The development of capitalism in housing provision

By Michael ball

Much has been written on the history of working-class housing to rent in the
nineteenth century. Explanations for the dominance of this housing tenure
generally centre on the low level of wages in relation to housing costs, and on the
attractiveness of this type of investment for the relatively small amounts of money
capital available to the petty bourgeoisie. It is frequently not relied, however, that
private landlordism was predominantly part of an historically specific structure of
housing provision which also involved particular types of landownership, house-
building and finance as well as private landlordism. The main features of this from
of housing provision in Britain emerged during the early years for nineteenth
century. The object of this paper is to elaborate the major social relations involved
in that structure of provision and to explain how they arose.
A central theme of the argument will be that there were major changes in the class
relations involved in housing production. Capitalism came to dominate house-
building in the form of the speculative housebuilder, and the emerging dominance
of the speculative housebuilder and the private landlord were mutually reinforcing
processes: each party profited from the existence of the other. The form, however,
that speculative building took was influenced by the existing nature of landowner-
ship, and a highly inefficient building industry was the result. Inevitably the work-
ing class ended up paying the price: as consumers faced with high housing costs
and as building workers subordinated to capital in an industry where the
extractions of absolute surplus value was paramount for profitability.
It will be argued that the economic interests of the landowners and capitalists who
came to dominate this structure of provision were the main determinants of its
form. The breakdown of guild production eventually enabled them to out-
manoeuvre an independent craft workforce and reduce them to wage labourers.
Much emphasis, therefore, will be placed on the economic interests of the various
agents involved in housing provision and on how those interests interrelated. Some
explanation, consequently, will have to be given as to how those interests were
formed and how they could be given expression. This requires movement away
from the economic level. To avoid, however, reproducing a history of the
development of capitalism in Britain, general changes in British society and the
widespread use of political repression to ensure the dominance of capital will not
referred to in any great detail.
Non-economic methods were undoubtedly necessary to ensure the general
dominance of capital. But within housing provision specifically economic housing
provision, as will be shown. It is highly likely, however, that the existence of a
contemporary overtly repressive legal apparatus and the threat of non-economic
intervention aided the smooth working of these economic processes. But, by their
very nature, specification of their detailed effects is virtually impossible.
The arguments presented here rely on a series of secondary sources that were
predominantly interested in certain features of urban development in specific
localities. Those histories show that there was an incredible variety and com-
plexity in the forms of housing provision during the transition to capitalism in the
period although a quite sizable body of information now exists. Some ‘facts’,
therefore, are highly conjectural and open to dispute. Empirical histories, however,
are not just about getting the facts straight. They are based on particular theories
of social and economic behavior from within whose framework the historical facts
are codified and interpreted. Different theories emphasize particular aspects of
historical change. Here I want to look at changes in class relations, whereas most
of the reference sources seem oblivious to the existence of such change.
The theoretical exercise which is involved in the following explanation will, it is
hoped, become clear. A simplified chart to help clarify the argument is given in
Figure 1. The first line gives the structure of guild production, which will be
discussed briefly in the next section. The second line gives the dominant structure
of capitalism housing provision. Each of the five agencies involved in this form of
provision (landowner, estate developer, speculative builder, building worker and
house owner) will be discussed separately. Finance took a number of forms and,
therefore, cannot be treated as a unitary agency but will be considered at the
relevant stages.
The transition from feudalism to capitalism in housing provision centred primarily
upon the form taken by housebuilding. In an intermediate period, independent
craftworkers free of guild restrictions played an important role in facilitating the
development of capitalist housing provision. In order, therefore, to explain the
reasons for the development of the particular structure of capitalism housing
provision that arose, it is not possible to discuss each agency in the order that they
temporally intervene in that form of housing provision. Instead, for ease of
explanation, they will be considered in the following order: estate developer, house
owner, speculative builder and building worker, and finally landowner.
These is a danger when trying to explain changes in class relations of forcing many
divergent and complex variations in those relations into a narrow and formalistic
structure. It should be emphasized, therefore, that what is classified as ‘capitalist
housing provision’ in figure 1 is not the only form in which housing was provided
in nineteenth-century Britain. Dominance is neither meant to imply exclusiveness
nor even necessarily the majority form of provision. This structure was instead the
form of housing provision that set pace and direction of change during the
nineteenth century. Its collapse, moreover, at the beginning of the twentieth
century was the starting point for the long, slow decline of private landlord in
Britain.
For similar reasons, it is not possible to put precise dates on its emergence as the
dominant housing form. London tended to set pace for the rest of the country, so
in different towns and regions a wide divergence in the dates of changes in housing
provision would have occurred. It does seem clear, however, that capitalist housing
provision triumphed at roughly the same time as the emergence of the capitalism
contracting system in the non-housing sectors of the construction industry. Its
broad framework subsequently lasted throughout the nineteenth century but there
were important changes in some of the elements, specially concerning finance (e.g.
the rise of the permanent building societies and the financier solicitor) and in
relations to speculative housebuilders (who got bigger and stated to own a lot of
house). But none of these subsequent changes will be dealt with here.

I building guilds and the rise of speculative development

Like virtually all urban craft activities in the Middle Ages, building work was
organized upon the basis of feudal craft guilds. Each trade had its own guild
consisting of masters, journeymen and apprentices. Numbers were limited though
apprenticeship and in most trades by restricting operatives to working in one town
only. The activities of the masters were circumscribed by rules concerning
employment, methods of production, the quality of work done and its price.
Masters thereby had limits placed on their ability to subordinate other workers in
the trade and on the potential size of their profits. In this way permanent
employment was virtually assured, and wage differences kept within narrow
bounds. In Edinburgh, for example, in 1500, journeymen were being paid 9d a day,
only 1d les than their masters (quoted in Postgate, 1923).
Anyone wishing to have building work undertaken would make separate arrange-
ments with each craft. This type of building organization did not require the
detailed specification and drawings usual in modern building nor did the type of
building contract exist that is now generally associated with such prebuilding
calculation. Instead, clients would specify their basic requirements and the
materials and style in which the structure should be built. Each craft would then
apply its long established work practices, techniques and details of design to the
building process. These guild practices produced a rigid division of labour within
the building process and left little possibility of coordination between trades. The
clients themselves generally took on the task of supervision and coordination.
Guilds were in no sense an idyllic form of organization of building process. The
hierarchy within trades of masters, journeymen and apprentices obviously placed
the masters in a strong position. Aprresntices’ labour was, for instance, completely
unpaid. Conflicts between building guilds and within the guilds themselves were
frequent. The dissolution of the building guilds is the story of the development of
capitalism in the building industry. This took two fairly distinctive paths: the
growth of the building contractor, associated particularly with large scale public
works projects and private industrial developments, and the rise of the speculative
housebuilder.
The division between contracting and speculative building was not total, each type
of building enterprise dabbled in the other activity where feasible and profitable.
Even, so, there was (and is) clear distinction between the two types of building
activity. They arose for different reasons and produced separate organizational
structures and paths of development (e.g. the former has always had a far mpre
unionized workforce). The rise of the building contractor, or Victorian master
builder, is better documented than of the speculative builder (cf. Kingsford, 197;
Cooney, 1995; Clarke 1980) and will not be considered in detail here.
Under feudalism building generally did not take the commodity form, instead they
were consumed directly as use-values by the commissioning agency. Public
buildings were the mainstay of the building trades but even houses would usually
be commissioned by the intending occupier. For capitalist relations to develop in
housing provision, therefore, housing consumption had to become widespread in
the commodity form through either its purchase or by renting.
Housing provided as a commodity does not necessarily imply the existence of
capitalist provision. Houses have been bought and sold for thousands of years.
Housing in the commodity form is not unique to any particular mode of production
but depends simply on the possibility of commodity exchange, no matter how
simple or limited. Housing provision in the commodity form, however, only
became generalized with the separation of home and workplace associated with
the development of capitalism. Domestic life and labour were at the same time
redefined to centre on the reproduction of the nuclear family; a new role that
required far more living space than had previous lifestyles.
Under feudalism, most agricultural labourers built their own dwellings; invariably
they were rudimentary wood, stone and mud structures. Producers in urban areas
generally lived at their master’s workplace and home. Domestic space for virtually
all social grades was limited; the ‘home’ was not the centre of life. As late as the
eighteenth century in London, for example, even the shopkeeper or well-to-do
artisan would live only in one or two rooms, renting out extra space in they had
any (George, 1996, 103).
The fist social groups to face housing provision in the commodity form as the norm
were at the social extremes: the urban poor and the well-to-do. For the poor, casual
or no employment, increasingly common with the decline of feudalism in the
larger towns like London, obviously made living at the workplace impossible.
Housing for them could be found only by renting low quality accommodation or
by squatting. Bad speculative building and slum lardlordism provided the former
and successive laws attempted to stop the latter. (one notorious late eighteenth
century slum builder in London went under the incongruous title of the Hedger of
the Dog and Duck in St George’s Fields!)
At the other social extreme, the stabilization of the Court in London, the
breakdown of the patronage system of great feudal lords housing large retinues of
lesser nobles and fellow travelers, and an increasing surfeit of noble siblings made
property less by not being the first-born male heir, led to a rising demand for
fashionable London accommodation. By the seventeenth and eighteenth centuries,
the Court, its functionaries and the lesser nobility were providing a growing market
for speculative developments; as, furthermore, did the fashionable spa and seaside
towns in the latter half of the eighteenth century. At the same began to demand
separate domestic accommodation in the town where they conducted their
business.
Speculative housebuilders initially enter the housebuilding process as the craft
builders’ clients, originating according to Summerson (1978) in the Middle Ages.
As clients, however, they wanted houses built because of their marketability as
exchange values rather than for their direct usefulness as accommodation. As the
providers of houses as commodities, ‘private landlordism’ and ‘speculative house-
building’ were practically synonymous. The two roles were often so integrated that
they are difficult to distinguish. The term ‘speculative housebuilder’ is in fact, used
in the literature to cover a wide variety of activities within the housing provision
process. Whilst this widespread use of the term might not hinder narratives of
particular developers/builders/landlords or those of the development of specific
localities, it does create problems for an analysis of the types of social agent
involved in housing provision as it conceals important distinctions.
Here the term speculative housebuilder will be limited to those social agents who
had direct overall control of the building of housing for general sale or letting. The
initial type of ‘speculative housebuilder’ can therefore, be seen to be something of
a misnomer. The activity they involved themselves in was residential development
(or sometimes just landlordism) rather than housebuilding. As developers, they
bought or leased the land and set the builder to work. They profited not from the
building provcess but from having to pay less for the plot (and/or the erection of
the dwelling) than they made from disposing of it. In doing so, they were
performing the classic merchant function of bringing the product of willing sellers
onto a market where it could command the highest price; profiting on the
difference between the buyinding and selling price. Capital investment by theses
speculators, as well as by housing landlords, was consequently stopped the growth
of large-scale building capitals and traditional, or even regressive, building
techniques. The development on merchant capital inhibiting ‘the really
revolutionizing path’ of capitalist development (Cpital III, chapter 20). To explain
why this was so, the operations of these developers and the reasons for those
operations must be considered in more detail.

II Estate development
Once housing became a commodity anyone could speculate in this provision as
long as they had the capital and land. The problem was acquiring then. This would
seem to present no difficulty for the original landowners who were, owners would
lease land to an intermediary, a speculative estate developer, even though they
knew the developer invariably took the lion’s share of the profits.
Estate developers were well know and involved in substantial schemes by the
middle of the seventeenth century; approaches by developers to landowners in
London in the wake of the Great Fire of 1666 were not seen, for example, as a new
innovation. Yet in no sense was their existence necessary for housebuilding; some
landowners or, more frequently, builders undertook the development role
particularly on smaller schemes. There were nonetheless important economic
reasons for the developers’ existence.
The estate developer determined the type of development that would take place
and its timing. Laying out the street pattern, subdividing the land into plots, and
broadly determining the type of housing to be constructed. Where the lan was
leasehold, the nature of the development would be determined by negotiating a
building agreement with the landowner or an agent of the landowner. The
developers in such cases profited through improved ground rents by being able to
sublet building plots at a higher rent than paid to the landowner. They could then
hold on to the improved ground rents as an investment or alternatively sell them to
get immediate revenue.
The aim of the estate developer was to profit out of the development gain generated
in the provision of new housing. But more was required to realize this development
gain than simply obtaining possession of the land through purchase or a building
agreement. Successful development actually had to occur. This generally involved
the developer in far more than just a formal subdivision of the land into building
plots. Someone had to be persuaded to build the house and someone had ultimately
to be prepared to pay a high price to live in them. The result was that the developer
had to undertake a considerable amount of building work through site preparation,
and possibly through housebuilding itself. The distinction between estate
developer and builder is consequently blurred. There is nonetheless a fairly clear
distinction between those who were mainly involved in development gain, and
those who built primarily to make a profit out of building itself. Many of the most
famous large-scale speculative housebuilders, including Barbon, Burton and even
Cubitt, were estate developers predominantly rather than housebuilders.
Whilst estate developers were capitalists, production relations were not necessarily
so. As developers were profiting out of the development gain, not from production,
non-capitalist relations in production were feasible. The precise activities a
developer had to undertake to make a profit dis not result from the physical
requirements of house construction but from the contemporary social relations
involved in housing provision. In other words, they depended on the other social
agents in existence at that point in time, the builders, landowners, building owners
and financiers, and on the economic relations faced by each of them. These social
agents changed. Prior to the nineteenth century capitalist builders were virtually
non-existent, for example, so selling plots to such builders was hardly an option
for earlier developers.
Estate development was undoubtedly the most profitable aspect of house-building.
Rates of return of 300 or 400% were common. One developer in 1808, for example,
hoped to make a profit of L80.000 by developing some land in Liverpool
purchased for only L10.000 (quoted in Chalkin, 1974, 152). But large amounts of
capital were required, and the project might fail, so those with money has to be
persuaded to invest it. The size of the capital required effectively excluded most
of those directly in the building industry. A well developed network of financial
institutions did not exist; large sums of money could be raised but it had to be done
on the basis of patronage of wealthy associates. In provincial towns development
tended, therefore, to be a part-time activity of wealthy locals – aristocrats, gentry
or tradespeople. In London, professional speculative developers in seventeenth and
eighteenth-century London; to compensate for their lack of building knowledge,
they would hire the services of a master craftsman, surveyor os self-appointed
architect, or form consortia with such a specialist in their midst (Chalkin, 1974;
Summerson, 1978, chapter 3).
Barbon’s activities at the end of the seventeenth century illustrate the nature of
these development operations, and the size that they could attain (see Summerson,
1978, chapter3). He developed on a gran scale, laying out on occasions L200000;
arguing that large projects produced the greatest development profit. Often he
encountered opposition to his schemes, such as over the Red Lion Square
development in Holborn. So subterfuge was a necessary element in this business,
not only with recalcitrant property owners but also in acquiring credit. He would
build houses only when the plot could not be let.
A contemporary account summarizes Barbon’s system:
He was the inventor of this new method of building by casting of ground into
streets and small houses, and to augment their number with as little front as
possible, and selling the ground workmen by so much per foot front, and what he
could no sell build himself. This has made ground rents high for the sake of
mortgaging, and others following his steps have refined and improved upon it, and
made a super foetation of houses about London.
Control over the design of structures erected by the small builders to whom plots
were let had to be maintained to give the development a coherence that would
enable it to sell. Control over the quality of the work done was not o important,
most potential purchasers or occupiers would be ignorant of such shortcomings.
Image rather than structural quality was the selling point. Skimped work and a
cheap finish were therefore part-and-parcel of Barbons’s developments.