Specters of Neil Smith in Chile's failed 2022 New Constitution

Abstract

The rent gap idea comes from neoclassical economics. Neil Smith explained that the Potential Ground Rent (PGR) is equivalent to the ‘best and highest’ land use value that any private developer recognizes and aims to internalize. However, like Marx, Ricardo, George, Haïla, and even Milton Friedman, Smith considered this gap as unearned valorization, made up of external factors, State infrastructure, FARs, upzoning, and so on. Furthermore, for him, making the PGR value profitable makes homes unaffordable to those who do not hold enough power to use or circulate in opportunity areas under the newly imposed market prices and rules and hence suffer displacement. Losing access to central spaces is not accidental nor natural but deliberate, only made possible by developers’ and property owners’ choices to extract the maximum PGR. When Smith claims the rent gap is not economic but political theory, it is an urgent invitation to the urban grassroots to act, resist, and bargain for cash or locational compensation because the PGR extraction means the privatization of a social good (the land rent), is an evident policy failure, and violates the right to the city. Smith passed away too early to witness the current global rentierization of land and housing economies (Christophers, 2019) by a new form of planetary feudalism. Finance and real estate barons take over substantial shares of land and housing investments while the middle classes live on the rest of the real estate available amidst growing financial instability. By 1979, Smith saw neighborhood-type gentrification as explaining the working of capitalism at the time. He took the neighborhood as a ‘witness place,’ as late anthropologist Angela Giglia (2022) would have probably commented. If by the 1970s, dominant theories of consumer sovereignty in postindustrial Anglo societies were not explaining the other half of gentrification, Neil Smith came to fill this void. However, currently, the rent gap theory explains beyond the neighborhood boundaries: let us accept that any housing policy which is ignorant of a form of land rent-value extraction would resolve little. The latter proves the relevance of Smith’s simple rent gap theory to understanding the urban and housing system, even for those who do not cite him or ignore his work. Further, Clark and Pissin (2020) rightly point out that the rent gap exists without gentrification. Ultimately, the rent gap questions political, economic, and – now we know (Wyly, this issue) – moral justifications for internalizing valorized land rent by a few privileged agents. The rent gap supersedes gentrification: there are density rent gaps in high-rise redevelopments of both New York and Santiago (Fisher et al., 2022, Vergara & Aguirre, 2020), Airbnb rent gaps (Wachsmuth and Weisler, 2018), transnational rent gaps (Hayes and Zaban, 2020), and rent gaps coming from the commodified