Politics and housing markets—four normative arguments

Abstract

The normative question of markets and politics in housing is discussed in relation to theories of welfare economics and political philosophy. The point of departure is a general presumption in favour of market solutions, based on both procedural (negative freedom) and instrumental (maximum utility) arguments. Four types of counter‐arguments are discussed against the background of the specific conditions of housing. The procedural arguments based on negative freedom or democracy are not found to be conclusive. The existence of transaction costs and externalities makes it questionable whether market solutions in housing could maximize consumer utility. Alternative values to utility have certain paternalistic implications, though political intervention may sometimes be justified in terms of physiological needs, positive freedom or social citizenship. From an empirical point of view the presumption in favour of market solutions may still be defensible, since housing provision in the Western world is ultim...