Are homeowners capitalists?
Who gets to be a member of the capitalist class?
Part 1
A couple of weeks ago on the Marxism mailing list (http://www.marxmail.org) I proposed the idea that the entire capitalist class in the United States should be defined as the ruling class. My guess at that time was that 90 million people might be included. I did not clearly define capital at the time, nor did anyone else in the conversation, but I did include houses as capital. A frequent poster on that list, S. Artesian, strongly disagreed. He wrote,
“Owning a house is not owning capital. A house is not capital, unless it is
used to extract surplus value, or to gain a portion of the surplus value
generated throughout the society. Employing a gardener, a cook, a child-care
worker in that house does not make one a capitalist, nor does it place
somebody into the ruling class.”
(Re: [Marxism] If you want to identify the ruling class, you have to decide what is a social class. * From: "S. Artesian"
The question of whether or not a house is a form of capital is an interesting one, which has a lot of bearing on the social structure of modern capitalism, especially modern imperialism, and especially the imperialist countries that were originally formed as settler states. Especially the United States of America.
My view is that there are three great social classes in modern imperialist capitalist societies: the working class, the capitalist class, and the petty bourgeoisie (little capitalists). Each of these social classes is further divided into different social strata, and each of these social classes interpenetrates the others. The working class contains an upper petty bourgeois, capital owning, strata.
The petty bourgeoisie includes many professionals who work, and who own capital, and many small business owners who work and employ others.
The capitalist class rises from its mass base of small capitalists to the heights inhabited by the very big capitalist family networks, with a few odd individual new comers.
Individuals frequently move from one strata within a class to another, and from one class to another: social mobility dampens class conflict and is one key to capitalist social stability.
I think houses that are bought and sold in markets like any other commodity are clearly a form of capital. The fact that the melt-down in the housing and mortgage markets was the catalyst for the current plunge into economic deep water ought to be a clue for anyone thinking about the topic (how’s that for mixing metaphors?)
Home equity constitutes the most important form of capital owned by the petty bourgeois strata of the working class, and is an important part of the capital owned by the petty bourgeoisie per se.
If you look at it this way, the current economic crisis can be seen in part as a gigantic liquidation of the capital accumulated by the labor aristocracy and the entire petty bourgeoisie.
Is a house capital?
Are homeowners capitalists?
Who gets to be a member of the capitalist class?
Part 2: So is home equity capital?
S. Artesian’s objection was, “Owning a house is not owning capital. A house is not capital, unless it is used to extract surplus value, or to gain a portion of the surplus value generated throughout the society.”
He is right, and he is wrong. Every person who buys a home in the United States, or at least every person who bought one in the past, expected to gain a portion of the surplus value generated throughout the society. The belief that real estate prices inevitably and inexorably rise is deeply held in all layers of society in the United States. And, over the long run, it has been historically true.
So, in S. Artesian’s own definition of what capital is, houses have always been a form of capital in the United States. To rephrase his objection,
“Owning a house IS owning capital because it is used to gain a portion of the surplus value generated throughout the society.”
It might be a good idea to review some definitions of what capital is, what rent is, what the price of land is, etc.
Marx, Engels, Lenin et. al defined “capital” in different ways, and divided capital into different kinds of capital. Among the different kinds of capital, according to Marx, there are constant capital, variable capital, commodity-capital, money-capital, fixed capital, commercial capital, merchant capital (or money-dealing capital), interest bearing capital, credit capital, fictitious capital, bank capital, real capital,
One of Marx’s first attempts at defining capital appeared in his Economic and Philosophical Manuscripts of 1844. Here it is
“Capital is thus the governing power over labour and its products. The capitalist possesses this power, not on account of his personal or human qualities, but inasmuch as he is an owner of capital. His power is the purchasing power of his capital, which nothing can withstand.”
Karl Marx, Economic and Philosophical Manuscripts of 1844
Profit of Capita, 1.Capital
http://www.marxists.org/archive/marx/works/1844/manuscripts/capital.htm
By this definition, a house might be called “potential capital”. The house itself has no governing power over labor and its products, but if it is sold – or rented – the money received will have the governing power which defines capital.
When Engel’s wrote a review of the first volume of Das Kapital for the Rheinische Zeitung in 1867 he defined capital simply.
“What is capital? Money which changes into a commodity in order to change from a commodity into more money than the original amount.”
(Review of Volume One of Capital for the Rheinische Zeitung, October 1867
http://www.marxists.org/archive/marx/works/1867/reviews-capital/rzeitung.htm)
This is the famous formula for capital of M-C-M which Marx explains at length in Volume 1 of Das Kapital. If we define a house as a commodity, then the formula can easily be applied. Money is invested in the house in order to gain more money when the house is later sold. (The only important variation in this formula when the commodity happens to be a house (or any other form of real estate), as compared to other types of commodities, is that the amount of time between the first transaction and the second transaction could be longer for real estate.)
In other words, by this most famous definition of capital, a house is capital.
What a house obviously is NOT, is CONSTANT CAPITAL, which is capital invested in machinery, inventory, etc. in the process of production.
Exactly what KIND of capital a house is, needs to be defined more precisely. But, a house, at least in the 21st century United States, is capital.
To be continued.
