Lifelong learning from the East

Professor Mark StephensMark Stephens, Professor of Public Policy at IHURER, describes how he first became interested in the post-communist transformation of housing systems in Central and Eastern Europe.

Growing up during the cold war, “Eastern Europe,” as it was then known, was something of a mystery. In an era when travel was far less affordable than it is today and even a visit to France seemed exotic, the idea of working with people from “Eastern Europe” seemed like a remote possibility. Members of the Czechoslovak dissident group Charter 77 such as Zdena Tomin, whom I heard speak in Leeds Town Hall in 1981, seemed impossibly glamorous. But hope of liberalisation in “Eastern Europe” appeared to die when, on 13 December 1981, General Jaruzelski declared martial law in Poland and suppressed Solidarity, the independent trade union. This all changed in a few short months in 1989. I had made the decision to return to study in the hope of becoming a housing academic, and in my bedsit listened to events unfold on the radio. Most memorably, the lethal division that was the Berlin Wall, was breached on 9 November 1989. Shortly after I moved to Glasgow to begin work at the Centre for Housing Research in 1991, the Soviet Union was dissolved.

One of the pleasant surprises of my academic career has therefore been the opportunity to work with people from “Eastern Europe” and indeed to study what now became known as the “transition economies.” But of course in the early stages of my career, I was in a position only to listen and learn as the mainly US advisors promoted their vision of housing reform based on the mass privatisation of public housing and the creation of systems of property rights backed by a “risk-based” mortgage finance system. To the extent that there was a debate, it was about which mortgage finance model should be imported. Should it be something like the US system? Or should it be like the German system? My earliest attempt to enter the debate, at an OECD conference on housing finance in transition countries in 2000, suggested that the choice mortgage finance system was about more than efficiency. It would also shape what kind of housing system was created. The papers were published in this book.

I learned much from David Donnison’s 1967 book The Government of Housing, later updated with Clare Ungerson as Housing Policy.  The notion of housing in the socialist system as a “dole paid with wages” is a powerful one, and has been rekindled recently in an absorbing book by Dr Mark B Smith with the evocative title Property of Communists, which I reviewed for Housing Studies. This examines the origins and charts the progress of the Khrushchev’s mass housing programme which “greatly improved the lives of tens of millions of Soviet citizens.” The truly epic scale of the housing problem – caused in part by the imperative of industrial investment in the 1930s when consumption was severely suppressed, but also of course by the destruction of the war – led to the industrial-scale building programme. This helps to explain the emphasis placed on building materials and construction techniques, which is a well-known characteristic of housing ministries across the region. On a visit to Russia in the early 1960s, David Donnison was told, “In the Soviet Union we have solved the housing problem. We have learned how to stick the big panels together.”

This was the period when the Soviet Union aspired to overtake the western standards of living. The rivalry was captured in this video clip from the so-called “Kitchen Debates” between Khruschev and Nixon at the American trade fair in Moscow in 1959. “You Americans expect that the Soviet people will be amazed. It is not so. We have all these things in our new flats,” said Kruschev. The optimism that surrounded the Soviet economy in the 1950s and early 1960s is superbly captured in Francis Spufford’s extraordinarily well researched and brilliantly crafted set of vignettes, Red Plenty.

Ironically there is more than a hint of “He who controls the past controls the future. He who controls the present controls the past” in common-place views of the Soviet system. To understand the transformation of housing systems in Central and Eastern Europe since the collapse of communism, we need to have a firmer grasp of how they operated under socialism.  I have gained much from a long-standing collaboration with Martin Lux of the Academy of Sciences in Prague. This collaboration arose from the year he spent in Glasgow as a Marie Curie Fellow in 2002-03. We have been working on a paper for more than a year now, which critiques common approaches to understanding transition. The work of Smith – and Donnison before him – provides insights into the nature of socialist tenure. The “personal” ownership that existed after “private” ownership was abolished is often labelled “owner occupied” when in fact it lacked the essential attributes of the tenure as understood in the capitalist systems. Similarly “socialist property” – and it sub-tenures – provided such high levels of security that they assumed some of the characteristics of western “ownership.”

“In the Soviet Union we have solved the housing problem. We have learned how to stick the big panels together.”

Combine this with the way in which state and state-enterprise housing was used as a reward system within a very flat wage structure, then – in western terms – the world really is turned upside down. In it, “decommodified” housing is a source of inequality and the unskilled workforce is more likely to be in “home-ownership.” Only then can we begin to understand what mass privatization meant.

Meanwhile we might reflect on how the development of mortgage systems is coming along. Jane R Zavisca’s book Housing the New Russia examines how and why the attempt to import American-style housing finance institutions failed in a system she characterises as “property without markets.” What is strikingly refreshing about this book is the injection of sociology into a debate – and in international terms and agenda – that has been dominated by economists. Zaviska highlights the legacy of socialist tenures as one reason for a strong cultural resistance to western-style mortgages, and this helps to explain why the “transition” country that has attempted to adopt the American system most closely has ended up with possibly the smallest mortgage market of any of these countries.

Martin and I have concluded that more than 20 years from the collapse of political communism in “Eastern Europe” these countries are more accurately characterised as being in “transformation” rather than in “transition.” “Transformation” might equally apply to academic understanding and policy formation.