POLITICS AND HOUSING MARKETS - 4 NORMATIVE ARGUMENTS

The normative question of markets and politics in housing is discussed in relation to theories of welfare economics and political philosophy . The point of departure is a general presumption in favour of market solutions, based on both procedural (''negative freedom'') and instrum ental (''maximum utility'') arguments. Four types of counter-arguments are discussed against the background of the specific conditions of ho using. The procedural arguments based on negative freedom or democracy are not found to be conclusive. The existence of transaction costs an d externalities makes it questionable whether market solutions in hous ing could maximize consumer utility. Alternative values to utility hav e certain paternalistic implications, though political intervention ma y sometimes be justified in terms of physiological needs, positive fre edom or social citizenship. From an empirical point of view the presum ption in favour of market solutions may still be defensible, since hou sing provision in the Western world is ultimately based on market cont racts and not on state allocation.