The rent-price experienced by a buyer of “housing services” (lol) is, even for ostensible Marxists, often mistaken to function along some sort of hedonically-inflected payment for access to particular housing services, which fluctuate according to particular economic rules. David Harvey is one such Marxist. His account relies on “class-monopoly rent” in order to highlight the power of “speculator-developers” as owners of a unique commodity (a certain number of square footage of inhabitable space) in the market.
It is my contention that the class-monopoly rent category is unnecessary. This echoes the position taken by Ilia Faharani in his dissertation Land rent, capital, rate of profit, but where Faharani derides Harvey for relying on socio-cultural explanations to derive his economic theory, I argue that, in fact, landlord power is utterly misunderstood by Harvey and lightly so by Faharani. For Harvey, the salience of landlords, who are capable of operating as a class in accordance with their own interests, requires him to develop a necessary theory of class-wide tactics. This is simply not true. Landlord-capitalists, in their appearance in the rent relation as personifications of property capital, do not appear as emissaries of a broader class of property owners any more than any other merchant does. To quote from Rubin, the landlord (of whatever size, from individual proprietor to property management company) appears before the renter as an “owner of a certain things”, namely, access to a particular cluster of square footage usable for residential purposes, which “enables its owner to occupy a determined place in the system of production relations”. When an owner of such a thing occupies this place as a personification of property capital and enters into a relationship with a buyer of such, we call their exchange of money “rent”. Their ownership of property capital bequeaths unto them the “form of a landlord”, lets say. The difference between this figure and the owner of any other capital, outside of the name, is minimal. Nevertheless, to say that all landlords are linked in some way in a class-wide dominion is an error, made for good reasons – landlord-capitalists are uniquely contemptuous, and may sometimes be able to advocate for protections for themselves within a particular municipality or housing market (see REBNY’s power New York, for the most obvious example). That does not mean they are capable of unitary thought and action. They are linked only by selfish squabbling for a greater portion of profitable opportunities within a finite market.
Following from this, I believe that the individuated power of a landlord-capitalist is already present within Marx’s own rent categories, specifically his double category of differential rent I & II. Differential rent I is the more commonly understood “extensive” category, where a particular property’s value rises in accordance with what is access to it allows. In typical Alonso-Mills-Muth center modeling, the determinant of a rent’s magnitude is related to its distance to the ‘city center’. Later geographers and economists have developed this concept further to point out that there may be many centers of varying importance, such as proximity to a train station or park, location in a desirable neighborhood, etc. It also goes without saying that the state’s role in constructing and maintaining streets, lights, water/power/sewer hookups, etc. is extremely important for establishing a basic relationality between a given property and its environment viewed through the lens of extensive amenity provision.
Differential rent II refers directly to a landlord-capitalists’s ability to coordinate the expansion of their profitability by creating intensive improvements within their properties. When it comes to residential holdings, the tactic here is simple: by maximizing rentable units, the owner enjoys an absolute rise in rent revenues. Strategies may include building up, subdividing apartments further, etc. This rent category also corresponds to internal improvements and maintenance made within a landlord-capitalist’s portfolio (such as capital improvements) that correspond with an increase in the asked rent. Again, pretty simple.
Additionally, differential rent II can be operationalized by not providing improvements. Founding a Limited Liability Company (LLC) and naming it the owner of a property effectively shields the landlord-capitalist from personal losses in the event of foreclosure, lawsuit, etc. Using this cleverly enables landlords to, firstly, save money by refusing to make repairs – an easy strategy of refusal, and one which leaves tenants with almost zero options to force rectification. They may endeavor to do their own repairs, but these repairs done at their own expense and with their own labor will immediately become the landlord-capitalists property and used to potentially raise rents (for example, if residents paint a hallway, the landlord may advertise the building as ‘freshly painted’ and thus charge a small premium). The only other option, then, is for both landlord-capitalist and tenant to ride out the building’s destitution as long as they can. In this scenario, the landlord-capitalist continues to receive rent payments while biding time until the building is repossessed by the city, at which point the LLC which “owned” the building is dissolved as bankrupt, but the parent’s assets are protected. This “strategic disinvestment” also drags down the property’s assessed value, meaning the landlord will pay less and less in taxes each year. If rents stay the same across that period, this translates to a greater share of profit with respect to maintenance costs.
Differential rents I and II are often doubted for their practical validity. Of course, they’re not entering into the landlord-capitalist’s mind when they set the rent-price; we may say they have a similar relation to that final price delivered to the buyer as does value to a commodity’s final price, as a “baseline” which establishes a parameter basis which allows fluctuations to become understandable over time. But they also have another function, I believe, in foregrounding the sublimely arbitrary and extractive quality of the entire rent relation. The landlord-capitalist, as a personification of property capital, exercises a relationship of domination related to their quality as owner of the only version of their commodity. There are zero duplicates in even the vastest property corporation’s portfolio – consider that landlord-capitalist’s may charge higher rents within the same building for the location of a unit with windows facing the back, on a higher or lower floor, more newly renovated than another, etc. By virtue of this fact alone, the rent relation is one of monopolistic domination. This is emphatically not the same or similar to that sort of domination which appears in the sale of labor time between a worker and capitalist, even if both are cheated; however, relying on this simplistic comparison elides the fact that the landlord-capitalist is a parasite who extracts their reduction from wages after the worker has already completed advancing their labor to the capitalist. As Irene Bruegel points out, “the tenant may be ‘cheated’ under capitalism, but this is not fundamental to the system: the exploitation of the worker is”. I believe that highlighting this exploitation as an individuated process of extraction from wages offers much greater explanatory power than Harvey’s, while highlighting the arbitrary domination visited upon the tenant by the landlord-capitalist, and furthermore, allows for a discussion of real competition between landlord-capitalists, in start distinction to the usual presentation of landlord-capitalists as a united front.
The notion of competition within a particular housing market on the part of suppliers often goes ignored. However, the theory of competing capitals may be adapted to the provision of residential units within a relatively fixed housing market. In Persistent Inequalities, Howard Botwinick draws on Marx and Shaikh’s theory of capitalist competition, as opposed to pure or imperfect/monopoly variants of competition (a la Sweezy, Hilferding, and Robinson). Foremost in his account is the insistence on the importance of the laws of accumulation of capital for this theory, meaning that larger firms (that is, firms with a higher rate of accumulation), by virtue of their capitalization and best practices in their sector, function as “regulating capitals”, or the “moving centers of gravity” for any given sector. In the property market, we may say that this position is occupied by extremely large firms, such as Douglas Elliman, for example. Given the sheer volume of properties a regulating capital holds (following differential rent II), their market share is necessarily gigantic. Other firms looking to get into the property market to take advantage of, say, the extremely high rent levels currently, are left with a harsh choice: either begin construction of a new building, which may take too long to capitalize on the current rates of profit on offer sectorally, or attempt to muscle their way in by appropriating a building already owned by another capital. Even if they do so, this does not mean they will be able to run that building profitably, as unlike Douglas Elliman, they will not have a portfolio large enough to cover up potential shortfalls in rent at certain properties with profits elsewhere. They will have to wring the profits from that building to the hilt, and still may fail, and thus be left with the enormous initial payment of building-as-fixed capital that was required for entry into the market. Thus it behooves this new entrant to make another buy, and another, while simultaneously squeezing their current tenants to fund further purchases. As property selling is, moreso than most industries, nearly completely defined by a firm’s ownership of fixed capital, this is nearly the only way they can realize greater profits – there is only a minimal labor force to beat surplus value out of, and honestly, most of them are management anyway.
This upstart firm is also joined in existential peril by, for example, the single building proprietor, who finds their commodity highly desirable for larger capitals engaged in the war of capitalist competition and will likely sell to them in the long run, a phenomenon sometimes given a nice socio-cultural gloss as “gentrification”. It is worth noting here, also, that lack of planning and information on the part of smaller non-regulating capitals is also a crucial benefit for the regulator, who is able to plan and prosper to a much greater degree, and only really has to concern itself with the actions of other regulators who are always looking to hoover off parts of its portfolio of their own. This means the regulators are the only ones, oftentimes, who may undertake the construction of new buildings; it is only they that can play long-run games and assure that they will be able to weather market oscillations long enough to make good on the eventual profits gained from this addition to their portfolio. The property sector, as a rule, largely goes through much more limited rises and falls with respect to the average rate of profit in the economy as a whole. This means that a rising sector is extremely attractive to further expansion of a portfolio, but also that when the downturn hits, that level of extensive capitalization and accumulation may very easily sound the death knell for the sectoral regulator if enough of its holdings become unprofitable.
Anyhoo