Chris, one of my most faithful readers, sent me a link to a brief piece by a Marxist, Michael Roberts, summarizing and linking in turn to some French criticisms of Piketty. This is a bit too inside-baseball for me to comment on, but one line in the piece struck me, and as I was taking my five a.m. walk this morning, I found myself chewing over it. Roberts says, "[Michel] Husson also points out that Piketty’s merging of the definition of capital, as Marx sees it, into wealth, by including housing and personal financial assets, distorts the real laws of motion of capitalism."
Why wouldn't one include housing in a tabulation or evaluation of the capital in a society? I wondered. Maybe this is obvious to real Marxists, not cocktail party Marxists like me, but I don't get it. This was the train of my thinking as I walked along [interrupted only by catching sight of a deer in front of the Finley playing fields on Old Mason Farm Road.]
If a capitalist takes the profits from this year's operations and uses them to build a new factory, that is an addition to capital, right? Suppose however he decides to diversify and builds a seaside resort, which he runs at a profit. That is capital too, no? It provides services rather than goods to consumers, but it is a for-profit enterprise, and the money invested in it surely counts as capital. How could it not? Surely Marx, more than anyone, would have argued that capital is not stuff, but surplus value extracted from workers and turned into a source of further surplus value.
Having made a killing on the seaside resort, suppose the capitalist uses his profits to diversify further by erecting a luxury apartment building that he rents to upscale yuppies who want a prestige address. That building also is capital, right? I mean, if the seaside resort, where people stay for a week or two, is capital, then the luxury apartment building where they live for years, paying high rents and making a ton of money for the owner, must also be capital.
Now suppose the capitalist decides to cash in his investment, and takes the building condo, as they say in New York. The renters all jump at the chance to buy their apartments. The day after the sales go through, the building, if I understand Roberts correctly, ceases to be capital and becomes -- housing, which is not capital, according to him.
But wait, there was a recording error in the transfer of ownership of the apartments from the capitalists to the renters, and each renter, instead of buying his or her own apartment, has actually bought someone else's apartment. No harm, no foul. Each renter now owns an investment property [the condo down the hall], on which a hefty rent is paid, and is of course also still paying rent on the apartment he or she or they live in. Each renter/owner, we may suppose, is making a profit, and so each of them has a piece of capital, yes? Until the error is corrected, and at a big condo party, everyone swaps deeds [all the apartments are the same size and sold for the same amount], at which point the building ceases to be capital, and finally becomes simply housing.
I have to confess that this seems to me a piece of what Marx would have called ideological mystification. I just don't get why housing is not capital even if it is owned by the person who lives in it.
Would the real Marxists out there please enlighten me.