The Structure of Mortgage Finance: Building Societies and the British Social Formation

Abstract

Analysis of urban processes must start by conceptualizing the structure of the society in which these processes are situated. This can usefully be achieved by using the concept of social formation. Attention then focuses on the nature of the relationship between institutions, with pertinent effects on the processes under consideration, and the structure of the social formation. The influence of the institutions within the urban system is then interpreted in terms of this higher-level relationship of institutions to theoretical structure. Here this approach is illustrated by examining the relationship of building societies to the structure of the contemporary British social formation. Study of Newcastle upon Tyne is used to show how this relationship is manifested in the allocation of mortgage finance to property and borrowers of varying characteristics, and in the spatial pattern produced. INVESTMENT in urban infrastructure has been characterized as a flow of capital mediated through a set of governmental and financial institutions.1 Here it is argued that any analysis of urban processes will remain superficial unless we examine the role of such institutions in terms of the deep structure of society. A starting point can be to adopt the concept of 'social formation.'2 This is a theoretical construct conceptualizing particular real societies in terms of economic, political and ideological levels articulated in a specific way to form a complex whole. The structure of a particular social formation implies a particular distribution of class power and of the social product of the formation, and the social formation will tend to maintain this structure and continuously to reproduce itself. This necessitates reproducing the means of production, consumed goods, and the social relations of production (the manner in which society is structured around the production process). Fixed capital formation embodied in urban infrastructure is a major process of urbanization, and is vital to the reproduction of the social formation. One can now view the production of urban infrastructure in terms of a set of interacting economic, political and ideological levels which are made manifest by a specific set of institutional intermediaries which produce a particular pattern of investment in infrastructure. In the case of housing, which is examined in this article, a structured output of housing resources is produced over which households of varying characteristics have varying degrees of command. Problems of housing production and allocation must therefore be seen as surface manifestations of the deep structure of the social formation. Thus in attempting to understand the housing system we must first examine the relationships between institutions which pertinently affect housing and the structure of the social formation and second see how the institutions operate, in the context of the formation, to pattern the production and allocation of housing resources. Studies of the housing system which focus upon the form and function of institutions have been growing in number recently,3 and constitute a major step forward from the welter of purely descriptive models of the outputs of a housing system, and from models which