— AI translation — Claude Fable 5 (Anthropic)

Part Two — A Leninist critique of statistical categories · Chapter 6

6 Anatomy of the national housing accounts: the toll promoted to production

Part I established the theory: land does not produce, it conditions (chapter 1); rent is the toll levied on this conditioning, and built space is today its principal deposit (chapter 4). It remains to understand why this evidence is so well hidden. That is the object of this part, where the book becomes Leninist in the strict sense: turning against the dominant economics the figures it produces itself. For the camouflage owes nothing to secrecy: it operates in broad daylight, in the most official of public statistics, the national accounts. Chapter 1 announced it: passing a toll off as a service “is precisely the operation that the statistical nomenclatures accomplish, and that Part II will undo”. We begin with the centrepiece of this operation: imputed rent.

6.1 What the accounts say: housing as “production”

The French national accounts make housing a considerable productive sector. Housing expenditure reached 611.7 billion euros in 2023, or 21.7 % of gross domestic product; and the “production of housing services” (the value the accounts attribute to the mere fact of being housed) amounts to 300 billion euros, or 10.6 % of GDP, against 7.6 % in 1984.¹ The rest of the expenditure (some 312 billion) is not rent: 141.7 billion of current expenditure other than rent (service charges and energy first among them), and 170.3 billion of capital expenditure, that is, new dwellings, land, major works and transaction costs.² Yet the “production” of housing services divides into two very unequal parts. Rents actually paid by tenants account for 91 billion of it. The remaining 209 billion, nearly two thirds of the total, are imputed rents: rents that nobody pays, attributed by convention to owners who occupy their own dwelling.³

The mechanism deserves to be set out exactly, for it is its very logic that will be turned around. The convention comes from the international standard. The owner-occupier is there “formally treated as the owner of an unincorporated enterprise that produces housing services consumed by that same household”.⁴ The household is thus counted twice: producer on one side, consumer on the other, of the same service, which it would sell to itself. The statistical data service (SDES) states it without evasion: owner-occupiers “are at once producers and consumers”; imputed rent “therefore appears in the income of these households […] and in the expenditure of these same households”.⁵ The imputed magnitude is the market rent of a comparable dwelling, estimated by stratification of the actual rental stock (the so-called rental-equivalence method, which France favours).⁶

This convention has its reasons, which are not absurd. First, invariance: the share of owner-occupiers varies from one country to another and from one period to another, and one wants GDP not to depend on this split (not to fall merely because a society counts more owners).⁷ Second, the standard of living: at equal money income, an owner household is better off than a tenant household, and one wants the accounts to reflect it. The argument is serious. It nonetheless has a flaw, and not one of detail: it justifies a decision about the measurement of well-being by a line of reasoning that has nothing to do with production.

6.2 A fictitious income: the toll promoted to production

Three facts, supplied by the accounts themselves, suffice to establish that imputed rent is not a production. The first is decisive and appears in the standard: “the only value added of the imputed rents of owner-occupied dwellings is the operating surplus”.⁸ A production without labour or inputs, whose value added is wholly a net surplus: that is the very definition of a tribute, not of a product. The second fact is that this income corresponds to no transaction and has no payer; the Stiglitz-Sen-Fitoussi commission concedes it in so many words (epigraph). The third is that, the imputed magnitude being a market price, it swells with property prices: a land bubble reads in the accounts as an increase in “production”.

This operation must then be named for what it is: by imputing to owners an income that no one pays, the accounts “invent an entirely fictitious source of income”, and they do so “in violation of the standard’s own principle of including only market production”; this gesture, far from being a mere technical decision, “makes not only rent, but home ownership itself, appear as a productive activity”.⁹ The diagnosis exactly matches the thesis of chapter 1. The market rent being imputed in fact mixes two things that this whole book strives to separate: on one side a genuine shelter service (the building, its maintenance, its management), which is a real production and must be counted as such; on the other the tribute of location, the locational value produced by the whole city and captured by the title (chapter 4), which is not a production. The accounts add the two together and count the whole. Imputed rent is the case where the fiction is at its barest, since there is not even a transaction; but the category error runs through the entire “production of housing services”, actual rents included: the location share of the 91 billion in rents actually paid is, likewise, a toll promoted to the rank of product. The owner is decreed a producer, and the toll becomes a line item of GDP.

6.3 The rental-equivalence defence, and why it does not hold

The strongest objection is well known. It fits into one sentence of the Stiglitz-Sen-Fitoussi commission: two people with the same money income, one of whom owns her dwelling while the other rents, are not equally well off; a rent must therefore be imputed in order to compare them.¹⁰ The objection is correct, but it does not prove what it is made to say. It conflates two distinct questions. To the first (is the owner better off than the tenant?) we shall grant a positive answer, and one may, to measure it, impute an income to him in distribution studies. The second (does the nation produce this income?) calls for the opposite answer, for the accounts use an argument belonging to the first question to settle the production boundary. The sleight of hand lies there, not in the figure: measuring an owner’s advantage as an imputed income in no way obliges one to record it as a production.

The invariance argument fares no better: if the point is that GDP should not depend on the proportion of owners, this is achieved just as well by excluding the imputation everywhere as by imputing it everywhere — the two conventions are symmetrical as regards comparability. Choosing to impute rather than to exclude (that is, to inflate the product rather than refrain from doing so) therefore owes nothing to comparability: it is a choice, and a choice that adopts the rentier’s point of view, for whom the value of a dwelling is the rent one can draw from it.

There remains the substance, which holds also for the tenant who actually pays. “You would pay rent anyway” concedes precisely what this book maintains: you would pay a tribute — and a tribute paid is not thereby wealth produced. That the tenant’s rent is, for its part, a genuine transaction changes nothing about the nature of its location component: it is a toll, whether one pays it to a landlord or imputes it to oneself. Imputed rent is merely the limiting case in which no transaction any longer veils the imputation. Care will be taken here not to lean on the wrong argument: the grievance is not that rent is “unearned”, for, as Christophers notes, non-rentier profit is no more earned.¹¹ The grievance is monopoly: the toll levied on a condition that others have produced. The accounts, by counting this toll as a product, do not measure a wealth created; they record a levy and christen it production.

6.4 Reading the accounts against the grain: Lenin’s method

The statisticians are not being accused of lying. The figures are public, the method is documented, the convention is openly declared “imputed” and even “fictitious”. The reproach lies elsewhere: the category and the aggregation are never neutral; they carry a point of view. That is the whole methodological lesson of Lenin, who never rejected official or zemstvo statistics: he took them up and recalculated them, page by page, to confound the adversary with his own data. His favourite object was precisely the average. “By lumping together rich and poor, adding up and dividing by the number of components, one can obtain an ‘equal distribution’ wherever one wishes”, he remarks with irony; and the “averages thus obtained mask the differentiation and are consequently purely fictitious”.¹²

The procedure he targeted is exactly the one that concerns us. Lenin showed how a nomenclature can make a social relation disappear: under expressions such as “auxiliary trades”, the Narodniks concealed “the formation of a class of wage-earning agricultural labourers”.¹³ “Housing services”, “household production”, “imputed rent”: these technical headings accomplish the same erasure. They dissolve the relation between the one who owns and the one who dwells into the neutrality of a “service” that the former would “produce” and the latter “consume”. The remedy is Leninist as well: reclassify according to the real economic relation (what pays for a production, what pays a tribute), and do so from the published figures, so that anyone can redo the calculation. That is the operation Part III will carry to its conclusion, separating the toll from the production in order to deliver its amount. We shall not say, for all that, that the convention is a conspiracy: it has its reasons (well-being and international standardisation), and that reason is not a lie. But a reason is not a neutrality. Counting the toll as a product is a choice.

6.5 The convention is not innocent: a bourgeois distillate, an interested State

One might take this convention for a purely technical convenience. It is not one, for the national accounts are the distillate of the society that produces them. Lenin said it of the whole of official economic science: “in a society founded on class struggle there can be no ‘impartial’ social science”, and “all official and liberal science defends, in one way or another, wage slavery”.¹⁴ That the rentier’s income should figure, in the accounts, as the “production of a service” is therefore nothing like the blunder of an absent-minded statistician: it is the taking of sides of a measuring apparatus shaped by and for bourgeois society. The procedure is exactly the one Marx, according to Lenin, had unearthed: “where the bourgeois economists saw relations between objects […], Marx discovered relations between people”.¹⁵ Beneath the object-category (a “housing service” that one produces and consumes) hides a relation between people, that of the user and the rentier. Imputed rent is its utmost distillation: it spirits away even the rentier, since it makes the owner the tenant of himself.

This convention is not only a veil; it has a material bearing. By entering into the product some 209 billion in rents that no one pays (and, within actual rents, the location share), it inflates GDP by as much. Now GDP is also the denominator of public debt. The European budget rules are denominated in points of GDP (deficit below 3 %, debt below 60 %), and the burden of the debt lightens as soon as nominal growth exceeds the interest rate.¹⁶ A higher GDP means a lower debt ratio, cheaper sovereign borrowing, and hence room for public services. Thus the same convention, Assa notes, “gives countries an incentive to pursue policies that support housing booms and the continuous rise in the cost of housing”: in the accounts, a bubble reads as a surplus of production.¹⁷ Hence an interest of the State in the maintenance of prices, which political economy documents under the name of “privatised Keynesianism”: a fall in house prices there “would be seen as a disaster […] and governments would be expected to act, through fiscal or other measures, to set prices rising again”.¹⁸

One should nonetheless refrain from making this a single cause. The State’s interest in rising prices is overdetermined (growth, “asset-based welfare”, household confidence, financial stability), and the literature relates it first to these springs, not to the accounting artifice alone; the link connecting them to the debt ratio is ours here, and we give it as such. But all push in the same direction, and imputed rent is precisely their accounting link: it converts the rise in prices into measured “wealth”, and gives the State one more reason to support that rise rather than fight it. This accounting link is nevertheless the most indirect, and the least massive, of the springs that tie the State to rising prices. It remains to name the others, more direct, and which owe nothing, for their part, to a statistical convention.

6.6 Why the State clings to prices: the tax office, the voter, the bank

As soon as one leaves accounting proper for political economy, the State’s interest in the maintenance of prices ceases to be a conjecture: it can be read in its revenues, in its electorate and in the mechanics of its banking system. Three springs, more direct than the previous one, converge there.

The tax office, first — and it is the most direct. The most immediately monetary reason has less to do with GDP than with the tax base. France is one of the OECD countries where property taxation weighs heaviest (of the order of 4 % of gross domestic product at the turn of the 2020s); and for recurrent taxes on property alone, it ranks first, at 2.2 % of GDP, double the Organisation’s average.¹⁹ Now this taxation is, for the most part, based on the value of properties and the price of transactions: it is ad valorem. An analyst of the public finances says it flatly: “if [these taxes] are based on the market value of real property, their proceeds increase”.²⁰

Three levies illustrate it. The tax on real-estate wealth (IFI), whose scale has not been revised since its creation in 2018, yields all the more as prices rise; the administration admits it: “the IFI scale has not been revised since its creation in 2018, which explains why the growth of receipts outstrips that of the base”.²¹ The property tax, which has become the central resource of the municipal block since the abolition of the housing tax, grew in 2023 “60 % through the annual revaluation of rental values”.²² And transfer duties, whose “amount […] derives from the number of property transactions and their prices”: the departments depend on them for up to 15.8 % of their operating revenue (40 % in the Alpes-Maritimes), to the point that their fall creates a “scissors effect” that unbalances budgets.²³

We shall see (chapter 7) that the property tax and transfer duties appear in the nomenclatures under the neutral label of “levies”, never related to the tribute they strike. The point here is different, and more troubling: by taxing this tribute in proportion to its value, the State makes itself its co-collector. It does not fight rent; it takes a share of it, and that share grows when rent grows. The collectivity thus becomes a rentier by proxy, interested, like the landlord, in bricks and mortar being worth a great deal. No institution writes, to be sure, that the State wishes for high prices; but what they all establish (the base follows value, the yield follows price and volume, local authorities depend on them) suffices to ground an inference which, though it is ours, rests only on their own figures.

The voter, next. Behind the tax collector stands the electorate: 57.2 % of French households own their main residence, and this ownership is massively concentrated in the age groups that vote most: 70.2 % of those aged sixty-five or over, against 16.7 % of the under-thirties.²⁴ The median voter is an ageing owner whose main asset is his dwelling; and political science has shown that the rise in the value of this asset turns him away from redistribution. Ben Ansell: owners whose dwelling appreciates “become less supportive of redistribution and social insurance”, rising prices increasing “the value of housing as self-supplied insurance against income loss”.²⁵

One would be tempted to add that decision-makers themselves are, in their majority, owners or indeed landlords (and this is likely). But the wealth declarations of members of parliament are not published; since the law of 2013, they can be consulted only at the prefecture, with no aggregation or reuse possible.²⁶ No statistic allows the claim to be asserted; we have only an indirect clue (70 % of deputies are managers or members of the higher intellectual professions, a category in which ownership is the rule), which makes the conjecture plausible without proving it.²⁷ The argument, in any case, does not need this conjecture: the owning electorate suffices. A government that let house prices collapse would collide head-on with the majority of its voters — and with their first asset.

At the local level, the interest is plainer still. Since the resources of municipalities and departments depend on the land value of their territory, the local elected official has an interest in the appreciation of the land: the mayor who drives prices up fills his municipality’s coffers, and the user, here again, finds no institution on his side.

The bank, finally. The third spring is structural, and it is the weightiest. Housing credit is much more than a market: it is a major source of money creation. Contrary to the textbook image (the bank supposedly lends the savings entrusted to it), the reverse is true: the bank creates money by lending. The Bundesbank writes it without evasion: “banks can create book money by a simple accounting entry”.²⁸ Now this very credit has become the leading banking activity: the share of mortgages in the balance sheets of advanced-economy banks has doubled in a century, “from about 30 % in 1900 to about 60 % today”, to the point that “the business model of banks […] now resembles that of real-estate funds”.²⁹ In France, outstanding housing credit reaches some 1 283 billion euros, of the order of 44 % of GDP, and more than 80 % of credit to households.³⁰

To which is added collateral. Real estate does not weigh only through the credit it calls forth; it guarantees that credit. The mortgaged property is the security for the loan: “land serves both as a factor of production and as collateral for loans”, posits the classic model of the credit cycle.³¹ And a guarantee whose value falls weakens the whole edifice: falling prices degrade the collateral, tighten credit, push prices down further: this is the “financial accelerator”, the loop through which a property correction propagates into a banking crisis.³² A financial system thus backed by bricks and mortar has a vital interest in their value not falling; and the State, guarantor of last resort of that system, inherits this interest.

That money is born of housing credit, that bank balance sheets rest on land collateral: these are facts, established by the central banks themselves. That the State defends prices for that reason is, for its part, an inference: these mechanisms create an objective structural interest, not necessarily a deliberate intention. But the objective interest suffices to explain the inertia. What the dismantling of this backing would cost, conversely (for the banks, for the transition), belongs to the last part of the book (chapter 16); it is enough here to have seen the lock.

Tax office, voter, bank — and, more discreet, the accounting link of GDP: the State’s interest in the maintenance of prices is overdetermined, and that is why it is so robust. None of these springs proves a conspiracy; all of them, together, trace a convergence: that of a State apparatus whose revenues, electorate and banking system are hooked to the value of bricks and mortar. The user, for his part, pays twice: the toll first; then the State which, collector of that toll, elected by those who collect it and guarantor of the banks that finance it, sees to it that it does not fall.

6.7 Institutional crystallisation: a bourgeois order without constraint

There remains a question that the “no conspiracy” leaves open, the weightiest of all: how does a result so consistently favourable to the rentier (inscribed in the categories of the accounts, in economic research, in public debate, and even in the law) come about without anyone being coerced, bought, or even, most often, aware of taking sides? The answer lies in crystallisation rather than coercion: the bourgeois structure of society has been deposited in its institutions, which reproduce its point of view without being forced to. The interest just described is not imposed on the State from outside; it is lodged in the very categories with which the State thinks.

An analogy illuminates the mechanism. Analysing the press, Chomsky and Herman asked how media owned by large firms and living off advertising come to relay what power expects of them, without censorship, in democracies that have none. Their answer, the “propaganda model”, is not a conspiracy thesis: “we shall not resort […] to any ‘conspiratorial’ hypothesis […]; our approach presents itself rather as an analysis of the rules of the ‘market’ […]. The most flagrant biases […] are the consequence of the selection of a personnel who think what must be thought, having internalised a common sense of the profession […]. Censorship here is chiefly a matter of self-censorship.”³³ The journalist, who “very often work[s] with integrity and good faith”, does not need to be censored: he has been selected, trained, promoted so as already to share the expected views, to the point that “editorial choices that would be arrived at otherwise are difficult to imagine”.³⁴ As Chomsky said to a journalist who expressed surprise at it: I do not doubt that you believe what you say; but if you believed something else, you would not be sitting where you are.³⁵

Let us transpose this to the apparatus that measures and governs rent. INSEE does not need to be ordered to count the rentier’s income as a “production”: it thinks in categories — those of the national accounts — which are, as we saw with Lenin, those of bourgeois society. Bourdieu states the depth of this: the State holds the power “to produce and to impose […] the categories of thought that we spontaneously apply to all things […], and to the State itself”, so that “to think the State is to expose oneself to taking over as one’s own a thought of the State”.³⁶ The same holds link by link: the Banque de France conceives money and credit within the same frame (we have just seen it); economic research works within it — the heterodox who contest this frame are a marginal minority, and the profession’s consensus holds the standard model to be self-evident, to the point of dismissing rent control with an “unless all the textbooks are wrong” (chapter 8)³⁷; public debate inherits these ready-made categories; and, at the end of the chain, the law is passed in the rentier’s favour, witness the revision of cadastral rental values, voted three times and never applied (chapter 8), without any constraint ever having been exerted on anyone. Each link is honest within its own order; the bias lies in the categories they share, not in the consciousness of those who handle them.

That is why the conjecture sketched above (that legislators are themselves owners, or indeed landlords) is neither necessary nor sufficient. Not necessary: even served by men without property, an apparatus whose categories are bourgeois would produce the same result. Not sufficient: it would explain only a sum of private interests, not the systematic coherence of the whole. Poulantzas established it against the “instrumentalist” reading: the State does not serve the bourgeoisie because bourgeois occupy it: the participation of members of the dominant class in the State apparatus “is not the cause, but the effect […] of this correspondence”, itself “due to the system itself”.³⁸ The State serves the dominant order by its structural position, and its relative autonomy (the very fact that it is not the landlord’s instrument) is what makes it effective, for where an openly captured State would lay itself open to contestation, an autonomous State naturalises the order it perpetuates. We rejoin Marx and Engels at the root: “the class which has at its disposal the means of material production has, at the same time, the means of intellectual production”, so that “the thoughts of the ruling class are also, in every epoch, the ruling thoughts”.³⁹ That the market itself can be a construction of the State, Bourdieu showed on our very object: the French housing market was reshaped in the administrative commissions of the 1970s — the Barre reform of 1977, the shift from “bricks-and-mortar aid” to “aid to the person”.⁴⁰ The “natural” market within which rent seems to go without saying is itself an institutional product.

Two consequences follow from this. The first touches the critique pursued in this part: if the bias is crystallised in the categories, then it is the categories that are at issue, not the persons. No one needs to be dishonest, duped or corrupt for the accounts to take the rentier’s side; it is enough that the measuring apparatus be, as Lenin said, the distillate of the society that produces it. That is why the chapters that follow denounce no fraud: they reclassify categories, and find the truth in the institution’s own data, provided one regroups them differently. The second engages the remainder of the book: a bias thus crystallised is not undone by correcting a number or replacing a minister, but by reaching the structure that the institutions perpetuate: that will be the stake of Part IV.

The balance sheet

The national accounts enter, under the heading of the “production of housing services”, some 209 billion euros of rents that nobody pays, and, within actual rents themselves, the location share which is a tribute: in all, more than a tenth of GDP in which a very real production of shelter mingles with a toll disguised as wealth created. The owner is there decreed a producer; the tribute there becomes a line of the national product. This is the operation that chapter 1 announced and that this part undoes: not by impugning the figures, but by showing that their category espouses the rentier’s point of view, and by recomposing them according to the only distinction that matters — what produces, what levies. And this convention is not neutral: it serves an overdetermined interest (fiscal, electoral, banking) that ties the State itself to the value of bricks and mortar, and makes of it the keeper of the toll it ought to curb. This interest does not even need to be imposed in order to impose itself: it is crystallised in the categories of the measuring apparatus — the State thinks rent with the categories of the society that levies it.

Two threads extend this chapter. The first follows rent into the other nomenclatures: “investment”, “maintenance-improvement”, which absorb and disperse the tribute to the point of making it unrecognisable: that is the object of the next chapter. The second leads to measurement: once the convention is undone, how much toll remains, in euros, once real production has been deducted? Part III draws up the inventory. Rent is not a product; it is a toll — and no accounting entry, however official, will turn it into wealth.