
The social reproduction of state socialism in Romania was made possible in part by the production of three million social housing units in a mixed housing sector that supported socialist industrialization, urbanization, and modernization. It is therefore not surprising that the transition to a market-oriented housing system has been one of the main pillars of establishing capitalism in post-1989 Romania. Today, we should reverse this development by disrupting the social reproduction of capitalism through housing policy. Enikő Vincze argues that this can be done by implementing the demands of a transition program compatible with a future socialist housing system.
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My article is based on research on the transformation of former industrial platforms into real estate development sites in Romania. We addressed these processes to understand class formation and re-urbanization after the dismantlement of state socialist economic and social structures. The collective book, which resulted from this research, theorized real estate development at the intersection of deindustrialization and financialization facilitated by privatization as they unfolded in the uneven capitalist global order of the 21st century (Vincze et al., 2024). My article explores these processes as components of capitalism’s destructive creativity.
The article acknowledges the pivotal role of housing within a political economy regime, highlighting its significance in economic production and social reproduction. Housing is an infrastructure that facilitates capital accumulation and meets a fundamental need of the labor force. Additionally, it functions as a means through which capital and the supporting state create new avenues for investment and markets while potentially also fostering anti-capitalist agency. I advocate for the necessity to disrupt, through a transitional program within the housing system, the social reproduction of capitalism’s destructive creativity.
From capitalism’s creative destruction to its destructive creativity
I propose shifting from the concept of creative destruction coined by Joseph Schumpeter in his book “Capitalism, Socialism, and Democracy” (1942) to emphasize that industrial mutations, which continually revolutionized the economic structure within capitalism, consistently destroyed the old and created a new structure, to the concept of destructive creativity.
Appealing to the latter concept, one may revisit the original perspective of Karl Marx and Friedrich Engels (1848), who noted that the bourgeoisie always sought to address the capitalist epidemic of over-production through the enforced destruction of productive forces, the conquest of new markets, and the intensified exploitation of existing ones. Destructiveness is not merely a ‘normal’ cost of doing business, as Schumpeter suggested, but rather an endemic feature of capitalism that facilitates the process of accumulation by dispossession (Harvey, 2004). In my interpretation, the concept of capitalism’s destructive creativity reveals instances where, like in the case of socialist CEE, in pursuit of maximizing profits, non-capitalist geographies and economic sectors were destroyed to create new investment opportunities through spatial fixing and capital switching.
In our research project, “Class Formation and Re-Urbanization through Real Estate Development at an Eastern Periphery of Global Capitalism” (2020-2023), we observed that in Romania, especially since the second half of the 2000s, when the privatization of all formerly state-owned factories was completed, deindustrialization and the subsequent demolition of old industrial platforms resulted in significant vacancies that could be reused as sites for new real estate development. This transformation is indicative of capitalism’s destructive creativity.
Not far from city centers, equipped with urban utilities, former industrial platforms played an essential role in redeveloping regional cities with economic growth and high demand for spaces for new constructions. Prior to demolitions, old industrial buildings could be rented for productive or non-productive activities. Simultaneously, the land could still be collateral to secure bank loans for the new private owners even after demolishing the former buildings on their sites. Their corporate debt could be converted into an asset, turning creditors into shareholders in the indebted company. Additionally, demolitions created opportunities to modify the land’s function from industrial to residential or mixed-use in alignment with evolving urban regulations. Once repurposed for new real estate development, the lands/buildings of a former industrial platform became fresh sources of capital accumulation. Moreover, since the new real estate developments could be sold through mortgages or other loans, former industrial platforms generated profits for credit institutions and individuals/companies who invested in real estate or became shareholders in companies listed on the stock exchange market.
The changes described above are symbols of comprehensive destruction, i.e., the dismantling of the state socialist regime and the establishment of capitalism on its ruins. This was grounded on the replacement of the social ownership of means of production, centralized planning, mixed housing regime, and labor class working in the productive economy, with private ownership in all economic sectors, a competition-based growth, market-dominated housing regime, and a middle-class sustaining the service- and consumption-based economies. In parallel with the advance of real estate development, former public lands were put at the service of a profit-making ‘urban regeneration’ and used as infrastructure for the real estate/financial complex (Aalbers, 2013) and the secondary circuit of capital. All these radical changes were footprints of the destructive creativity of capitalism.
The social reproduction of state socialism and capitalism through housing
Housing played a central role in the social reproduction of both state socialism and capitalism, as well as in the political economy transformations in Romania over the past decades.
The social reproduction of state socialism in Romania was facilitated, among other things, by the production of three million public housing units in a mixed housing regime (Vincze, 2022) that supported socialist industrialization, urbanization, and modernization. Legally and practically, the state socialist mixed housing regime assured housing on personal property (comprising 30% at the national level and 50-60% in cities); however, this type of private property was under strict state control. The construction of public housing as economic production was possible in a centralized planned economy and through the negotiation process with local actors (including workers’ collectives and local councils) and the central state.
Moreover, it could be achieved due to the surplus value created by the labor force, which was directed toward the state budget and distributed according to a centralized plan to ensure a balanced territorial and economic development and make public goods and services accessible to everyone. It was also enabled by a set of non-profit financial institutions and a price system that established prices in the planning process and considered the purchasing power of the workers. Last but not least, during state socialism, the creation of a significant public housing sector was considered an investment (and paid for from the country’s development or accumulation fund) and a consumption good (maintained from the social consumption fund). Alternatively, the creation and distribution of public housing acted as a component of the productive economy and a vehicle of social reproduction that sustained economic production.
The extensive privatization of state-owned housing stock and the dramatic reduction in the construction of new public housing became a cornerstone in creating and expanding a system where housing is predominantly accessible through the market, facilitating its hyper-commodification and financialization and, ultimately, the social reproduction of capitalism. The latter hinges on ensuring that the surplus value created by the labor force is appropriated by capital. The perpetuation of the exploitative relation between capital and labor is propelled by capital’s pursuit of accumulation in various economic sectors, including housing, and is bolstered by the labor force’s necessity to survive, namely, having employment and housing. While the labor force is exploited by capital in the productive economy, laborers are often required to allocate a significant portion of their income, sometimes exceeding 30- 40%, toward acquiring housing from the market. Since neither employers nor the state offer housing for laborers, the latter are compelled to bear the cost of homes’ exchange value, including the profits of institutional developers, investors, and landlords. Moreover, in capitalism, the material production of housing constitutes a productive economic activity where the owners of the means of production exploit the labor force.
In financialized capitalism, housing transcends its physical existence: real estate capital is intertwined with financial capital, not solely due to the necessity of finance for material production and commodification of housing, but also through its trading as an asset class on financial markets via mortgage schemes, exploitative rental relations, or stock market speculation.
Disrupting the social reproduction of capitalism through a transitional program
The shift from a mixed housing regime to a market-driven housing system was among the main pillars of interrupting the social reproduction of state socialism. Today, we should reverse this by disrupting capitalism’s social reproduction through housing measures. This can be achieved by implementing the demands of a transitional program (Trotsky, 1938) consistent with a future socialist housing system that we could envision today as part of an alternative to capitalism. Housing movements can and should have a significant task in imagining it. Broadly speaking, they play a role in anti-capitalist struggles, which is to strengthen class consciousness and solidarity among different labor classes, enabling them to reveal how exploitation operates not only in the workplace but also in the housing sector for everyone who relies on selling their labor and is constrained to access housing on the market.
Recognizing this, the demands of our Cluj-Napoca-based movement, Căși sociale ACUM!/ Social Housing NOW! are constituents of such a transitional program: recognition of housing as a constitutional right; a significant increase of the percentage of public housing up to 50% of the total housing stock; creation of public housing companies and non-profit financial institutions to facilitate the production of public housing; expropriation of 25% of the housing units made by institutional developers, starting with the real estate developments on former industrial platforms; establishment of public tenant associations that would ensure the democratic administration of public housing and its securing it from sale; constrain the cost of housing rental to 10% from the renters’ income; regulate the housing market and protect households from being overburden with housing costs.
Recognizing that capitalism created the housing affordability crisis and that it cannot be solved within capitalism, housing movements could expose the ‘kin relations’ between exploitation in housing and labor markets and economic production and social reproduction that sustain global capitalism. They might forge connections among different struggles of laborers, including waged and informal workers, unpaid laborers in the domestic sphere, and the reserve army of labor –each suffering various forms of housing dispossession and deprivation, such as high rents, mortgage or housing purchase costs, inadequate housing conditions, or substandard informal housing.
The social reproduction of capitalism can be disrupted primarily through the expropriation of institutional developers and landlords or the socialization of large housing stock to remove housing from the market’s influence; the control and regulation of the housing markets; and the democratization of the financial system, to ensure that funds are invested according to the housing needs of the laborers and not to the logic of profitability.
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