‘On the buses’ – and other evolving systems

Waiting at a bus stop for 34 minutes gives you time to get over the irritation and start to think.

It’s largely passed beneath the radar of national news but Christchurch has been experiencing supposed ‘aftershocks‘ from the September 4th earthquake in the unlikely – and largely unfashionable – world of public transport.

For those who aren’t up with the play, Environment Canterbury (prior to the dissolution of the Regional Council and appointment of Commissioners) altered its tender policies and, after the latest round of tenders, awarded routes previously operated by RedBus (the fully council-owned bus company) to three other operators – Leopard Coachlines, Ritchies and Christchurch Bus Services.

The three private companies awarded the routes are running old buses because, variously, they claim that the Canterbury earthquake and floods in China have delayed delivery of new buses ordered to fulfill the requirements of the successful tenders.

Letters to the Editor in The Press newspaper, including a letter from Paul McNoe, CEO of RedBus, claim it’s more complicated than simply the companies being caught out by unexpected natural disasters. Paul McNoe, for example, said work on the buses by DesignLine in Rolleston was already behind schedule prior to 4 September (the date of the earthquake).

A recent development, is that the Police, in response to letters to The Press, carried out a three day ‘sting’, pulling over buses on routes of particular concern and checking their roadworthiness. Over 60% of the buses pulled over had problems and,

Sergeant Michael Moloney, of the commercial vehicle investigation unit, said results of the sting were “very disturbing”.

“I think vehicles that are operating with the flaws that police have identified today are placing passengers at risk and it is unconscionable that certain operators are using these vehicles,” he said.

“It is extremely disappointing that police have to come out on the road to check up on a passenger service and find these flaws.

“We are staggered by the number of flaws we have found.”

Those who use public transport are often looked down upon as society’s ‘losers’ – the symbolic status of the car versus the bus is forever immortalised in Margaret Thatcher’s statement in the UK Parliament in 1986 that “[a] man who, beyond the age of 26, finds himself on a bus can count himself as a failure.” (see page 8 in the link). Disparagement and neglect go hand in hand.

Environmental and traffic congestion concerns have had an impact on this image but public transport remains the Cinderella option: Lauded as virtuous but left in rags. But, tendering, according to the theory, should enable Environment Canterbury (ECAN) to employ the virtuous effects of competition to provide quality, cost-effective bus services and lift public transport out of its lowly status. So far, the process doesn’t seem to have worked with these latest tenders. Why not?

The chaos experienced by Christchurch bus patrons and the apparent safety risk they’ve been exposed to has received a lot of attention in local media and has led to various ideas about what went wrong. That’s all perfectly understandable but I want to focus on deeper aspects of the issue and the assumptions that lie beneath them.

An editorial in The Press claimed that

The requirement that services be retendered regularly is, of course, a way of ensuring that ratepayers and taxpayers are getting the best value for the large sum of their money that is spent on them. Nowhere in the world does public transport pay for itself from passenger revenues, and bus services in Canterbury are no exception. Passenger fares provide only about half the cost of running the system. In the absence, therefore, of the free market to provide discipline to the business, tenders are the next best system.

Tendering is the ‘next best system’ to the ‘free market’. ‘Next best’ because it apes the competitive aspects of a market. The virtue of competition is the central assumption of arguments in favour of the superiority of the economic efficiency of markets over other economic arrangements. Firms are ‘disciplined’ – through competition geared towards responsiveness to market information – to provide requisite levels of price, quality and whatever else consumers may want. It’s an all purpose assumption that can be applied just about everywhere.

It’s an assumption that sits on top of another assumption: That economies are equilibrium systems. Demand, everywhere, ‘wants’ to be matched to supply and supply ‘wants’ to be matched to demand in the best of all possible markets.

Anyone who’s encountered the logic of the supply-demand curves of standard economics will understand the inevitability of conclusions about the efficiency of markets. Much fundamental economic research is simply a protracted, deductive ‘working out’ of the base assumptions of equilibrium models of economies and the parallel assumption of ‘choice under scarcity’. (For a refresher you could do worse than Ben Bernanke’s co-authored introductory text on microeconomics.) Economics, at heart, is a logical model not an empirical one. That’s its strength. (It’s why Karl Popper praised Friedrich Hayek’s economic model in The Poverty of Historicism.)

But it’s also its weakness.

Roy Porter’s excellent – just posthumous – book ‘Flesh in the Age of Reason‘ captures the peculiar disjunction and conflicts that arose during the ‘Age of Reason’ – and are still with us – between the notion of a reasoning (rational) mind and an all too human flesh. His final sentence, though, captures a relevant point in any discussion of the equilibrium assumptions that dominate modern economics:

The doctrine of the mind over matter stood for power over the people.

The rational ‘mind’ and the rational-logical models it builds are, as often as not, constructions to justify the exercise of power over the many.

The idea of the purity of logic and rationality goes back a long way. The presumed rational-logical harmony in the equilibrium model of the market echoes Phythagoras’ commitment to the underlying mathematical order (and substance) of the cosmos. Harmony, order, beauty and rationality were closely cleaved in the thinking of the Greek rationalists and idealists. (Our word ‘cosmetic’ comes from the same route as the Greek word for ‘cosmos’ – the universe, for some Greek philosophers, manifest logical order and, as a consequence, beauty.)

Order – and hence the possibility of control through ‘discipline’ (i.e., ‘learning’) – and beauty were therefore unified in the very fabric of existence. Markets also ‘discipline’ (i.e., ‘teach’) their participants and this delivers order, at least according to market enthusiasts.

Practical consequences of the exertion of control, however, have repeatedly shown that the control is only temporary and ‘parochial’. Greater control in one narrow sphere leads to more disturbance – and hence less control – in other areas. These disturbances (consequences) are often not predicted or, as economists and social scientists sometimes put it, they are unintended consequences. (I’ll return to this point later).

In the end, the assumptions of ideological rationalism are to assert order for the purpose of control. (The early scientists were, revealingly, often also magicians, occultists, astrologers and the like. That might seem odd to modern eyes but it isn’t. Both arenas – science and magic – are motivated by a concern for control over the world and life’s messiness.)

An equilibrium model of the economy is part of this long tradition of the attempt to understand the world in such a way as to put it at the service of control, which is to say at the service of ‘power’. But it’s an especially interesting part of that tradition. In particular, it’s a part of that tradition that denies it involves any attempt at control.

The notion of the free market, it is often pointed out by advocates such as Hayek, is meant to be one of ‘spontaneous order’ rather than a planned or controlled environment. This is why neo-liberal economists – and many other economists – advocate markets. Markets supposedly involve many individuals who, in order to achieve their purposes, respond to detailed information ‘on the ground’ that no planners could possibly know about or incorporate into their plans. The market is nothing but individuals pursuing their own ‘plans’ and generating, out of their ‘self-interested’ pursuits, a remarkably coordinated order in the economy. A free market isn’t an order imposed upon people, so we are repeatedly assured by economists and free market philosophers: It’s an order that emerges once people are economically free.

No-one, as market advocates say, is in control.

This sounds like the antithesis of the kind of attempt to impose order that I mentioned above as stemming from science and rationalism. Sadly, it isn’t – it’s another manifestation of the same vain hope. This time ‘order’ has been elevated to a fortuitous ‘natural’ order. It’s the order that you get when nobody is trying to impose order. The only problem is … there is someone trying to impose order.

Have you ever noticed that markets are always ‘correcting’, they are never in equilibrium? There’s a good reason for that. Markets are not equilibrium systems. They are, therefore, not logical systems.

What are they then? Well, how about evolving systems? (Or, if you prefer straight text, here’s the first chapter.)

Equilibrium systems are the hallmark of certain types of rational models – they are not the hallmark of nature. Nature proliferates and, interestingly, so have modern economies – and only very recently.

So far as we can tell, nature is a non-equilibrium system. Most of the human sub-systems we care about (our families, neighbourhoods, societies, countries) are also not equilibrium systems. It would be remarkable if economies were equilibrium systems.

There’s a lot now known about how systems evolve, and a lot still to find out. We know enough, however, to understand why the simple logical model that is the ‘market’ theory of economies shouldn’t be the basis for our collective decision making about economies. Evolving systems respond to their environments. It’s a free for all.

What’s all this got to do with the chaos in Christchurch bus services? Christchurch used to have a council monopoly on the buses. Those council red buses have been here for decades. I remember taking the Lincoln Road 7 bus up to Addington back in the 1960s (there’s still a ‘7’ bus that goes down Lincoln Road – it’s now the ‘Halswell 7’ and is run by Leopard Coachlines). RedBus is the latest incarnation of this inheritance. Like SOEs at national level, RedBus is council-owned but commercial in its operations.

We could ignore the fact that people quite like to have collectively owned (and run) buses. We could say that sentimental attachment to red buses in Christchurch is a luxury we can’t afford in a modern, competitive, neo-liberally lean economy.

We could say all these things, but we’d be wrong. We’d also be misunderstanding what an economy is. Everything goes into the mix. All the influences, all the quirks of our psychological and social lives, all the political hopes and aspirations of all the groups of people who interact in an economy. If we want unforeseen innovation, if we want an economy that responds to all our diverse needs, if we truly want the hope of a future that addresses our needs and all our fears about what we might be doing to this planet then we need to admit that there is no ‘one size fits all’. (I just love using free market rhetoric against itself!)

Seeing an economy as an evolving complex system means not putting our trust in singular ideas – such as ‘competition’ in a free market generates all we can – or should – desire, therefore, we need to impose a free market.

That is, the idea of the ‘free market’, ironically, is often asserted in a way to stifle competition at other, political, levels. Free marketeers run their fear line about how any tampering with the market spells disaster – or at least sub-optimal performance.

But there’s no reason to believe that. TINA (there is no alternative) is the antithesis of what evolution needs to flourish. Free marketeers should be grateful that we have more choices – and more freedom – than the single option of free markets to structure our economic futures.

When it comes to public transport there’s absolutely no rational reason why we should necessarily opt for a free market or “the next best thing”. We could simply – politically – decide that we actually like a bus system that we have charge of. We could back ourselves to use our political ‘nouse’ and pressure to ensure through our own activism that we get buses that run on time.

Oddly enough, that is what’s happening; that is what the people of Christchurch are doing through letters to The Press, through complaints to and about ECAN and, not insignificantly, through their discussions every day in work tearooms, cafes and at the end of phone conversations.

And they’re doing it without worrying that they aren’t expressing themselves through a free market.

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