Capital City: Gentrification and the Real Estate State

CAPITAL CITY:  Gentrification and the Real Estate State

by Samuel Stein

Verso Press, London/New York, 2019, 202 pp.

Reviewed by Joshua Barnett, an architect at the New York City Housing Authority since 1999 and formerly the Boston Housing Authority, affordable housing activist, and union representative in Local 375, DC 37, AFSCME. 

When Charles Dickens toured America he reportedly said “I never saw people living as badly as they do in London.  I never saw animals living as badly as people do in New York.”  Housing was one of the first casualties of the industrial revolution.  As early capitalism drew, or forced, people to the burgeoning cities a house was not a home to live in but a box for people to survive, if barely, so they could work.

Even those shacks and derelict tenements charged rent.  There was always money in housing, but it was never the engine fueling capitalism.  Now, however, real estate development is a gigantic economic force unto itself with dire effects on working class neighborhoods and the basic availability of housing, and that transformation is the basis of Samuel Stein’s vital and devastating study, Capital City, Gentrification and the Real Estate State.

It’s a global phenomenon, as Stein points out.  Global real estate is now worth $217 trillion.  It makes up 60% of the world’s assets, 75% in housing.  Capital City focuses on New York City, because it’s one of the most known symbols of gentrification and where Stein has first-hand experience as a city planner.  The book traces the history of the rise of the ‘real estate state’, the long-standing, deep, and unsurprisingly cozy relationship between the real estate industry and the government.

The book’s particular focus is on the role of city planners in urban development.  Stein points out in great (but thankfully readable) detail the role of planners in striking a balance between the need of landlords to maximize profits and the ruling class’s need to avoid chaos and total alienation of the city’s populace from the process.  Planners aren’t the driving force, but the historical need to manage development is vital to understand.  The analysis helps shatter the myth of laissez-faire capitalism; market economies always require planning, and in this case “Planners are also responsible for maintaining the spatial dimension of racial inequalities.”

The history presented here is concise, but essential.  The City Beautiful movement of the 1800s, public housing from the 1930s, urban renewal (called “Negro Removal”) of the 40s, 50s and 60s were attempts to bring rationalization to growth and propagate the myth that everyone would benefit.  But behind that were often conflicts between capitalists–industrialists actually often want cheap housing to attract workers.  And the movements and planning had devastating effects on poorer neighborhoods and the incorporation of legal racism such as redlining, still felt today.

Obviously the timing of the book is key, as gentrification, along with homelessness, is now an entrenched part of the political lexicon and landscape.  From the labor perspective, as Stein points out, gentrification is the process of real estate becoming a dominant force in creating profits after the loss of huge number of manufacturing jobs and fiscal crises in cities across the country.  The city lost 750,000 jobs from the 50s to the 90s, but land values soared from $20 billion to $400 billion.  The flight of both jobs and population caused a shrinking tax base, but real estate provided the basis for the rich and the politicians to recoup.  The chapter “Planning Gentrification”—seemingly an oxymoron—outlines how municipal support for rising rents and displacement follows real estate investment.

Needless to say this doesn’t take place on a blank slate.  The people living in neighborhoods undergoing or targeted for development, invariably on the lower side of the economic bell curve and usually people of color, are forced out by rising rents, evictions (legal and otherwise), conversions of rental buildings to coops and condos. That practically every city today has a department of homeless affairs, unheard of 40 years ago, speaks to the sad acceptance of devastating housing inequality.

It’s tempting to think the Democrats would be more renter-friendly than the Republicans.  But as “New York’s Bi-Partisan Consensus” shows, developers have always had friends in City Hall, from either side of the aisle.  The NYC Planning Commission under both Republican mayor Michael Bloomberg and Democrat mayor Bill DeBlasio facilitated policies and revisions to the city’s zoning that allowed virtually untrammeled development of for-profit properties.  Even the supposed attempts by liberal Democrats to increase “affordable” housing are couched in market-based incentives, a frustrating constant in capitalist city planning.

One particularly telling example in the chapter “The Developer President and the Private Side of Planning History” describes the sordid history of one major New York developer family named Trump (yes, that Trump).  It’s a classic example of real estate money skating around, or through, morality and the law, with the willing help of elected public servants.  Suffice it to say it’s illustrative of the book’s general point, and you’ll probably want to take a shower after reading it.

So how to stop this development steamroller, or at least slow it down?  The book isn’t simply an analysis.  It’s unabashed in its advocacy of a more equitable distribution of land and housing.  A chapter called “Unmaking the Real Estate State” won’t be seen in most analyses of planning or real estate.  Stein puts forward several ideas, both in terms of legal tactics and mass action, all based on the idea that there should be public stewardship over land and planning, including universal rent control.  It’s a tough climb, but it’s always been a struggle for decent housing in a capitalist society.  At the heart is that housing is virtually unquestioned as a profit-generating venture, not a human need.

Capital City, given its focus on analyzing the power and profits of development, could be a powerful companion to studies of the global rise of informal cities such as Mike Davis’ Planet of Slums, the racist history of housing in Richard Rothstein’s The Color of Law, the horrid effects of losing one’s home in Matthew Desmond’s Evicted.  The rise of the real estate state, and the fight against it, could affect the squatter’s movement and the possibility of union-built housing, such as Electchester Housing in Queens, or neighborhood development non-profits.  Or how it could affect affordable housing design, with the push against land-generous public housing (what little still remains) or the trend to micro-apartments.  But it all starts with understanding that the real estate state has a lot on the line and isn’t about to give up the “right” to make a buck off a roof.

For those of us from New York, or really anywhere, who remember solid, integrated, working class neighborhoods, the rise of real estate power described in Capital City rings also carries a painful poignancy for a diversity of both race and class now lost.  Few now remember the giant breweries with hundreds of workers, thousands of printing shops, when 400,000 people worked in the garment center; and fewer still can probably even envision, much less remember, a city that housed them all.

It will still be infuriating, or should be, the next time you see a homeless person on the subway or another luxury tower putting the streets in shadow.  Of course one book cannot turn housing from a commodity into a right.  But Capital City breaks important ground in exposing the high cost of the free market and proposing a plan to get us out of this mess, and for that it’s well worth reading.