Housing in a Participatory Economy

Originally published at: https://participatoryeconomy.org/housing-in-a-participatory-economy-2/

Housing is a very special type of good. It is essential for society since everybody needs a place to live and it consists of buildings that will stand for a very long time, often hundreds of years. This means that from the perspective of society, housing is an important long-term asset that will affect and…


I have long pondered how to treat “housing” sensibly in a participatory economy. Housing has a number of unique characteristics compared to other goods and services, which Anders usefully lists at the beginning of this proposal. I’m very interested to hear what others think of what Anders has proposed. On a first read, I am very happy with what he has come up with. I have two comments at this point:

(1) When writing about this myself… always VERY BRIEFLY!.. I came up with the idea of “first right of refusal” as something that seemed to make sense to me. In other words, when everyone is making proposals to “consume” housing during annual planning, I thought it made sense for the present occupant to have the right to renew their “consumption” of the house they live in, before it is thrown open to others.

(2) As best I can tell the social cost of providing a housing unit will vary from year to year even if the physical house is no different than it was in the past, and this change in its “iterative price” will happen during annual planning. In capitalism if I am a renter, my rent can, or will change as a result from year to year even if there are no improvements or changes to my housing. In capitalism, however, if I am a home owner with a mortgage, my mortgage payment will NOT change. How would this be handled in a participatory economy?

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Thanks, Robin.

Here are my thoughts on the issues you bring up:

  1. I agree. I also think it is fair that a resident has the right to stay as long as they pay the announced housing fee/“rent”.
  2. As I have it in the article, the equivalent of the mortgage payment is the fee that the housing provider is charged for access to the building. The resident’s charged fee for access to housing is derived from prices set in the annual planning and will depend on demand and supply. Simplified, one may think of the difference between the two as the cost of “land” or location. In any case, the difference is in the end credited to what I elsewhere call the “Society account”.
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I like this solution to organising housing in a Participatory Economy. One of the main problems was always how to deal with the conflict between enabling those who wish to be “home-owners” to still be able to “own” a house like today, have control over it, and yet not also be able to personally gain from any rise in its value and profit from the sale. I think Anders’ innovative solution of enabling individuals to also be ‘housing providers’ (housing providers to themselves as users in this case) solves this problem.

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Anders, a few questions:

  • If housing course categories are set in the annual planning, could you give an example of what that might look like? for example, what might an individual consumer have to fill in regarding housing in their annual consumption plan?

  • If the housing fee is made up of the following three costs:

  1. The user-right fee for access to the building, in practice the annual depreciation of the historic acquisition cost,
  2. Costs for management, maintenance, upkeep, and repairs, and
  3. The user-right fee for the land on which the buildings sit.

How do these separate costs get distinguished from the coarse category housing fee demanded by consumers during the planning? Do you see the building fee as being a fixed annual deprecation every year, or can this change year to year?

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Thanks, Jason. These are good questions. They are a bit tricky to answer in an accessible way, and I don’t think there is one correct answer to them. But here are my thoughts:

  1. Coarse categories of housing should aim to allow for potential residents in a defined geographical area to express, during annual planning, their preference for a) location in a broad sense, reflected in a few alternatives, for instance, metropolitan, urban, countryside, coastal, b) type of housing which could also indicate size, such as studios and larger units in co-housing, communal housing, apartments and detached houses and c) if applicable, a limited number of categories identifying a more specific location, within the general location, for instance reflecting access to a coveted view. Of course, a classification scheme like this of coarse categories will not, by a long shot, be able to reflect every criterion that residents consider when looking for a house but if should be good enough for our purposes.

2a) Without going too much into the details, the costs you list are costs that are charged to housing providers, tracked and recorded for individual housing units. The housing fee for an individual housing unit is derived from the fee for the coarse category housing that is decided in the annual planning based on supply and demand.

2b) Yes, as a general rule, I see the fee for access to a building for housing purposes that is charged to a housing provider as the fixed annual depreciation (potentially together with a discount rate calculated on the depreciated cost).

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I’m new to this forum, but not completely new to Participatory Economics. I’m not an economist though, so all my questions are going to be quite basic am afraid.

Most of the ideas put forward within the domain of PE have always seemed sensible to me, (although I haven’t studied some of the more technical proposals to any depth, such as the iterative pricing algorithm). I think I understand the need for such processes fairly well and none of them have ever struck me as particularly troubling. This idea of charging a fee for housing however, I find a bit jarring, so I would like to get a better understanding of why it is being proposed and how it works alongside other important aspects of housing.

As I understand it, the point of doing housing allocation this way would be to prevent the commodification of housing while also averting the need for some sort of centrally planned allocation system. Sounds good. The fees being charged for different categories of housing will reflect supply and demand, allowing price signals to do their job. My simple-minded way of looking at the fees being proposed though cause me to wonder who is paying who, for what, in some scenarios. Going to do some imagining now, about how this works in practice, to try to relate to this scheme with my layman’s understanding, (will try not to get too carried away).

Let’s suppose we are in a participatory society, and some group of people get chatting online. They are all city folks who find that they all share a desire to move away from the hustle and bustle of city life. So, they decide to start looking for a spot of land to build their dream community on. They are all very ecologically conscious so they aim to design their housing themselves. They want passive solar heating, solar panels and small wind turbines, sand batteries, the works! They also design the layout of their community such that they can do water retention and permaculture planting all over the land. If all goes well, they would be basically self-sufficient for food, water, energy and much else. They plan to have a small workshop with some computers and 3D printers, to do some socially valued work they can be remunerated for, (so they can still have an income from society to buy things like internet services and holidays and so on). They don’t plan on doing too many hours in that workshop though, because as I said, they have a food forest to look after, and want a good work life balance. They are realistic about how self-sufficient they can be, but are aiming to meet as much of their own needs and wants as they can while living in harmony with the land and so on.

Let’s say there are 50 of them, and they have been working hard in the city in technical jobs, including construction, design, agricultural science and so on, so are more than capable of pulling this project off.

Am trying to think through how they would realize their dream in a participatory economy under this scheme. They presumably look up some register of land, which some institution maintains, and find a piece of land which they would be allowed to develop. They find a remote site in the register that looks promising, so they visit it and do a rough topographical survey and confirm it is perfect for what they want to do. So they register as a housing provider and a housing developer with some institution… They create the blueprints for the housing and I guess they submit them to someone to ensure that no building regs are being violated, right? So, which institution is that in a PE?

Assuming there is no problem with their plan, they start construction. They hire some porta cabins and caravans to take to the site, and buy an electric pickup to get back and forth with materials from the nearest town a few miles away. Am assuming that since they are doing valued construction / development work, that they are able to earn an income while doing this as construction workers, right?

I guess they get some sort of loan to purchase the building materials and hire the heavy plant they will need. Which institution will loan them the capital in this case? Do they have to apply to a nearby credit union? Lets say all that is taken care of and they get the building up. It gets inspected presumably by some local authority? It passes all checks and gets categorized as “Grade A - communal housing”.

So they move in and now start paying their fees. Who are they paying the user-right fees to? If some credit union provided the loan which gave them the money they needed to pay for construction materials, then would the user-right fee for the housing not just be a repayment of that loan to the credit union? Supposing they pay that fee for a number of years, then the loan would be paid off, and they would no longer have to pay it, right? If not, what are they paying that for?

Let’s assume that they are doing all their maintenance and repairs themselves, so they would have no costs in that category.

Who are they paying the land user-right fee to? How would that fee be calculated? What incentive do they have to keep paying it after a while? Am guessing they would be removed from their homes if they stop paying that right?

Suppose they live in that housing for 50 years and create a really nice setup, like some sort of garden of Eden almost, and most of their children stay in the community, so every so often they seek permission to build more housing in their community. Would you not say that after a while, these people have earned the right to stay there without paying a fee to the rest of society for the right to live there? That is more a moral question than an economic one I suppose, but it seems pertinent. The reason I ask is as follows:

Maybe many years after moving in and developing the land, they get fed up with making designer widgets in their fab shop to deliver to the rest of society. For that work, they were being remunerated, and have used the money to import all kinds of good stuff. Fancy fruit trees, computers, glass making gear, construction equipment and all kinds of other stuff which means that they basically don’t need anything now. How are they going to pay their land user-right fee if they don’t do “socially valued” work though? They do lots of work of course, but for themselves, growing their own food, and keeping on top of their water management and so on, but they don’t get paid for that surely, because they aren’t providing anything to society. Just looking after themselves…

So here are some implications of this scenario I think: If they need to raise money, to pay this land fee, either they have to keep working for others, for the right to stay on the land, or they have to do some creative accounting and claim for labour hours doing their own gardening. Either option doesn’t seem very ideal to me. In the former case, well… they essentially have a landlord, it just happens to be the rest of society… They aren’t asking anything of the rest of society, they look after themselves, but they have to keep working, doing “socially valued” work or they will not have the money to pay that fee and will get kicked off the land they themselves developed… In the latter case, they are doing a lot of fake accountancy just to justify themselves to the rest of society… which seems a bit of a waste of time and more importantly, an intrusion of sorts into their community.

Am I way off the mark with these speculations? I could construct other scenarios, but this is the sort of one which interests me the most, because it involves something I consider quite crucial to the creation of a better society; the formation of non-alienated, sustainable, community life. Housing and land allocation is central to the viability of communities for obvious reasons, so I would like to see a way of allocating housing which actually encourages self-sufficiency within community, but am not sure if this fee proposal achieves that or does the opposite. In an urban environment, some level of alienation is a given I think, even in a participatory society, but that’s why I would hope that in the future more people form such communities, and are able to live in settings where they can have a more intimate partnership with nature and each other.

It also brings to mind the issue of indigenous lands, because in a way, this hypothetical community would be attempting to live with that same kind of relationship to the land. How would a participatory economic system relate to people who have that sense of “ownership” over the land? They consider themselves as a society, with their own land, even if that doesn’t quite mean what it means in western culture.

It also brings to mind travelling people, who need access to land, but don’t stay on any one piece of land for that long. Would a participatory economic system be as hostile to a nomadic life as market allocation of land has been I wonder?

Here are some further general questions then, about the housing fee proposal in relation to the above (slightly elaborate) scenario:

Do you think people would find it easy to pursue that kind of community under this scheme?
Would this system incentivize or disincentivize people building their own homes and communities in this way?
Do you think this scheme, combined with the other institutions of a participatory society, would make the pursuit of self sufficient living more or less viable as a way of life?


I see. So for the housing provider, are these three combined costs their social costs (SC) and the housing fee they receive from the resident their social benefit (SB)? And, in this case, would housing providers, need to have a SB > SC?

Yes, a housing provider’s combined costs are his social costs (SB) and the received housing fees are his social benefit (SB). And yes, in principle, the SB has to cover the SC.

Though, I have said elsewhere that I think that a housing provider’s charged fee for access to land, in the end, will be calculated as the difference between the housing fee, from the annual planning, based on supply and demand, and all charged costs except the land fee. The fee for land will be the residual. This means that SB will equal SC so long as someone is willing to take up residence and pay the determined fee.

Hi Richard,

I don’t think I will be able to answer all the many questions you raise above in this short answer but I want to make two quick comments:

  1. If a housing provider (or anyone else in a PE) wants to get access to resources and/or supply goods or services to the economy, there is only one way to go about this in PE and that is to participate in the annual planning. I don’t think there should be any exceptions for housing residents or housing providers.

  2. The question about fees for access to land, buildings etc. and who receives them is a fair question. I focus on this question in my article about financial flows elsewhere on the site. In short, fees for access to land, buildings and capital goods in general, for that matter, and also any surplus (difference between benefits and costs), end up in what I call the Society Account, since there are no land or capital owners. The fees become part of Society’s income. (I suggest an answer to how the fee for land could be calculated in an answer to another question below)

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Understood. Thanks for clarifying.

I wonder how accurate the demand data from consumers for housing will be from the annual planning. As a consumer, preparing my consumption plan, I know with much more confidence, based on my past behaviour, what I’m likely to consume regarding food, clothing, transport, utilities, etc. However, with housing, I think it’s much harder to give a meaningful answer every December about, if I would like to move, which location I would like to move to, until I have done some research into it, and even then I may have a few different options. As the annual planning will set land use prices, I’m thinking about how the interface may need to be designed to better help with this, or if this might need some further special treatment, or how we might be able to get more useful demand data.

Is this an area you have some concerns or thought about too?

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Richard, here are a few comments on an important question you raise on why do we even need to pay for land. Land is in limited supply, it is in a fixed location, and it has an unlimited life span - in practise, it exists for ever. If we zone a society’s total land area into land for agriculture, land for wild nature, land for transport, and so on, and we end up with a total area of land for housing that people can use for living. Some locations of land will be more desirable to live in than others and the question becomes who gets access to it. Who gets the sea-view condo in a trendy neighbourhood area? If one person lives in a location, someone else doesn’t and the land can’t be used for something else, so therefore there is an opportunity cost and we want it to accurately reflect the desirability of land locations so that those who prefer to live in more valuable locations do so because they choose to sacrifice more by foregoing other consumption or through greater burdens at work.

Otherwise, without prices, how would land be allocated fairly?

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Yes, you are probably right. There is of course a big difference between buying a pair of shoes and deciding on a preferred location to live in. Of course, one can only speculate but perhaps one can assume that a person will have a good enough idea whether she prefers, for instance, a metropolitan, urban, countryside, or coastal location to live in. And given the supply of different housing opportunities in different such locations and the different housing fees, hopefully, a person will be able to settle on a most preferred location out of a number of favourites.

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This is an important topic, and I don’t have strong opinions about how certain things ought to be accomplished – mostly because I haven’t spent a lot of time thinking the implications through.

But understandably people will want to know if certain “rights” they might have now – assuming they have the income/resources to assert them under capitalism – will continue to exist in a participatory economy. Can they “pass on” the house they always lived in to their children or grandchildren, if they want to? Is there a “right of refusal” for these sorts of things? To what extent would a just society want to allow that?

Rhetorically speaking, people get hung up on labels, though. Is everyone “renting” housing in a participatory economy, or is everyone now “owning” their home in some sort of meaningful way? Perhaps there continues to be a distinction between these two things: not because a landlord is exploiting renters, but perhaps more akin to a distinction between temporary and permanent or semi-permanent housing. Personally, though, I think it might be more fruitful (in the sense of generating support for the idea) to talk about everyone being an owner or co-owner of housing , rather than renters – because most of the rights that are currently tied to house ownership are viewed by people as desirable relative to renting. (Rights to determine how to improve or not improve one’s home, for example, rights of privacy, rights to be noisier (perhaps) than one could be in a more communal setting, rights to have pets, rights to exclude others from one’s “property,” and rights to remain there on some level.)

Of course, under capitalism one’s “right to remain” in one’s own house is STILL provisional in a way that often gets forgotten when we talk about limiting people’s rights in a hypothetical future participatory economy. Under capitalism, most home owners still pay mortgages to a bank, still pay taxes to their municipality and so on, and they are solely responsible for all manner of crucial repairs and maintenance: like if the furnace breaks, or the hot water tank, or the roof needs to be re-done, or the foundation needs to be fixed – the “owner” generally has to foot the bill themselves. Even under capitalism, ownership is contingent upon paying the banks and taxes. Even under capitalism, there are costs associated with ownership that renters need not worry about.

In a participatory economy, ownership or co-ownership costs could be reflected in different ways as well. Even if there is no “mortgage” being paid to a bank, there could be a strong case for progressive property taxes – and these could be, in turn, based on desirability of location, size of housing unit, and so on. What we call these things is perhaps less important than their substance and rationale. But presumably an annual or quarterly “tax” is meant to cover things like service-provision (water and sewage, utilities, and repairs). Perhaps the “owner” still pays a property tax but they are no longer solely responsible for their furnace or roof repairs.

Another aspect of housing that requires distinction is between rights to existing housing, and the construction of new housing. I think each of these would likely have to be handled in a different way. I think it’s reasonable to want the economic vision to support rights to stay in an existing home (or rights of first refusal), rights to relocate (within a city, or to a completely new one), rights to repair, augment, improve, or expand a housing unit, and so on. But when it comes to expansions and new housing, there clearly needs to be limitations / parameters on the construction itself (for example, zoning limitations, using ecological design/architecture elements, ecological materials, accessibility requirements – which would presumably be standard in all housing – and many other things.).

I don’t think the idea raised earlier by the fellow talking about a group of a dozen or fifty people wanting to build their own little rural utopia – and planning the layout, architecture, ecological elements, and so on – is necessarily a problem for a participatory economy vision. I think they could probably apply to do much of the planning and construction work themselves through the “normal” institutional framework – but it would still be subject to P.E. constraints and decision-making processes. The land / location would have to be approved. The blueprints or design elements would have to follow ecological and labour norms (just like they might in ANY society). And the resources needed to build it all in the first place would have to approved, and within the limits of the “commune’s” income (i.e., consumption pool). And the work itself would have to be carried out presumably by workers participating in the annual planning process and who all have balanced job complexes. Could some of that work be done by the members of this hypothetical commune themselves? I wouldn’t see why not, if they wanted to? Maybe they all LOVE that kind of work, and have the requisite skills, or want to learn. But these people are still part of society, and subject to its basic work and institutional expectations, presumably. (I think the question of Indigenous peoples that was mentioned is an entirely separate one, because the self-determination of peoples does not get steam-rolled in a participatory economy, and – in my view – Indigenous nations ought to have rights of secession that others may not, including within settler-societies like Canada and the U.S. and others. Although in my view a participatory economy ought to be understood as antithetical to settler-colonialism itself – but these are very different conversations.).

Anyway, I think people sometimes get hung up on the idea that they might “lose” rights that they ostensibly have under capitalism – even if they’re too poor to realize any of these rights under capitalism. I find that kind of ironic. But that doesn’t mean some of those desirable “rights of ownership” that we typically associate with owning a house aren’t still worthy of consideration. People want self-management (and security) in their own homes as much as we want self-management (and security) in the workplace.

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I agree. I think what’s tricky is that some types of housing (like apartments) double as workplaces where workers (such as maintenance) are technically offering a service to residents. In those cases, I think it makes sense to have housing owned commonly and to have them operate like any other workplace going through the annual planning procedure.

However, there’s a big difference between that and someone who wants to buy a house to live in for their own personal use. I think this type of housing should be considered personal property that can be owned like your furniture or food. The thing I think we want to avoid is people extracting income from owning a house, but there are several ways this could be addressed.

I think once someone pays off their house, they should no longer have to keep paying some kind of “rent” payment. I think it should be theirs to do whatever with until they want to get rid of it… at that point some tricky questions arise if we want to ensure people aren’t extracting income for ownership, but I think it’s a solvable problem and there are some good ideas in Anders’ article for dealing with that.

When it comes to producers, I think it makes sense to include the costs of land and buildings when they make proposals. But when it comes to housing people own, I’d prefer to have a zoning system where once a house is built people don’t have to worry about paying all these fees other than the initial cost of acquiring the house. It makes sense to have workplaces “compete” to ensure the most socially valuable thing is happening… but when it comes to someone living in a house, it seems to me like the sensible thing is to try and keep those people in the house for as long as possible?

Like you say, it’s an important topic and it’s something we’ll have to continue thinking through.

Hi Michael,
Just two quick comments that came to mind when reading your post:

  1. Housing is very different from a piece of furniture or food. Housing will stand for a very long time, often hundreds of years, and most likely many “generations” of occupiers will live in it and it is, therefore, a community asset as well as a consumer good.
  2. If people don’t have to pay “rent” for access to housing after they have “paid off their house”, they do in effect extract income from ownership.
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I agree that it’s different from food and furniture, but there are other types of personal property that last for generations like family heirlooms that get passed down for centuries (similar to how family built houses get passed down). I don’t think the duration of how long it lasts changes the fact that it’s a “personal use” type of item. The community doesn’t use someone’s personal house, it’s the person/people who occupy it.

It’s a different story if we’re talking about apartments or some kind of public housing, which is why I think there needs to be a distinction.

I think the main difference between a personal house and other personal property is that there will need to be special rules and conditions for when the owner wants to transfer it or get rid of it, and I think the ideas in your article can be applied to these scenarios well.

Could you give an example of what you mean? To me, extracting income for ownership would be like renting a house you own and charging rent to the people that stay there. Or selling the house to someone and being paid for the deed transfer.

Any product or good with an economic life exceeding one year is, in principle, an investment in the sense that you incur a cost at the time of acquisition but receive the benefits (“income”) in years to come, even if the “income” is the access to your car or your washing machine (or access to a house)

For simplicity, in the case of productive resources, accountants today usually say that a product with a relatively short life span (though exceeding one year) and with a relatively low production cost, can still be treated as an expense at the time of acquisition and not an asset, in the books. And, of course, very few personal-use items are treated as assets in any case.

In the case of housing, which has very long economic lives and very high acquisition costs, in a PE if your cost for access to a house is not to based on updated supply and demand for categories of housing but instead based solely on the yearly amortisation of your debt incurred at the time of acquisition (if I understand you correctly), then you will have a situation where one person may have a very low housing cost and the neighbour in an exact replica of your house may have to pay very high costs, depending on the time of acquisition and changes in demand for housing in different areas. This means that your “income” in terms of access to housing will very much be affected by luck and other circumstances that you cannot affect and this also introduces speculation about what areas will increase in demand etc.

This is one major issue I want to address with my proposal above.

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I think we’ll have to agree to disagree on this one :stuck_out_tongue: I don’t see any harm in letting someone continue living in a house they paid off, even if you define the benefit as having continued access to the house. The important thing, I think, is making sure people don’t use the house to accrue income (meaning actual money in their bank accounts) on the basis of ownership, and I don’t think charging a never ending fee does anything positive or negative to deal with that problem. If all housing is commonly owned, there’s a control mechanism in place to prevent that from happening. If personal housing can be owned, there are other methods to prevent that from happening (regulating when the deed is transferred, non-transferable currency etc.)

I agree that’s a problem that needs to be addressed. But I would argue in favor of updating their monthly payment and total owed to reflect that until it’s paid off. That seems like a more simple and friendly way of dealing with the issue, assuming there’s a limit where it can only go down and not up.

You also have to understand, Anders, that I’ve lived most of my life in the country. My family spent years building their homes from scratch so we could get away from all of you city slickers and your concrete jungles! :stuck_out_tongue: