the ability to reduce value of
labour-power . Capital as a whole will be affected by this restriction but any
potential solution will operate against the interests of specific individual capitals,
or fractions of capital . Certain fractions might themselves have a contradictory
relation to housing costs . Loan capital will want to reduce the cost of its labour
force and to sustain the total surplus value produced in the productive sector . But,
at the same time, it directly benefits from surplus value appropriated through
housing and consequently would not want its removal .
2 . the state will also try to contain working class demands and channel those
struggles into the established political apparatus . This will affect both the content
of housing policies and the way in which they are presented .
3 . The ideological conditions necessary for the existence of a capitalist mode of
production also have to be reproduced . As part of this, the state appears as the
representative of the interests of the general public and above class struggle . Its
concern over housing as a result might extend beyond the immediate economic
interests of capital . ideological questions will also enter directly into housing
policies . Some housing tenures, for example, facilitate the reproduction of the
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flg CAPITAL & CLASS

dominant ideology and will therefore be encouraged .

The role of housing in the class struggle will alter over time . This results from
the fact that both the structure of the social formation and the state of class
struggle are not static . Two examples will illustrate this point .
(i) The durability of housing means that its production need not be continuous,
in the sense of regularly producing a certain amount of new stock each year . It is
consequently possible to reproduce the capitalist mode of production at any
specific point in time without much capital having to be applied to housing
production Capital as a whole might therefore find expedient a severe reduction,
or abandonment, of housing production during periods of crisis .
(ii) The position of class struggle will affect the state's response to working class
demands . During 1974, for example, the Labour Government was trying to contain
strong militancy by the working class over economic demands . Part of its response
included a rent freeze and a substantial loan to building societies to keep
mortgage rates down . A year later this militancy had been weakened and the
state's response to housing costs changed : rents have risen, mortgage interest rates
reached unprecedented heights during 1976, and housing expenditure cuts have
been implemented .
Attempts by the state to increase the productivity of British industry are
well-known . [lie state has intervened into many industrial sectors, aiding the
restructuring of capitals in those industries . It has advanced capital in the form of
tax relief or grants, and used many other methods all of which are specifically
aimed at lowering costs through increased productivity Yet these forms of inter-
vention have rarely been tried in house-building, though its rate of productivity
growth is particularly low . Attempts by the state to increase productivity in this
sector instead have been limited primarily to technical advice and the encourage-
ment of new techniques (e .g . industrialised building), with the occasional use of
public expenditure to sustain demand .
At present it is only possible to assert that the structure of the house-building
industry has not facilitated direct intervention by the state . Instead the housing
problem has been treated primarily as a realisation problem : final consumers are
seen as having insufficient funds . This emphasis on the realisation process is
accentuated by the role played by capitals attempting to appropriate surplus value
through that process . State policy is therefore directed at the minimisation of this
realisation problem, via the manipulation of subsidies and tenures . Thus the state
influences the cost of housing to the final consumer without attempting to tackle
the fundamental problems in the production of housing . If objective conditions in
the building industry limit the ability for state intervention, concentration on the
tenure system rather than on production does not necessarily imply that the state
has simply missed the correct policy prescription . Nevertheless it does mean that
state policy is not directed to the fundamental cause of the high cost of housing .
So the effects for capital, via the restrictions on relative surplus value, continue
and intensify Working class strategies directed against state housing policy must
be based, therefore, on an understanding of this central housing problem for
capitalism and the contradictions generated by it .
State policies towards different tenures cannot however be ignored . The form
of the realisation process is dependent on particular tenure structures, and the
latter will therefore determine whether and how much surplus value can be

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 appropriated in the realisation process . State policies towards specific tenures will
consequently affect this . Again, some tenures might be more conducive to
changes in the process of production of housing . Finally, the state's role is not
solely economic . Even if it cannot confront, let alone solve, the central economic
problems of housing for capitalism, it can operate in this sphere to further the
ideological conditions necessary for the reproduction of the capitalist mode of
production . And tenures provide ample opportunity for this activity .
It has often been argued that changes in housing tenures are the result of
either victories or defeats for the working class, at the expense or gain of the
bourgeoisie (Byrne and Beirne, Merrett, and Clarke and Ginsberg in PEHW, 1975 .
CDP . 1976a) . One tenure is classified as the working class tenure : namely local
authority housing : and all movements towards greater encouragement of this
tenure are treated as working class victories and all moves away from it as defeats .
The role of the bourgeoisie at times when local authority housing has been
encouraged is dismissed because no direct economic interest of the bourgeoisie in
encouraging local authority housing was expressed politically . Instead the histori-
cal "facts" show that such housing policies were appeasements by the state of
working class militancy(111 . In this section it will be suggested that this simple
dichotomy of working class gains or losses in the housing sphere is misplaced, as it
ignores the structure within which the class struggle over housing operates . The
reasons for the demise of the dominance of the private landlord in the provision of
working class housing illustrates the inadequacy of an explanation which relies
solely on working class militancy .
The above position also relies on the assumption that the economic interests
of classes always result in their direct political expression . This ignores the
importance of ideology . Capitalist calculation and bourgeois ideology cannot lead
to a correct analysis . The understanding by the bourgeoisie of the "housing
problem" cannot be read off from its objective economic interests, and the same is
true for the economic interests of the other classes, fractions and strata . The
ideological understanding by each social category of the "housing problem" will
determine the political demands made by it . These demands in turn can be made
only through some form of political representation, which will itself alter the
nature of those demands . There is consequently a two-fold dislocation of the
economic interests of classes before a class position is represented politically :
within the class ideology and within the form of political representation . Further-
more . the state is the site of political class struggle, it does not operate in the
immediate economic interests of any dominant class or fraction of a class ;
including the intervention by the state into housing through its housing policy . An
understanding of the development of British housing policy would consequently
entail, as a prerequisite, a detailed analysis of class positions on housing and how
those have changed over time, necessitating an understanding of the class
structure of the U .K . and of the ideological and political representation of those
classes .
Nevertheless this conclusion does not entirely sever the theoretical links
between the economic and political levels of a social formation . Certain condi-
tions are necessary for the economic reproduction of the capitalist mode of
production . State policies cannot continually operate against those conditions
without destroying the basis of capitalist society . The class struggle over state
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90 CAPITAL & CLASS

policies will consequently be constrained by the economic "needs" of capital ;

something that reformism and successive Labour governments have "discovered"
but refuse to recognise . The economic problems for capital over the provision of
working class housing will consequently necessitate some type of state interven-
tion and will constrain the forms it can take, but it will not determine the exact
nature or timing of that intervention . When considering British housing policy it is
consequently legitimate to consider the economic interests of specific classes in
this sphere, including those of capital-in-general(121.
The relation between the economic and political levels explains why it is
possible to say, at the same time, that British housing policy has been ad hoc and
that it has been overdetermined by the economic needs of capital . The existence
of a specific contradiction at the economic level and the need for state inter-
vention m an attempt to resolve that contradiction does not automatically result
in state intervention . Yet that contradiction will remain and thus influence
political class struggle and action by the state. With this in mind, an alternative
interpretation of early twentieth century housing legislation will now be given .

5 .2 Private renting
Private landlords purchase the commodity housing as an investment of capital .
Their purpose is to appropriate surplus value in the form of profit on that capital
by charging rents .
Nineteenth century housing landlords tended to be petty bourgeois ; the
renting of housing was a sphere of investment for small capitals . This form of
investment was localised, required direct management, did not allow the spread
ing of risk and was often difficult to resell . Its existence depended on the absence
of investment alternatives rather than on its own inherent profitability (although
substantial profits could sometimes be made) . Its petty bourgeois nature meant
that the eventual demise of private landlordism did not lead to major conflict with
any fraction of the bourgeoisie .
This was an era of low technical change in house-building . As Section 3
showed, the only estimate of productivity for this period attributed most of the
little productivity increase that did occur to the introduction of machines into the
wood-working trades ()ones 1933) . The last half of the nineteenth century did,
however, see changes in the relations of production with the emergence of
speculative housing-estate development . Estate developers/builders made profits
not only from the building process but also from rising urban land values
(Richardson and Aldcroft, 1968) .
Private renting in the nineteenth century always had limited success in
housing the working class . Rents were tied to wage levels which were low, so that
the accommodation provided was limited . The lack of improved methods of
production meant the value of housing was not reduced . Improvements in condi-
tions could consequently be achieved only by higher expenditure . Yet any
increase in wages would not necessarily lead to a greater amount of money being
spent on a larger quantity, or an improved quality of, housing . Housing costs,
which had to be paid out of wages, also had to include a payment for the land-
lord's profit on capital and for the cost of land . Increases in wages, enabling
increased expenditure on housing, might simply increase profits . The contradic-
tion for capital imposed by the effect of the comparatively high value of housing

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 on the ability to extract surplus value was therefore considerably exacerbated by
the existence of private landlordism . Poor housing conditions have health effects
which directly limit the productivity of the labour force but private landlordism,
given the process of production in housing, provided no guarantee that those
conditions could be improved . Housing landlords therefore came increasingly into
conflict with industrial capital in its quest for surplus value . In addition, poor
housing conditions created the possibility of epidemics which frightened the
bourgeoisie . Fxpensive, overcrowded and poor quality housing also had political
repercussions, creating a demand around which working class agitation could
form (Stedman-(ones, 1971) . The bourgeoisie consequently had a considerable
"interest" in alternative forms of working class housing provision
Other conditions had to exist however before this economic "interest" could
find a response in state action . Victorian bourgeois ideology was strongly imbibed
with the concepts of "self-help", the "efficiency" of the market mechanism, and
explanations of poverty in terms of the personal characteristics of the affected
individuals . The conception of the housing problem by the Victorian bourgeoisie
did not consequently lead to fundamental attacks on private landlordism
(Gauldie, 1974) .
The first of the conditions which produced state involvement was a fall in
investment in housing to rent . The decline of private renting started with the
development of alternative forms of investment . This occurred towards the end of
the nineteenth century, with the growth of financial institutions which could offer
relatively secure returns for small capitals, drawing them away from the housing
sector . The decline in private landlordism consequently started prior to state inter-
vention and rent control (Bowley, 1945) . Rent control policies should therefore be
seen as a reaction by the state to a shortage created by a decline in private land-
lordism that was already in motion . A rise in rent levels could have sufficed to
increase landlord profitability but this would have necessitated increased wages,
thus bringing housing landlords into direct conflict with the interests of the
bourgeoisie .
In the face of the existence of a massive housing shortage and a decline in
private landlord investment, the bourgeoisie and the state gradually "realised"
that direct state involvement in housing was necessary . Little published work
exists on how this political change took place, or on the legislation which led to
the introduction of council housing before the First World War . Nevertheless, this
ideological transformation and associated political effect was undoubtedly
influenced by the existence of working class agitation and its potential political
repercussions . Although the first major economic involvement of the state in
housing did not take place until the Rent and Mortgage Interest (War Restrictions)
Act of 1915 and the first state housing subsidies were not introduced until 1919,
the impending outbreak of war probably delayed the introduction of subsidies
prior to 1914 . This conclusion is reinforced by an examination of pre-1914 govern-
ment housing documents (Wilding, 1972) . The First World War undoubtedly
exacerbated the housing problem and the delay changed the form in which the
state intervened . The timirtg and form of state involvement did depend on the
state of class struggle : the 1915 rent control legislation was preceded by rent
strikes in areas vital for munitions production . But the structural role played by the
private landlord and the pre-existing contradictions of private landlordism helps

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92 CAPITAL & CLASS

to explain the response of the state to that outbreak of working class militancy,
when other cases were dealt with so severely (Hinton 1973) . Similarly housing
policy could play a different ideological role when introduced after the First World
War (e .g ., "domes fit for Heroes") . Post-war conditions also enabled justification
in terms of the "temporary" nature of state intervention and determined the type
of intervention . But this does not alter the fundamental explanation of the
involvement of the state in terms of a pre-existing contradiction, primarily at the
economic level, in the provision of housing to maintain and reproduce the labour
force .
The object of all this was to demonstrate that the role of class struggle cannot
be examined outside of the structure in which it takes place . If such a theoretical
analysis of the class struggle is not undertaken, superficial examination of the
historical "facts" of the class struggle can lead to serious political mistakes : for
example, it can produce a misunderstanding of the nature of reformism and its
role for capitalism . It can also lead to over-optimistic expectations of the
spontaneous power of the working class . If particular periods of changes in
housing policy are seen solely as victories for the working class, the capitalist
nature of the new forms of housing provision (e .g ., in this case, local authority
housing with substantial state subsidies) will be ignored .
The gradual removal of the housing landlord represents the removal of one
group of agents who appropriate surplus value from the provision of housing . One
contender in the distributional struggle for surplus value has been displaced . But
as the productivity of the house-building industry has not been directly affected
this gain can only be a distributional advantage to capital . The question now arises
as to whether the subsequent dominant tenures did still enable other mechanisms
for appropriating surplus value .

5 .3 Local Authority Housing and Owner-Occupation .

Ownership by the state represents the most direct form of housing intervention . Its
prime function is to house the working class adequately, as cheaply as possible
within the structure of costs facing the branch of government given responsibility
for its operation . the local authorities . The provider of housing in this case has no
interest in appropriating surplus value for itself through housing rent . This tenure
also has beneficial effects on housing production by aiding attempts to increase
building productivity . Here the builder does not have land acquisition costs ;
projects tend to be large scale; non-traditional techniques are positively
encouraged, the builder does not have to face a conservative market or a building
society that is loath to lend on anything but the most traditional type of property ;
and the speculative element in building is removed . At the economic level,
therefore, this tenure might seem ideal . But even at the economic level this
process is not successful . Surplus value can be appropriated through the provision
of local authority housing, so that the housing realisation process still acts as a
barrier to tire lowering of the cost of housing .
Additions to the local authority housing stock are regarded by local authori-
ties as capital investments, and money is generally borrowed to finance it . The
loan charges have risen rapidly, and rents have risen accordingly . The size of the
local authorities' outstanding housing debt depends on the amount of new
building . Over (AM of local authority housing costs in 1974/75 simply represented

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 interest charges No other local authority service is faced with such interest costs .
In 197 .3/74, for example, loan charges represented only 9% of English and Welsh
local authority expenditure on education and 16% for highways, yet for council
housing the figure was 68% .
Local authorities borrow from two principal sources : central government in
the form of the Public Works Loan Board, and private loan capital . The former
essentially operates as an intermediary between private loan capital and local
government, charging a rate of interest which reflects its management expenses
and the cost to central government of borrowing . The need to pay interest
represents the major mechanism through which surplus value can be acquired by
private loan capital from the provision of local authority housing It obviously
benefits those capitals who lend in this way but it operates against the economic
interests of the rest of capital, which has to forego surplus value as a result : either
through the need for higher wages to pay the rents, or through the taxes required
to finance the state subsidies .
In the case of owner-occupation housing is purchased in the commodity
form, and unlike the other two tenures, it can be resold at anytime . The selling
price will be determined by the current cost of newly constructed houses and the
"state of the market" (i .e ., short-term shortages or gluts) . This market system
involves the existence of various agents in the exchange process - solicitors,
estate agents, surveyors, etc . - who are unproductive and paid out of surplus
value . Purchase usually involves mortgage funds on which a rate of interest has to
be paid, and consequently it represents another mechanism through which surplus
value is appropriated . Owner-occupation in no sense removes the ability to
appropriate surplus value; the expense of fees associated with purchases and sales
and costs of mortgage finance ensure its continuing existence(13) .
A number of comments about these two tenures need to be made :
(1) Much discussion concerning these tenures has centred on comparisons
between the costs of the two tenures for individual households, and on how much
subsidy the average household receives in each of them . These exercises are
essentially fruitless as they attempt to compare cost items which are not
comparable . Arbitrary assumptions have to be made about which costs to include
to make the comparison "fair", and, as the relative costs of each tenure vary over
time, assumptions have to be made about individual subjective "time prefer-
ences" and, in the case of owner occupiers, their subjective valuations of so-
called "capital gains" : an exercise which is as absurd as it is arbitrary .
The main reason why such comparisons must remain arbitrary, however, is
that they ignore the social relations within which housing provision exists . In the
first place, there is a determinate relationship between housing costs and wages . If
any tenure did result in reduced housing costs for the working class, this would
lower the value of labour-power . Secondly, the comparison treats the structure of
the tenures as eternal entities and not the product of class struggle . Households
pay out costs and receive subsidies and benefits, it is implied . i n a socially neutral
framework ; such that the individual local authority tenant, or owner-occupier
receive for themselves, for example, subsidies . The existence of subsidies of any
given magnitude might however be a condition for the existence of the tenure
itself . A comparison of the costs to individual households must consequently be
replaced by a mapping of the social relations that exist within any housing tenure .
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94 CAPITAL & CLASS

(ii) It has been shown that both local authority housing and owner-occupation
enable the appropriation of surplus value by loan capital . State subsidies to both
tenures are explicitly designed to finance a part of those interest charges . State
housing subsidies do not reduce for the household the high cost of housing which
results from its production cost, but instead lower the high cost of finance
imposed by loan capital . There is no necessary technical reason for the existence
of loan capital in the structure of housing provision . By reducing the direct cost of
loan finance, state subsidies facilitate political acceptance of tenure structures
requiring loan capital . Subsidies are then treated ideologically as subsidies to
households, and not as what they really are : mechanisms for the appropriation of
surplus value by loan capital .
(iii) Local authority housing is burdened with particularly heavy loan charges,
which at times of general economic crisis produce intense strains on housing
finance The state's response is to resolve the problem at the expense of council
tenants, rents are raised and the sector is rundown as being "too expensive" . The
ideological disadvantages to capitalism of local authority housing mean that there
is little incentive for the state to reduce its overall cost . Attempts to alter the
structure of state housing provision, removing the ability to appropriate surplus
value through lending to local authorities, will meet with considerable opposition .
Encouraging owner-occupation does not produce this effect, instead, it presents
positive ideological and political advantages . The existence of this alternative
tenure in consequence ensures that little positive political action will be taken
towards local authority housing . This ideological context can explain the apparent
paradox that in Britain over recent decades a greater rate of profit could be
obtained for loan capital lent to local authority housing programmes than for
capital invested in manufacturing industry, and yet state subsidies are seen as
subsidies to council tenants rather than to loan capital . Demands could be made
for the removal of loan capital and its replacement by finance through direct state
grants and from rental income . Attacks on loan finance should form a major plank
of working class political action in defence of the housing situation of council
tenants( 141 This will not resolve the problem of rising building costs but it would
remove an important cause of escalating local authority housing costs . Such
demands would imply a complete restructuring of the nature of local authority
housing finance, but it is a reform which is possible without capitalism .
(vi) The setting of rent levels within each local authority has since the mid-1930's
primarily been based on (lie existing level of subsidies and the "pooling" of rents .
Rents are consequently determined by the overall cost of the housing stock, so
that the rent on a council house bears no relation to its own construction cost . In
effect, tenants in older dwellings help finance new construction through their rent
payments This is often regarded as resulting in tenants subsidising each other .
Alternatively it has been argued to be a progressive measure as it socialises (sic)
housing costs (papers in PEtJW, 1975) . Once again such conclusions ignore the
structure within which local authority housing is placed . The high cost of new
council buildings and its concomitant loan costs result in dwellings whose rent
levels would make it impossible for working class households to live in them, if the
rents were directly based on the costs incurred by the local authority as a result of
the construction of these dwellings, even given the level of state subsidies . New
council building would in this case not be a way of housing the working class

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 unless that structure of costs were changed (e .g ., the removal of loan charges or
vastly increased state subsidies) The pooling of rents solves the problem without
changing the structure of local authority housing provision . The effect of the high
cost of new building is resolved at the expense of current tenants ; in an ideological
form which is acceptable : namely, rent pooling . In those circumstances. tenants
are not subsidising each other but paying the loan charges and building costs
imposed on local authority housing .
The recent movement towards greater encouragement of owner-occupation
in the U .K . can now be explained as a solution by the bourgeoisie to the "housing
problem" . It has already been suggested that bourgeois ideology has perceived the
high cost of housing as being primarily a problem in the sphere of circulation . In
this conception the problem of cost can be ameliorated by manipulations of the
tenure systems and the subsidies that they receive . The effects of the current
structure of local authority housing provision on the cost of council housing has
already been discussed . The encouragement of owner-occupation is a part of the
"solution" to the problem of cost in the local authority sector, as it enables a
rundown of the latter ; thereby avoiding the necessity to restructure the nature of
state housing provision . Owner-occupation has ideological advantages for capital-
ism over local authority housing ; advantages which not only facilitate the
continued reproduction of the ideological conditions necessary for capitalism .
They will also be ideological advantages which enable households to be burdened
with higher housing costs without necessarily creating struggles at the political or
economic levels in attempts to offset these costs . But, whatever the advantages of
owner-occupation for the bourgeoisie, the rundown of local authority housing and
the tenure with which it is replaced depends on the political response of the
working class .
(v) Nevertheless, the economic advantages for capital of owner-occupation are
limited . Owner-occupation is just a tenure and encouragement of it does not alter
the basic relations, discussed earlier, that are involved in the production of surplus
value . Owner-occupier housing is provided in a commodity form which leads to
the perpetuation of the most traditional type of labour process in housing, for
speculative house building faces considerable difficulties in transforming the
process of producing housing . Owner-occupier house prices, moreover, are
closely tied in the long-run to the cost of newly constructed dwellings, and the
cost of the latter is rising over time . The price of previously built houses, therefore,
is related to that of new ones, and, unlike local authority housing, loans will be
incurred on exchanges of second-hand houses as well as on the purchase of new
ones . In the long-run it is probable consequently that more loan capital will
circulate in owner-occupation, and more surplus value will be extracted via it
In addition, owner-occupation can fulfil only a limited role in slum clearance
programmes so that in periods in Britain when the reproduction of adequate
working class housing has necessitated substantial slum clearance, owner-occupa
tion could play only a minor role in it . State housing was a necessary outcome of
slum clearance programmes of the 1930'5, 50'5 and 60'5 . Private speculative
building could not have achieved such a task without massive state subsidies and
control over the process of production . The switch in state housing policy away
from comprehensive redevelopment to improvement of the existing stock at the
end of the 1960'5 was consequently interlinked with the policy of encouraging
owner-occupation .

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96 CAPITAL & CLASS

6 . CONCLUSIONS

This paper highlighted certain factors which should be central to an analysis of

British housing policy but which tend to be ignored . It has argued that the contra-
diction between the process of production in the house-building industry and the
needs of the capitalist mode of production in general is a mayor "housing problem"
for British capitalism . Any examination of British housing policy, and any political
conclusions that are drawn from them, should therefore be structured around this
contradiction .
Much of the current debate over housing concerns its costs to the household .
Discussions over which tenure is the most subsidised are a useful antidote to the
image of the scrounging council tenant . Such discussions do however create
problems and cannot in themselves form the basis of an adequate working class
housing strategy . In the first place they get enmeshed in esoteric questions of what
really constitutes a "subsidy" or even "equality" . Secondly, and more important,
they do not break out of the ideological framework into which state policy has
placed housing . The issue revolves around which household gets more subsidies
or, alternatively, cheaper housing : the council tenant or owner-occupier . The two
categories of household are consequently posed in opposition to each other . The
divisiveness of bourgeois ideology in housing has not been overcome but instead it
has been reinforced . The issued is sited in the costs to the respective households
not in what causes those costs .
A housing strategy which tries to break down the effects of capitalist ideology
must consider why subsidies are necessary and who actually receives them . Loan
capital appropriates more surplus value through local authority and owner
occupied housing than the total amount of state subsidy to either tenure . State
housing subsidies should be seen therefore as a transference of surplus value to
loan capital, a part of the struggle between fractions of capital over the
distribution of surplus value, and not as a subsidy to members of the working class
whichever tenure they might live in . Moreover, loan capital only heightens the
"housing problem", it does not create it . It is not enough to point out the role of
loan capital in housing provision . The high cost of housing is primarily caused by
its process of production and the role of loan capital arises only as a result of this
high production cost . Attempts by the state to reduce the cost of housing are not
undertaken solely to placate the working class but also to increase capitals' ability
to extract surplus value . A housing strategy based on an understanding of these
issues is necessary to aid tenants' struggles and to negate those ideologies,
generated in housing provision, which divide the working class .

NOTES

Michael Ball teaches economics at Birkbeck College, 7-15 Cresse Street,

London, W11' IPA
1 The separation is not a total one, however, the distribution of surplus value
can have repercussions for the sphere of production : c .f . comments later on

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 the influence of land rent on the production of housing .
2 The exception is local authority direct labour organisations . They, however,
produce only a small proportion of new housing output and consequently will
not be discussed .
3 ' the degree of productivity of labour, in a given society, is expressed in
the relative extent of the means of production that one labourer, during a
given time, with the same tension of labour-power turns into products ."
Capital Vol . I . p . 621 .
4 C .f . Bettleheim 1974 and Balibar 1970, p . 233 ff .
5 Industrialised systems have fallen from a peak of 41% of new local authority
dwellings in 1970 to only 21% in 1975, and are still declining in importance .
It is often argued that this decline was the result of "social objections" to the
predominance of high rise designs for industrialised dwellings Capitalism is
not, however, renowned for its concern for the living conditions of the prole-
tariat . Reliance on such an explanation necessitates the demonstration of
why complaints against this building form were so successful, and were the
sole reason for the decline of industrialised building . Industrialised building
systems do not require high rise designs, so that complaints against that
design cannot be sufficient to explain its demise . By the late sixties it was
apparent that industrialised building had failed to achieve the hoped for con-
struction economies . An adequate explanation of the post-war development
of industrialised building must concentrate on the reasons for this failure to
reduce costs, by looking at the structure of the industry and the role of, and
reasons for, the state encouraging the development of the specific forms
adopted for industrialised building . Explanations which rely solely on "social
objections" to a particular housing design simply reinforce the ideology of
the benevolent state which is essentially reformable once the influence on
the state of certain monopoly capitals is removed . (Dunleavy, 1977) .
6 Housing and Construction Statistics, no . 16, supplementarv table LV, HM50 .
7 Department of Employment Gazette, Dec . 1976 .
8 The rejection of durability as the prime cause of the realisation structure rules
out an explanation in terms of the assertion that a house "releases" its
embodied value gradually over time, as this also treats time as the determi-
nant factor .
9 As stated in the previous section, no adequate explanation of the develop-
ment of the building industry exists . So the actual impact of finance and land
on the process of production remain to be specified adequately, and the
description of their role in the text must be treated solely as schematic .
10 The political importance of such a distributional struggle for the working
class could, however, be considerable .
11 The following quote summarises this position : "Whatever the interest of
industrial capital in the reduction of the cost of reproduction of labour-
power, it is the working class which has achieved such reductions as have
been enforced by state action in the field of housing . Hence there is no
direct relation between a reduction in the price of housing and a reduction in
the cost of reproduction of labour-power . The gains have therefore, probably
accrued to the working class rather than to capital ." Clarke and Ginsberg,
PEHW, 1975, pp . 11-12 .

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98 CAPITAL & CLASS

12 It is only in this structural context that the concept of capital in general has
any meaning for at the political level, and in terms of capitalist competition,
such a unity does not exist .
13 Profits against Houses, CDP 1976b, gives an excellent description both of the
cost of agents associated with house purchase and the role of building
societies
14 Merrett has suggested that "political attacks on the money lenders are easy
to formulate but they rest on a complete misunderstanding of the manner in
which council tenants are exploited" (PEHW, 1975) p . 75 . This is done by
arguing that finance within capitalist societies necessitates repayment at
rates of interest (industrial capital in receipt of state handouts, please note!)
And that this is a "rate of exploitation", the magnitude of which depends on
the rnoney rate of interest and the rate of inflation . Finally . it is concluded
that the rate of inflation has been so high in the 1970's that the real rate of
interest (i e "exploitation") has been negative . Council tenants are, however,
not exploited through the need to pay loan charges because the rate of
interest is not a relationship of exploitation . Exploitation occurs only in the
extraction of surplus labour in the sphere of production . In addition . the
concept of a "real" rate of interest relies on the bourgeois theory that
interest is a reward for thrift or "waiting" so that inflation reduces the real
reward below its nominal value . This conception of the rate of interest is
dismissed by Marx in Capital, who shows instead that the rate of interest is a
mechanism for appropriating surplus value . This will take place as long as
the money rate is positive . The conclusion reached by Merrett is conse-
quently untenable .

REFERENCES

Ascher, F ., 1974, C .M .E . et Secteur de Production du Batiment et des travaux

publics (B .I .P .) . In Urbanisme Monopoliste, Urbanisme Democratique,
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