David Harvey

David Harvey a Marxist geographer was influenced by Henri Lefebvre’s writings on the urban analysis of Marx and Engels. He explains the complex process through which profit is made from the real estate in urban context.

First, he points out that urban development is not a monolithic process of growth. The ‘second circuit of capital’ is composed of a variety of arrangements, each with its own set of social factors, conflicts, and possibilities in determining the level and quality of investment in real estate.

Second, the second circuit of capital consists of a combination of private financial institutions, community banks and assorted government programmes that support housing in different ways. Thus, real estate is not a pure case of private enterprise but involves the government in direct ways.

Third, it was found out that the housing market discriminates against certain social groups such as in America it is the African Americans. Inner-city African Americans have it the worst. They must finance most of their transactions by cash payment since banks will not lend to them. Only the middle and upper classes have free access to loans.

Finally, the discrimination against the poor and the African American people is also revealed in the data on government-sponsored insurance. Inner-city and ethnic areas cannot obtain such support. In short, the real estate market reinforces the inequities and uneven development of the society.

Harvey took a detailed look at the capitalist class and how it made money within the space of the city.
He borrowed the concept of circuit capital and elaborated on it.

He said that those who are involved in primary circuit of capital (manufacturing and commerce) are interested in location within the urban environment and in reducing their costs of manufacturing.

Capitalists in the second circuit hold a different set of priorities relating to the flow of investment and the realization of interest on money loaned or rent on property owned. These differences are reflected in the different ways capital investment circulates within the two circuits.

Whereas investments in factories is often located in places with cheap housing, capitalists in the second circuit often refuse to invest in poorer areas and seek out only the higher-rent districts of the city. As a consequence, areas of the city can become run-down and abandoned not because of the actions of industrial capital but because of actions taken by investors in real estate. In the Baltimore study, both suburbanization of the population and central city decay were linked to the priorities of the second circuit of capital, assisted by government programmes. Thus according to Harvey the built environment under capitalism serves production, circulation and consumption.