Why the distribution of wealth has more to do with power than productivity

Image: Glenn Halog, CC BY-NC 2.0

According to a new OECD working paper, Britain is one of the wealthiest countries in the world. Net wealth is estimated to stand at around $500,000 per household – more than double the equivalent figure in Germany, and triple that in the Netherlands. Only Luxembourg and the USA are wealthier among OECD countries.

On one level, this isn’t too surprising – Britain has long been a wealthy country. But in recent decades Britain’s economic performance has been poor. Decades of economic mismanagement have left the UK lagging far behind other advanced economies. British workers are now 29% less productive than workers in France, and 35% less than in Germany. How can this discrepancy between high levels of wealth and low levels of productivity be explained?

The process of how wealth is accumulated has been subject of much debate throughout history. If you pick up an economics textbook today, you’ll probably encounter a narrative similar to the following: wealth is created when entrepreneurs combine the factors of production – land, labour and capital – to create something more valuable than the raw inputs. Some of this surplus may be saved, increasing the stock of wealth, while the rest is reinvested in the production process to create more wealth.

How the fruits of wealth creation should be divided between capital, land and labour has been subject of considerable debate throughout history. In 1817, the economist David Ricardo described this as “the principal problem in political economy”.

Nowadays, however, this debate attracts much less attention. That’s because modern economic theory has developed an answer to this problem, called ‘marginal productivity theory’. This theory, developed at the end of the 19th century by the American economist John Bates Clark, states that each factor of production is rewarded in line with its contribution to production. Marginal productivity theory describes a world where, so long as there is sufficient competition and free markets, all will receive their just rewards in relation to their true contribution to society. There is, in Milton Friedman’s famous terms, “no such thing as a free lunch”.

The aim was to develop a theory of distribution that was based on scientific ‘natural laws’, free from political or ethical considerations. As Bates Clark wrote in his seminal book, ‘The Distribution of Wealth’:

“[i]t is the purpose of this work to show that the distribution of income to society is controlled by a natural law, and that this law, if it worked without friction, would give to every agent of production the amount of wealth which that agent creates”.

Seen in this light, wealth accumulation is a positive sum game – higher levels of wealth reflect superior productive capacity, and people generally get what they deserve. There is some truth to this, but it is only a very small part of the picture. When it comes to how wealth is created and distributed, many other forces are at work.

Wealth, property and plunder

The measure of wealth used by the OECD is ‘mean net wealth per household’. This is the value of all of the assets in a country, minus all debts. Assets can be physical, such as buildings and machinery, financial, such as shares and bonds, or intangible, such as intellectual property rights.

But something can only become an asset once it has become property – something that can be alienated, priced, bought and sold. What is considered as property has varied across different jurisdictions and time periods, and is intimately bound up with the evolution of power and class relations.

For example, in 1770 wealth in the southern United States amounted to 600% of national income – more than double the equivalent figure in the northern United States. This stark difference in wealth can summed up by one word: slavery.

For white slave owners in the South, black slaves were physical property – commodities to be owned and traded. And just like any other type of asset, slaves had a market price. As the below chart shows, the appalling scale of slavery meant that enslaved people were the largest source of private wealth in the southern United States in 1770.

When the United States finally abolished slavery in 1865, people who had formerly been slaves ceased to be counted as private property. As a result, slaveowners lost what had previously been their prized possessions, and overnight over half of the wealth in the southern US essentially vanished. All of a sudden, the southern states were no longer “wealthier” than their northern neighbours.

But did the southern states really become any less wealthy in any meaningful sense? Obviously not – the amount of labour, capital and natural resources remained the same. What changed was the rights of certain individuals to exercise an exclusive claim over these resources.

But the wealth that had been generated by slave labour did not disappear, and it wasn’t only the USA that benefitted from this. Many of Britain’s major cities and ports were built with money that originated in the slave trade. Several major banks, including Barclays and HSBC, can trace their origins to the financing of the slave trade, or the plundering of other countries’ resources. Many of Britain’s great properties, which today make up a significant proportion of household wealth, were built on the back of slave wealth. Even today, many millionaires (including many politicians) can trace some of their wealth to the slave trade.

The lesson here is that aggregate wealth is not simply a reflection of the process of accumulation, as theory tends to imply. It is also a reflection of the boundaries of what can and cannot be alienated, priced, bought and sold, and the power dynamics that underpin them. This is not just a historical matter.

Today some goods and services are provided by private firms on a commodified basis, whereas others are provided socially as a collective good. This can often vary significantly between countries. Where a service is provided by private firms (for example, healthcare in the USA), shareholder claims over profits are reflected in the firm’s value – and these claims can be bought and sold, for example on the stock market. These claims are also recorded as financial wealth in the national accounts.

However, where a service is provided socially as a collective good (such as the NHS in the UK), there are no claims over profits to be owned and traded among investors. Instead, the claims over these sectors are socialised. Profits are foregone in favour of free, universal access. Because these benefits are non-monetary and accrue to everyone, they are not reflected in any asset prices and are not recorded as “wealth” in the national accounts.

A similar effect is observed with pension provision: while private pensions (funded through capital markets) are included as a component of financial wealth in the OECD’s figures, public pensions (funded from general taxation) are excluded. As a result, a country that provides generous universal public pensions will look less wealthy than a country that rely solely on private pensions, all else being equal. The way that we measure national wealth is therefore skewed towards commodification and privatisation, and against socialisation and universal provision.

Capital gains, labour losses

The amount of wealth does not just depend on the number of assets that are accumulated – it also depends on the value of these assets. The value of assets can go up and down over time, otherwise known as capital gains and losses. The price of an asset such as a share in a company or a physical property reflects the discounted value of the expected future returns. If the expected future return on an asset is high, then it will trade at a higher price today. If the expected future return on an asset falls for whatever reason, then its price will also fall.

Marginal productivity theory states that each factor of production will be rewarded in line with its true contribution to production. But although presented as an objective theory of distribution, marginal productivity theory has a strong normative element. It says nothing about the rules and laws that govern the ownership and use of the factors of production, which are essentially political variables. For example, rules that favour capitalists and landlords over workers and tenants, such as repressive trade union legislation and weak tenants’ rights, increase returns on capital and land. All else being equal, this will translate into higher stock and property prices, which will increased measured wealth. In contrast, rules that favour workers and tenants, such as minimum wage laws and rent controls, reduce returns on capital and land. This in turn will translate into lower stock and property prices, and lower paper wealth.

Importantly, in both scenarios the productive capacity of the economy is unchanged. The fact that wealth would be higher in the former case, and lower in the latter case, is a result of an asymmetry between how the claims of capitalists and landlords are recorded, and how the claims of workers and tenants are recorded. While future returns to capital and land get capitalised into stock and property prices, future returns to labour – wages – do not get capitalised into asset prices. This is because unlike physical and financial assets, people do not have an “asset price”. They cannot become property. As a result, it is possible for measured wealth to increase simply because the balance of power shifts in favour of capitalists and landowners, allowing them to claim a larger slice of the pie at the expense of workers and tenants.

To the early classical economists, this kind of wealth – attained by simply extracting value created by others ­­– was deemed to be unearned, and referred to it as ‘economic rent’. However, ever since neoclassical economics replaced classical economics as the dominant school of thinking in the late 19th century, economic rent has been increasingly marginalised from economic discourse. To the extent that it is acknowledged, it is usually viewed as being peripheral to the story of wealth accumulation, resulting from  ‘market frictions’, such as monopsony and asymmetric information, which give rise to certain instances of ‘market power’. For the most part, economists have tended to focus on the acts of saving and investment which drive the real production process. But on closer inspection, it is clear that economic rent is far from peripheral. Indeed, in many countries it has been the main story of changing wealth patterns.

To see why, let’s return to the OECD wealth statistics. Recall that net wealth per household in Britain is more than double what it is in Germany, even though Germany is far more productive than the UK. This can partly be explained by comparing the power dynamics associated with each factor of production.

Let’s start with land: Germany has among the strongest tenant protection laws in Europe, and many German cities also impose rent controls. This, along with a banking sector that favours real economy lending over property lending, means that Germany has not experienced the rampant house price inflation that the UK has. Remarkably, the house price-to-income ratio is lower in Germany today than it was in 1995, while in the UK it has nearly tripled over the same time period. The fact that houses are not lucrative financial assets, and renting is more secure and affordable, means that the majority of people choose to rent rather than own a home in Germany – and therefore do not own any property wealth.

In Britain, the story couldn’t be more different. Over the past five decades Britain has become a property owners’ paradise, as successive governments have sought to encourage people onto the property ladder. Taxes on land and property have been removed, and subsidies for homeownership introduced. The deregulation of the mortgage credit market in the 1980s meant that banks quickly became hooked on mortgage lending – unleashing a flood of new credit into the housing market. Rent controls were abolished, and the private rental market was deregulated. Today tenant protection is weaker than almost anywhere else in Europe. Meanwhile, the London property market has served as a laundromat for the world’s dirty money. As Donald Toon, head of the National Crime Agency, has described: “Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK”.

The result has been an unprecedented house price boom. Since 1995, skyrocketing house prices have increased value of Britain’s housing stock by over £5 trillion – accounting for three quarters of all household wealth accumulated over the same period. While this has been great news for property owners, it has been disastrous for tenants. As I’ve written elsewhere, the driving force behind rising house prices has been rapidly escalating land prices, and we have known since the days of Adam Smith and David Ricardo that land is not a source of wealth, but of economic rent. The trillions of pounds of wealth amassed through the British housing market has mostly been gained at the expense of current and future generations who don’t own property, who will see more of their incomes eaten up by higher rents and larger mortgage payments.

So while German property owners have not benefited from skyrocketing house prices in the way that they have in Britain, the flipside is that German renters only spend 25% of their incomes on rent on average, while British renters spend 40%. The former is captured in the OECD’s measure of wealth, while the discounted value of the latter is not.

Now let’s look at capital. In the UK and the US, the goal of the firm has traditionally been to maximise shareholder value. In Germany however, firms are generally expected to have regard for a wider range of stakeholders, including workers. This has led to a different culture of corporate governance, and different power dynamics between capital and labour.

Large companies in Germany must have worker representatives of boards (referred to as ‘codetermination’), and they are also required to allow ‘works councils’ to represent workers in day-to-day disputes over pay and conditions. The evidence indicates that this system has led to higher wages, less short-termism, greater productivity, even higher levels of income equality. The quid pro quo is that it also tends to result in lower capital returns for shareholders, as workers are able to claim more of the surplus. This in turn means that German firms tend to be valued less than their British counterparts on the stock market, which contributes to lower levels of financial wealth.

None of this means that Germany is poorer than Britain. Instead, it just reflects the fact that German capitalists and landowners have less bargaining power than they do in the UK, while workers and tenants have more power. While lower shareholder returns and house prices are reflected in the OECD’s measure of wealth, better pay and conditions and lower rents are not.

Conclusion

All statistics tell a story, but stories can be told from different perspectives. Embedded in the definitions of all economic statistics are value judgements about what is desirable and what is undesirable, which in turn shape the way we think about the economy. At the moment, the way we measure the wealth of nations mainly reflects the fortunes of capitalists and landowners rather than workers and tenants. Britain looks wealthier than Germany on paper, but this does not reflect the lived reality for most people. While it’s important not to overstate the extent to which statistics can influence the real world, this is important for at least three reasons.

Firstly, it illustrates how seemingly objective metrics often have ideological assumptions baked into them. While there is already a well-established literature on alternatives to GDP, many economic metrics are used in economic analysis and policy appraisal without any critical appraisal of their underlying ideological assumptions. This needs to change.

Second, it highlights how paper wealth has in many places become decoupled from productive capacity, and how conflating the two can be highly misleading. This is particularly the case where zero sum rentier activity is widespread, as in the case of Britain. Such discrepancies raise the question of whether the way that we currently measure wealth is really the most sensible.

But most importantly, it illustrates that the distribution of wealth has little to do with contribution or productivity, and everything to do with politics and power. As J.W. Mason states: “It’s bargaining power, it’s politics, all the way down.”

For economists who see their discipline as a ‘value free’ science which is separate from politics, this is uncomfortable territory. But if the aim is to understand the economy as it really exists, then analysing power beyond the narrow concept of ‘market power’ is essential. Among other things, this means grappling with the power dynamics that underpin ownership and property relations, as well as those that that drive inequalities between different social groups and identities.

It’s been 200 years since David Ricardo described the “principal problem” of political economy. Perhaps it’s time to revisit it.

  • Ben Jamin’

    This can all be dealt with on the harm done principle.

    If those who suffer a loss of opportunity are not compensated by those that cause it, we bake in excessive inequalities and resource misallocation.

    This is why we pay wages and for goods and services. We all argee now that slavery and theft are a bad idea.

    Yet this logic is not extended to natural resources. As land is supplied for free by nature/God, when it becomes valuable, those excluded from its use suffer a loss of opportunity equal to its rental value. As we are all equally excluded, we should therefore be entitled to an equal share of the total rental value of all land.

    As this does not current happen, there is a net transfer of incomes from those that own little/no land by value, relative to the taxes they currently pay, to those whom the opposite is true.

    There the selling price of land is but a measure of economic injustice. If there was no net transfer, it’s selling price would be zero.

    So not only does a typical working household have to pay much more to by a house, they need to do so from a reduced disposable income.

    Furthermore, as the incomes of some in society are higher than they should be, this leads to over consumption and misallocation of housing.

    The housing crisis is just one symptom of economic injustice. It along with many other issues can in principle be easily solved by the application of a 100% tax on the rental value of land.

    It just needs enough people to stand up and say so.

    • Would it be OK if I converted a few of your comments on this thread into a stand-alone article for publication on my website?

      There is no fee, I’m simply trying to add more content divewrsity for Writer Beat and liked what you wrote. I’ll be sure to give you complete credit as the author. You can learn more about the site by checking out my Disqus profile (my email and the website address are in the upper left hand corner) or just reply “sure” and I’ll handle the rest.

      • Ben Jamin’

        Sure.

        Leave a reply here with a link to your site.

        • I think Disqus blocked my effort to thank you and send you a link. Articles are sorted by recent recommendations and your article is currently in the #10 spot. However, between now and when you read this message, it may move around a bit. If you wish to engage your commenters (presently you have 2 comments ), use the following access information:

          email: jamin at writerbeat com
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  • Zen9

    A very interesting piece!
    Sadly this really needed confronting back in the 1990’s when house prices had already risen uncomfortably fast and the idea of productivity growth was traded got population growth.

  • A model of clarity. Well done! The problem, of course, is essentially political. Will a Labour government have the balls to tackle the UK’s real estate distortions and deal – finally – with the City’s role as world money laundry ? The Tories certainly won’t.

  • I would add to this an analysis of how risk-of-ruin creates a near-gravitational wealth effect. A mathematical example:

    Opportunity O costs 5 per attempt. O is risky, and only 1-in-5 attempts will be winners, but one winning attempt has a payout of 30. So with 100 attempts at O (total cost 500) you would expect ~20 winners (total payout ~600) for a net payout of ~100. On average, the expected value of O is ~1 per attempt …

    … but only on average. You might easily fund 2 losers (total cost 10) before funding a winner. In fact, the probability of two-losers-before-a-winner is about 64% (0.8 first loser x 0.8 second loser) and the probability of three-losers-before-a-winner is 51.2% (0.8 x 0.8 x 0.8). So … more often than not … if you start funding O, you’ll pick at least three losers before you pick a winner.

    Now, if you start with 500 … it’s extremely likely that you will profit by funding O, because your risk-of-ruin is very small.

    But if you start with 15 … it’s more likely than not you’ll go bankrupt by funding O, because your risk-of-ruin is very large.

    When free market ideologues say the current system “rewards risk-takers,” they mean the current system rewards people with enough wealth that their risk-of-ruin is very small. And that creates a near-gravitational wealth effect.

  • John Picton

    This is really well written.

  • Business Exploration

    spaziale. I see very few times in my life an article with such a clarity. THANKS A LOT!

  • William MacDougall

    Your assumption that “productive capacity of the economy is unchanged” with different labour laws is highly debatable, as is your assumption that minimum wages and other labour market interventions benefit labour over all, not just one group of workers over other groups of workers. Your unsupported argument that speculation by foreign buyers is the main driver of high house prices in Britain is also doubtful; the main driver is the increase in demand from immigration and the restriction in supply from planning laws, amongst the tightest in Europe.

    More generally I agree that measures of one country’s wealth relative to another are distorted by relative supply of goods by the state vs by the private sector, and other factors. But few are really concerned with that. Rather the argument is that people in capitalist societies receive what they produce, and that is generally true except where state power has distorted the market.

    • darkcity darkcity

      People can receive income from what they own, this distorts the income received from production.

      • William MacDougall

        They’re receiving income from capital, income that has been produced by that capital: no distortion.

        • darkcity darkcity

          Right, the capital has produced the income not the person. The statement “people in capitalist societies receive what they produce” is incomplete at best. People receive from what they own (ie. capital) as well as from what they produce.

  • armchair_socialist

    I am sympathetic to large chunks of this well-written article, but also have some quibbles and genuine questions.
    1. As a non-economist I have always wondered if calculations of wages’ purchasing power in different countries and at different times also factors in the question of whether certain goods are available on a universal, societal basis and, therefore, do not need to be paid for with wages. In other words, whilst – for argument’s sake – an American worker’s wages might be convertible into a greater number of market goods than those of a worker in a socialist country, would this calculation reflect the fact that the socialist worker does not need to pay for as many things (e.g. utilities, healthcare etc.)?
    2. Secondly, whilst completely in agreement as to the fallacy of excluding political variables from understandings of wealth distribution, I do find this reverence for and redwashing of the German model a little suspect. For a start, property and rental prices. Your article makes no reference to the rather obvious question of supply and demand. Does Germany possess more housing stock per capita than the UK? A financialisation-based explanation of soaring house prices in the UK intuitively doesn’t really cut it. It’s not like vast numbers of people are buying houses as assets that they then keep empty. Sure, the future exchange value of the houses is a factor in determining why people invest in property, but the exchange value depends on the use value and the scarcity/abundance of this use value. It’s not really in dispute that the UK, or at least certain key regions of it, does face a genuine housing shortage, so these explanations that foreground mortgage deregulation, foreign speculation etc. can surely be no more than side-stories.
    3. The elephant in the room whenever people talk about labour’s bargaining power in Germany is that German labour took a massive pay cut with the introduction of the euro in order to increase the competitiveness of German industry. Now, admittedly, this was a political, not a corporate measure (putting aside the question of corporate lobbying), so doesn’t speak directly to your argument about corporate governance. Even still, it would be nice to see it included in your analysis before you start turning Germany into some workers’ and tenants’ democracy.

    • Alasdair Macdonald

      Armchair Socialist,

      In response to your second point: when Mrs Thatcher’s government introduced the right of tenants of council housing to buy their homes at fairly cheap prices, she initiated the rigging of the housing property market.

      Selling council houses to tenants is defensible, provided that the price reflects the public investment in the building of the house (although a discount is reasonable to take into consideration the amount of rent paid).

      The rigging of the market came in because Councils were not permitted to use the receipts to build more council housing. These new houses would have had two price effects – they would keep the supply of houses high and thereby curtail the huge property price inflation we have seen in the past 4 decades, and they would also keep the rents for private rentals at a reasonable level.

      Some of the council houses which tenants bought were in areas which were not seen as ‘desirable’ and so, were difficult to resell. Many of the purchasers were also unable to afford the maintenance of the fabric. Within around two decades, many of such houses were in poor condition and a burden on the owners, who sold them cheaply to property speculators who demolished them, thus further reducing supply and forcing prices higher.

      Finally, you express some scepticism about buying houses and keeping them empty. This does, indeed happen. There are many unoccupied houses in London and our cities, which are simply being kept off the market, to make the property market ‘buoyant’. There are many brownfield sites in our cities which could be used for house building which are simply left by the owners, many of them house building companies, who are not developing them and preventing potential self-builders from having access. This introduces an artificial land shortage and forces up land prices, thus further excluding self builders from participation. Undeveloped land is exempt from council and other taxes, so there is no running costs accruing to the speculators. Indeed, when such land suffers problems such as burst pipes which cause localised flooding, the public purse usually has to pick up the cost and is unable to recoup it because ownership is usually obscured via a web of shell companies, usually offshore.

      The Scottish Government introduced a right for Councils to double Council tax on unoccupied ‘second homes’, as a way of forcing such houses back on to the market. It is also reestablishing the land register, which both Conservatives and Labour had allowed to fall into desuetude, so that beneficial owners can be identified. This is part of a wider policy of land reform.

      Ambitious and redistributive land reform would go a long way in dealing with the power inequalities which the author has so clearly set out.

      • armchair_socialist

        Alasdair, thanks for a beautifully thorough and erudite response. You have done an excellent job of clarifying the political economy of the housing shortage, the policy decisions, perverse regulations, power imbalances and market forces that have brought it about. Ultimately, however, this does no more than furnish a much more convincing and exhaustive demonstration of the point I myself was making, namely that supply and demand are at the centre of this story. That inadequate supply is itself the result of politics you have, of course, shown magisterially, but this remains in conflict with Macfarlane’s explanation. The Scottish govt’s decision re. empty homes is, of course, a good one, but we have yet to see how fundamental the effects of such a policy will be. My own hunch is that whilst the super-rich do invest in property exclusively for its asset value, therefore leaving many properties empty, this cannot account for more than a tiny fraction of the housing shortage. If you have evidence of financialisation leading to a large-scale epidemic of uninhabited housing, I would of course be very happy to see it and recant accordingly. (That there is lots of derelict, empty housing in towns all over the UK that fail to attract new inhabitants because of a lack of economic opportunities is another story, even if its redeployment – alongside an appropriate industrial strategy to revive such places – is part of the solution.)

        • Alasdair Macdonald

          Armchair Socialist,

          Thank you for the kind words!

          I was trying to deal with one specific point you had raised.

          In my answer, I touched on land reform and I think that if that were to be dealt with in a serious way, then it could have a significant effect on the balance of the economy.

          The land-owners (which are as much multi-national, offshore corporations as the likes of Mrs Samantha Cameron’s father-in-law, Lord Astor, the Duke of Westminster, the Duke of Buccleuch, etc.) have been very successful in getting land reform off the political agenda, virtually since the second World War. Things like the land register are now significantly out of date. The landowners, through their patronage of Westminster and Whitehall have managed to keep this off the agenda and have sneaked through legislation to bolster their powers.

          There are few politicians who know much about the labyrinthine complexities of land law. One of those who does is the Green Member of the Scottish Parliament Mr Andy Wightman, who has written extensively on this (“The Poor had no Lawyers”. etc) He is currently the subject of litigation by agents of the Scottish Landowners, essentially in an attempt to bankrupt him and thus have him disqualified from Parliament.

          If brownfield sites, which are currently exempted from taxation were subject to local taxation, which increased exponentially with the length of time the land was undeveloped, they would quickly be brought back into the local economy. The increased supply would reduce land prices. Small parcels would become more affordable for ‘ordinary’ people, who would then be able feasibly to consider self-buiid or co-operative build. This would probably result in better quality housing since the land price was swallowing far less of the buyer’s money and more could be spent on the actual design, bricks and mortar. (Glasgow City Council’s City Building and the social enterprise, the WISE Group have developed housing designs which are to the highest energy and eco efficiency standards.) Such building would stimulate local economies.

          Finally you raise the issue of the wider economy. The economy of almost all of the United Kingdom is being strangled by the rapaciousness of the financial market in the City of London. It is diverting money which, in years past, was used in vibrant local economy centres like Glasgow, Manchester, Leeds, Birmingham, etc. It is sucking in huge amounts of public money. The metropolitan media scornfully brand people in the North East of England, Wales, the West Midlands etc ‘subsidy junkies’ whereas the real subsidy junkies are in and around the City. Per capita public expenditure for London is far in excess of the more economically weak areas. There is a book called ‘The Upas Tree’ by Stanley Checkland, written nearly 50 years ago which describes the effect far more accurately than I can.

          One of the main reasons why I support independence for Scotland is to take some degree of control of our Scottish economy, because Westminster’s is almost wholly controlled by the City. Rhetoric about the Northern Powerhouse, is just that – rhetoric. Manchester was, indeed, once a global economic powerhouse, but, like others it was destroyed by the hyenas of London, abetted, sadly, by a centralising Labour Party, many of whose leading figures were seduced (sometimes literally sexually) by the wealthy and powerful. Look at the ridiculous figure Ramsay Macdonald became.

  • Curse of Nephros

    A big part of the UK’s ‘productivity puzzle’ is no puzzle whatsoever. The substantial net inflow of immigrants into low skilled jobs has allowed chunks of the economy to substitute low wage labour for productivity raising capital. The implications of this are probably not ones that a site like OpenDemocracy would care to dwell on; especially what the trade offs would be for shifting towards a higher skilled, higher productivity, higher wage model.

  • waylaid

    Having lived in two other countries, I’ve never understood the British obsession with owning houses. I mean, sure, I’d love to own a house (that’ll never happen) but it isn’t a big deal if I don’t. I also don’t have to deal with fixing the plumbing, the mortgage, that leak in the roof…. In Eastern Canada, where I lived for many years, most people rent. If they have the money, when they’re ready to have a family they buy somewhere. If they don’t, eh. Of course, tenant’s rights are much stronger there than in the UK.

    Being a renter in the UK is incredibly insecure. I lived in a property I like to call The Mold Palace. It was everywhere: walls, ceiling, carpet, bed, sofa… I mentioned it to the landlady a few times, but was scared to push it any further in case she kicked us out. I suffered with severe allergies for 2 years (didn’t realise it as it came on slowly), and ended up with asthma which hasn’t gone away.

    Being a lodger is worse. My landlord/housemate kicked me out a couple of years ago because he wanted to move his gf in. 4.5 years living together, 3 weeks notice. I ended up homeless.

    Now I live in a housing cooperative (~85 people). We each own a share in the co-op, so we’re both landlords and tenants, and most of us contribute to the co-op in some way. (I put together and type up agendas and minutes for general meetings. It’s really good to feel useful. Anyway.) Barring some kind of severe behavioural nono, I can stay here for the rest of my life. I may just do that. Of course, I’m sharing a house with 5 other people in my 40’s, but I like having people around. I’m disabled, can’t work, don’t get out much, and was very, very isolated before I moved here. 🙂 It’s also incredibly cheap: half the price of any other place I could live here!

    While I know that co-operative living isn’t for everyone, I think that co-operatives would be a good thing to invest in. We preferentially take in people who are homeless, in danger of homelessness, on benefits, etc. Of course, one could have a co-op that involved everyone having their own flat, so they could live “normally” if they wanted, but with a central house for big events, things like workbenches, storage, etc. It could still be co-operative in many ways.

    I should go to bed. Sorry if I’m babbling.

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