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Theory Thursday: We Must Demand A Rent Tax by Andy Merrifield

Posted 1 week ago on July 16, 2014, 12:54 p.m. EST by Andy-Merrifield
Tags: global cities, economic growth, real estate, Theory Thursday, Andy Merrifield, urban development

“This is the inaugural article in a Theory Thursday series commissioned by the Occupy Solidarity Network to encourage intellectual curiosity, strategic thinking and tactical innovation within the global Occupy movement. To catalyze an Occupy reboot, we asked the greatest political philosophers of our movement to contribute a thought-piece. We will post one each week.

We begin with Andy Merrifield—a prolific political philosopher—because his work is woefully under-read in North America. And yet, he is one of the greats. For an introduction to Merrifield’s work, find yourself a copy of both The Wisdom of Donkeys: Finding Tranquility in a Chaotic World and Magical Marxism: Subversive Politics and the Imagination.” - Micah White

Anybody who glances at the latest literature on cities and urban development will see a lot of hype about “global cities” as engines of economic growth. Yet you’ve really got to wonder what cities these commentators have in mind? You’ve really got to wonder if big cities nowadays are actually about the “wealth of nations” (as Jane Jacobs proclaimed in the 1980s) or express some “triumph of the city” (Ed Glaeser’s patent). On the contrary, today's big cities have economies almost exclusively predicated on activities we could justifiably categorize as “parasitic.”

World cities are giant arenas where the most prominent activity is the activity of extorting land rent, of making land pay. London, like New York, like other megacities, is now rich pickings for the world’s super-elite. Its property market is a newer, safer investment haven (at least for the time being), a stock market in exile, a global reserve currency with bonanza rates of annualized return (currently around 10%), generating an inflationary spiral that squeezes other, more modest sectors of the housing and rental market.

The only thing that is truly entrepreneurial and creative about parasitic elites is the innovative way in which they’ve reclaimed the public sector, how they’ve used and abused the public sector to prime the private pump, to subsidize the accumulation of capital rather than the reproduction of people. “Creation” here seems more akin to creative accountancy and creative ways to avoid paying tax; creative devices to gouge make-believe fees from ordinary citizens (especially in utility bills); creative finagling of stock and financial markets (like LIBOR); creative destruction of competition to garner inflated monopoly rents and merchant profits; creative excuses to cadge money from the state. The list goes on, creatively. And when they parachute into cities, these “creative” parasitic classes have little use of public infrastructure anyway; their lives are so utterly privatized, geared only towards individual, market-oriented goods, that they bid up land values and property prices and hasten the abandonment of the public realm in the creative bargain.

“These are fiery, start-up movements and ideas that we, the people, can further fuel and develop.” - Andy Merrifield

When things go belly up, furthermore, as they inevitably do, when there are glitches within the overall economy, the state inevitably plays its ace card as a first line of defense, as a veritable executive committee managing the common affairs of a bourgeois and aristocratic super-elite, stepping in at the first signs of crisis—bailing out the bankrupted corporations, the debt-ridden, too-big-to-fail financial institutions, dishing out corporate welfare to multinationals, turning a blind-eye on tax avoidance and sleazy accountancy.

One string in the state’s bow is austerity governance. Austerity is manufactured consent, ruling class ideology, neatly fitting into the material needs of the 1%. Austerity enables parasitic predilections to flourish by opening up hitherto closed market niches: it lets primitive accumulation continue apace, condoning the flogging off of public sector assets and infrastructure, the fire-sales and free giveaways, the privatizations, etc., etc., all done in the name of cost control, of supposedly trimming bloated public budgets. What were once untouchable and non-negotiable collective use-values (public services) are now fair game for re-commodification, for snapping up cheaply by the predators only to resell at colossally dearer prices to those who can afford them.

Austerity conditions the global urbanization boom by nourishing the parasitic city. In parasitic cities, social wealth is consumed through conspicuously wasteful enterprises, administered by parasitic urban elites, who, acting like rentier aristocrats from the Gilded Age, now squander generative capacity by thriving off unproductive activities. They prosper from rents and interest-bearing assets, from shareholder dividends and fictitious fees. Paradoxically, they’ve amassed colossal wealth when corporate profits have dipped, defying economic gravity because rentiers have helped themselves to the commonwealth the world over. They’ve eaten away inside our social body, stripped peoples’ assets, made predatory loans to people who can’t afford these loans, repossessed homes, engineered land grabs and eminent domain to dispossess value rather than contribute anything toward its creation. They’ve simply invested in themselves rather than built up human capital, privatizing profit all the while as they socialize risk.

How can ordinary people develop civic immunity? One initial measure is to stop the billions of pounds and dollars draining from public finances because of corporate tax avoidance. Governments insist on belt-tightening policies, running down public service provision at the same time as they turn a blind eye on tax dodging companies and super-rich individuals, who’ve carved themselves up and re-registering head offices in offshore tax havens like the Cayman Islands, Monaco or Luxembourg, etc., etc. Already a groundswell of opposition has developed. Grassroots organizations in Britain like “UK Uncut” has adopted rambunctious and brilliantly innovative direct action occupations, creating scandals around tax-avoiding parasites like Vodafone (with its handy 0% income tax rate for 2012) and assorted banks like HSBC, Royal Bank of Scotland, Barclay’s and other Dodge City financial institutions.

Maybe there’s a sense in which tax reform and stamping down on bigwig tax avoidance can be revolutionary? Paris-based economist Thomas Piketty has lately been campaigning for a “fiscal revolution” [“révolution fiscale”]. While Piketty has stirred up debate in France, his manifesto has broader, European and global implications, given systems of taxation everywhere cannot be reformed: they need a complete overhaul, a thorough reconstitution on a new democratic basis, with a dual prong of equity and progressive taxation. Equity here boils down to applying the same fiscal logic to capital as to work, rallying around the development of a Financial Transactions Tax(FTT). In Britain and Europe, ordinary small-businesses and self-employed people are compelled to pay 20% Valued Added Tax (VAT) on profitable earnings, so why should we let financial institutions off the hook, particularly when they balk at even a miserly 0.01% penalty?

We might also bring the other aspect of that famous capitalist holy trinity—land—into the taxable bargain. Long ago in Poverty and Progress (1879), Henry George proposed a novel idea that we might want to explore today. In order to “satisfy the law of justice,” George said, a rent tax seems the only alternative preventing parasitic anti-social wealth appropriation. George, accordingly, declared that all land accruing inflated dividends for private investors should be subject to taxation. “I do not propose either to purchase or to confiscate private property in land,” George wrote. “Let individuals who now hold it still retain, if they want to, possession of what they are pleased to call their land. Let them continue to call it their land. Let them buy and sell it, and bequeath and devise it. We may safely leave them the shell, if we take the kernel. It is not necessary to confiscate land; it is only necessary to confiscate rent.

Thus that preeminent parasitic organism, the leech of landed property—“the monstrous power wielded by landed property,” Marx called it, “expelling people from the earth as a dwelling-place”—can be expunged, or at least democratized by a Community Land Trust that collects this rent tax, instigating another notion of the public realm, one not owned and managed by any centralized state but owned and run by a collectivization of people, federated, communal and truly responsive to citizens’ needs.

Likely the greatest fiscal reform and strongest prophylactic against parasitic urban invasion, though, is democracy, a strengthening of participatory democracy in the face of too much representative democracy, especially when representation means public servants intent on defending private gain. On this note, French philosopher Etienne Balibar has reversed the famous American Revolution mantra and Washington D.C. bumper sticker slogan—“no taxation without representation”—suggesting these days that “no representation without taxation” is more appropriate. Balibar concurs with Piketty, and even thinks that widespread political mobilization for such a “fiscal revolution” could be a key for converting the current “passive citizenship” of the populace into an “active citizenship.”

Active citizens need to engineer some planned shrinkage of the financial sector, and must wage war on monetary blood sucking in the same vein as ruling classes waged war on public services during the 1970s and 1980s. In 1976, then-New York City Housing Commissioner Roger Starr said the city, any city, needed separating into neighborhoods that were “productive” and “unproductive” on the tax base. The plan was to eliminate the unproductive ones, closing down the fire stations, police and sanitation services. Poor areas like the South Bronx suffered immeasurably. Ironically, the idea retains some purchase. Shrinking services that are unproductive drags on our tax base might boil down to financial services; and neighborhoods like London’s Mayfair, home of hedge funds and private equity companies, discreet behind iron-railed Victorian mews, spotlessly painted white, might be the first to be reclaimed. Indeed, as Nicholas Shaxson says, “Mayfair would be far more economically productive if it were turned into a giant waste-disposal center.”

Meanwhile, citizens can strike out at our “Creditocracy” (Andrew Ross’s label), and participate in a debtors’ movement, like Rolling Jubilee, Occupy Wall Street’s roving Strike Debt group, which hasn’t only waged war on the debt collector (college tuition debt alone stands at $1 trillion), but has likewise bailed out the people, organizing a committee to buy back $15 millions worth of household debt, at knockdown prices, on the secondary debt market. Rolling Jubilee has liberated debt at the same time as highlighted the grand larceny and absurdity of the growing debt racket.

These are fiery, start-up movements and ideas that we, the people, can further fuel and develop. We’ve sat back way too long watching our cities and society get repossessed by crooked investors and creditors, gaped helplessly as all this gets endorsed by career politicians and their administrators (or is that the other way around?) who no longer even pretend to want to change anything significant.

Andy Merrifield is a radical political philosopher. Merrifield has written several books including a biography of Situationist philosopher Guy Debord. His latest work is The New Urban Question forthcoming from London’s Pluto Press (March, 2014)

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