A Capitalist Revolution for Effective Urbanisation
Patrik Schumacher, London, April 2018, for The Guardian
Published on May 1st in The Guardian – Housing Opinion - as:
"Smaller living spaces in cities could help solve Britain’s housing crisis"
The London Housing Crisis is just the most conspicuous aspect of our collective failure to meet the urban development demands and thereby to seize the prosperity potentials of our Post-fordist Network Society. Our communication intensive new economy depends on continuous professional networking and thrives best in large, dense urban clusters. We all feel it in our bones that we must join the central networks and that our careers are incompatible with living cut off in provincial, suburban locations. Accordingly we are willing to spend an increasing proportion of our income on being located centrally. However, since supply has fallen much behind demand, prices have increased to a point where many who otherwise could and should join this productive hub are discouraged to do so, leading to frustration and loss of potential productivity. The urban development market is not allowed to function due to political interferences, especially with respect to housing.
While London’s urban fabric remains incredibly low density, e.g. compared to Paris, the development process faces severe density restrictions. Supply of adequate spaces is restricted and prices increased via the planning system, via the imposition of space standards, and ironically via the “affordable housing” system ostensibly crafted to alleviate the crisis.
What should be a technology fuelled economic take off and urban renaissance has become a struggle on many fronts. The average annual UK productivity growth over the last 10 years was just 0.1%. This is a scandal, considering all the progress in science and technology. Of course the political barriers to urban development are only one part of a larger picture. The general problem is that the prosperity potentials unleashed by the new empowering technologies are stifled by a slow, cumbersome and paranoid political process. What is required is that entrepreneurial creativity must be unleashed so that we can individually – as market participants - explore and discover the new prosperity potentials, rather than acting collectively as political subjects thereby largely constraining each other. This necessity to free up individual choice and to unleash entrepreneurial creativity is especially acute in the urban development arena, where inflexible density restrictions, strict land use allocations stifle and misdirect development, and where in the housing sector choice is killed by ridiculously detailed and vastly oversized space standards, that make central living unaffordable for most.
Housing is one of our most essential and most cherished commodities. The housing market is therefore rightly one of our biggest markets, but unfortunately it is also one of the most politicized markets, suffocating under quasi-socialist political interventionism. The loss of societal prosperity is here enormous, not only due to the poor housing provision, but further due to its stifling impact on all economic activities. Here a capitalist revolution is most urgently required. I would like to argue that we can expect not only more urbanity and prosperity from opening up the magic of the market, but also more justice: The lack of development imposes a steadily increasing, politically engineered wealth inequality. Zoning restrictions redistribute wealth and income to homeowners and landowners. Also, the current rationing and allocation of “affordable homes” remains obscure and suspect too. It certainly does not deliver what is always supposed: allocation to the poorest members of society. Rather it is a huge redistribution machine now meant to encompass a full 50% of all new housing supply. Politicians tend to know how to channel resources to the median voters who can make a difference to them. Many of those who pay for these subsidies are less well off than many of those who receive the benefits. Also, politicians fire rhetoric against the price hikes but we can be sure that as long as they remain so empowered they will never allow prices to come down.
So my plea: Let’s risk more degrees of freedom and self-responsibility for all and let’s allow the creative energies unleashed thereby discover the solutions that integrate the many purposes and plans and that best utilize the land resources available. That’s what markets do best. The freedom of mixing land-uses is crucial for the vitality of the city. Only a creative trial and error process guided by price signals can discover and optimize, at each individual site, the most value-enhancing use-mixes that best synergize with the particular urban adjacencies of that site. The planning bureaucracy lacks the requisite knowledge, as well as agility and the incentive to optimize. It is precisely these use synergies that motivate us to agglomerate in cities in the first place. Equally important is experimentation with new models of living beyond the stifling space standards. Smaller units, co-living and other new forms should be offered. It should left to us how much we want to trade centrality for size, or whether we mind the number of units sharing a core, or whether we are really bothered by overlooking, or whether balconies are a necessary ingredient. All these paternalistic handcuffs must be replaced by our choices. What will really protect us is not politicians taking choices away - that can only make us poorer- but a lively competition among different suppliers with different product offers to choose from.
You might ask how we can be sure that the private sector would build the right amounts and quality without quotas? Nothing is certain but consider this: How can we be sure that the private sector delivers fresh croissants, coffee and orange juice and myriad other delights according to individual preferences onto billions of breakfast tables every morning? All this happens without any quotas! Further, remember that the 19th century, the era of laissez faire capitalism, delivered all those beautiful urban asset we still thrive in better than in what 20th century government planning delivered. Read ‘The Death and Life of Great American Cities’ by the libertarian thinker Jane Jacobs and her comparative appraisal of market grown cities versus governmental urban planning. Her insights remain very relevant today for seeing what freedom can do for us and our cities.
Patrik Schumacher, London, April 2018
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