Originally published at: » Housing in a Participatory Economy – Part 1A
In this interview, Robin Hahnel talks to After the Oligarchy about housing, construction, and land, in a Participatory Economy. Contents00:00 – Introduction 00:50 – Democratic Economic Planning, Engineers/Economists 05:00 – Q1 – Housing 13:05 – Q2 – Who Collects? 21:10 – Q3 – Opportunity Cost of Land 26:55 – Q4 – Differences in Housing 28:35…
This video was informative and of interest to me because real estate may be the most thorny area for Parecon given how property values can vary depending on their location.
As Robin points out, the production of housing is the simplest, most straightforward aspect to real estate. WCs can easily organize themselves to produce homes, etc. for the lowest cost possible.
But what of ownership. Robin mentions that homes would be leased or rented. The point being they would not be owned. Assuming that in a Parecon, you cannot will your estate to your loved ones, it makes no sense to pay off your home. Instead, one can simply divide the cost to build by the buildings expected life expectancy to calculate say a yearly cost to live in a given property. Factors influencing costs would be the square footage of a home; or the type of construction, such as multiple story buildings, which likely cost less per square foot than a bungalow for instance.
Land is land, so the cost should be the same everywhere it it weren’t for ‘location, location, location’. Waterfront properties, those with views, in warm climates (I’m under 2 feet of snow where i am now), are all factors that influence the intrinsic value of a home. This may be a tough area to sort out. What matters to one individual (ski trails) may not matter to another (beaches). This may be the hardest area to sort out and i don’t have any answers for this one.
Any suggestions on that point?
Cheers
Claude
Dear Claude: Factoring in the differences in the “quality” of land a housing unit sits on may not be as difficult as you imagine.
Think for a moment about agricultural land, where some acres will be more fertile, have better rainfall, etc. WCs who want to farm will bid on land they want to use as input. There is a fixed supply of each different “quality” of farming land. During annual planning the demands to use it and the supply of it available will lead to an indicative price for each kind of land, i.e. the opportunity cost of using it. To use farm land that is more fertile a farming WC will have to pay a higher indicative price because using it has a higher opportunity cost to society. And, the farming WCs which can make best use of it will be the ones who it gets allocated to.
Something similar will happen for land used for housing units, although the different attractiveness of different pieces of land to housing consumers will get communicated to WCs who must successfully bid on the land to build housing units .
In this case: Some land will have better views, better location, better weather, etc. which those who will live in the unit will appreciate. Not all housing consumers will care the same amount about view or weather etc. But let’s stick to land with better views. That land will be valued more highly by consumers on average. In this case it will be WCs building housing units who will be bidding for permission to use particular pieces of land during annual planning. But they will be anticipating that the social benefit of supplying a housing unit with a better view will be higher because consumers on average like better views. So the WCs building houses will be willing to request land with a better view even it its indicative price is higher. In effect the WCs building housing will say: As long as consumers like a better view enough so my offer to supply housing with a better view will yield a higher SB in my SB/SC ratio, which will compensates for the fact that when I bid on land with a view when I request my inputs, I will be charged more for land with a view than land without a view, i.e. the SC in my SB/SC ratio will be higher, I will be willing to bid more on a land with a better view. Again, the annual planning procedure will lead to an indicative price for each kind of land, i.e. the opportunity cost of using it to put housing units on it, just as it does for land used for agriculture. There is just an extra level of “mediation” so to speak.