I'm pro-density, pro-public transportation, pro-walkability, and pro-bike infrastructure. As you can see, these positions are shared with conventional urbanism, a movement that began in the 1960s with Jane Jacobs's famous confrontation with the car-centric city planner Robert Moses. Ten or so years after the latter was defeated, urbanism was codified in, of all places, Florida. In the 1990s, the rise of urbanism's influence corresponded with the destruction of public housing and white re-flight to urban cores from the suburbs, which became more and more diverse as a consequence of displacement.
As we entered the present century, it was clear that, as a project, urbanism had failed. Its key principles proved to be too market-friendly. Walkability, improved bike infrastructure, and even access to transit increased, rather than depreciated, the value of a location. At present, the densest zip codes in the USA are inhabited by millionaires (and a few billionaires). Why this outcome? The purpose of this post is to provide an explanation.
Maturing is understanding that a lot of (well-meaning?) urbanist are free market capitalist with a severe deficiency in understanding how gentrification works. A lot of leftist assume Urbanism and Socialism are interchangeable. Not true. https://t.co/mAuEpqfxZh
— Dae (@daeshikjr) April 21, 2024
Urbanism's failure can be reduced to its primitive analysis of capitalism. For this movement, markets are all about supply and demand. And so the thinking is: More supply reduces demand-side costs. Build more and prices fall. This is why it's common to blame San Fransisco's affordability crisis on NIMBYism, on the freeze on housing construction. But this kind of economics is an illusion. Supply and demand is not capitalism's be-all and end-all. It is instead investment.
This fact was not realized until the depression that followed the Wall Street crash of 1929. When it became abundantly clear that the market had no solutions for the crisis and growing political unrest, a number of theorists were forced to abandon the neoclassical (or marginalist) thinking that dominated economics since the early 1870s (markets self-correct and so on) and examine capitalism as it actually functioned in the world of people and things. And what did they find? Investment, not supply and demand, is the causa causans.
This understanding became the center of John Maynard Keynes's 1936 book The General Theory of Employment, Interest and Money.
In Keynes's words:
[T]he level of output and employment as a whole depends on the amount of investment. I put it in this way, not because this is the only factor on which aggregate output depends, but because it is usual in a complex system to regard as the causa causans that factor which is most prone to sudden and wide fluctuation. More comprehensively, aggregate output depends on the propensity to hoard, on the policy of the monetary authority as it affects the quantity of money, on the state of confidence concerning the prospective yield of capital assets, on the propensity to spend and on the social factors which influence the level of the money wage. But of these several factors it is those which determine the rate of investment which are most unreliable, since it is they which are influenced by our views of the future about which we know so little.
The Polish economist Michał Kalečki, who was close to the school of thought launched by The General Theory, Keynesianism, put it this way: Capitalists earn what they spend, and workers spend what they earn. Keynes called this "the widow's curse." The moment capitalists stop spending, the system crashes. A boom is nothing but capitalists earning from their own spending (which in our times is highly leveraged—but that is an issue for another post).
And now comes the big question, and one that Keynes failed to ask: What kind of investments do capitalists typically make? For an answer, one only has to look at the construction boom Seattle experienced in the previous decade. When the smoke cleared, the city had nothing but high-end office towers and luxury apartments. This was to be expected because business investments are concerned with (or are locked in) the "short run." This is why Keynes pretty much ignored the "long run" in his book. Business expectations are not farseeing. They can't be. It's too risky, and the returns, if they are any, are bound to be slow. This is why Keynes called for the "socialization of investment."
Socialism, in its deepest sense, is all about the long run. And it is only in this wide timeframe that housing affordability can appear and flourish. Business expectations are condemned to the quarterly. Social expectations have to be generational. The advantages of free healthcare take decades to materialize. The same goes with Social Security, which, due to its longue duree, is not a capitalist institution. No matter how many apartments are thrown up by the market, they will remain unaffordable because private investors are always trying to beat the clock. Socialism, to borrow an expression from Depeche Mode, is a question of time.
