Housing and Capital in the 21st Century

This paper originated in a discussion at the Centre for Urban Research at RMIT and evolved through the ENHR conference of 2014. We are grateful for comments and suggestions by colleagues at these meetings and at the Universities of Glasgow and St Andrews.

Abstract

Thomas Piketty’s Capital in the 21st Century has attracted public, policy and academic attention. Although there is a growing research literature on the formation, distribution, utilization and wider implications of housing wealth there has been little discussion of Piketty’s work in housing studies. This paper outlines and assesses the major contributions of Piketty, including re-emphasizing distribution and political economy perspectives within economics, modelling growth and distribution, establishing detailed long run patterns of wealth change and policy implications. The paper highlights the significance of shifting housing wealth in increasing inequalities in some countries: housing matters in macro-shifts. We also draw out the implications of house price and wealth growth for the balance of rentier vs. entrepreneurial forms of capitalism. If Piketty’s work is important for housing research, we also argue the converse, that housing research findings can strengthen his analysis. The stylized facts of advanced economy metropolitan growth suggest that housing market processes and wealth outcomes will drive higher inequality and lower productivity into the future unless housing and related policies change markedly. Piketty, strong on evidence and conceptualization is weak on policy development and housing studies can drive more effective assessments of change possibilities.

Key Words:

• Housing system
• Housing outcomes
• Inequality
• Housing policy

Acknowledgements

We are grateful for comments and suggestions by colleagues at these meetings and at the Universities of Glasgow and St Andrews.

Notes

This paper originated in a discussion at the Centre for Urban Research at RMIT and evolved through the ENHR conference of 2014. We are grateful for comments and suggestions by colleagues at these meetings and at the Universities of Glasgow and St Andrews.

1. Housing researchers will be familiar with these broad patterns and indeed aware of the differences and nuances for particular countries. Beyond the realm of housing studies these broad patterns are not always understood but a knowledge of them is important in understanding how economies have developed over time.

2. Political economy is not solely the intellectual preserve of the economics discipline, and other disciplines ranging from political science and sociology through economic history to a broad spectrum of views within human geography have maintained interest within these issues. It is however important that the diversity of, shifting, views within economics becomes re-attached to political economy.

3. None of the participants in the debate make reference to access to natural capital.