Tent cities are popping up in cities all across Canada as a result of rising homelessness and inadequate supports. In 2016 approximately 235,000 people in Canada experienced homelessness, with 35,000 without permanent shelter on any given night. Advocates for the homeless would say the total number is much higher than the official figure, since many people who are unhoused live with friends or relatives or couch surf and do not come into contact with emergency shelters. We haven’t seen homelessness like this since the Great Depression almost a century ago. Why is this happening and how do we solve it?
The purpose of housing under capitalism
Housing is a basic human need; it is necessary for survival. Unfortunately, under capitalism this essential human necessity has been turned into a profit-driven enterprise. Housing is monopolized by wealthy landlords and leased out to the workers in exchange for rent. According to the apologists of capital, these landlords take rent in exchange for providing a valuable “service”. In reality, the actual value represented by an apartment or a house is a tiny fraction of the amount that we pay in rent and mortgage payments. Why is it that a house built in the 1970s and maintained in its original condition can go for over a million dollars in today’s market? Does it contain more labour today than it did when it was built? The actual value of a property is represented by the labour and materials that were required for the initial construction and for maintenance. Rent does not reflect the “value” of the property. Real estate is one of those commodities that has a price that far exceeds the amount of labour contained in it. Marx explains that “in order to sell a thing, nothing more is required than its capacity to be monopolized and alienated,” and this is what has occurred under capitalism. Landlords can charge us exorbitant rent because they have a monopoly over housing. Working class people are left with no choice but to hand over our hard-earned money to these leeches in exchange for shelter.
Landlords receive much higher compensation than the property is actually worth. Where does this wealth come from? Marx explains that ground rent is parasitically extracted from the productive sectors of the economy such as manufacturing. Rent comes from “a deduction from the average profit or from the normal wages, or both. This portion, whether of profit or wages, appears here as ground-rent, because instead of falling to the industrial capitalist or the wage-worker, as would normally be the case, it is paid to the landlord in the form of lease money.” This concept is easy to see in practice today, especially in a city like Toronto where wages are stagnant and rents go up every year. It is plain to see that the wealth that landlords are collecting each month is extracted parasitically from the rest of the economy.
Real estate represents a large and growing portion of the total economy. According to the Financial Post, “Total residential construction has surged 22.5 per cent in the past year and that has taken the housing share of GDP to a record high of 9.3 per cent—double the historical norm. Strip out housing, and GDP contracted 3.5 per cent in the past year (versus the actual decline of 1.5 per cent).” While real estate is a parasitical sector of the economy, it is currently acting as the main lifeline for Canadian capitalism and it is the most profitable sphere for investment. Instead of investing in production, the capitalists are throwing their hoards of wealth into speculation on real estate. This speculation is serving to push property prices further and further up and out of the reach of ordinary people. It is becoming increasingly difficult for low-income and especially unemployed workers to access housing.
Capitalism, unemployment and housing
Under capitalism, there will always be a section of the population that cannot find work and is unable to afford housing and other necessities. Unemployment and the homelessness that results from it are not the exception under capitalism but the rule. With the exception of times of war, the system cannot provide jobs for all of those who are willing to work. Even in periods of economic prosperity there are not enough jobs for everyone. There are a few reasons for this.
When a section of the working class is unemployed and desperate for work, the employed workers live in constant fear of joining their ranks. The capitalists need their workers to feel like they are replaceable and open to the threat of losing their jobs. When a worker complains about low wages or difficult work conditions they are told they are lucky to even have a job and that there are hundreds of workers willing to replace them. A high unemployment rate results in higher competition between workers for a limited number of jobs and gives the capitalists an advantage when setting terms of employment. The bourgeois economists actually admit that a certain unemployment rate is good! This is called the “natural rate of unemployment”. According to mainstream bourgeois economists, the unemployment rate should not fall below this rate because it would lead to higher wages (the horror!).
Regardless of the wishes of the capitalists, the unemployment rate is mainly determined by the laws of capitalist production, such as the process of capitalist accumulation. Under capitalism, the capitalists are forced to perpetually invest in more efficient ways of producing commodities in order to compete with other capitalists. This results in a general rise in the productivity of labour, in other words, the amount of wealth that can be produced by one hour of labour. Rising productivity would benefit humanity under a socialist economy, where wealth is distributed based on need and everybody who is able to work is given a job. Under a rational system, rising productivity would result in a shorter work week and a rising standard of living for all.
Under capitalism, rising productivity actually hurts the very workers who create all of the wealth in society. It allows the capitalists to produce more wealth with fewer workers. Capitalism creates unemployment at the same time as it creates wealth. As a result of innovation, we are able to produce more and more wealth as a society; but each time a new advance is made, large sections of the working class are laid off. As society’s ability to create wealth grows, a growing section of the population is unable to access that wealth because they cannot find employment. After months of job searching, a layer of these unemployed workers are priced out of housing and forced to find shelter by couch-surfing and sleeping in their cars. There are even instances where the combination of low wages and high rents lead to employed people finding themselves homeless. When all other options are expended, many of these unemployed workers are left with no choice but to set up a tent in a park and sleep there. Thousands across Canada find themselves in this very situation today, where the shelters are at capacity and there is nowhere left to go.
Welfare and homeless support under capitalism
The economic crisis, exacerbated by the COVID-19 pandemic, has resulted in hundreds of thousands being thrown out of work, and consequently tens of thousands thrown onto the streets. In recent months the government has begun reopening the economy and there has been a reduction in official unemployment. Despite this, it is unlikely that the new normal is going to go away. On the surface, we see rising GDP growth and falling unemployment. But with unprecedented national debt, money printing, and a potential fourth wave, the current recovery could prove to be very short lived. With the economic crisis ongoing, the homelessness crisis will only get worse and the current supports in place are grossly inadequate. This is unlikely to dramatically change under this system.
The capitalist system requires welfare for the unemployed, and housing resources for the homeless, to be maintained in a miserable state so workers are forced to work. If workers had the option to survive without working long hours for pathetic wages, the bosses would have a harder time exploiting them. The bosses admitted this themselves when they whined incessantly about CERB during the pandemic. They complained in the bourgeois press that the Canadian Emergency Response Benefit was too high and nobody wanted to work. In reality, people want to work. Nobody wants to live off of $2000 a month from the government. If workers would rather squeeze by on a miserable $2000 a month than work, then wages are too low. But the bosses do not want to raise wages. Instead, the unemployed must be miserable and haunted by the spectre of homelessness so as to force them into low-paying jobs. Simply giving away housing for free or for the cost of maintenance is out of the question for the capitalists because housing is an important sphere of investment and profit for them.
The homelessness epidemic is the inevitable result of how jobs and housing are distributed under capitalism. The social supports that are in place, such as shelters and welfare, are inadequate by design. They are not there to actually help unemployed and homeless workers, but to stop the worst aspects of destitution and in essence to prevent riots and social unrest. If the government was interested in genuinely helping these workers, they could give every homeless person a home and actually save money by doing so! According to a recent study, the average homeless person in Canada uses $53,144 a year in tax-funded social services. The money that is currently going to shelters, social agencies and hospitals, as well as police, fire and paramedic services, could be going toward just giving these people actual homes. This would make sense from the perspective of society. But it makes no sense from the perspective of capitalism.
Instead of providing housing or at least better services for the homeless, the state is organizing a war on the poor. The government is not doing nearly enough to address unemployment or to provide proper housing, but it also does not want the inevitable homelessness that results to be visible. The tent cities that have appeared as a result of this crisis are apparently an eyesore to the very condo developers that are driving forward the crisis. When homeless people set up tents to sleep next to half-empty condo buildings, it pushes down the price that each unit can be sold for. We can’t have that happen! In Toronto, mayor John Tory has unleashed the police to terrorize the homeless and destroy their encampments at Alexandra park and Lamport Stadium. Moss Park is likely their next target. They are going in and destroying the few belongings that the people in the parks have and telling them to just go to the shelters. Some advocates for the homeless have also been encouraging the people in the parks to leave willingly and go to the shelters. The reality is, most of the people sleeping in parks today have already tried going to shelters and the reason they are in the parks instead of the shelters is that they feel safer in the parks. Rather than joining the capitalist government in demanding that these people go to the shelters, we must help them defend their encampments from the state, and we must fight for an end to for-profit housing.
For a socialist solution to end homelessness
A report from 2019 estimates there were 1.34 million empty and temporarily occupied homes across Canada. We cannot continue to allow landlords to keep thousands of homes empty while there are people sleeping in the streets. We must get organized and seize these properties to immediately house the homeless. In order to permanently end homelessness and guarantee decent housing for all, we need to end for-profit housing. We need to employ unemployed youth to build social housing as the solution to both unemployment and homelessness. As long as housing is treated as a commodity built for the profit of landlords instead of the fulfillment of basic human needs, there will always be thousands of people who cannot afford a permanent place to sleep. The fight to end for-profit housing is linked to the fight to bring down capitalism and the capitalist state that represents the millionaires and billionaires. We must create an entire economy where the working class owns and controls the vast wealth in society, and puts it to use for the fulfilment of human need. Only in this way will we be able to end the scourge of homelessness and allow everyone to live in safety and dignity.