In today’s NYT Business section (“City Coffers Feel Impact As Building Prices Fall,” March 19, 2024), Alan Rappeport sheds light on a central principle of critical economic theory. Surface forms of appearance — in this case office buildings — are valued not for the substances out of which they are composed — offices — but for the abstract immaterial value consumed in their composition. Expressed mathematically: MPL = ΔQ/ΔL. Building space and the revenues cities receive from building occupancy has become prohibitively efficient for cities. So efficient that it no longer produces revenue for them. In the language of critical economics, this has produced a “crisis.” The good news is that efficiencies of this sort are often incubators of innovation. Ask yourself: how else might these surface forms generate value?
In volume one of Capital Marx noted:
Circulation bursts through all the temporal, spatial and personal barriers imposed by the direct exchange of products, and it does this by splitting up the direct identity present in this case between the exchange of one’s own product and the acquisition of someone else’s into the two antithetical segments of sale and purchase. To say that these mutually independent and antithetical processes form an internal unity is to say also that their internal unity moves forward through external antitheses. These two processes lack internal independence because they complement each other. Hence, if the assertion of their external independence proceeds to a certain critical point, their unity violently makes itself felt by producing — a crisis.
Penguin Edition, p. 209.
There is nothing in concrete, glass, and steel that naturally suits them for high end office suites. As the Pandemic taught many firms, the wood, brick, and stucco of gated community McMansions serve equally well or even better given fiber optic cables and a Zoom platform. Voila. Instant efficiency.
Socially, however, office buildings and office work “lack internal independence.” They have become dependent on one another. This means that “the assertion of their external independence proceeds to a certain critical point,” which according to Alan Rappeport they have, “their unity violently makes itself felt by producing — a crisis.”
One way to handle this crisis would be to transform these giants into low and moderate income housing and affordable shopping districts. Now there’s an idea. With the shortage of housing and all. Which would be fine if it weren’t for the revenue needed to maintain these giants, not to mention the capital lost to the investors who expected a more handsome return. Low and moderate income housing would generate spectacular efficiencies. Moreover, because the new occupants would be living in these units, it’s not likely they would pull up stakes and move on when they discover they work more efficiently remotely. They already are remote. Problem: the wrong people are benefiting from these efficiencies.
I feel confident that like all crises this one too will pass. As Marx noted in the passage sited above, “These . . . therefore imply the possibility of crises, though no more than the possibility.”