[ In postwar Germany, a cooperative run by trade unionists created
Europe’s largest housing company. Building over 400,000 homes,
“Neue Heimat” showed we don’t have to live on the terms dictated
by landlords — we can take control for ourselves.]
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WHEN GERMAN UNIONS BUILT HOUSING FOR THE PEOPLE  
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David O'Connell
October 15, 2019
Jacobin
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_ In postwar Germany, a cooperative run by trade unionists created
Europe’s largest housing company. Building over 400,000 homes,
“Neue Heimat” showed we don’t have to live on the terms dictated
by landlords — we can take control for ourselves. _

Protesters demonstrate against rising housing rental prices on
October 20, 2018 in Frankfurt, Germany. , Thomas Lohnes / Getty

 

In recent months, Germany’s “rent crisis” has captured
international attention. This particularly owes to
a headline-grabbing
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in Berlin, where faced with the rising rents, activists are working to
force a referendum on the expropriation of the biggest landlords. Even
beyond the capital, continual rent hikes and a series of massive
demonstrations have urgently posed the need for practical solutions to
the housing problem. Yet if today renters are struggling to pay their
bills, they didn’t always find themselves in such a bind. For there
was a time when Germany was home to one of the West’s most
ambitious social housing
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— and it was run by trade unionists.

This was, indeed, no small initiative. Until 1982, the German Trade
Union Confederation — the Deutsch Gewekschaftsbund (DGB) — owned
the largest housing and construction companies in Europe. Encompassing
400,000 apartments, its portfolio also included swimming pools,
shopping malls, office spaces, universities, congress centers and
health clinics. It was one of the world’s most significant examples
of a cooperative social housing project — one built not in the
interests of corporate profit, but from below, in service of residents
themselves.

At its peak, the DGB’s Neue Heimat (“New Homeland”) had a
turnover of 6.4 billion DM (around €3 billion in today’s money)
and employed nearly 6,000 people, with dozens of subsidiary companies
throughout West Germany and the world. The idea was to create
affordable cooperative housing, democratically owned and managed by
the broad sections of the population who lived in them.

This also served a wider social project — the idea of building a
permanent “sharing economy” which would serve as an alternative to
both the state socialism of East Germany, and the laissez-faire
capitalism of the West. As well as building up its own housing stock,
DGB used this behemoth to push successive West German governments into
implementing increasingly progressive housing policies at the national
level.

Neue Heimat’s successes were not to last. In the early 1980s,
corruption, scandal, and debt brought the company into liquidation.
This put an end to the idea of union-owned urban development, and
deeply undermined the grassroots municipal socialism that the trade
unions had hitherto driven. The state took the opportunity to abolish
the privileged tax status previously enjoyed by nonprofit construction
companies, and even today the idea of cooperatives remains taboo
within trade union circles. Yet things didn’t have to turn out this
way.

Radical (and Reactionary) Beginnings

After the tumultuous events of World War I, Germany’s various
socialists, communists, and social democrats were deeply divided
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the early 1920s. But what they could agree on was the need to address
the question of where workers should live. This problem could not be
left in the hands of landlords, nor could it be left up to
philanthropists or churches, who thought they could outflank organized
labor — and win the hearts and minds of the working class — by
building low-cost cooperative housing. Housing conditions were
atrocious, and the Left needed to offer a coherent, practical
response.

The newly unified Allgemeinen Deutschen Gewerkschaftsbundes (ADGB)
trade union federation sought a bridge between its different reformist
and revolutionary tendencies, and in 1926 found the answer in the
pressing question of workers’ housing conditions. That year, the
union began to build democratic worker-owned cooperative housing, in a
project which soon extended throughout the Weimar Republic.

These efforts began with the founding of the Gemeinnützige
Kleinwohnungsbaugesellschaft Groß-Hamburg (GKB) which built hundreds
of union-owned, low-cost housing units. Over the 1920s, the GKB and
other local initiatives built several thousand homes nationally.
Usually four stories high, they utilized a range of architectural
forms, from the expressionistic features included by figures like
Friedrich Richard Ostermeyer, to the distinctly classical motifs of
Oskar Gerson.

If this was a visible display of the trade unions’ influence in the
Weimar Republic, it did not last for long. On May 2, 1933, just months
after Hitler had become Chancellor, the ADGB, along with all other
trade unions, was dissolved by the Nazis. Its leaders were murdered or
imprisoned, and its assets seized. In their place, the Nazi
dictatorship established the Deutsche Arbeitsfront (DAF) which served
as a key plank in sustaining the regime’s power over the following
decade. Hitler awarded the DAF all the assets previously held by the
ADGB, including its thousands of cooperative housing units and
construction companies. In line with Nazi policy, the DAF centralized
the numerous initiatives and firms into a single organization which
they named Neue Heimat.

After Germany was liberated from Nazi rule in 1945, the DAF’s assets
were, in turn, seized by the Allies and eventually returned to the
newly established DGB union. After the division of Germany into two
states in 1949, the DGB eventually acquired the of Neue Heimat, along
with a number of smaller DAF housing projects. This titanic project
quickly became the single most important actor in the reconstruction
of West Germany in the 1950s — permanently altering the skylines of
almost every city across the country.

Postwar Growth

The postwar DGB believed that workplace organizing had to be
accompanied by dramatic improvements in urban living. For the DGB, it
was an “instrument of trade union structural policy” — a tool to
develop a popular “sharing economy” within West Germany. The
successes shouldn’t be understated. After 1945 Neue Heimat was
perhaps the most important tool for urban reconstruction in West
Germany. The 400,000 housing units, small towns, clinics, and urban
districts they built across the country rivaled the living standards
of workers anywhere in the world.

While Neue Heimat built a number of now infamously ugly “relief
cities” — low-quality housing designed to quickly replace the
housing stock destroyed during the war — internal reviews and
consultations with residents pushed it to move away from what senior
advisor Alexander Mitscherlich called the “uniformed monotony of the
residential block.” In some areas it instead began to develop
innovative urban landscapes with Weimar-style buildings, sufficient
green space, parks, and amenities. Serious efforts were made to
involve residents in the active running of their own urban spaces, and
most Neue Heimat projects included elected tenant councils to
represent residents’ interests. These organizations usually pressed
for the inclusion of more sports and social facilities as well as
receiving funding for independent tenant newspapers from the
cooperative itself.

Rents were effectively at market price, but Neue Heimat’s tax-free
status also made purchases cheaper. They were calculated to be
affordable for single-earner households, and when the administration
set costs it paid close attention to the wage rates set in each round
of collective bargaining. While Neue Heimat could not afford to make
its properties as cheap as public housing, it remained a less
expensive alternative to private renting.

Unmanageable

But there were other problems with “Neue Heimat,” visible even in
its name itself, inherited from the Hitler years. Indeed, the Nazi era
had left problematic structural imprints on the organization. While
the original GKB had been a separate company headed by dedicated
socialists like John Ehrenteit and Ulrich Bannwolf, it was nonetheless
still accountable to an independent, democratically controlled
oversight committee controlled by the ADGB. Neue Heimat had no such
mechanism.

Not only did the DGB fail to decentralize the Neue Heimat company, but
its director Heinrich Plett centralized the project even further;
unifying all construction and housing assets held by the German labor
movement into a single nonprofit company.

There was another concern. Neue Heimat had established itself as one
of the core forces in the reconstruction of postwar housing, outpacing
regional governments which proved incapable of developing the
necessary municipal infrastructure. State governments of all parties
wanted to hand these lucrative contracts to Neue Heimat, but its
status as a nonprofit prevented it from taking them on. In order to
bypass its own principles, it founded a number of commercial
subsidiaries like Neue Heimat Kommunal and Neue Heimat Städtebau.
This allowed it to build for-profit shopping centers, office spaces,
and other municipal buildings on behalf of local municipalities.
Despite the pressure to develop greener, more beautiful urban
development projects, skyscrapers were more profitable, and concrete
much cheaper.

By the 1970s, Neue Heimat’s progressive façade hid a complex
patchwork of for-profit construction companies and housing stock,
managed by a board who seemed largely unaccountable to their own
constituents as well as the ideals they were supposed to represent.

The Scandal

This arrangement could not last. In 1982 _Der Spiegel_ magazine
revealed that a number of members of the board, led by “King”
Albert Vietor, had been personally enriching themselves while running
the company into debt, siphoning off rent and deposit money, and using
“strawman” companies to get rich from lucrative contracts. The
company was, contrary to its image, heavily indebted, as a result of
serious mismanagement.

Despite efforts by DGB chairman Heinz Oskar Vetter to fire the
responsible individuals and to distance the union from the scandal
politically, the damage was already done. With Neue Heimat now in
massive debt and with the DGB, receiving no help from the government,
the federation was forced to sell the entire national housing stock to
the Berlin Entrepreneur Horst Schiesser for the symbolic price of one
DM. Though the courts undid this sale a month later, the stock that
had once been the hallmark of trade union housing policy was
nonetheless split up and sold off to private landlords. The bulk of it
is now held by the big private companies “Vonovia” and “Deutsche
Wohnen.”

 

Following the collapse of Neue Heimat, things changed for the worse.
Through the 1990s Gerhard Schröder’s Social Democrats (SPD) and the
governments that followed oversaw the privatization of German housing
stock. Indeed, with the threat of union-owned social housing gone,
private capital soon organized its counterattack. Six years after the
scandal, the Bundestag abolished the tax privilege for nonprofit
housing associations and strengthened the power of private owners —
gradually changing the law to allow 11 percent of their refurbishment
costs to be passed on to tenants, pushing rent prices up 4 percent per
year on average, and reducing public housing to only 8 percent of all
housing in Germany. A meager 6 percent is still cooperatively managed.
In February this year, the Supreme Court ruled that social housing
still subsidized by the state could be put back on the market under
certain conditions — a ruling likely to reduce these numbers
further.

The second effect was the complete retreat of trade unions from any
serious intervention into questions of housing and urban development,
pushing them back within the confines of the workplace. While the DGB
voices a litany of progressive housing policies, calling for federal
rent caps, shifting modernization costs onto landlords, and the
construction of 100,000 new social homes, it has no real way of
implementing these demands. Despite token participation in larger
forums such as the Alternative Housing Summits, its strategy largely
centers on a progressive government eventually doing something on its
behalf.

Yet if the destruction of the union threat to private landlordism has
left a vacuum, it’s now being filled by mass popular mobilizations.
The demonstrations of residents in Berlin calling for the
expropriation of large private residencies has gained national and
international attention. Calls for the large landlords to be
nationalized, now backed by Berlin’s “red-red-green
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coalition government (SPD, Die Linke, Greens), has now inspired
similar movements in Cologne, Frankfurt, and Munich. But where exactly
is the union in all of this?

Making Demands Reality

ADGB mass meeting in Essen last November asked ““Affordable living
space must be provided — but how?” Members of the DGB and its
affiliated unions met with tenants’ associations, housing
cooperatives, party members, and residents to discuss solutions to the
housing crisis. The open question that served as the meeting’s title
perhaps revealed a crisis of confidence in its own strategy. Yet the
union’s openness to revisiting wider social alliances, including
cooperative and tenants’ movements, may mark an important step in
overcoming the original sin branded on the federation by the Neue
Heimat scandal.

In 2017 the DGB in Munich turned a corner by offering its vocal
support to the newly established Stadtwerkschaft housing and
construction cooperative. In the two years it has existed,
Stadtwerkschaft has grown to a staggering 9,000 members (whether those
claiming residency rights, or “solidarity members” who invest in
the projects without living there). This cooperative owns 600
apartments and is currently in the process of building 500 new units.
By 2025 it aims to have completed a total of 1,700 new apartments.

The size and rapid growth of this project is noteworthy in and of
itself, but the support of the regional DGB, citing it as a potential
model for future urban development, deserves particular attention.

The SPD’s own foundation, named after Friedrich Ebert, has also
begun to look overseas for trade union experiences with cooperatives,
particularly in the platform economy, which it notes are “important
since German and European actors still play a marginal role in the
platform economy compared to the USA,” while the leader of the Jusos
(the youth wing of the SPD) Kevin Kühnert, has embraced calls for
major German car manufacturers to be collectivized. It seems there is
a general shift in the zeitgeist — and there’s no reason for this
to be a slow transformation.

Efforts to revisit the Neue Heimat project have also found sympathy in
wider society. A recent exhibition in Hamburg explored the successes
of the project throughout the post war decades, and asked visitors to
consider the need for a new cooperative enterprise. It is difficult to
know for sure whether or not the DGB is ready to reengage with the
concept of union-cooperative housing. Despite local exceptions, the
idea itself remains a sore point for those who remember.

New Strategy

The German trade unionists and Social Democrats of the 1920s had it
right. Housing is a key battleground
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the hearts and minds of the working class, and a key element of our
material conditions. It can’t be abandoned to enemy forces. It has
taken three decades for the German labor movement to revisit the idea
of cooperative housing, and it is doing so cautiously. But this may be
a good time to do so, at a key junction in the struggle for affordable
quality housing.

German trade unions are today steadily declining, locked into
industry-level bargaining which covers ever fewer workers. But with
housing now firmly back on the national political agenda, the DGB and
its affiliated unions have a golden opportunity to assert their
relevance as a force not only for better conditions in the workplace,
but for the transformation of society, extending democracy to the
household.

With its immense resources, power, and expertise, the DGB could once
again lead the push for cooperative worker-owned housing. The negative
end point that Neue Heimat reached is far from simply a black stain on
the idea. Rather, this experience gives trade unions a deeper and far
more comprehensive understanding of the potential dangers of such a
project. And it’s never too late to change the world.

_David O’Connell is a doctoral student at the University of Kassel
and a member of the IG Metall union._

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