Why all new construction is ugly
The final word
Written on request of my friend Jules, Knight of the Realm, who writes here.
It’s boring at this point to complain about the look of new apartment buildings, hideous as they may be, to the point that they’ve actually started getting pushback here and there from idiots bold enough to claim that they’re Actually Fine because they offer cost-effective density or whatever, which is probably the nadir of architectural functionalism. But I digress. Anyway we’re talking about buildings like this, basically, called “podium buildings” or “5-over-1s” due to the fact that they typically have a structural organization wherein the first floor is a poured concrete slab with common stick-built wood frame construction overhead.
The stick-built construction is crucial because, being more or less standardized, the amount of labor-hours spent on site is cut down to the minimum possible and there is almost zero need for machinery or equipment other than hand tools (which are almost always supplied by the worker themselves). Combine these features with the fact that, in the Euro-American context at least, there is extraordinarily low union density (12.7%) in private sector residential construction and thus low wages and bargaining power, we may assume that the wage bill for construction firms is already shaved down to the absolute minimum. Thus the strategy for the expansion of a firm’s individual profit consists the reduction of absolute labor time on site (while, of course, extending shifts and eliminating breaks as needed) by employing the most efficient “best practices” copied from the regulating capitals within the industry. But where a manufacturing capital may seek efficiencies by modifying its own manufacturing process, upgrading machinery, etc. a construction capital seeks to “offload” any and all labor hours by moving labor hours off site and entirely out of the industry altogether, into the manufacturing sector.
In so doing, construction balances its books – from the perspective of the individual firm and insofar as we look at construction as a discrete industry, meaning that within any particular period inputs are assumed and output is completed. I have written about construction’s deep embeddedness in other economic industries here, but the gloss of it is the construction process passes through many; here I am concerned only with its beginning. Taking land for development, a contractor begins the process by acquiring inputs of materials from the manufacturing sector as well as labor in accordance with their own estimates, available contracting budget, specifications from the client communicated by the architect, etc. This is crucial. Construction profits are historically high precisely because it “offshores” its fixed capital needs onto the manufacturing sector. Thus, firms are able to remain “artificially” small – essentially existing for economic purposes as direct employers of workers (note that almost all construction equipment is rented or subcontracted for a particular job, not owned by all but the largest contracting firms), with their process of surplus value creation “vertically integrated” with other sectors. In Marxist terms, the industry has an enormously low organic composition of capital (meaning variable capital well outweighs constant capital). Marx notes in Chapter 9 of Capital Volume 3 that determination of the general rate of profit is determined by this “organic composition of capital in the various spheres of production” which is the “different rates of profit in the particular spheres”. We can calculate this incrementally in order to observe the stark difference between construction and other sectors.
Bear in mind that my calculation here is inspired by Anwar Shaikh’s and Michael Roberts’, fusing the two somewhat, with additional insight from Ilia Faharani. But, as Roberts notes, “it does not seem to matter how you measure the Marxist rate of profit” (within reason, I might add). Not to get all Appendix-y here, but the calculation depicted uses the simple formula R = (S-D) / K
where R is the incremental rate of profit, S is the Gross Operating Surplus (Value added less employee compensation less taxes), D is depreciation of private fixed assets in current costs, and K is the net stock of fixed assets in current costs. In Marx’s terms, this is basically the first part of his P = S/C + V equation
where P is the rate of profit, S is surplus value, C is constant capital, and V is variable capital. Obviously missing in my calculation is V but this represents significant and laborious issues when comparing across sectors with extreme differences in worker composition with respect to waged and individual contractor percentages, with the former predominating in manufacturing and the latter in construction. Shiakh notes that there is difficulty in transferring employee compensation to variable capital1 and the question is explored in depth in Shaikh and Tonak’s Measuring the Wealth of Nations.2 But, to be totally honest with you, I’m not going to do all that shit for a Substack post that I’m writing for free and you can deal. In any case, what we do have is a measure of outputs over costs per industry, and we can see that construction as a sector is far and away the most profitable even using these basic calculations.
It is also here where the contractor has the opportunity to maximize the value they can extract from their contractual budget by choosing materials which they know will minimize labor time on site and thereby constrict the turnover time on their project and the realization of their profit. One way to do this is by purchasing exterior cladding products, including panels, coming in fiber cement, aluminum, EIFS, etc., all of which come from the durable manufacturing industry. Panels are particularly suited for the discerning, profit-hungry contractor’s desires for two main reasons; first, because they can cover far more square footage per unit than say, brick (and brick veneer panels exist as well); second, these panels are purchased as a system guaranteed and specified by the manufacturer thus reducing the requirement for specialized skilled labor on-site (such as bricklayers, stonemasons, etc.) who may command a higher wage given their specialization. Mike Davis writes in Prisoners of the American Dream that the 70s saw the first serious attempt to outflank the unions at the site of construction: “the adoption of new building technologies involving extensive use of prefabricated structures, like precast concrete, eroded the boundaries of traditional skills and introduced a larger semi-skilled component into the labor force”.
In sum, the ugly look of all these buildings is the result of their use of cladding systems, and their use of cladding systems is the result of good old profit maximization. Historically speaking, the advent of this particular non-style (the oft-decried) “loss of beauty” or whatever can be tracked relatively directly to an emphatic and long-term attack on construction (especially trade) labor. Given that construction cannot pursue a deskilling regime via technological modifications of the production process qua standardization given the uniqueness of each and every site, along with the fact that there is no permanent site like there is in the manufacturing process.
This attack on labor intensified in the 1960s, through the 70s, and into the 80s. David B. Lipsky and Henry S. Farber write in 1978 that “the construction industry may be the most strike-prone industry in the American economy”, noting also that “peaceful procedures” were less commonly used, with data beginning in 1948, just after World War II. This was obviously an untenable situation for the US economy, and extensive attempts for broad coalitions between labor and capital (such as the Construction Industry Stabilization Committee (or CISC, founded in 1971 and bringing the AFL-CIO Building and Construction Trades Department together with Brookings ghouls)) followed in a desperate attempt to tamp down the industry. The creation of the Business Roundtable in 1972 produced an effective lobbying force wherein “business leaders” could pursue favorable industrial relations (to them, of course). The chairman of the CISC, John Dunlop, proposed in 1975 a settlement deal modeled on the steel industry’s own no-strike “Experimental Negotiating Agreement”, representing the AFL-CIO BCTD in extending a prohibition on unauthorized strike actions in exchange for the industry leaders’ acceptance of common situs picketing of an entire building site. But even this was murdered by a coalition of business groups and activists who appealed President Ford directly for a veto.
The AFL-CIO, having overextended and seeing already its base of craft workers eroding in the face of a change in technical building practices, abdicated its place in the staterooms of industrial relations, leaving the Business Roundtable basically unopposed. Without even the quietist protection of the BCTD, the Roundtable, composed of the largest construction employers in the country, was free to create the industrial environment we have today, and thus, a deskilling like all the others, achieved via mechanization. Stands to reason that our “built environment” would look very different today had construction capitals not pulled off a state-backed coup some 40 years ago.
Shaikh, Anwar. “Competition and Industrial Rates of Return.” In Issues in Finance and Industry : Essays in Honour of Ajit Singh, 167–94. Basingstoke: Palgrave Macmillan, 2008.
Shaikh, Anwar M., and E. Ahmet Tonak. Measuring the Wealth of Nations: The Political Economy of National Accounts. Cambridge ; New York: Cambridge University Press, 1996.