Abstract
This article, employing a political economy analysis, explores how American "market theory" has been received within American society. In my view, American "market theory" has not been fully realized even in the society that has produced that logic; this is due to various countervailing forces that have prevented the diffusion of pure market theory into society. I fear that scholars outside of the U.S., including those in Japan, have embraced the view that the perspectives of mainstream economics that have emerged since the Reagan Administration have been accepted without question in American society. I do not deny that changes to housing policy adopted under the Reagan administration had a strong effect, reversing the tendency to expand the American welfare state. However, I have noticed that while the impact of the political rhetoric in the slogans voiced by the Reagan administration was strong, the views contained therein did not establish themselves fully in society; rather, one sees strong resistance to them among communities in the U.S. Under Reagan, housing assistance outlays, either nominal or constant, did not in fact decline. While his administration was successful in restricting budget authority, communities worried about neighborhood blight established numerous nonprofit housing developers (of which CDCs are a representative example) and confronted the deterioration of the living environment. Ultimately, the Federal government had to make security of the living environment a policy goal in the 1990s. We must note that housing policy reforms in the 1990s were not a repeat of those undertaken before the 1970s. The more recent reforms involve the use of non-profit organizations, the influx of private capital, and include both block grant programs that empower state and local governments and "tax expenditure" programs that empower private housing developers. I emphasize that, even though the American welfare state was changed to some degree in the 1980s and 1990s, in the field of housing policy at least these changes have meant only that old-fashioned direct housing assistance was replaced with "indirect housing assistance." In fact, since the 1990s the supply of affordable housing units for low-income individuals offered by non-profits and other private developers is greater than that of Federal assisted housing. These changes in policy-for instance, indirect assistance-are more difficult to analyze than those that have been seen before. Nonetheless, this article demonstrates that the American market theory prevalent in mainstream economics has not been fully realized in American society, that this is due to the presence of countervailing forces that seek to protect social environments, and that a balance is being maintained in American society due to the establishment of a new policy framework.
