CHAPTER 6: HOUSING POLICY AND PRACTICE
6.4 Housing policy and state intervention
Government policy plays an important role in the analysis and explanation of the development of housing policy. However, it is not possible to establish a direct connection between the political leanings of the government (left-wing or right-wing, liberal or conservative), the policy implemented and the output of the public housing system. The existing public housing system, with its established institutional structure, forms the framework within which post Apartheid policy is developed, and can also form a Significant counterforce to the implementation of a desired policy (Boelhouwer &
van der Heijden, 1992). Kleinman (1996) uses the term 'path dependency' in this context. Moreover, various exogenous factors, such as economic and demographic developments, also influence both policy choices and the possibilities for implementation. Lundqvist (1992) has developed an analysis framework in which government policy takes a central place, and within which both the institutional structure of the housing system and the various exogenous factors are taken into account. Lundqvist regards public housing policy as the result of interaction between the political balance of power and the ensuing compromise-based policy proposals on the one hand, and the institutional structure of the housing markets on the other. Policy is then placed in the context of economic and demographic development in which, it is to be implemented before the relationship between policy and policy effects can be established.
Overall, there is a broad consensus that the state must play a role in housing processes (Malpass & Murie, 1999). However, there is no consensus about the kind of State interventions in the housing process. Such interventions depend on the political ideology of the State, whether it embraces neo-liberal or socialism strategies and the resources of the country. The evolution of housing policy debated above, has shown that there is no specific or defined state intervention in housing that every state must follow, although there is an agreement about the importance of housing in the global
economics of the countries and the social aspects of the populations (World Bank, 1993, UNCHS Habitat, 1996, Eugeden, 2001).
The role of the state in housing, as formulated in the years after 1945, has been questioned from virtually every conceivable political perspective in most advanced capitalist countries (Westergaard & Resler, 1975). Most explanations of the reasons for the consistency of trends in housing policy debates places overwhelming emphasis on political ideologies in the face of a changing world economy. Economic crises since the early 1970s have had a disastrous effect on social democratic style consensus politics and have encouraged a flowering of market liberalism as the dominant political ideology (Aaron, 1972). In practice, governments have continued to intervene in economic and social affairs as much as they did in the past. Their intervention now, however, is overlaid with market based ideology and an acute awareness of the need to offer an 'economic sweetener' to prospective voters. Changes in housing policy consequently, can be said to be a clear example of the shifts in political terrain.
It is necessary to distinguish the underlying reason for state intervention in housing from the ends and means of particular individuals or interest groups such as political parties. However, the underlying reason for state intervention is itself a matter of dispute and subject to different theoretical interpretations (Mishra, 1981). The consensus and conflict theories are broadly representative of two ends of the theoretical spectrum underlying state intervention (George; Wilding, Routledge &
Keagan 1976). Functionalist approaches tend to assume a basic consensus on fundamental social values and frequently employ the organic analogy, to represent SOCiety and to emphasise the interdependence of individuals and groups. Society is seen as having a tendency towards equilibrium, so that events or circumstances that are damaging or destabilising stimulate a response to restore the health of the social system (Murie & Forest, 1980). The state, given the assumption of a broad consensus, is seen as acting on behalf of 'society as a whole'. In the case of state housing policy, functionalist theories explain intervention in terms of the need to eliminate dysfunctional features of an industrial society, such as unhealthy and overcrowded dwellings. The State acts on behalf of society as a whole to bring about a general improvement in living conditions. Such perspectives tend to explain the development of social policy generally in terms of a process in which the revelation of intolerable and inhuman conditions somehow inexorably leads to reform by an enlightened sas society steadily evolves (Bowley, Allen & Unwin, 1945).
Between countries, there are contrasting general economic, social and political contexts, and differences specific to housing provision itself - such as in the sources of finance, tenures, subsidy systems, housing production, consumption, location and design. Henderson (1999) for example points out that healthier states do not adopt Self-Help-Housing as a strategy to tackle housing backlog or housing crisis. The impact of one part is misunderstood, when it is isolated from the whole. A policy, for instance, that 'works' in one country might have radically different effects in the social context of another country and may have a greater impact on the amelioration of the living conditions of the poor.
Capitalism and market mechanisms, based on liberal theories, were regarded as the best general forms of economic organisations, but situations arose where the state had to intervene to relieve the burdens experienced by those who bore the costs of market failure (Donnison & Ungerson, 1982). The issue with regard to housing was not simply a matter of individual welfare. A poorly housed workforce could also have adverse consequences for general economic development of a country. The philosophy underlying this prescription for the state intervention can be described as liberal- interventionist (Cutler, Smith & Williams, 1986).
Marxism ideology which founded its origin in the devastating practice of capitalism and the struggle of workers in general, would suggest a different intervention of state in housing process different from a capitalist state. The Marxist theory based on the notion of class domination and conflict suggests that phenomena such as housing policies should be seen as the products of a class struggle. Here the state is not seen as a benevolent agent of welfare improvement for all, but as an arena for class struggle. In general that struggle results in State policies, which serve the interests of the dominant class, but the subordinate class may win occasional battles and wrest certain concessions to its interests (Byrne & Damer 1981).
There have been SUbstantial changes in housing provision over the last 50 years, and considerable theoretical shifts and debates within housing research (Ball, 1986a).
Within those developments, a number of common trends can be identified. The most significant was the acceptance in most advanced capitalist countries by the 1940s, of the need for SUbstantial state intervention in housing provision. In industrial societies, unfettered markets could not create sufficient adequate working-class housing. The problem was seen as one of high cost, of even minimally acceptable housing in relation to working class incomes.
State intervention has to result in the minimum of intervention into pre-existing market processes commensurate with improving working class housing conditions and limiting additional state expenditure (Aaron, 1972). Subsidies and regulatory controls were the best means of achieving those goals. As a corollary, to ensure the efficient use of subsidies and regulation, the state might also have to encourage a reordering of the contemporary institutional framework of housing provision.
The actual history of the development of state intervention into housing provision and the forms it has taken has varied widely between countries (Burnett, 1978; Merret, 1979; Duncan et aI., 1985; Harloe, 1985). However, decent housing for the working class is not a desire by them alone; it is a long-term advantage for a large proportion of the population living in unhealthy or seriously inadequate accommodation. This is to say that the provision of decent housing is a requirement that a state, whether capitalist or socialist must provide to its citizens. An efficient and productive labour force, must be adequately provided with the services such as education, health-care and housing, which maintain and enhance the capacity to labour (Burnett, David & Charles, 1978).
Unfortunately, for capitalist interest, the provision of decent housing for the working class has proved to be unprofitable. It is, therefore, in the interest of industrial capital to have this conundrum resolved by state intervention. But, the political reasons leading to the State intervention were generally couched in terms of a common ideological framework.
The nature of the housing problem as perceived by the liberal-interventionists (Cutler et ai, 1986) is that the framework has influenced both the forms of state intervention and successive investigations of its success or failure. Social democracy had been the dominant ideology of housing interventions in Europe. But supporters of state intervention, had however, accepted the general terms of contemporary housing debate, laid down by liberal-interventionists. The liberal-interventionists perspective has a long tradition stretching back into the nineteenth century (Duclaud-Williams, 1978). In fact, the insignificant income of the workers in relation to the market price of housing stimulates the state to intervene in one form or another to combat the inequality, which was occurring in the housing sector (Swenarton, 1981).
Modern neo-c1assical economists like Myrdal (1993) are more optimistic about the robustness of the capitalist system and argued for the converse strategy. They suggested that raising the incomes of the poor is the only efficient (i.e. non-market
distorting) way of improving bad housing conditions (Muth, 1969; Robinson, 1979). The arguments of such economists, however, have been put forward in a context where social security systems are widespread and the taxation of incomes substantial and all pervasive.
Early liberal-interventionists were aware of one of the problems of subsidies. If they were given to private agencies, a significant part of the subsidy would end up enhancing the profits of these agencies, so that the final outcome of subsidies in terms of the quantity and cost of housing would be uncertain. Therefore, suitable agencies had to be found to avoid the problem. In this sense, state intervention was desirable in order to combat or to reduce inequalities generated by the private housing market. One of the main means of tackling the problem was to take rental housing out of the private market, in the form of social housing while leaving other aspects of provision, like the actual building of the housing to market forces (Bullock & Read, 1985).
In some countries, because of associated political developments, constraints were put on other private agencies to implement housing delivery projects. In Germany, for instance municipal acquisition of suburban land was instigated from the turn of the century, while in Britain, at times there has been low-interest funding of local authority capital works and a limited creation of local authority building departments (Hallet, 1977). However, such innovations were piecemeal and on a small scale, and not systematically introduced through recognition of the interlinked nature of the housing provision. In addition, despite the arguments about the efficiency of social housing as the vehicle for improving working-class housing conditions, political consensus could rarely be achieved simply by subsidising rental housing. Governments particularly those on the right, have often over the past 50 years wanted to encourage home- ownership, so subsidies have been given, either as a tax relief or as production subsidies.
The South African social structure and the institutions through which capitalism has developed since the post Apartheid democratic order of 1994, were established through a mixed economy comprising a balance between the State, the market, the family and occupational welfare. The social and economic conditions in South Africa immediately after the 1994 elections were severe, therefore strategies for reconstruction and recovery from Apartheid included a range of political, policy and social reforms. Constitutional reform granted South African citizens an equal minimum standard of healthy civilised life. The expanding scope of State involvement was
evident in extended social security schemes, mass education and a housing subsidy scheme, all of which were seen to complement and enhance the possibilities for modernisation and sustained economic growth. The provision of housing for the poor was and still is almost exclusively in the hands of the state. An expanding economy and extended welfare provision contributed to an improvement in living standards.
Marxist theory predicts quite widespread agreement that the state should be involved in housing. There remains, however, the issue of the extent and form of intervention. This is because, there is a conflict between dominant and subordinate classes arising out of their differing points of view on housing. Despite the existing conflict between dominant and subordinate classes, understood as dialectic relation, the provision of adequate housing for the working class is important primarily for its contribution to the productive process. Thus the commitment for a Marxist State to improve housing conditions is contingent upon this contribution. For the working class, decent housing is desirable in itself, as an item of consumption, and as a prerequisite of a satisfactory standard of living (Chapman, David & Charles, 1971).
Despite the differences between functionalist and Marxist theorists, most would broadly agree that State intervention arises from the failure of the market mechanism to produce and distribute a socially acceptable supply of housing. Thus, the reasons for State intervention are the problems caused by the market, and the objective of housing policy is to overcome the deficiencies of free enterprise. It is one thing to agree that there is a problem, but agreement on remedies is much more difficult. Here, it is necessary to distinguish between ends and means to an end and to turn to considering the policy objectives of particular individuals and groups.
It is recognised that there have been shifts in political emphasis in every country since World War II, but the principles of subsidy and state regulation have generally survived intact. Considerable changes, however, have occurred in both the patterns of subsidy and the instruments used to put them into operation. Although subsidy and security of tenure have been the main instruments in the liberal-interventionists armoury of housing policy tools, Mandelker (1973) observes that a variety of other schemes have been used, schemes which interestingly, do take account of specific agencies involved in the process of housing provision.
Land-use planning has been another form of intervention. Early proponents of land-use planning primarily couched their arguments in terms of the beneficial effects of planning
on housing provIsion (Sutcliffe, 1981; Bullock & Read, 1985). Claims that planning would reduce land and infrastructure costs and produce better estate layouts and urban spatial structures were made. Again, for its principal theorists, the prime role of planning has been seen as directing the market rather than going against it, an approach which contains fundamental logical contradictions (Ball, 1983). The high cost of land has also been tackled in some countries at various points in time through taxation schemes, the cheap purchase of land for privileged uses or through the large- scale acquisition of land, the latter often being associated with the development of post Apartheid towns and suburbs.
In many West European countries shift is also observed in state intervention in housing. Although, the state still plays a key role by funding research and development in construction, but now the aim of housing intervention in Western countries is more a gradual, piecemeal transformation of the house building process. As Fuerst (1974) argues, the retreat, however, is not only a political and ideological one; it is also a severe defeat for a strong 'statist' version of the liberal-interventionist philosophy.
According to Headey (1978) the shift witnessed in state intervention is not seen as the bankruptcy of one form of intervention, but as denying the feasibility of any major initiative. Indeed, the ideology of West European countries believing in market forces looks contradictory with State intervention.