2000s >> 2000 >> no-1155-november-2000

So far as the working class is concerned, the great privatisation/ nationalisation issue has always been a completely bogus one. Unlike socialism, which has never been tried, state ownership of whole or part of a country’s economy has been widely applied.

State ownership of Britain’s railways was first proposed in the 1840s, not as you might suppose by primeval leftists but by the Conservative Party as a means of putting pressure on the railway companies not to overcharge their fellow capitalists. On the continent there was another reason—militarism. State ownership allowed greater control over the flow of troops to internal or external trouble spots. This is essentially why the railways in countries such as Germany and Russia were state-owned from early on. In Germany the situation was admittedly a little more complicated: only the strategic routes were state run whilst private enterprises were allowed to own the less important routes. When Germany began its state-directed industrialisation project later in the nineteenth century the railways were a vital part of this. Gradually the state began to eat up the private companies as the scope of lines considered developmentally useful widened. In Britain, however, the state did not need to take over the railways in order to force capitalist development and, because of the geographical nature of Britain as an island, there was no urgent military reason either.

The early association of nationalisation with the Conservative Party, Bismarck, and militarism should logically have made clear to anyone its non-socialistic nature. It was comparatively late in the nineteenth century that nationalisation became a “socialist” demand. Fuelled by propaganda barrages from such witty and knowledgeable individuals as Robert Blatchford and his paper the Clarion, nationalisation was by 1900 firmly established as another name for socialism, even for Marxism. Sadly it remains so amongst the pseudo-socialists of the left such as Paul Foot and Socialist Worker. Marx and Engels on the other hand made a clear differentiation between the two. Engels could not have been clearer in his note in Socialism: Utopian and Scientific: “state ownership (. . .) was, in no sense, a socialistic measure, directly or indirectly, consciously or unconsciously”.

Britain’s railways were nationalised as a result of the Railways Act of 1947, which became effective on 1 January 1948. “Old Labour”‘ will proudly tell you that this was solely an ideological decision of Attlee and his mates. However, the desire for post-war economic recovery (increased profits) was far more influential.

Two previous interludes of state control during the world wars had brought round the capitalist class to the practicality of the idea. Doubly so when the railways had been revealed as virtually bankrupt. In real terms it was vital that transportation essential for industry should function well. Under government control if necessary. Offered generous dividends from government bonds, the shareholders recognised a good deal when they saw it. As a “‘rescue package” state ownership also has an extensive history in the USA, Conrail (formed 1976 to take over the bankrupt companies of the Northeast, privatised in the 1980s and recently bought out by other private companies) and Amtrak (providing a subsidised intercity service since 1970) being the obvious examples.

The nationalisation experience
Socialists are, of course, concerned about profits versus safety issues arising from crashes. But what should not be credited is that nationalisation overcomes the need to make a profit. In fact, the fifty years experience of nationalised railways in Britain was a clear demonstration of the profit drive at work. And it is not much of an exaggeration to call this experience an unmitigated disaster.

The first ten years of nationalisation were almost wholly barren. This inactivity was ironic given that the private companies were planning extensive dieselisation and electrification projects which were cancelled by the government. Oddly enough, private ownership can be an advantage over state control: a private company can be induced to incur huge debts for capital projects on the grounds of anticipated profits whereas bureaucratic state control lacks this animating factor.

The second decade was hugely disastrous. By the end of the 1950s competition from road transport, especially in the freight sector, was beginning to bite. An investment programme was launched as a part of the 1955 modernisation plan, but this was slow to take effect. Further reductions in profitability in the early 1960s resulted in a rushed plan, associated with Dr Richard Beeching (chairman of the British Railways Board 1963-65). Essentially the Beeching Plan involved the concentrating of resources on city to city services and full trainload containerised freight. The number of passenger lines was drastically cut, leaving whole areas (e.g. Norfolk and Devon) virtually devoid of rail transport, and thus often severely affected by road traffic congestion. The result was that in Britain the railway network is thus considerably smaller than in comparable European countries. The railways were also virtually destroyed as freight carriers since the bulk carriers they were to have depended on (coal, iron etc) declined rapidly in importance after 1970.

For why? Profit. The railways were expected to pay, or at least not to make a loss. Subsidies were ruled out even then for “social” reasons until the late 1960s. Rural passenger routes and small goods carrying failed to show direct profitability (although it may be asserted that rural routes acted as vital feeders to the trunk routes). The only ray of light was the crash dieselisation programme. In classic Marxist fashion, however, economic factors, principally the increased cost of labour power, was the prime motivation behind this, rather than some airy fairy notion of a smutless service for passengers. During the 1950s and 1960s diesels cost about the same to run as steam engines, although the latter require far more maintenance. Especially during the Sixties real wages increased considerably, biting into profits and making labour intensive steam engines a liability. Like the electrification of the West Coast main line in the mid-60s dieselisation was introduced much later than technically it could have been and was hindered by the rapid nature of the change (some of the overlarge variety of locomotives were inadequately field-tested and proved unreliable in service).

The last thirty years have been pretty much dealing with what was left over from Beeching. Numerous lines have been electrified but compared with similar countries abroad the percentage of track electrified is much less (see chart below). This lack of progress is even more pronounced when one considers the considerable track mileage electrified on the third rail principle which is now generally considered unsuitable except for inner suburban journeys.

Country	track (km)	electrified (km)	%	pop. (mn.s)	km per 1000
Germany (DB)	41,119	14,960	36%	82.1	0.50
France (RFF)	31,852	14,070	44%	58.6	0.55
UK (Railtrack)	16,536	4,928	30%	56.7	0.29

The British experience of nationalisation does not mean that state ownership cannot be effective and efficient in capitalist terms. Few supporters of re-nationalisation would back a simple return to the old British Rail. What is needed, they might say, is massive subsidies as practised in, for example, Germany and France until recent years. In both these countries the railway system is better in terms of extent and modernisation. Yet it is clear that such subsidies are not sustainable over the long term especially in Germany, with the huge costs of reintegrating the former East Germany burdening tax-paying capitalists, and have already begun to be reduced.

French and German capitalists have always stressed long-term investment, especially in infrastructure, rather more than their English (and American) counterparts. Their experience of railway nationalisation emphasises this. To a certain extent this has resulted in better and faster passenger services and increased freight use. However it should be stressed that this is a merely a difference in approach between different sets of capitalists, who, it should be added, are by no means a monolithic bloc.

Privatisation
Britain’s railways were privatised as a result of the Railways Act of 1993. Essentially, this divided the railways into two types of company: an infrastructure company known as Railtrack responsible for maintenance of tracks, stations and the like, timetabling, etc; and “Train Operating Companies” (TOCs) which actually provide the services and rolling stock. Franchises for running services were all awarded by the end of 1996. The rationale behind privatisation is simple. The government receives a lump sum which it can offset against taxation and can also wash its hands of responsibility when something goes wrong. Digging deeper we find that railway freight traffic is no longer considered essential to profit-making, due to the long-term decline in British manufacturing industry. While on the passenger side the railways have again become profitable due to a dramatic increase in traffic. As such a 1948-type nationalisation “rescue plan” is no longer needed.

 

So far as safety goes deaths on the railways have not noticeably increased since privatisation (remember Harrow in 1952 was the biggest peacetime disaster). Certainly confusion resulting from the hacking of old British Railways into chunks (as suggested by one report into that disaster) cannot have helped matters. But the evidence points to the profit drive as the killer. In the case of the Paddington disaster, bi-directional lines had been introduced to give “greater flexibility” to operations. For “greater flexibility”‘ read “speed up”; faster trains mean bigger profits. Coupled with inadequate and insufficient signalling, a cost-cutting measure that was again brought in too fast to reduce costs, this was a recipe for disaster. Governmental action can affect the level of accidents, but the desire for profits favours the cutting of corners, so the possibility will always be there.

Capitalism means the lust for profits. It does not entail “fair competition” or any of that sort of wishy-washy apologetic mumbo-jumbo. By fair means or foul gaining monopoly is the order of the day. No doubt we shall see this in operation in the corporate world of railways in the years to come. Indeed this has already started; a cursory glance at a list of the real owners of the railway companies reveals a number of firms, such as Stagecoach, in control of more than a few. Government regulation can hinder this process but can never prevent it.

Nationalised industries are the property of the state, the executive organ of the capitalist ruling class; in effect they are under corporate ownership of the capitalist class as a whole. They operate under the same rules of profit and loss as privately-owned companies because they exist within a system where everything is measured in terms of money. In socialism all property will be owned by all. Since the people, not the state (which will not exist), will own everything there will be no need to buy or sell anything.

Being owned by all people in common, the railways in Socialism would naturally have different priorities. Instead of making profits the comfort, convenience and safety of passengers and staff would be paramount. In addition, a rational society would emphasis such points as their environmental soundness, particularly when electrical power is utilised.

KAZ