No Ship Will Come to Save Us
Housing Expropriation in Berlin?
Protest marches with up to 40,000 people, countless self-organized neighborhood assemblies against rising rents and gentrification, occasionally even attempts at squatting: the housing crisis has become the most important issue in Berlin and triggered significant resistance over the last couple of years.1 This crisis has affected all major cities in Germany, but has a few particular features in the capital.
For many years, the city’s rents were lower than in most other German places, not to mention other European capitals like London or Paris. Over the last ten years, however, Berlin’s population has grown by 400,000—more than ten percent—and the local government has all but stopped building affordable housing. This has led to rents rising sharply—by forty-two percent (for new leases) since 2016, more than anywhere else in the country. And with a homeownership rate of barely fifteen percent, this problem affects an enormous part of the population.
It was against this background that some left-wing activists initiated a referendum over expropriating corporate housing stocks in the city. Named after one such real estate corporation, the initiative “Expropriate Deutsche Wohnen & Co.” (EDW) first got huge numbers of volunteers to collect the necessary 170,000 signatures and then, in September 2021, won at the ballot box with 56.4 percent voting “yes.”
The idea sounds appealing: real estate companies that own more than 3,000 apartments in Berlin will be expropriated, and the holdings transferred to municipal ownership, with extensive tenant control, in a way that rules out renewed privatization. The rents for the 240,000 or so apartments affected will be capped or even lowered, and because we are talking about fifteen percent of the city’s housing stock, this will affect the entire market and thus also benefit other tenants. Ironically, this would reverse a policy pursued by none other than the “red-red” local government (the Berlin Senate) in the 2000s: faced with the near bankruptcy of their city state, the ruling Social Democrats (SPD) and Left Party—the former Stalinist party of East Germany, now converted to “democratic socialism”—sold off 140,000 of the 400,000 city-owned apartments to private investors who had just discovered that Berlin was the new hip place to be and promised handsome profits. The SPD and the Left Party, again in power in a coalition with the Greens, have to find a way of dealing with the success of the referendum, which only the Left Party explicitly supported.
The initiative is seen by many as one of the rare left-wing success stories of recent times, and its strategies and tools for “organizing” are being studied with great interest. We do not share this euphoria and believe that a huge disappointment will inevitably follow; the hopes for a solution to the current housing misery by means of a referendum will crash against political reality, with a bad hangover on the horizon.
What does “expropriation” mean?
Spontaneous sympathy for the campaign was hard to resist, all the more so if one followed the overwrought reactions it triggered, and not only among representatives of capital. The press conjured up the specter of Venezuelan conditions: pictures of dilapidated old buildings in East Berlin in 1989 were supposed to serve as a forceful reminder of where this crazy, completely out-of-date project had to lead, and there was even talk of a “GDR 2.0.” When the loudspeakers of the existing order immediately bring up the horror of authoritarian state socialism, even though the question being raised is only that of affordable housing, the campaign must have hit a nerve. The mere word “expropriation” causes panic; after all, it is an attack on the highest ideological value of liberalism: private property. Many leftists involved in the campaign consider it a great step forward in itself that now, even outside their own tiny milieu, people are talking about property relations and socialization again.
This success of the campaign, however, has a downside. The expropriation it promotes is supposed to take place according to existing law, based on Article 15 of the German Constitution, and it cannot be otherwise in a referendum. That is precisely why what is being proposed is not an expropriation worthy of the name, but a forced sale to the state, because, without compensation, a transfer of private companies to public ownership is, of course, not constitutional. Since Article 15 has never been applied, it is completely up in the air what sum the courts will ultimately judge to be an “equitable balance between the public interest and the interests of those affected” (Article 14), and there is little doubt that the case will end up in court, provided that the Senate takes the referendum vote (which is by no means binding) seriously and initiates appropriate measures. Regardless of the amount of compensation, it is questionable whether the courts would even allow this so-called expropriation. Fifty percent of the rents charged by the corporations in question are still at 6.50 euros per square meter, which is on par with subsidized social housing in Berlin; the state-owned corporations are no cheaper. Judges could conclude that the state does have options in the fight against “rent insanity” other than taking over the real estate corporations, and so-called expropriation is permissible only as a last resort when all else has failed. Moreover, they are likely to regard the arbitrary threshold of 3,000 apartments, above which companies are subject to “expropriation,” as a violation of the principle of equal treatment.
The campaign has responded to this situation with the assurance that it is very possible to have both an “expropriation” that is strictly in accordance with the law and a significant improvement for tenants. Even seven to fourteen billion euros—significantly less than the current market value—would be justified as compensation; with the right financing models this would not burden the state budget with a single cent, rents could be reduced, and, with the housing stock, one would still have a cash cow that could be used to fund inexpensive new municipal construction. In contrast, the red-red-green Senate’s appraisals estimated twenty-nine to thirty-six billion euros (Berlin’s budget for 2019 was thirty billion). Whether the whole operation, should it get off the ground, will benefit tenants at all, however, depends on the amount of compensation in the end. Thus, one legal opinion follows the next, and left-wing activists suddenly turn into financial experts who brood over questions of “capitalized earnings value methods” and “interest repayment rates.” Most of them probably do this with the best of intentions, but as we know, that is no guarantee of anything.
Such discussions will continue in the “expert commission” agreed upon by the SPD, the Greens and Die Linke after their coalition almost collapsed over the issue. The future mayor, the law-and-order Social Democrat Franziska Giffey, declared during the election campaign that there would be no expropriation under her, while her Green Party rival Bettina Jarasch made no secret of the fact that she would ignore a yes vote on expropriation except to use it as leverage in negotiations with the real estate corporations. As mentioned, only the Left backed the campaign, whose activists often come from its ranks. Representatives of the campaign are also to sit at the table of “experts” to discuss legal and financial aspects of the matter for a year. In the end, the Senate will decide.
The new old Senate has already made it clear what it thinks of expropriation. If it considered expropriation of large property owners to be an appropriate means of alleviating the housing crisis, it would not have needed to petition for a referendum in the first place, but could have taken relevant steps itself. What makes it shy away from this are not only legal and financial concerns. It is at least as much the fear of screwing up the city’s economic upswing by attaining a reputation for being hostile to investors, and this fear is well-founded. Even if the envisaged expropriation was merely a forced sale, it would represent an encroachment on the sacred freedom of property. That is why the Senate repeatedly said that such a step would send “the wrong signal.”
Therein lies the crux of every left-wing government: it, too, must court capital, because without investment, there are no jobs and no tax revenue. And therein, consequently, lies the crux of the campaign: as much as it strikes pragmatic tones and exercises budgetary expertise, the step it demands is one that even a left-wing Senate is unlikely to take. Some representatives of the campaign are aware of the foreseeable consequences of expropriation, but they don’t see a problem in it: “If the rating agency Moody’s threatens Berlin with a credit rating downgrade, we say with our campaign: yes, stay away. We don't want you here.” No government, however nominally left-wing, can adopt that position if it still has half a right mind. But the campaign has chosen to pin its hopes fully on the government.
“You have to take housing away from corporations,” campaign activists declare. That would indeed be the simple, obvious, radical solution, but it was not on the ballot in the referendum because this cannot be achieved within the confines of the bourgeois legal order. To their great reassurance, this occasionally occurs to the bourgeois ideologists as well, and therefore the same papers that indulge in anti-communist fear fantasies immediately give the all-clear: “Must we then fear that socialism can be introduced on the ground of our constitution … ? No chance, after all. Anyone who wants socialism still has to stage a proper revolution. Under the constitution, on the other hand, the core of the property system takes precedence.”
The newspaper is not alone in this assessment. The share prices of the companies that would be affected by the “expropriation” did not plummet after the referendum. One corporation, Akelius, did sell its Berlin holdings, but another grabbed them immediately. If you read the business press, you don’t get the impression that the industry is in a tizzy. On the contrary, it relies on the existing law, which is committed to protecting private property. What it doesn’t like, for understandable reasons, is the mood, the widespread unease with the current state of affairs, which is expressed in calls for “expropriation.” The wiser people from the campaign, who do not believe in a real political success of the matter, say the same thing with the opposite sign: even if in the end probably nothing will come of it for the tenants, at least “the discourse has been shifted.” This is not to be dismissed out of hand, but it turns out to be a mixed bag.
A “shift in discourse” to where?
The fact that an absolute majority is backing the slogan of expropriation and socialization of housing, thus breaking out of the ideological boundaries of private property, can be considered an undoubted success of the campaign. It has taken up—but also strengthened—an underlying change of mood that had already become apparent before the referendum and was expressed not only in mass demonstrations, tenant protests, and neighborhood meetings, but also in polls, according to which as many as thirty-eight percent of those surveyed throughout Germany “consider it a justifiable means of criticism [to] occupy vacant buildings in order to draw attention to the housing shortage.” After all attempts to raise the question of ownership through squatting have failed in recent years due both to a lack of vacancies and to the hard line of the red-red-green senate, the campaign has succeeded in popularizing the idea of socializing housing in other ways, and thus putting it on a mass basis—albeit at the price of confining it within the narrow limits of bourgeois politics. When, on the other hand, signs like “expropriation now, compensation never!” appear at demonstrations, there are at least hints of the direction in which the struggle could develop. In the near future, when the “expert commission” will pulverize the social question of the future of housing in technical-administrative terms, there will be all kinds of opportunities to continue the debate and push it further. So far, the much-cited “shift in discourse” is unquestionably a good thing.
However, the campaign itself has not necessarily helped spread radical criticism. Its focus on large corporations narrows the critique of private property to supposedly particularly sinister actors and “speculators,” as if they alone were responsible for the rent explosion of recent years and “small” landlords had not also exploited the tight housing market to maximize profits—or their personal retirement savings—on the backs of tenants. In the campaign rhetoric, the evil corporations are confronted with a diffuse, class-neutral “we”; there is constant talk of “our city,” which “we” should “take back” or even “buy back,” as if it had ever belonged to “us.” The rhetoric culminates in a local patriotism that insists that profits made here should stay here: real estate corporations, the campaign declares, “are destroying our city for the dividends of their shareholders, who let their billions in profits flow out of Berlin.” Suspiciously often, it is emphasized that it is “capital from all over the world” that is flowing into the “German housing market” and that “our cities … should no longer be playgrounds for international investors.” The end result is the vulgar opposition of “speculation” to “general welfare,” not a critique of the property relations that make the housing business possible in the first place. The leftists active in the campaign should very well know that talk of the “common good” in a class society is pure ideology and that “speculation” is part of normal business and that its moral denunciation has nothing in common with a critique of capitalism, and even stands in its way. In this way, above all, the discourse of the left itself is shifted: from materialist critique of production and property relations to simple populism. When representatives of the campaign promote the socialization of housing as “an investment in the future of our city,” the transition to conformism is complete.
In this way the campaign, in our opinion, stirs up illusions about the relationship between private property, law, and the state. “What would certainly scare off the actually existing working class would be a scuttling of the referendum. Victories, on the other hand, inspire and create trust and confidence,” write two campaigners.2 But this kind of failure is inevitable. In the end, there is likely to be a huge demoralization: the tireless scrambling of several thousand activists will in all likelihood have been for naught. Either the Senate will water down the matter and a compromise that helps no one will be reached, or, contrary to expectations, it will introduce a law to buy 240,000 apartments at a bargain price, in which case the courts will intervene. Or, and this would be an even more fatal outcome politically, the “expropriation” will go through, but the “rent insanity” will continue to run rampant.
The campaign raises the strategic question of whether radical criticism should be abandoned in favor of a broad impact, and whether one should simply promote skewed ideas that are anchored in everyday consciousness. Some of the campaigners are probably attached to such notions themselves; others are probably aware that they do not address the real social conditions and that the housing question in capitalism cannot be reduced to “speculation,” but they do it anyway for tactical reasons. Such “mediation” of anti-capitalist critique, which in reality it erases, imagines itself superior to the elitist ivory tower of purist critics, but in fact is itself much more elitist, insofar as it apparently considers the “broad population” to be too stupid to acquire an adequate awareness of its own situation and the possibilities of changing it.
The campaign started with the promise of moving from a small-scale war with apartment owners to a big offensive. This has brought it huge support, because the small-scale war is grueling and successes are rare. On this basis, even anarchist friends have gone collecting signatures for the petition. Finally, all reasonable people can probably agree on one thing: the more housing that is taken out of the private market and transferred to social ownership, the better for those who live in it. The success of the campaign on the streets and at the ballot box is a symbolic victory, but anyone who is serious about the housing issue should beware of the illusion that the battle has already been won. It should really start now, first and foremost through a radicalization of the forms of struggle and a generalization of the critique, which should not be limited to individual real estate corporations but tackle property relations as a whole.
The fact that a “left-wing” Senate is not an ally in this struggle will become clearer in the coming months of representative weaseling. A grassroots assembly in one district of Berlin declared in April 2018: “
No government can afford an ‘anti-business’ image. The overdue declaration of war on private owners … can only come from below—from the tenants. From people who don’t understand why more and more of their meager income goes to pay for a roof over their heads. Who don’t understand why you have to pay rent at all. After all, the houses could belong to everyone and be managed by everyone together.
That ultimately all houses should be expropriated, that overcoming the housing crisis can only be meaningfully thought of in a different form of society and can only be achieved by overcoming the general misery called capitalism—in this insight the moment of a collective self-empowerment flashes up, which points far beyond the limited procedure of bourgeois realpolitik, going to the ballot box, and “expert commissions.”