ÁREAS FUNCIONALES

In capitalism, land is increasingly commodified, but always in a process of being shaped, reshaped, and challenged by the spatial practices of various groups and individuals whose identities and actions undermine the comparatively more homogeneous pre-capitalist city (Katznelson, 1993)¹⁸. Rent is consequently the rationing device for the commodification of land, required by all its inhabitants for multiple uses. And, given that rent is derived from a title to land (i.e. landed property), this title can change hands infrequently but decisively, just like a pure financial asset (Harvey, 1989b).

Land rent can be understood as the future payment for a plot of land but, differently from other commodities, rent in its natural state costs nothing to be produced to its owner. In fact, in words of Marx, rent only comes to exist when commodified and appropriated by a parasitic landowning bourgeoisie (Marx, 1995). Notwithstanding that

18 Katznelson’s could be an excessive generalisation. According to Hardoy (1975a, b) and Hardoy et al.

(1978), a constant characteristic of pre-Columbian, colonial and modern Latin American cities was their spatial segregation. However, in Santiago, its highly stratified colonial socio-spatial structure until the 19^th century was far more socially integrated than the capitalist city developed later (Romero, 2007).

its value is explained by classical theorists as produced by physical characteristics, in Marx’s categories, rent starts with the social transformation of nature. In fact, differential rents can be produced by differences in land productivity. A first form is Differential (ground) Rent I, explained by Marx as the surplus generated by the social work performed in a piece of land with better productivity (or centrality, or connectivity). Then, due to the intensity of the capital invested on land and the capacity of the capitalist class to technically transform the natural properties of land (or space) Differential Rent II emerges. Both types of rent are to be accumulated at the end of the day by a landlord, or the land-owning class (Borisov et al., 1965; Marx, 1995).

However, in the city, the natural characteristics of land are less important, whilst the social agency produced around it by the needs and interests that the city agglomerates are far more crucial. For instance, with rent levels established by human-produced scarcity, the power exerted by landowners can be decisive in the determination of a level of rent, since it allows them to hold back this resource, creating artificial scarcity, until they receive a positive return above all the differential rents (Barnes, 2000). This is basically class-monopoly rent, and is further developed below.

The differential rents in the city are artificially created. According to classical interpretations (e.g. Von Thünen’s model), land rent is determined by the distance of a land plot to a central market place (Garrocho, 2003). In Ricardo’s model, it is produced by the productivity of a piece of land in comparison to a totally unproductive plot.

Alonso’s model of urban location follows Von Thünen’s logic, but it replaces ground productivity with social agents’ purchasing power, yet maintaining the distance to the centre as rent-generator mechanism (Alonso, 1972). Yet in the city, the creation of differential rent is far more complicated, and more factors intervene, such as distance to the different centres in the city, building regulations, density permitted, advantages in infrastructure nearby, and in general, everything that generates externalities in the urban space.

Contemporary Marxism has reinterpreted Marxian classical categories of rent and contextualised them in the contemporary capitalist city (Harvey, 1974, 1989b). From these categories, the social nature of rent can be explained as follows:

a) Although the general definition of rent conceives it as payment from a user for utilising a natural scarce productive resource owned by somebody else, in the case of ‘urban’ rent, the process is far more complicated. Urban rent is neither a naturally produced resource nor naturally scarce. Instead, it is human-produced and artificially scarce.

b) Rather than being an efficient rationing device for organising land and its related resources for meeting the productive needs of a society (as it is defined by classical definitions, more applicable in isotropic spaces), rent in urbanised spaces is produced by a social group, acting as a class and aiming at incrementing its price without producing anything for it.

c) The city is a space where power relations matter. The urban ground rent is shaped by the interests of the land owners acting together as a class in order to raise the rate of return when there is not enough scarcity¹⁹. This is a particular form of ground rent, seldom stressed by classical or neoclassical authors, and that usually largely exceeds differential land rents. Urban rent as ‘class-monopoly rent’ is based on the interests of the owning bourgeoisie who on the one hand intervene in political and institutional arrangements and influence the urban land market seeking to obtain a better rate of return, and on the other generate extra surplus because they own a scarce commodity, which is the well-located city space and/or building, rented or sold in the market at much higher price than its real cost of production (Borisov et al., 1965).

d) This class power is exercised in order to reduce the uncertainty of land-use competition, and takes place through governmental regulation (planning controls, provision of infrastructure, subsidies, or even political corruption), giving the speculator or developer reasonable expectations over the long run.

State institutions and regulations, a ‘superstructure’ made by the ruling class,

19 Marx observed a contradiction within the bourgeoisie when the full accumulation of rent by landowners undermines the rate of profit of industrial capitalists, who are dispossessed from those rents (Marx, 1995).

This contradiction finds analogy in the city between speculative landowners (who profit from land increases fully appropriating the socially produced rent) and urban developers (for whom most of their investment goes on paying the land price). As seen in CHAPTER 3, in Chile this contradiction tends to be non-existent because both economic agents are essentially the same.

pursue the maintenance of this existing organisation intact, while allowing growth and accumulation, avoiding cyclical crises and controlling social discontent. This process rests, essentially, upon the nature of liberalism, and its ideological, economic and political principle of private freedom, regulated by the exertion of class power (Jessop, 2002). This aspect will be further developed in section 2.4.

e) Rent in an ascendant way, percolates upwards but not downwards; it transfers money from low or middle income groups to the dominant bourgeoisie, transiting from differential into monopoly rent, ending finally in financial spheres. If, as Marx (1995) noted, during the industrial revolution, money was transferred from a productive bourgeoisie to a landlord-class (this applied to the period of mass industrialisation in the world during the 20^th century too) after the abovementioned ‘urban revolution’ in the second half of the 20^th century (Lefebvre, 2003), the ground rent started to be extracted from the rented land or building, rather than from productive processes.

f) The modern mechanisms of class-monopoly rent need to operate in constrained markets (with the aim of generating scarcity), these being one of the main producers of urban spatial fragmentation. The exploitation of rent needs to be produced in segmented niches, usually spatially constrained sub-markets, for the purpose of assuring enough scarcity within them. Building regulations are vital for this (for instance, through guidelines that limit the small-budget construction) so certain geographical areas are aimed at certain income groups whilst the social access to those areas is constrained insofar as land and property prices increase. The impact on the price of housing results in large sectors of society

“finding barriers to operate in the market in so far as their ‘need of housing’ is not paralleled by a payment capacity that guarantees [enough] levels of accumulation to the producers of this commodity” (Jaramillo, 1981: 21; my translation from the original in Spanish).

g) Class-monopoly rent in the city is a reified mechanism; it responds to the necessity of creating money without producing value. This responds to the rules of the financial market, where the primary circuit of capital is radically moved

into the second one – speculative and land rent-based – always under the condition that the urban realm offers better rate of return rates than the financial or commercial market. Otherwise, capital is sent back to productive spheres again. This is thus a plausible explanation for the process of massive reinvestment and renewal in formerly dilapidated areas, as seen in the following sections.