Martin

Social exclusion definitions 2

It has proved impossible to incorporate links to fuller document extracts into the post as they occur so I have added them here as numbered in the text.

1 Definitions from The English Index of Deprivation

2 Spirit Level R Wilkinson p24-31

3 Pradhan-Understandng-Social-Inclusion-and-Exclusion

4 Social Exclusion Framework H Silver 2007

5 Endless Pressure K Pryce p95-101

6 One Blood J Heale p43_51

Martin



Martin

http://www.bbc.co.uk/iplayer/episode/b00scbd2/HARDtalk_David_Harvey_Marxist_Academic/

L

http://www.ft.com/cms/s/0/8f06df9e-8ac1-11df-8e17-00144feab49a.html

“In a world in which people have borrowed heavily to own a location, they are desperate to enjoy land price rises and, still more, to prevent price falls. Thus we see a bizarre spectacle: newspapers hail upward moves in the price of a place to live – the most basic of all amenities. The beneficiaries are more than land speculators. They are also enthusiastic supporters of efforts to rig the market. Particularly in the UK, they welcome the creation of artificial scarcity of land, via a ludicrously restrictive regime of planning controls. This is the most important way in which wealth is transferred from the unpropertied young to the propertied old.”

Louis

…for discussion next week (8th July)

i don’t think harvey was doing the drawings

The report is particularly interesting for this group, as it has some striking similarities to themes raised in Marx’s chapter on machinery (which we keep coming back to), and Harvey’s analysis of capital’s tendency to spatially displace contradictions through widening and intensifying the division of labour and resource exploitation – (take a look at the FT’s footnote on the global supply chain “Marvel of the world brings both benefit and risk” )

In particular, for those that’ve spent a lot of time working through the ratios of constant and variable capital in Capital and Limits, you might recognise some very ‘organic composition of capital’ like calculations, suggesting that Western firms needn’t worry too much about worker militancy because the labour component represents very “low value added.”

But perhaps the most interesting point is that wave upon wave of capital restructuring and spatial fixing and re-fixing have led to an extremely powerful, technologically complex, but essentially fragile global supply chain, where the race to find the most ‘flexible’ labour has reached rock bottom. And it looks like Chinese workers are striking back…

“Ms Li issued an open letter on behalf of the 16 employees chosen by workers to negotiate on their behalf during a strike that closed the Japanese carmaker’s [Honda] operations for a full week.”We must maintain a high degree of unity and not let the representatives of Capital divide us.” the letter urged. “This factory’s profits are the fruits of our bitter toil…This struggle is not just about the interests of our 1800 workers. We also care about the rights and interests of all Chinese workers.”

Louis

Wednesday, 02 June 2010 5.30pm

Room 517 (5th floor), Bartlett School of Planning, UCL, Wates House, 22 Gordon Street, London WC1H 0QB.

More details at: Spectacle blog

Land-lord and tenant in discussion on whether differential rent is a 70s anachronism

Louis :

Apologies for dashing off from last Thursday’s discussion on land rent. Going into last week’s session I thought I’d got the gist of the analysis of rent. But listening to the issues that Joon and Martin raised I’d realised I’d forgotten much of what we learned from Limits. So this week I went back to the Fixed Capital and Rent chapters (together with the material Harvey uses from Ben Fine and Michael Ball). And if we get a chance over a beer or coffee at some point I hope I can respond better to Joon and Martin’s points.

For my part, reading it all again, I agree with something Michael said in an earlier post, buried underneath these agrarian categories is a powerful set of tools to unravel – what Harvey calls – the political and economic complexities of everyday life. And as I mentioned in my reply to Michael the way rent is so ingrained in mainstream economic theory, policy making and the logic of home ownership, makes it something that really deserves critical scrutiny. But working out where to start, what tools to use (how to use them), and what practical applications arise from the exercise can be perplexing.

So to try to make sense of it all the question I want to ask is this. Does the Marxian question of rent help us understand the real exercise of capital accumulation, division of labour and social inequality in cities today?

I’ll try and begin to answer this with some posts linked to the chapters over the next few weeks . Some of which may reproduce the issues Joon and Michael have already raised on this matter. But I hope this provides an opportunity to extend the discussion further. If anything connects with you, or if I’ve got it all wrong, let me know…

This week what I want to do first is try to put down my what I understand from the rent discussion we’ve had (drawing on Ball, Fine, Ive and Gruenberg, as well as Harvey – I’ve got pdfs of the paper and can forward them if you like) and again please set me straight if my reading is off-beam…

The purpose of the analysis of rent is to explain the logic and process through which ground-rents manipulate value – expressed through the historical forms and conditions taken by capitalist production and competition. Land-owners are interested in the production process only to the extent that they are in receipt of rent which can be exacted from profits. Ground-rent therefore is paid to land-owners out of surpluses and not from the capital advanced and consumed in production.

The ability to levy this Absolute Rent represents the social power of real-estate owners to convert (and potentially manipulate) the value of land into a price of production. This is achieved by raising barriers to the flow of capital across sectors (constraining capital to sectors and locations). According to Ricardo’s rent theory – “high land prices do not cause high property prices, rather it is the institution of private property in land which cause high property prices” (Ive and Gruneberg). Because land owners own title to the land, farmers who want to cultivate land parcels have to bid through auction. The highest bidder receives a lease. Competition between farmers forces land rents up to a point consistent with the ‘normal’ rate of profit expected from capital in the rest of the economy .

This is why Marx sees the land-owner as having a critical role in preparing the grounds for capital accumulation. They create a social mechanism which results in the alienation of labour from land; a competitive search process to shift land into its highest and most productive uses; and because the absolute rent squeezes capital, it levers a downward pressure on wages. In other words the formation of land markets – through physical, legal and political constraint on land access – have knock-on impacts on the markets for capital, labour, technology affecting decision making processes regarding investment and location.

But as each land parcel will vary in qualities of fertility and geography the level of ground-rent reflects different levels of productivity and consumer demand subject to changing social requirements of tenants (to reproduce themselves and their dependents), the constraints on access to technology and money (minimum capital needed to compete in a sector), and technological change (which can alter the value of land). So defining what is the ‘normal’ rate of capital investment (to push land into economic use) is complicated by the dynamic state of the use values each land parcel represents.

Marx’s insight (and developed by Ball, Fine, Harvey et al) is that differential rents represent the interaction effects of land quality (DR 1) and capital investment (DR 2) giving the capitalist production process its particular geographical, historical and social character. The cost of producing on the worst land generates a base line differential rent, DR 1. The marginal quantity of capital needed to push land of indifferent quality into economic use forms DR 2.

The Marxian analysis of differential rent becomes a critical method to help explain the historical basis of the interactive and dynamic relationship between real-estate owners and capitalists. The land-owner requires the capitalist to identify and unlock the potential value of land through the speculative process of competition and development. But even though land owners rely on capital to realize the value of their land, their role isn’t to advance any capital. This means they can eventually (as Marx says) ‘filch’ all the benefits arising through capital improvements, which can increase the demand for land and serve to ratchet up property prices.

The incentive then for capitalists is to seek relative surplus value (technological change, lower input prices) which lower their outlay. Normally in other sectors (not subject to such strong monopoly-like constraints) improvements through competition are passed onto consumers, but here the goal is is to push up the market price while lowering capital (what is now called value-engineering). To take Gruneberg’s example from the construction sector,

“ Developers compete for sites by finding uses for sites that generate the highest possible actual or imputed rental income. However, the price of the site also depends on the cost of construction. The higher the cost of construction, the less will be available for developers to bid for the site [...] The point here is that the cost of construction has no influence on the value of a building, but the lower the cost of construction, the higher the value of a site, since the savings in construction costs can be used by the developer to increase the bid price of the site [...] The significance of this for construction is that the cost reductions in construction do not lead to lower building prices [as normally happens through capitalist competition and technical change] but to higher land values [...] in the long run, land prices tend to rise in line with growth in the economy because of growing population pressures and the rise in productivity due to new technology and methods of production.” (Gruneberg 119)

If capital investment (improvements in infrastructure, soil etc.) improves the desirability of a location, this will be captured in land market prices. So improvements in construction technology and, more broadly, physical and social infrastructure can be capitalised and privatised by land markets which can result in effects of residential differentiation (this week’s topic)

On this theme, but moving away from the Marxian approach, Paul Cheshire has shown in a paper called Capitalising the Value of Free Schools public investment in education, transport, neighbourhoods etc. will eventually be capitalised through the land markets, precipitating displacement of those unable to compete with the escalating rents emerging off the back of demand for scarce, good quality schools.

This I think is a powerful example of the way land markets shape welfare and under the guise of freedom and choice of the market, reinforce and spatialize social inequality. And I think it links well with this weeks topic of residential differentiation. Next week I’ll try and follow this up with some thoughts stimulated by the work of Matthew Watson and Paul Langley – examining the way the credit crunch in the UK and US symptomises a deep structural change in the logic of social welfare provision. I think the debates around differential rent have a real practical application in tackling the morbid desire for home-ownership.