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Joe Bord © 2002


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Socialists love railways: the iconic charge of the armoured train, the modern manifestation of public space, and its amenability to democratic planning. The environmental benefits, the equality of mass travel, and the linkage of town and country all continue to justify this nineteenth-century technology. British transport in particular offers a field in which privatised models fail to work: whether in roads congested by individual cars, buses slashed by Thatcherite deregulation, or the grotesque shambles of rail denationalisation itself. The railway workers have responded to this fragmentation with robustness and industrial independence, taking on bad management and winning.

And yet, the British Left has yet to produce a coherent critique of social transport in a post-industrial economy. This can perhaps be clarified if a key paradox in the current market consensus is elucidated. On the one hand, mobility forms an expanding part of the cost base of production. The movement of goods, services and people becomes greater as the economy grows and diversifies, and new techniques tend to create larger volumes of transferable items. Thus, for example, information systems have led to a revolution in the logistics of retailing and the manufacturing chain, with ‘just in time’ ordering. The expansion of London’s financial and commercial sector has increased the numbers of a commuting white-collar workforce (the same is true, in fact, of centres such as Leeds and Edinburgh). The economic geography of Britain, along with most other mature capitalist countries, resembles a network of city-regions. The price of every exchangeable item in this hugely complicated and interdependent market incorporates the cost of movement. Yet this mobility cost is largely set by government according to external considerations. In other words, prices in the exchange economy contain a considerable and growing element that is not a true price (not set by the direct adjustment of supply and demand, but through the mediating structures of the state). Thus, the "price" of road travel is largely set by petrol tax, levies on vehicles, and regulated insurance requirements. Train ticketing represents a fraction of train operating revenue: charges lie under elaborate regulatory control, and vary with the level of government subsidy. Bus, tram, and shuttle services are commissioned by contract under the auspices of local authorities or regional quangos. Even internal air travel is heavily managed, although less obviously, with airport construction depending on the planning process and airlines absorbing or passing on the cost of safety and security regulations.

The rail debacle in the Major and Blair era can be understood as a determined attempt to transform the costs of mobility into true prices. The enterprise foundered on the simple question, "Who is the customer?" On this hangs the definition of demand. The obvious answer, the user, turns out not to be so obvious after all. Does the passenger consume the track? If so, how? Presumably by a form of rent for temporary use and occupancy. But the passenger does not consume the track any more than the tenant consumes the land of her house: both the passenger and the tenant consume an intermediate good, a house or a train. The customers of land, in this example, are the builders and managers of houses. Landlords are able to set a market price on their property by competing with each other for the primary goods (land and raw materials, or finished real estate) and then for tenants. The Tories thought they were doing the same thing by splitting Railtrack off from the train operating companies. But whereas land is ubiquitous, railways are fixed restricted assets: many landlords may compete for the business of tenants in a given area, but only one train company can carry on a given route. The old argument from natural monopolies obstinately refused to go away. The Conservative fix was to have partial competition among train companies for operating contracts, and then regulation of the final fees paid by the passenger. But this means that the state determines the rate of profit. The alternative was to have the train companies setting their own profits at will, subject only to the ultimate barrier of forcing large parts of the population off the transit system, a catastrophe for the ever-mobilising wider economy. The parallel with the housing market holds even here, in this respect: competition among landlords is never limitless, and is often de facto monopolistic – so the government only prevents mass homelessness through the housing benefit system.

Railtrack’s charges to its own customers, the train companies, were manipulated by the state through infrastructure subsidies (this was the second method of controlling the ultimate charge to the passenger). So this too was a sham market and a sham price. Tory policy towards the public services often privatised and sometimes did not, but it always established Potemkin markets (internal competition in the NHS was another good example of this). Thus Stephen Byers’ argument that Railtrack had to be wound up because it was bankrupt was entirely spurious. Railtrack was always bust, and leftwing glee over the confiscation of shareholders was misplaced. In effect, the Railtrack shareholders were lending money to the government through a paper front company. The state undertook to pay a higher rate of interest in return for the debt not showing up on the Public Sector Borrowing Requirement. Byers tried to dodge his creditors before being forced to cough up. The New Labour incarnation of this scam, the "company limited by guarantee" presents the trivial distinction of "member", rather than shareholder creditors: but the lenders are still the banks and City financial institutions. The leftwing misapprehension, cynically appropriated by the government, was that the wicked shareholders were taking part of the profits in the form of dividends that should have been put back into the railway. But there were never any profits, never any genuine dividends, and no true prices. What existed was money that had been expensively borrowed, and had to be repaid.

The cheapest way to raise money is, of course, to raise taxes: and indeed this is the only proper way to fund social goods that cannot be priced. The rejuvenation of the railway should be paid for by a hike in corporation tax, given that the expansion and profitability of business depends directly on transport. The inefficiency, bureaucratic waste and duplication caused by the futile search for the holy price should be ended by the reintegration of the system through public ownership, under a delegated system of management. The process should be an honest renationalisation, buying back shares (i.e. Redeeming hidden debt) according the rules clearly set out by the European Commission. The management executive should be accountable to a rail council of passenger representatives, trade unionists and parliamentarians. This body should have the freedom to set user charges at will: so that the public would immediately feel the pinch of any Treasury under-investment and would have the chance to respond politically. The process would be straightforward, economical and transparent. The very opposite of the lying, cheating, confidence trickery that has so disfigured our railways.




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