A peculiar mix of political extremism and ideological malaise characterizes post-2016 American politics. While factions abound, few of them have anything new to say. Instead, the most outré cliques on both the left and the right have resorted to nostrums that reached the height of their appeal in the middle of the last century. It is as if everyone showed up to a party wearing their parents’ ill-fitting hand-me-downs.
Nowhere is this intellectual stagnation more obvious than in discussions of class. The only contemporary right-wing intellectuals to explicitly recognize the existence of an American class system—the nationalist conservatives—seem to have pillaged their rhetoric of globalist elites and common folk from anti-Dreyfusard pamphlets and even more unsavory German sources. Meanwhile, class discourse on the left tends to revolve around the categories inherited from Marx: proletariat and bourgeoisie, labor and capital.
To say that Marx’s class schema has lost some of its salience is not to suggest that class has become irrelevant. The economic class structure in the United States is more rigid—and the distance between the upper and lower classes vaster—than at any point in the past 80 years, if not longer. But the categories that the US left most often uses have lost some of their purchase. The connection between one’s class and one’s relationship to the means of production seems to have been partially severed, such that people with similar salaries and job descriptions—perhaps even colleagues performing equivalent functions in a shared workplace—may have dramatically different class backgrounds and economic prospects. We need new categories to explain why.
Here, Marx still has something timely to say—not so much in his typology of class as in the method he used to arrive at it. Recall that he developed his theory while watching the emergence of a new class, the urban industrial proletariat. By tracing the development of new social classes, we can better understand how our world has changed and what that means. Following Marx’s example, we should look for distinct social classes that have emerged in the postindustrial era. Doing so will help us identify the driving force behind modern inequality. An ideal subject for investigation would be one that, like the urban proletariat of the industrial age, sits near the bottom of the economic ladder but has become a major political concern for members of all other classes. Such a class would also need to be recognizably new. Our strongest candidate is a group that we have come to call the homeless.
Although poor Americans have always resided in substandard housing, street homelessness only became a large-scale urban phenomenon in the late 1970s. A relatively early study of the homelessness crisis, Peter Rossi’s Down and Out in America, distinguishes between “old” homelessness and contemporary “literal homelessness” by noting that in the decades prior to the rise of mass homelessness, “the homeless by and large were familyless persons living in very inexpensive (and often inadequate) housing, mainly cubicle and SRO [single-room-occupancy] hotels.” By 1979, Rossi wrote, “It became more and more difficult to ignore the evidence that some people had no shelter and lived on the streets.” (Under the current definition used by the federal government, many SRO and cubicle hotel residents would not be considered homeless.)
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Homelessness is now a highly visible feature of nearly every major city in the United States, particularly those on the West Coast. And while it is difficult to track the country’s homeless population with any precision, we know it is a diverse bunch. A minority are chronically homeless, meaning that most unhoused people experience homelessness as either an intermittent calamity or as a transitional stage between precarious housing situations. And although unhoused people are disproportionately likely to suffer from severe mental health problems or substance use disorders, not everyone who is homeless has a mental illness or a drug habit. Even among those who do, many of them acquired these conditions only after losing their housing.
Under the old Marxist paradigm, what determines an individual’s class position is their relationship to the production process. In that regard, too, the homeless population is highly diverse. Many people experiencing homelessness have income, from either formal or informal sources. A share of this population—we are not sure how many, but certainly more than most people would expect—work in the gig economy or other low-wage service jobs. If you live in an expensive metropolitan area, it is likely that you have received an Uber ride, package delivery, or takeout order from someone who spent the previous night in a shelter, car, or tent.
It is not one’s psychiatric history or income source that makes one homeless. The one thing all homeless people share is that they are unable to buy or rent private housing. What determines the condition of their homelessness, in other words, is their relationship not to production but to real estate—that is to say, to a particular type of asset.
What does a class system structured around asset ownership rather than production look like? That’s the question that Lisa Adkins, Melinda Cooper, and Martijn Konings attempt to answer in their recent book, The Asset Economy. This slim, lucid volume argues that the “key element shaping inequality is no longer the employment relationship, but rather whether one is able to buy assets that appreciate at a faster rate than both inflation and wages.” Because real estate is the asset class most crucial to building wealth for most non-billionaires, the authors center most of their class schema around the different relationships one can have to housing. At the very top of their class ladder are investors who hold vast, diversified asset portfolios; the options for everyone else are outright homeownership, homeownership with a mortgage, renting, or—for those at the very bottom of the asset economy’s class hierarchy—being unhoused.
Adkins, Cooper, and Konings date the origin of this class system to the 1970s, around the same time that modern homelessness began. The asset economy emerged from the wreckage of the New Deal system that had governed American class relations since World War II. This system was characterized by relatively low inequality, high union density, robust wage growth, and vigorous social spending, all underwritten by a prolonged economic boom. But as growth slowed, unions continued to secure wage increases for their members, which capital matched with price hikes, resulting in consumer price inflation. As Adkins et al. write, “The wage and consumer price spiral of the 1970s was the symptom of an undecided struggle between different social groups who sought to maintain their respective shares of the national income at a time when economic growth was faltering.”
The resulting inflation “seriously eroded the wealth of the top decile and centile of households—those whose wealth was invested in financial assets such as stocks, bonds, or Treasury bills and whose income derived primarily from interests, dividends, rents, and capital gains.” The governments of the United States, the United Kingdom, and Australia eventually resolved the class conflict in favor of the wealthy. The model of economic governance that would replace the postwar Keynesian system tilted the balance toward asset price inflation by cutting taxes on investment income, slashing social spending, and prioritizing consumer price stability over labor market tightness. The result: Consumer price inflation slowed, and wages stagnated.
“These dynamics would very likely have generated significant social unrest had they not been accompanied by the promise that the gains on asset appreciation would be distributed among the wider population,” the three authors write. Workers were compensated for the loss of future wage growth with an opportunity to buy into the asset economy. For most people, this meant the promise of building wealth through faster home price inflation.
The rise of the asset economy was both a symptom and a cause of the New Deal order’s breakdown. Union density reached its zenith in the late 1950s and had already begun its steady decline by the 1960s. In the wake of the Lyndon Johnson presidency, the old New Deal coalition had fractured and given way to a new generation of Democrats, best exemplified by President Jimmy Carter, who were austerity-minded and ambivalent toward the labor movement. Making asset inflation rather than wage growth the primary end of public policy only further depleted the strength of organized labor and those who favored aggressive public spending to address social problems.
No social revolution totally overwrites the old order. Unions and New Deal–era social programs persist in a diminished form. Similarly, employment relations continue to play an important role in structuring class: A decent income can mean the difference between homelessness and renting an apartment, or between steady homeownership and foreclosure. But while variations in income are highly influential, they are not necessarily determinative; someone with access to equity will always have a firmer grip on their economic position than someone who does not. This is particularly true in the high-cost metropolitan areas that have most fully transitioned to an asset-based class system.
Asset-based stratification has also entrenched racial hierarchy. As Richard Rothstein has documented extensively in The Color of Law, white homeowners spent the century between emancipation and the civil rights era methodically segregating their neighborhoods and, through a combination of public policy and personal initiative, denying the gains of homeownership to Black and brown people. When the Jim Crow era came to an end shortly before the asset economy transition, it was succeeded in the housing market by what Keeanga-Yamahtta Taylor calls “predatory inclusion,” defined in her book Race for Profit as a system through which “African American homebuyers were granted access to conventional real estate practices and mortgage financing, but on more expensive and comparatively unequal terms.” Under predatory inclusion, Black homeownership is less a vehicle for building Black wealth than a mechanism for extracting it.
A feature of the asset-based class system is its relationship to time: Perpetual asset price inflation means that the cost of buying into the asset economy is always getting higher. Each successive generation of prospective homebuyers becomes more dependent on intergenerational transfers of wealth. Under such conditions, anyone whose parents are not affluent homeowners will find it increasingly difficult to become homeowners themselves. Thus, the gap in homeownership rates between Black and white households is close to its highest point in more than a century. Meanwhile, in a country where Black people comprise 12 percent of the total population, roughly 40 percent of people experiencing homelessness are Black.
It should be obvious that a system built on endless asset inflation is inherently unsustainable. As property get more expensive, homeownership will increasingly become concentrated in the hands of a hereditary caste that will monopolize the gains of asset inflation. Indeed, a recent report by the National Association of Realtors Research Group suggests we have been trending in that direction since at least the 2008 housing market crash. Between 2010 and 2020, the report finds, high-income homeowners’ share of housing wealth went from 28 percent to more than 42 percent.
In California, engorged housing costs have led to mass homelessness, social disorder, and a deepening crisis of political legitimacy; other high-cost regions of the country are not far behind. Left unchecked, the asset economy will continually swell the ranks of the homeless and consign what’s left of the middle class to permanent tenancy.
But while the asset economy may already be straining under the weight of its own contradictions, we should not underestimate its durability. Too many people are too invested in the logic of asset inflation—at least for now. Though it has declined from its pre-2008 peak, the American homeownership rate is nearly 66 percent; furthermore, most homeowners have mortgages. If asset inflation were to stop—or, worse, move in reverse—many of them would take a loss on the most important investment they ever made, with implications for not just their own economic security but also that of their descendants. As a result, homeowners as a class understandably tend to be protective of their home values. A substantial body of political science research has found that homeownership motivates far deeper engagement in local politics than can be found among renters. The homeowner class even has a radical vanguard, comprised of groups like the Howard Jarvis Taxpayers Association and the country’s extensive network of homeowner associations. These groups help structure public policy to safeguard homeowners’ investments against perceived threats—particularly measures to increase housing supply and make homes a less scarce (and therefore less precious) resource.
Critically, these groups have also managed to capture the instruments of state power to a remarkable degree. It was not the “1 percent” that, for example, amended the California Constitution to suppress property taxes and enrich homeowners at the expense of state spending capacity; it was a majority of the voters, led by a small number of organized and outraged suburbanites. To this day, Proposition 13 commands majority support in opinion polls and has withstood multiple attempts to tinker around its margins.
In contrast, the constellation of groups representing the interests of renters and homeless people is relatively weak and disorganized. This is partly for the obvious reason that homeowners are in the majority in the United States (65.5 percent, according to the latest Census), and carry greater economic clout. But there are two other important reasons that merit investigation.
The first reason is another great social transformation that was taking place in the 1970s—what political scientist Theda Skocpol calls the transition from membership to management. In Diminished Democracy, Skocpol writes: “Where once cross-class voluntary federations held sway, national public life is now dominated by professionally managed advocacy groups without chapters or members.” Prior generations saw their political preferences shaped, aggregated, and transmitted upward by membership in labor unions, business associations, religious organizations, and fraternal groups such as the Knights of Columbus and the Elks. Critically, because these were membership-based organizations, they could mobilize on a large scale for coordinated social action, including in electoral politics.
As membership in these organizations has decayed, they’ve been replaced by a vast network of nonprofits, advocacy groups, and political action committees. These groups have employees and donors, but they typically do not have members. They can lobby elected officials, and they can engage in public communications, but they cannot mobilize their base, for the simple reason that their base is comprised of donors rather than of members.
The membership-to-management transition has been asymmetrical. Homeowner associations are member-based organizations, and they can be highly disciplined. With private-sector union membership rates inching toward the single digits, groups such as the Sherman Oaks Homeowners Association are the modern era’s superlative example of a class-conscious, organized movement bloc. America’s steadily rising housing costs and chronic underbuilding testify to their success.
The second reason is factionalization. There are, of course, some membership-based organizations that fight for housing affordability. The rise of local Yes in My Backyard (YIMBY) chapters that agitate for more housing development in their communities has been an encouraging development. Many cities also have tenants’ unions, Democratic Socialists of America (DSA) chapters that focus on housing, or organizations like San Francisco’s Coalition on Homelessness that seek to politically organize homeless communities. But the housing activism world is highly balkanized. While many of these groups share overarching goals in common, relations between them can range from frosty to overtly hostile. A combination of substantive complaints, stylistic differences, and personal enmities stand in the way of durable alliances.
A big part of the problem is that many people in the housing policy and activism world—including me—are far too online. A platform like Twitter incentivizes ideological differentiation over coalition-building; you’re encouraged to develop a strong individual voice rather than to craft a broadly appealing message. The quickest shortcut to building a following is rank unpleasantness toward anyone who differs with you even on trivial points. While I have interacted with lovely people from organizations that span the Housing Twitter spectrum, theirs are not the voices that predominate in social media.
Some of these groups have real disagreements with one another, and those disagreements can be profound. Many YIMBYs are skeptical of rent control; some tenants’ rights activists do not see the need for more market-rate housing development. But these differences should not prevent groups that represent those on the losing end of the asset economy from trying to find common ground and collaborating where possible. (Hardcore ideologues—including both free-market fundamentalists and people who oppose building any additional non-public housing—will probably resist any effort to be incorporated into a functional coalition. But these people are a tiny minority within activist networks.)
The membership-based organizations that Skocpol describes in Diminished Democracy often spanned social classes, and so should the broad pro-housing coalition of today. Renters have an obvious stake in bringing down housing costs; so do homeowners who recognize the toll that perpetual asset inflation and artificially constrained housing supply have taken on their communities. And so do institutions like labor unions, which have seen the income gains they fought for swallowed up by housing price inflation. As for homeless people, they should be viewed as neighbors and potential coalition partners instead of as passive recipients for aid. Housed people frequently use the language of compassion when calling for anti-homelessness measures; but compassion, while laudable, is a virtue for individuals. It is no substitute for solidarity.
There are some encouraging signs that housing activists are moving in the direction of broad-based coalition building. In California, Alex Lee, a state Assemblyman and DSA member, has introduced legislation that would create a state authority in charge of developing social housing—essentially mixed-income public housing. This legislation, which recognizes the need for both strong renter protections and for more housing at all income levels, commands support from a diverse coalition of organizations on the left, including both YIMBY chapters and the anti-YIMBY group Housing Is a Human Right.
The postwar, post–New Deal economic order was built through struggle. Though militant union members played the starring role in these efforts, they were aided by bohemian intellectuals, Washington technocrats, and even bourgeois Rotarians. Today’s struggle against the depredations of the asset economy is different in some ways, but the physics of social movements has not changed. Nor has the inexorable logic of wealth concentration and its grim implications for democracy. We cannot stay on our current trajectory; as the asset-based class system becomes more bifurcated, it will also become even more unstable. The result of this instability could be disaster, or it could be an orderly transition to a more just economic order. Perhaps it will be something in between. We will make the choice, or it will be made for us.