Broken Cities. Deborah Potts
and a massive global depression was avoided, but the world has still not recovered from the colossal debts imposed on states and the austerity programmes that followed.
2. The impact of the neoliberal phase
In the 1980s a new phase of capitalism based on neoliberal ideology began to replace the more regulated and state-interventionist types of capitalism that had been typical in post-war Global North societies. The second premise is that this neoliberal turn exacerbated the urban housing issues that will always exist in a capitalist society. It should be noted here that a distinction is being drawn between the impacts on urban housing of the essential requirements of any variety of capitalism, as discussed above, and the conditions encouraged by neoliberal capitalist ideology. This is analytically helpful, as, quite rightly, urban scholars critique the idea that neoliberalism is at the root of all inequalities and urban problems, especially given that many of these pre-date the 1980s. In essence, the neoliberal turn promoted a much stronger reliance on market forces for determining how resources were allocated and a much reduced role for government. Public expenditure came to be seen as something to be cut wherever possible. Given the situation outlined above whereby it is largely inevitable that affordable formal-sector housing for poorer people is achievable only through state intervention in the market, the problems that neoliberal ideology create for urban housing are obvious. In both the rich and poor parts of the world the same processes emerged. Governments and development agencies of all types sought to find ways to impose full cost recovery on housing programmes for the poor at the very least, and preferably to shift the burden of provision to the large-scale private sector, which, it was argued, was more efficient and skilled due to the disciplines imposed by the requirement to make a profit. Unfortunately, that is the very requirement that simultaneously makes affordable low-income housing impossible for the private sector to provide. Functioning and long-standing public-sector large-scale provision of affordable urban housing – such as council housing in the UK – was also deemed to be inherently wrong under the new ideology because it was not market-oriented and was such a significant element of government budgets. As a 2017 EU report, The State of Housing in the EU, states: ‘In most cases policy responses at Member States level have been to decrease public expenditure for housing and … [to rely] on measures to increase the supply in the private sector or access to homeownership.’1 The gradual undermining and reduction of the public sector across the Global North has served to make the crisis of the shortage of affordable housing in cities very much worse. Recognition of the ideological underpinnings of this situation is crucial – the conditions are not inherent in the way that the profit motive is for capitalism as a mode of production – these are political choices about what is claimed to be ‘right’. Since subsidies are seen as inherently wrong, and somehow even dangerous, this has created a fundamental constraint on the types of affordable housing solutions deemed acceptable and limits the policy conversations that are possible.
3. Segmented housing demand
The simple logic of the rule that prices are set by supply and demand is the default mindset of most housing policymakers and housing analysts. But the understanding tends to be simplistic. The general argument made is that the more urban housing is built, the lower the prices will become, and that this means that eventually they will become low enough to be affordable for the poorer groups. This mindset relates to the formal, planned housing sector – the messy unplanned markets of informal settlements in the Global South are deemed to be ‘problems’ that might be alleviated by the achievement of affordable housing in the formal market system. For the sake of argument, it helps to set informal housing aside at this point. The focus for the moment is on the planned and legally constituted housing markets.
It is also understood by most analysts that because houses actually have to be located in particular places, unlike most other goods, then the provision of urban land for housing is an essential element of the supply and demand equation. Indeed, inadequate provision of planned land – lack of land supply – is often pinpointed as the reason why housing is unaffordable for so many urban families, shifting the focus to land rather than buildings. For pro-market protagonists, this also has the benefit of shifting the ‘blame’ onto governments, since these nearly always play key roles in determining which urban land can legally be used for new housing, and away from the constraints imposed by relying on private profit-oriented suppliers.
The land issue is important but it is not the panacea so often assumed. The problem is that it is quite possible – indeed it is common – to have land occupied by empty housing units, including new-build houses, across a city at the same time that many poorer groups cannot afford to buy or rent legal, planned housing. The issue that is insufficiently recognised in the simple supply/demand analyses, or possibly dismissed because it is an ‘inconvenient truth’, is that housing markets are segmented. Increasing the supply of most types of housing makes no difference to the housing problems faced by the poorer groups as they cannot afford ‘most types of housing’. This is true in poor and rich countries – the same processes play out whether you are in Harare, Zimbabwe or Haringey in London, places with which I am deeply familiar (as noted in the Foreword). Housing that is affordable for such groups is a different sort of housing with a separate set of market conditions. This makes the measurement and conceptualisation of what is ‘affordable housing’ deeply political.
The significance of segmented markets is well developed in studies of labour and migration to cities, especially international migration to global cities.2 It is obvious that there are different types of labour (skilled, semi-skilled, unskilled) and that, in any one city, demand for each type will vary. If internal labour migration cannot meet demands, then international migrants may fill the gaps. But the gaps are specific – the classic division being between demands for very low-paid service-sector workers (such as cleaners) because insufficient numbers of local workers will (or can afford to) work at these pay levels, and separate demands for highly paid skilled professionals (in IT or the finance sectors, for example) where a lack of domestic supply is ‘real’. As research on the associated migration streams demonstrates, these different groups are treated very differently in terms of immigration laws, etc. And just as there are segmented markets in labour, there are segmented markets in housing. In the same way that a plentiful supply of skilled financiers will not meet any unmet demand for poorly paid cleaners, increasing the supply of housing types that can be afforded only by those in the top income distribution bands cannot meet any unmet demand for cheap housing for those in the bottom bands.
4. ‘Decent’, ‘legal’ housing
Having argued that profit-oriented private suppliers cannot meet the demand for urban low-income affordable housing, it is now time to point out that, in fact, this is easily disproved! In most cities and towns across the world, informal markets provide millions upon millions of housing units, both for owners and renters. The market does work. But this is precisely the sort of housing that is so frequently labelled ‘a problem’. Often the argument outlined and criticised above – that the answer is to increase the formal supply of legal zoned land and thereby housing – is trotted out as the solution to this problem.
The mistake is to cordon off this ‘housing type’ analytically as something peculiar to, or inherent in, societies of the Global South and of no significance for urban housing studies in the Global North. For it is neither peculiar nor irrelevant. In the eighteenth, nineteenth and early twentieth centuries, European and North American societies had plenty of exceedingly poor-quality urban housing, usually in the rental sector. It certainly rivalled, and often exceeded, the worst housing conditions experienced in urban slums across Asia, Africa and Latin America today. But at the time the concepts of ‘informality’ and ‘legal standards’ in relation to housing (and indeed labour) were not current or were in the process of being formulated. This is why the premises outlined so far are scattered with these terms (‘informal’, ‘formal’, ‘legal’, ‘zoned’, ‘planned’), because these are key to understanding not only the differences between affordable housing issues in the Global North and the Global South, but also the similarities.
For very good reasons, as they