Labour movements

From the mid-19th century onwards, many industrial companies settled in Berlin and its environs. Although these factories brought new jobs, industrialisation also aggravated poverty, as the prices of non-industrially manufactured products fell. Craftsmen, agricultural and textile workers were hit as their goods could no longer compete on price. Many workers changed jobs and sought work in large factories, causing the industrial workforce to expand. Karl Marx, the great social theorist, called this emerging working class the "proletariat". He was referring to simple people who had almost nothing to offer but their labour and were forced to earn their living by "selling" it. To assert their interests, workers organised themselves in trade unions despite their members' dependence on powerful factory owners. These unions demanded higher wages, more security, greater social justice and better living, working and housing conditions.

Many ordinary factory workers elected candidates from left-wing parties, such as the Social Democratic Party of Germany (SPD) and the Communist Party of Germany (KPD), which held a combined majority on the Berlin city council in the 1920s. Left-wing parties called for more housing construction, to be financed either by the public sector or through cooperatives. These demands came as working-class living standards were in decline in cramped tenement blocks.

In Germany, housing associations were then founded to create pleasant, affordable housing for the lower and middle classes.