Housing in Red Vienna and the question of reform v. revolution

Eamon Dyas

Although the phenomenon that is usually referred to as “Red Vienna” began with the election of the Social Democrats to the City Council in May 1919 the legacy of that phenomenon can be dated to the imposition of the taxation system introduced in 1923. It was the funds generated from that taxation that enabled the city to embark on its ambitious housing programme which began with the building of 25,000 municipal housing units financed by the new taxes on land, rents and luxury goods. What this gave rise to has since become the main symbol of the legacy of “Red Vienna”. Just as the National Health Service introduced in 1948 is the remaining legacy of the 1945 Labour Government so too is Vienna’s municipal housing the legacy of the Social Democrats who came to power in the City of Vienna in 1919. Both represent an abiding political development that have benefited their respective working classes.

Over the past few years I have visited many of the municipal housing projects built during the days of “Red Vienna” and these projects continue to act as examples of what is possible when a municipal authority has the will and the means to prioritise municipal housing. The 1945 Labour Government, like the Social Democrats in Vienna in 1919, viewed housing as an integral part of the population’s health. So it is not surprising that the 1945 Labour Government in Britain also embarked on an ambitious housing programme that, with admittedly some significant modifications, was continued by subsequent Conservative Governments. Until, that is, the 1979 Conservative Government under Margaret Thatcher. Up to then successive Labour and Conservative Governments oversaw some important advances in municipal housing. But whereas in Britain those advances were set to nought by the advent of the 1979 Thatcher Government, in Vienna, despite the subsequent disruptions of the Second World War and the Cold War, the housing legacy of the 1919 Vienna Social Democrats remains largely intact with the municipal authorities continuing to prioritise the provision of housing.

But, that is not to say that there are no significant threats to the City of Vienna’s housing legacy. When Austria joined the EU in 1995 (it applied in 1989) that event provided the country with access to its traditional central and eastern European markets that had more or less been closed to it since the First World War. This brought with it certain commercial opportunities that have benefited the country as well as Vienna. However, joining the EU also brought with it the compulsion to comply with the free-market orthodoxy (given impetus by post-Thatcher Britain) as a requirement of membership and this had implications for the extensive state and municipally controlled assets and services that had been a feature of the country’s economy with particular pressure being applied in favour of privatisation of those assets. Although the privatisation of state and municipally-owned assets had begun under a coalition government led by the Social Democratic Party in 1987 those privatisations were on a level commensurate with what could be defined as something consistent with the state or municipal management of publicly-owned assets. In other words, those privatisations had taken place in a situation where the respective state or municipal authority continued to retain the ultimate control over the management of decisions regarding privatisations. But what membership of the EU brought in its wake was the potential removal of such management where it was no longer under state or municipal control but rather subject to an external authority which was dominated by a free-market orthodoxy.

The extent of the threat posed by this development is obvious in the way that state and municipal-owned assets have been in the sights of the free-market academics for some years now:

“Although a substantial privatisation took place [since the joining of the EU – ED], the privatisation potential in Austria is still quite large. In most cases, the Austrian government kept substantial shares in partly privatised enterprises. Taking into account the federal, state and community level and including all public utilities, there is a privatisation potential of 45 billion euro from which the federal government owns 62%, the city or state of Vienna 13%, all the other states (e.g. Upper and Lower Austria) 14% and the communes (without Vienna) 11%.” (Privatisation in Austria: Response to Internal and External Pressures, by Ansgar Belke and Friedrich Schneider. See https://core.ac.uk/download/pdf/6630953.pdf)

There have been more privatisations of state and municipal assets since then with the contracting out of services also a feature of what is happening in Vienna in recent years. 

When it comes to housing the most immediate aspect of what is happening in Austria is in the area of private rents. The centenary of “Red Vienna” has been the occasion of some effusive reporting in the British mainstream media. For instance the Financial Times on 30 December 2022 was full of praise for the achievements of modern Vienna and cited such things as the fact that 60% of the residents of Vienna live in high-quality subsidised social housing and that:

“Competition for rental homes in London is now at an all-time high. According to Rightmove, the average monthly rental price in London is now £2,343, a rise of 16% in the past year. . . . In Vienna, the wide availability of subsidised housing has moderated rents in the private sector – the average monthly price for a 60 sq. m, flat in the city is 767 Euro . . .  Added to that, tenants have high levels of protection against rent rises and evictions.” (Lessons from Vienna: a housing success story 100 years in the making, by Kirsty Lang, Financial Times, 30 Dec. 2022).

What the author omits from her account is that the city’s capacity to maintain the low-rental private sector has been under pressure for some time. The significance of Austria joining the EU may have led to the transformation of the city from one of relative poverty to relative prosperity but it also places the municipality in a precarious position with regards to its rent control policies. This is because those rent control policies are reliant on the continuance of the current tenant protection laws and those laws rested on two components. The law provides an almost absolute guarantee that a tenant has the right to reside in a privately rented property for as long as they choose to live there or until they die. The law also ensured that any rent increase sought by the private landlord at the expiry of an existing rental arrangement could not be inflated to a level that was viewed as a means of inducing the tenant to leave the property. Consequently, those rent increases had to be officially authorised by a body which ensured that the rise was deemed reasonable according to existing market values. This arrangement was something that those espousing the free-market orthodoxy believed was an impairment of the free market in property and the landlord’s right to fully utilise their investment in that property with the result that it has been significantly diluted since Austria joined the EU. However, the results of this dilution have yet to be fully felt in the Viennese private rental sector. This is because landlords are compelled to honour the contracts they entered into at a time when the tenant protection law prevailed and naturally those tenants who entered into their arrangement at that time are not liable to voluntarily give up the arrangement particularly when their next contract with a landlord would not have such protections built in. The result is that the changing arrangement is happening slowly as in most cases the landlord is compelled to wait until the tenant voluntarily leaves or dies before they can enjoy their new rights as a landlord. But slow as this process is happening there are significant implications for the wider property market. 

Prior to the relaxation of the tenant protection laws, landlords could expect a reasonable and regular income from their investment and this had the effect of keeping property values low. With the relaxation of the tenant protection laws the prospect of making more generous returns from rented property has helped fuel the property market in Vienna over the past twenty years to the point where the cost of purchasing apartments in the city has reached unprecedented levels. This in turn has implications for the city’s municipal housing policies as, with property values rising dramatically in recent years, there will undoubtedly be a growing pressure to encourage those who are currently municipal tenants to be given the right to purchase their properties. When Austria first embarked on its limited privatisation programme in 1987 it was accused of being, as usual, behind international economic trends (trends in privatisation practices that had been initiated by Britain). When it comes to municipal housing policies Vienna could also be seen as currently behind international trends. With Britain having also taken the lead in establishing those trends it is worth looking at where those trends are likely to lead Vienna should they not be checked in time. 

In 1980 31% of the British population was accommodated in a municipal housing stock consisting of over 5 million council homes. By 1997, around 20% of the population was similarly housed. Between the 1980 figure and 1997, 1.8 million of these council homes were sold under the Thatcher-initiated privatising “Right to Buy” scheme. (See: Municipal Dreams: the rise and fall of Council Housing, by John Boughton, Verso Press, 2019, p.171). Since then, the idea of the municipal council home has almost disappeared. What we have instead is a category defined as “Social Housing”. This category disguises a multitude of sins of omission but even using the latest Government figures for “Social Homes” (figures that include both private and local authority registered providers) the figure as of 31 March 2022 for such homes was 4.4. million – still 600,000 short of the number of municipal council homes that existed in 1980. But the situation is even worse for those who traditionally relied on local authority council homes as the 4.4 million “Social Housing” sector includes categories such as “affordable rent” and “low cost home ownership” which are commonly known to be anything but affordable for the average couple as both “Affordable” and “low cost” are defined in terms of a runaway and unrestricted rental and property markets.

As to the future of the “Red Vienna” housing legacy this is something that should be defended as vigorously as possible not only for the sake of the working people of Vienna but also so that Vienna continues to provide an example for those interested in seeing a similar arrangement in Britain and elsewhere. It has been said that because the municipal housing policies of Vienna benefit the professional and middle class the housing policy of Vienna should be modified to ensure that this kind of accommodation is exclusively reserved for the working class. This would be a mistake. It is because the municipal housing in Vienna accommodates those who wish to avail of it that it has survived so long. It is akin to the way in which the National Health Service was always meant to be open to all at the point of need that enabled it to be immune for so long against the erosion of private health schemes. The National Health Service is now at its most vulnerable precisely because the policies adopted by both Tory and Labour Governments in the past twenty years have driven the more affluent working class and professional and middle class people increasingly to the private sector and this in turn has provided a momentum which is proving ever more difficult for the health service to withstand. This isn’t only because of the loss of this component of the electorate to the cause of the National Health Service but the movement of these “customers” from the public health sector to the private health sector also provides the latter with a growing market from which it can generate the resources to position itself as a more efficient provider of health facilities and therefore a greater threat to the NHS. The same thing would happen to the ability of the city of Vienna to preserve its housing policy. Should the professional and middle class desert municipal housing the only place they could go would be to the private property market. That added influx to the private property market – already buoyant as a result of the dilution of the city’s rent protection policies – would create a situation that would add to the pressure on the city to ensure that its working class tenants were given the same opportunity to “have a fair chance” to make money out of their homes by the introduction of a “Right to Buy” arrangement similar to the one that destroyed the municipal housing stock in Britain.

The housing achievements of “Red Vienna” arose in the revolutionary circumstances of post-First World War Austria and within the parameters of conventional left wing thinking much of what was achieved in Vienna at that time could be said to have been the result of a ruling class fearful of the revolutionary potential of the working class. In other words things like a radical housing programme was the price the ruling class was prepared to pay in order to maintain its position. But there is another way this could be viewed. These developments can also be seen as outcomes of a situation where the Vienna working class benefited from a kind of auction among the contending parties after the First World War. Those contending parties were the Catholic Church – which was a significant early investor in social housing in Vienna; upper class philanthropists – there remain several examples of significant philanthropic investment in social housing in Vienna by individuals that date from before the First World War, and the Vienna city authorities.

While it can be argued that the provision of such housing had the effect of preventing anarchy as an outcome in the immediate aftermath of the First World War that consideration was not the only, or in many cases, even the main, consideration of those who supplied such housing. In terms of national politics we have been taught to view anything that emerged in Germany and Austria-Hungary before the First World War as inherently bad. In terms of working class politics we have been taught to view anything that emerged in those countries by way of social advancement prior to the Russian Revolution as bad because it defied the revolutionary potential of the situation. The combination of these two vantage points has in many ways hindered any prospect of our understanding of Europe and has prevented the emergence of any useful assessment of the significance of the actual behaviour of the working class as functioning elements in their respective societies.

Unfortunately, societies and class relationships are not so easily compacted into either of these perspectives. Both Bismarckian Germany and Hapsburg Austria-Hungary offered their respective working classes a lot more than was on offer from the Anglo-Saxon world that went on to defeat them. It has to be remembered that it is precisely the perspective of these victors that has determined how we now look back on the predicament of the working class during those times. But looked at objectively, even before the advent of “Red Vienna”, an important aspect of governance in the Hapsburg world was one that emphasised social responsibility and this was reflected in the way that the city of Vienna was managed in terms of housing. In May-June 1910 the 9^th International Congress on Housing was held in Vienna and such was the importance attached to it by the Hapsburg Government that the Daily News correspondent commented that the person presiding over proceedings at the Congress was a former Minister of Justice of Austria and the current Minister of Public Works made a point of taking a direct part in the opening session. The Daily News correspondent also observed “that almost all the Governments of the Continent are officially represented (our own Government, I need hardly say, is not), among them being fewer than eleven of the German States.” (Daily News, 2 June 1910)

With all this in mind it is a mistake to view the relationship of the working class to these societies as one that can be reduced to its revolutionary potential versus its capacity to be “bribed” with concessions that blunt that revolutionary potential. When it came to housing in Vienna, aside from the commitment of those governing the City, the Catholic Church was always committed to housing the poor without any reference to how such provision might blunt their revolutionary potential. Their prime concern was for the impact on the morals of a population when forced to live in over-crowded and unhealthy conditions.

All in all, societies can only function when the various components that comprise them have reached an equilibrium between their contending interests. From time to time that equilibrium is thrown out of balance and in the attempt to re-establish equilibrium those contending interests either re-establish the old equilibrium or devise a completely new one. The First World War had the most devastating impact on the equilibrium of all the societies of Europe and we continue to experience the reverberations of that destruction.

In that context whether the achievements of “Red Vienna” are seen as a “bribe” forestalling the working class attaining its rightful place in a revolutionary world is irrelevant. Those developments had their genesis at a time when post-First World War Austrian society was attempting to re-establish a new equilibrium and where the working class continued to assert a place for itself on it on its own terms. A more accurate assessment would be to view those achievements as the inevitable outcome of an attempt by the components of Austrian society to re-establish social equilibrium in the aftermath of the destruction by the Allies of the old equilibrium after the First World War. The results of what was eventually restored was what the working class has been quite prepared to accept as an arrangement that enabled it to live comfortably and with dignity. The problem with continuing to treat such radical reforms as those instigated by the Social Democratic authorities in Vienna as mere “bribes” to sate the revolutionary potential of the working class is that it diminishes the ability of the working class to defend those reforms when they are under threat. As the example of the current threat to the “Red Vienna” housing legacy shows, such an attitude can end up leaving the road clear for those who would claim that a release of municipal housing to the market is ultimately a better way of serving the working class by concentrating on their interests as individuals rather than as a class.