Housing As a Process of Community Development

The Journal of Sociology & Social Welfare Volume 4 Issue 2 November Article 5 November 1976 Housing as a Process of Community Development Gary D. Askerooth University of Iowa Follow this and additional works at: https://scholarworks.wmich.edu/jssw Part of the Social Work Commons, and the Urban Studies and Planning Commons Recommended Citation Askerooth, Gary D. (1976) "Housing as a Process of Community Development," The Journal of Sociology & Social Welfare: Vol. 4 : Iss. 2 , Article 5. Available at: https://scholarworks.wmich.edu/jssw/vol4/iss2/5 This Article is brought to you by the Western Michigan University School of Social Work. For more information, please contact [email protected]. HOUSING AS A PROCESS OF COMMUNITY DEVELOPMENT Gary D. Askerooth School of Social Work University of Iowa Nearly everyone agrees that we have "a housing problem" in America. Many would also agree that inadequate housing for the poor is the most serious dimension of that problem. There is much less agreement on the causes of our housing problems and even less, unfortunately, on their solutions. The inadequacies of profit-centered market systems have been under- stood for at least a century. * We can prove that our housing industry is part of an advanced capitalist industrial society which is based on dehanization and exploitation of people as commodities. But our radical critiques often lack the strategies that produce radical results. We must insure that well-intentioned rent-control fights and mass-produced modular housing do not simply weed out the less efficient, small landlords and producers. We must begin, even if only on a block-by- block or neighborhood scale, to replace the system that will only produce housing as an incidental by-product of profit. In this essay, I shall outline a strategy that could lead to the initial stages of developing a society in which human needs are not de- pendent on residuals from the market. By using cooperative, mutual self- help methods to develop local community power, we may provide examples applicable to other sectors as well. My argument rests on three assumptions: 1) Any low-cost production of housing in urban America (including rehabilitation of decaying housing stock) must substantially bypass the profit-oriented sector; 2) any ap- proximation to equal distribution of housing in urban America must be based on changing the social organization of the political economy of the housing process; and 3) while the ideal situation would be a socialized political economy based on decentralized labor and knowledge-intensive technology, certain compromises can be made that will increase the social welfare of those in need of housing. As a parallel with "socialism in one country," there are places and times in which socialism in one neighborhood can become a significant catalyst for social change. The Fallacy of Aggregate Growth There are some significant ideological notions that we must dispel if we are to make decent housing available to the disadvantaged in urban *The best early formulation of a critique of modern market economies is Josiah Warren's (1852). He argued that cost to the producer, not market value, should decide prices. -218- America. First, let us tackle that curious abstraction of neo-classical economics, which we can call "the fallacy of aggregate growth." As Thurman Arnold so ironically informs us, there is a long tradition of a "Folklore of Capitalism" in which fanciful metaphors are employed to deflect criticism of nasty, mundane activities. The fallacy of aggregate growth is based on the convenient theory of economic development popularized by W. W. Rostow and embraced by those who believe that the sum of an industrial society's production figures is the best measure-- nearly the only important measure, of prosperity. Despite all the recent criticism of this assumption, which is essentially a convenient reliance on the Gross National Product and attendant aggregate figures such as National Income (Friedman and Wulff, 1975; Uphoff, 1973), an aggregate production figure is still the foundation of most public policy decisions. Aggregations such as total dollar value of building permits and total numbers of housing starts hide several disparities between aggregate figures and housing communities of people. A complex of competition and profit motives pushes housing into a high-cost/unit situation. Utility companies, materials suppliers, local real estate taxers, real estate brokers, architects, highly skilled building tradesmen, all find it ea- sier to increase their own percentage of profit with more expensive units. Investors, developers and contractors, likewise, can expect a higher rate of return from more costly dwellings. Separating production problems from distribution usually means ig- noring the latter. Unequal distribution is inherent in a capital-intensive industry such as modern housing. Our public policy of deliberate, heavy investment in the capital side through large financial establish- ments is inefficient as a housing strategy but very efficient in support of financial elites. Nearly one-third of all United States capital is fixed in the housing sector (Stone, 1973a). A majority of this goes to finance the development of housing industry, not to the building of housing. How can this be? Quite simply, investment in capital is not necessarily related to its productive use. Because there is no direct incentive to produce more housing with their investment, financial wi- zards will merely place our money in the largest, most capital-intensive and unproductive projects.* As more of the housing dollar goes into non-housing items, we exper- ience a decline in the productivity of capital. Costs of finance and land purchase have risen 200-300% in 25 years (Stinchcombe, 1973:304). The need for a different investment strategy seems clear. The primary reason for this decline in production has little to do with the efficiency of the industry in producing things called "dwelling units." Simms (1973; Pynoos: 330) found that since 1947 at least the *Almost universal among officials is the practice of denying grants and loans to individuals and small group projects. HUD often requires 50 to 100 unit minimums for assistance to be granted. -219- productivity of the industry has actually increased. Since materials and epipment are only about 35% of the construction cost of housing and, at present interest rates, construction costs account for less than one-half the total debt service on the average single family dwelling, even a sub- stantial (say 25%) reduction in material and equipment costs would reduce the debt service by only 4.5%. The problem is caused by the nature of housing: an extremely expensive, highly durable consumer good that is unresponsive to demand. This makes housing, if it is treated as a consumer good, a relatively risky investment in the financial marketplace, and necessitates all the government guarantees and concentration of lend- ing power in the hands of a few powerful financial organizations. Investment in Human Capital Because our unjust, inefficient system is maintained through an ela- borate method of wasteful investment, successful alternative housing strategies must concentrate on investment in workers and their tools. This has been described as "Buddhist Economics" by E.F. Schumacher in Small is Beautiful (1973), and is clearly the basis for much of China's recent campaign to reach peasant-urbanite equality and full employment (Salter, 1975). Instead of our comic ritual of technocratic scenarios in which believers in material-mechanical solutions to social problems continue to play the role of Rube Goldberg, inventing machines to replace workers during an extended period of combined unemployment andinflationwe need a social policy that combines houses and employment into a community self- housing process. Another major fallacy is involved in conventional solutions to the U.S. housing problem: the assumption that housing is simply production of a "bunch of units." Housing viewed as the production of things leads logically to an emphasis on the things and "economies of scale" to produce those things. Thus, it is naively assumed that if the government's policy were to facilitate production of 26 million dwelling units by 1978, monetary policy could be manipulated to induce the private sector to produce them. Of course, we are only producing one-half the quantity of dwelling units envisioned by the planners. It is often argued that housing cannot compete for capital because the industry is so fragmented. There are over 320,000 homebuilding firms in the United States and more than one-half of these employ fewer than three people! (Stegman, 1973:372) But even if we could concentrate production of housing in a few firms (extremely unlikely because of varying codes, weather, socio-historical distribution and transportation patterns), it is still true that only one-sixth the purchase price of a dwelling is in the envelope (the shell) (Mandelker:407). Furthermore, because of the great geographic dispersal of those in need of housing, the industry would have to induce demand for specific prototypical dwelling units in some effective manner throughout the market for this strategy to have even a slight chance of success. So long as housing is looked at as the production of a mass of things, we will be plagued by an inability to mesh our concepts with what we see -220- around us. Housing must be viewed as a process (Turner and Fichter call it a verb, 1972:Chapter 7), a process involving the owner, builder, and the community in a long-term investment. Housing must be viewed as an investment in collective goods, not merely the production of a disposable such as a golfball or a loaf of bread. Housing cannot be simply mass- produced, because the resultant product must be tied to a place and a comanunity.

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