The Commodification Gap. Matthias Bernt

companion for decades. The same goes for Margit Mayer who has crucially influenced my thinking about cities since I was a student. Over the years, a couple of people have been especially important for my studies on Prenzlauer Berg, both by providing information and supporting my work, and also by disagreeing and discussing things with me. These include Carola Handwerg, Michail Nelken, Theo Winters, Ullrich Lautenschläger, Jochen Hucke, Ulf Heitmann, Hartmut Häußermann, Karin Baumert, Wolfgang Kil, and Wilhelm Fehse and Bernd Holtfreter (who both passed way too early).

      Grateful appreciation is also due to Talja Blokland, Michael Gentile and Slavomira Ferenčuhová, who read earlier versions of individual chapters. Finally, Willem van der Zwaag, Mary Beth Wilson and Kerstin Wegel have provided superb technical support.

      Above all, I thank Anja and Juri for their love, support and patience, which have allowed this book to be written.

      Berlin, 23 October 2021

CHAPTER 1 Introduction

      Gentrification Between Universality and Particularity

      In the late 1990s, Prenzlauer Berg, a neighbourhood in East Berlin, experienced rapid changes. After decades of decay, more and more of its dilapidated residential buildings were bought up by investors, renovated and rented out with considerable price increases. Grey and weathered facades turned into colourful yellow, lilac and pale blue. The smell of coal produced by oven heating disappeared. The place became fashionable and more and more media reports came up with stories about Berlin’s new ‘in‐quarter’. Accompanying this, the composition of the population changed too, with newcomers tending to be younger, better educated and, as time went by, also richer than the established residents. Together with this new population came a wave of newly established bars, clubs, restaurants, boutiques, etc.

      So far, the story hardly sounds spectacular – even readers who have never heard of Prenzlauer Berg will most likely be aware of similar changes in other neighbourhoods and cities. In fact, what happened in Prenzlauer Berg has been experienced in many places in the world, before and since. The term gentrification has now become the most common term used for this kind of urban transformation. The theme has become so omnipresent that hardly any international conference that is focused on the urban proceeds without presentations on gentrification. Stacks of books have been written on the subject and in many countries the term has entered everyday vocabulary. Gentrification, however, was a term invented by the British‐German sociologist Ruth Glass, who described it as early as 1964, in the following words:

One by one, many of the working class quarters of London have been invaded by the middle‐classes – upper and lower. Shabby, modest mews and cottages – two rooms up, two down – have been taken over, when their leases have expired, and have become elegant, expensive residences. Larger Victorian houses, downgraded in an earlier or recent period – which were used as lodging houses or were otherwise in multiple occupation – have been upgraded once again… . Once this process of ‘gentrification’ starts in a district, it goes on rapidly until all or most of the original working class occupiers are displaced, and the whole social character of the district has changed.

      (Glass 1964, pp. xviii–xix)

      Changes from shabby and modest to elegant and expensive were, of course, exactly what activists in Prenzlauer Berg had in mind when they started using the term gentrification to depict the changes they saw happening in their neighbourhood in the late 1990s. They were met by sharp opposition. Public officials and urban planners, but also Berlin‐based urban scholars, took the claim that the changes taking place in the quarter could be termed as gentrification as an insolent provocation (see Winters 1997; Häußermann and Kapphan 2002). Interestingly, the arguments brought forward at that time were neither confined to questions of data interpretation, nor did they move quickly to the possible implications for public policies and planning. More often than not, a rejection of the argument came together with de facto claims about the ontological status of the concept of gentrification. A larger group of critics posited that the concept of gentrification was developed in the contexts of the USA and the UK, with their untamed laissez‐faire capitalism (and had limited value beyond these locations). European cities, in contrast – and Berlin, in particular – would be marked by stronger urban planning, more welfare state assistance and highly developed tenant rights that together would protect the city from the excessive development experienced elsewhere. Altogether, this would make the concept of gentrification inapplicable. A second group of critics addressed the situation from another direction. They argued that gentrification was a necessary and unavoidable companion of capitalist land and housing markets. As long as there was capitalism, there would be gentrification. Talking about rent regulations and planning strategies would, therefore, only turn attention away from problems that were systemic in nature.

Thus, whereas one line of critiques emphasised the particularities of Berlin and set them in contrast to a perceived Anglo‐American ‘normal’, the other managed to do exactly the opposite and abandoned the specificities of Berlin to make a global critique of capitalism. Unwittingly, both perspectives made an age‐old choice known from the field of comparative social research: analysing the same situation and empirical data, the first argued in a clearly individualising way, whereas the latter rested on a universalising form of explanation. The outcome was diametrically opposed positions.

      What both perspectives had in common, however, is that they effectively cushioned Berlin’s planning and renewal policies against criticism. If planning, welfare protection and tenant rights were so strong that gentrification could not happen here, why change anything? If gentrification was so deeply embedded in the nature of global capitalism, why should one expect local policies to make a difference? In summary, while coming from opposite directions, both critiques effectively shielded the policies of ‘Careful Urban Renewal’ exercised in Berlin at those times (see Chapter 5 for details) against criticism and helped in defending the status quo.

      With this study, I want to suggest a different perspective on gentrification. I will show that gentrification is, indeed, a universal phenomenon that reflects general conditions set by capitalist land and housing markets, yet at the same time, it is only made possible through specific institutional constellations. Gentrification, I argue, is at the same time economically and politically determined. It rests on historically specific entanglements of markets and states, expressed in multiple combinations of commodification and decommodification. Analysing the historically specific nexus between commodification and decommodification in driving gentrification is, therefore, central to this book.

      What is meant by decommodification and commodification? Under capitalism, most housing is produced for the purpose of being sold as a commodity in the market. At the same time, housing is an essential human need. Most societies have, therefore, found ways in which the production and/or consumption of housing is completely or partly sheltered against the markets, so that its character as a commodity is limited and/or restricted. Thereby, commodification and decommodification stand in a dialectical relationship. Commodification happens when the social use of housing is subordinated to its economic value. When housing is commodified, it can be treated as an investment and can be purchased, sold, mortgaged, securitised and traded in markets. Decommodification occurs when exactly the opposite is taking place (see Esping‐Andersen 1990, p. 22). When the provision of housing is rendered as a right and/or when a person can maintain accommodation without reliance on the market, or when the conditions in the markets make it impossible to trade housing or invest in it, the commodity status is loosened and housing becomes decommodified.

With this study, I argue that it is only when decommodification is limited to a degree that allows for satisfactory rates of return on investment in housing that upgrading becomes lucrative for investors and gentrification is achieved. This is what I call the ‘commodification gap’. I argue that it lies at the heart of what makes a difference when comparing gentrification across varied contexts. The major point here is that the general dynamics of commodification are universal in capitalist societies, whereas the ways in which markets are embedded into societies and the variations in which social rights are perceived,