Solving Britain's housing crisis means ripping up the international financial consensus
In January this year I submitted an entry for Red Pepper and HCI Skill Gateway's Dawn Foster memorial essay competition, a chance to submit a piece of political writing that focused on the housing crisis, as a tribute to one of Britain's greatest and most fearless working-class journalists, Dawn Foster. Not expecting to make it far, I was elated to be placed on the longlist for a piece I wrote on the need to break the international financial consensus in order to solve the UK housing crisis. While not reaching the shortlist, I've decided to upload the piece here as it is one I am proud of.
As a journalist, Dawn refused mainstream orthodoxies of reporting and writing that kowtowed to power; her work on housing, feminism, and disability was invaluable in a mediascape that shunned voices that dared to make those issues falsely seen as individual aberrations into inherently political ones.
Dawn also belongs to a cadre of great minds and individuals gone too soon, and whose contributions will be sorely missed; from Mark Fisher's tragic passing in 2017 to Dawn's last year, it is crucial that their legacies are honoured through a vital push back against the ever-rapid national slip into a form of highly policed and managed 'democracy' that is increasingly coterminous with the ugly warts of far-right populism, and faces ineffectual opposition from popular media, politics, and culture.
It is to Dawn's memory that I wrote this piece on the need to rip apart the way in which finance structures housing in this country and the world, as it is on the battleground of housing and living safely that so many symptoms of the UK's terminal decline can be diagnosed.
Dawn Foster forever, and a big thanks to Red Pepper, HCI Skills Gateway, and the judging panel for seeing something in my work.
Solving Britain’s housing crisis means ripping up the international financial consensus
While perhaps unlikely to be the harbinger of great left-wing political media, a recent search on BBC iPlayer for documentaries led me to the populistically titled ‘The Decade The Rich Won’, a programme detailing the events and social and political fallout of the 2008 global financial crash. Throughout, it featured interview excerpts from different players in and commentators on the crash; hedge fund managers, politicians, and think-tank experts all gave their two cents on what unfolded. Most revealing was that of the financiers themselves, with Guy Hands; founder of private equity firm Terra Firma, almost gleefully admitting how the bailout process allowed huge amounts of capital to flow further up to the banking bandits who plunged the economy into crisis in the first place, summarising that “Government assumes that money goes in, and it gets spread equally, rather than realizing that money goes in and it gets attracted to money.”
One damning indictment from within the system itself lays bare the inequalities and contradictions inherent in the World and UK’s financial system, its reliance on and deference to a propertied class predominantly concentrated in the South East of England, its negative reliance on and exploitation of renters across the country, and the unequivocal need to break the back of this system in order to solve the housing crisis that is so irrevocably tied to the global financialised economy. Put short: to solve what could and has been easily deemed a housing crisis of domestic proportions, you need to fundamentally restructure the financialised global economy and its contingency on the peaks and troughs of the economic value of property assets.
There is of course an historic story behind this, tied up in the West’s response to war in the twentieth century, the golden age of capitalism, declining empire, and the rise of the neoliberal right. In the mid to late 40s, with the British Empire reeling from the devastating economic output of War and taking on astronomical debts, the growth of political independence movements in colonies such as India and Egypt, and the meteoric rise of America inevitable, a carefully crafted stable economic consensus was carved out at the Bretton Woods conference in 1944.
This was a foundational event, as a consensus was reached amongst economists and statesmen ranging from Britain to Bolivia that international economic cooperation was vital. Thus, America solidified its new hegemony as the world’s monetary creditor, insisting all currencies remained within a one percent exchange rate of the dollar, which itself could be; in theory, converted to gold, $35 per ounce to be exact. Bretton Woods’s objective was to stabilise the global economy after the tumult of war, the consequent glut of debt, and gradual decolonization of European empires; ensuring economic co-operation was vital in the future, and establishing a mode of ‘managed’ capitalism that would fuel the new American empire at the expense of Europe and the rest of the world. As economist and journalist Grace Blakeley puts it in her history of financialization Stolen, Bretton Woods:
“marked the dawning of a new era for the global economy. Europe set about the long processes of post-war reconstruction and decolonisation, and the multinational corporations of the world’s new superpower profited handsomely. Trade flows increased after the years of autarky during the war, and a new age of globalisation began.”
Yet; as everyone except Francis Fukuyama seems to understand, history has a pesky habit of biting back. Internal contradictions and structural problems fundamental to Bretton Woods soon bore fruit, and as US federal reserves high on their own supply admonished an endless supply of dollars; which the rest of the world gladly lapped up, this led to a shortage and undervaluation of gold in comparison to the dollar, thus undermining the principles on which Bretton Woods rested. As $22 billion left US shores in the first six months of 1971, President Nixon issued Executive Order 11615, reversing the convertibility of dollars to gold and thereby the system itself.
Image credit: @Bungacast https://twitter.com/BungaCast/status/1152161324404748288
The failure of the ‘end of history’ left an ideological and philosophical power gap, and henceforth leaders grappled onto housing as a political tool with which to exacerbate and solidify massive inequalities of wealth. After the collapse of Bretton Woods and the 70s energy crisis, politicians of the New Right Thatcher and Reagan pioneered new political programs with a keen focus on re-unleashing free markets in factors of production like land and capital in order to grow the economy, honing in on housing as a key asset on which to build popularity and wealth among the middle and upper classes.
In the UK, with the 1980 Housing Act, owning one’s home became an attainable goal as the (in)famous ‘right to buy’ scheme was introduced for those living in social housing. While many benefitted through buying their own home, the programme decimated British social housing stock, lowering standards across the board as newly created landlords sought to maximise a return on their investment, and helped forge the legacy of unaffordable homes as prices skyrocketed and completions plummeted.
The focus on homes became inexplicably tied to the new financial settlement, as the banking centre of the world the City of London became deregulated at great speed to free up capital for mortgages for first time homeowners, and soon the mass creation of wealth via the banking system became contingent on an expanding and politically obedient property-owning class.
The historic origins of our housing crisis could not be clear and better documented, a multiplicity of historic factors of war, empire, debt, and finance changed the world many times over in the twentieth century. This all being true, there lies much ambiguity as to the next political steps to solve this crisis. For some, much of these vast and intractable historical processes could be interpreted as high-handed and overly academic, robbing campaigners and activists of any agency to initiate change, immiserating renters and those looking to get ahead and own their own home, and condemning the economy at large to terminal decline. Yet radical optimism is essential, housing for many is the pressing issue, and any emancipatory socialist political project must put the fact that working enough to pay rent and live is still an uphill struggle for the majority in the UK.
To give context, in a variety of factors Britain’s housing crisis is as bad as it’s ever been: the Local Government Association has said that the pandemic’s effects could cause council house waiting lists to double to 2.1 million this year, rent increases have hit a thirteen year high and have increased for the first time in sixteen months in London, and the removal of economic Covid protections have caused the ongoing and shameful homelessness crisis to spiral further out of control in recent months.
It’s therefore crucial that intellectual arguments for a radical overhaul of the principles on which wealth is created and the economy is run continue to be heard and propagated by the activists, campaigners, and leaders of tomorrow. While the starry-eyed days of Corbynism gave the power of the financial sector something to worry about, the push has to be continued to make the boldest changes possible in the biggest crises of the twenty-first century.
A few chosen charities:
Thanks for reading.