For years, Chicago’s real estate capitalists have been creating a huge property glut downtown. Now that they face the economic consequences of their own actions, they squall about protests in the Loop in a cynical attempt to shift responsibility and secure even more tax breaks.
A narrative is beginning to develop within ruling class circles in Chicago that goes something like this: downtown—known locally as “the Loop”—used to be a playground for tourists and well-heeled Chicagoans looking to see the sights and enjoy high-end shopping and dining. But after waves of protest against police violence and two large-scale episodes of looting in the central business district, everything has changed. The Loop is no longer safe—and residents and visitors with deep pockets are fleeing the area in record numbers. Unless something is done to stop this mass exodus and restore law and order, the story goes, this once decadent “global city” will slip into a state of decay, blight and criminality. Some more hysterical versions of this story end with lines like “Chicago is on its way to becoming another Detroit” or “something must be done before it’s too late.”
This last line, of course, is verbatim the racist campaign slogan used by Bernard Epton in 1983, a white Republican mayoral candidate with the backing of most of the Chicago Democratic Machine, in his bid to defeat Harold Washington, the first Black mayor of the city. I mention this simply to point out that the racist obsession with “becoming another Detroit” has deep roots in Chicago’s political culture.
There is a kernel of truth to this narrative, however: capital flight really does hurt city residents, as even a cursory glance at the poorest neighborhoods in the city makes clear. With the withdrawal of investment, employment and tax revenues drop—and this is a recipe for poverty, crumbling infrastructure and cash-strapped schools.
So, is the narrative about restoring “law and order” in the Loop to “save Chicago” correct after all? Hardly.
Who is to blame?
Let us first of all take a critical look at the alleged exodus of residents from downtown. The business press has recently made much of the fact that there is a huge glut of real estate in the Loop at the moment. Occupancy rates for residential properties in the Loop are at 20 year lows, and there is something like 4 times more supply of housing than is considered “normal” in a healthy, balanced housing market. Why is this the case?
The answer has little to nothing to do with protests or looting. The first thing to mention is the pandemic: lockdowns have negated the convenience of living in the central business district as workplaces, restaurants and museums are closed and people increasingly work from home. And why should businesses rent swanky downtown office suites when their workforces are remote?
The Covid-19 crisis has undoubtedly caused some to leave the Loop at the same time that it has dissuaded new residents from moving there. But, according to Crain’s Business Chicago, only some of the glut of properties in the Loop is due to live-in residents vacating their homes—while a substantial amount is due to large-scale investors dumping newly-constructed or newly-renovated properties onto the market. These properties were in the pipeline long before the pandemic or looting took place.
What we’re seeing, then, is the culmination of a long-term process of wild speculation in high-end real estate in the Loop in particular. The economic slowdown caused by the pandemic—which is global in scope, as is the networks of investment that fuel downtown real estate speculation—has only exacerbated and brought to a head a long-simmering risk of what Marxists call a crisis of overaccumulation or overproduction. This occurs when more capacity is accumulated by capitalist investors than can be sold profitably. Overaccumulation isn’t the result of miscalculations by investors or “market failure”; this economic pathology is built into the very DNA of capitalism.
As always, capitalists do their best to socialize risks and losses while pocketing profits for themselves. So, as the speculative ecosystem revolving around high-end real estate in Chicago enters what appears to be a moment of crisis, we should expect owners of capital to do what they always do: wriggle off the hook by lobbying the state for ways to ease their pain through public subsidies, tax breaks, and all the rest. This is what much of the grandstanding about the perils of “lawlessness” in the Loop is actually about: whipping up political support for material assistance to a class of wealthy speculators reeling from a sudden drop in rates of profit.
Fortunately for this sector of the ruling class, power brokers in City Hall are accustomed to lending them a helping hand. As Sean Larson and I wrote in February, for those who run City Hall, “the purpose of municipal government… is to strive to create a stable, consistent political and economic landscape that inspires confidence among real estate developers and the investors who back their projects.” Indeed, “the best mayor, on this view, is one who is able to set investors at ease; who is widely regarded in the business community as a reliable, consistent steward of their interests; who is powerful enough to keep all the various branches of city administration within their grip… who can be counted on to act swiftly to eliminate disruptions such as strikes, demonstrations, and the like; who can be trusted not to embark on unforeseen, erratic policy initiatives that haven’t been properly vetted by capital; and who work tirelessly to ensure that the city’s branding and public image is not tarnished by bad press.”
Thus far, Mayor Lori Lightfoot has satisfied capital’s criteria well, particularly when it comes to brutally suppressing protest. But there’s a huge storm brewing on the horizon: tax revenues are down more than 25 percent due to the pandemic and, if no new funds are raised to plug the hole in the budget, one in three city jobs will have to be eliminated through austerity measures. What will be cut? Where will new revenue come from? This remains to be determined. The hand-wringing about safety in the Loop must be seen in this context.
This hand-wringing has its costs for capital, however, making it a somewhat risky way of advancing its bid for more subsidies, tax breaks and so on. The more noise that gets made about “criminality and lawlessness” in the Loop, the more the area’s branding is damaged and the harder it is for capital to offload its investment properties sitting idly on the market. Moreover, since “crime” in Chicago represents something of an obsession for the Right nationally, this strategy also risks confirming Trumpian talking points, further entrenching stigma that might deter investment. Indeed, this fact is not lost on significant fractions of Chicago’s business class.
Risky or not, we have to keep in mind that this is a game to them. As a real estate agent quoted in Crain’s recently put it, the hubbub about looting is “70 percent optics, 30 percent reality.” In other words: sporadic large-scale acts of resistance such as mass demonstrations and coordinated looting of luxury retail do frighten capital, but far less than you’d think. The truth is that much of the hollering about looting in high places is a cynical attempt to externalize responsibility for gambling debts incurred through real estate speculation.
Tyler Zimmer is a member of the Democratic Socialists of America and the co-chair of the Chicago DSA Anti-Racist Working Group. He is also a member of the Rampant editorial collective.