At 09:18 AM 11/9/98 +0800, you wrote:
>-----Original Message-----
>From: Chris Burford <cburford at gn.apc.org>
>Date: Monday, November 09, 1998 8:23 AM
>
>
>>I need more information about exactly how the market in land works. I
>>suspect that even if all land is formally owned by the state, some features
>>of the market, are equivalents to capitalist procedures in states where
>>there is private property in land. Perhaps Michael knows with real estate
>>moguls, where their wealth lies.
>
>
>Chris,
>
>I'm not an expert of land issues, but according to what I understand the
>situation is not that different from other common law jurisdictions: the
>ultimate ownership of the land was vested in the Crown and, now, it is in
>the state. The only substantial difference with other ex British colonies
>(such as, e.g., Singapore) is that here in HK freehold status has never been
>granted: probably because the place was to be given back to China. However,
>please note that even freehold does not mean "ownership": it is only a
>concession that can be overridden by other considerations, such as the need
>of building a new road or other public facilities. Naturally, in those
>cases compensations apply, even though their level is (predictably enough)
>matter of long controversies.
>In HK, developers typically bid for land leases in public auctions, which
>provide a substantial share of the government revenues. Anybody can bid:
>last year a woman screwed up an auction outbidding all the other amazed
>participants with offers for several billions, before it was finally
>discovered that she had no money at all, but, instead, a clinical history of
>mental problems...
>
>Cheers --
>
>Enzo
Thanks. This makes more sense. My information comes from a good friend, a member of the Cooperative Society and the Labour Land Campaign. He has explained it to me several times, but he always has a bit of a gleam in his eye.
It seems we can confirm there is no freehold. The real estate moguls that Michael knows presumably have a bundle of leaseholds. On this list previously there has been debate about the length of the leases with one suggestion of up to 99 years, but my understanding is that most leases may be for 25 or 30 years. No doubt there are stats somewhere on this and different categories of lease, which we would have to understand to interpret the stats. Any offers?
The particular point you mention about auctions appears to be crucial about how this process does to some extent socialize a market that is in other respects definitely capitalist. It enhances the possiblity of town planning and means that a proportion of the rise in land values that goes with development accrues to the state.
It comes historically from the old colonial system, plus drawing on reformist ideas of Henry George, but it is interesting Enzo wonders if it is being kept in preparation for Hong Kong's future economic integration with China.
How it works I understand is this: When the state/city decides to plan for a shopping centre in a new location, it puts this leasehold up for auction. If the capitalist market thinks the prospects of making surplus value in that particular location are especially favourable, they have to pay a higher price, which goes to the state, rather than in large parts of London, to the Duke of Devonshire, or some other beneficiary of landed aristocracy. There may be real estate moguls in Hong Kong but they are not clipping coupons merely because they own the land. In that sense the landowning class is small to non-existent.
I have written previously under this thread about the advantages of the state having a significant supply of income, and how in economic downturns it may use its reserves to spend, as Hong Kong is doing now, on a massive building programme relative to its GDP. The fact that the building programme is not for houses for the most exploited of the working class seems to be true, but is another point. This is a capitalist system.
Enzo notes that in practice in modern capitalist society there are some restrictions on freehold. That is correct and it is one of the reasons why approached in a technical fashion it would be possible to find ways of further socializing the market in land development in many parts of the world. The revolutionary passion can occur and be developed if the capitalist try to thwart this process.
The other reason is that as we move towards an international economy, more attention needs to be given to the sub-economies of economic regions, which focus around a major city, or occasionally a group of cities. We need to realise that in marxist terms there are gradients of value that vary with geographical location. Auctioning of leasehold within economic zones would therefore aid socially responsible planning as well as eliminate the landowning class.
Chris Burford
London.
PS The Hang Seng has just gone 7 points below 10,000. But this argument stands or falls on its merits if the index was at 9,000 or even 8,000 considering the lows this summer.
And it stands on its merits anyway. Sorry. I just have to guard against robust expressions of absurdity from correspondents like Louis Proyect.