Rent Notes 1
I've begun reading Marx's work on rent in Capital 3. I'm going to be progressing on two parallel tracks: in the drafts section, I'm assembling a study guide of excerpts (and some notes); meanwhile, I'm going to record my thoughts on how the theory applies to the politics of the city.
I've posted a preliminary study guide to the Introduction. The thing I was most impressed by is Marx's incisive analysis of the formal aspects of the rental agreement.
"...as soon as the time stipulated by contract has expired — and this is one of the reasons why with the development of capitalist production the landowners seek to shorten the contract period as much as possible — the improvements incorporated in the soil become the property of the landowner as an inseparable feature of the substance, the land."
This translates into a chronic problem for the cities, often noticed but rarely understood, obscured by the confused discourse on "gentrification," understood largely as a social process (albeit one enriching to landlords). Infrastructural improvements accrue to the landlords. As a neighborhood improves in terms of services and safety, so rent rises, without the landlords having to lift a finger. (At this point, it's important to distinguish rent (ground rent) from return on capital, i.e. return on investment in buildings).
This analysis provides an alternative to the typical supply-and-demand explanation of rent raises. While the chronic shortage of housing clearly plays a role in the ability of landlords to raise rents, Marx understands this not in terms of supply-demand, but by way of the monopoly on land that forms the basis of rent under capitalism. The need to understand this difference is particularly important in understanding the movement of commercial rents. For example, when a restaurant moves into a commercial space, a series of upgrades are necessary -- ventilation (a hood), fire safety system, gas line upgrades, etc. The expenses for these upgrades are paid for by the tenant, but once they have been made...
Residential tenants fare somewhat better, but protections such as we have in New York city merely serve to regulate the speed of this handover. The majority of leases are one or two year leases. For rents under $2000/month (almost all worker housing), the allowable rise in between leases is set by a city commision, usually at a rate of 2% for a new single year lease and 4% for a two year lease. (Under conditions of stable rises, the tenant is always better off taking single year renewals -- their right to renew their lease is protected. However, the last "finding" of the commision saw these rates double, benefitting those with longer-term leases.) While this rise in rent is not mandatory, it is almost always levied.
When a tenant moves and a new tenant (not related by blood or marriage) takes over an aparment, a "vacancy" raise is permitted, usually of about 14%, or more if "improvements" are made. Moreover, "improvements" made by the landlord during the occupancy of a tenant may legitimate a rental raise -- "improvements" which often amount to merely replace decrepit or broken fixtures! Needless to say, even these meager protections are often trampled by "over-eager" landlords (over-eager to line their own pockets!) who go so far as to terrorize (or even murder) tenants in order to secure the vacancy allotment. The history of neighborhood "development" is rife with sordid details, and reaches into the highest parts of city government, which has acted in complicity with landlords to destroy and "vacate" neighborhoods as part of urban renewal plans.
Posted by Sam at December 8, 2004 04:10 AM
As a neighborhood improves
in terms of services and safety,
so rent rises,
without the landlords having to lift a finger.
(At this point,
it's important
to distinguish rent (ground rent)
from return on capital,
i.e. return on investment in buildings)
BEAUTIFUL U CAPTURE THE EXTERNALITIES OF GENTRIFYING A NEIGHBORHOOOD
EXTERNALITIES REFLECTED INCOSTLESS INCREASES IN GROUND RENT REFLECTED IN INCREASING VALUES
BASED ON THE HIGHER RELATIVE
LEASING RATE
WITH GENTRY LIVING WITH GENTRY
ACTUALLY THE HIGHEST GROUND RENTS FOR LEASED PREMISES MAY BE IN THE SUPER CROWDED SLUM
WHERE THE LEASE COMP FOR THE DELAPIDATED BUILDING ITSELF MAY BE VERY LOW INDEED
ENGELS WRITES OF THIS
