Why Railroad Rules

I love trains.

But I didn’t grow up riding them. My western Michigan upbringing revolved around the car, which represented freedom upon turning the age of sixteen, when the driver’s license was acquired with an endless possibility of the open road. 

It wasn’t until I moved outside of Chicago after college that I began riding trains daily for my commute downtown from the western suburbs. It was now the train that provided a new found freedom. With just a few dollars, I could go anywhere in the city. 

I didn’t need a car. I didn’t need parking. No traffic jams. No white knuckling commutes causing cortisol levels to explode by navigating a sea of bumper to bumper traffic traveling at 75mph on the I-80 and I-90 until an inevitable car accident stopped the motion of thousands.

Peacefully, I could read, write, sleep, meditate and drift off in reveries while watching people or staring out the window as the train rumbled from one station to the next.

A few years later, I saved enough money for a three month trip to Europe. A Eurail pass with unlimited train travel took me from Madrid to Budapest, down to the bootheel of Bari and up to the rocky coast of Cherbourg. I would depart a station where French was heard and arrive at the next where everyone spoke Italian. It was a glorious experience that cemented my love for trains. 

When I returned to the US, I began to investigate why we are deprived of such modern technology that makes life better for the many.

Below is a snapshot of what I’ve uncovered.

The Rail of Civilization

Strong nations require interconnected transportation. The rail integrates energy, labor and capital into one seamless system multiplying the productivity of every participant.

A railroad unites regions into one productive organism. Grain from the plains, mining from the mountains and goods from factories all converge on the same arteries. Every mile of track shortens the distance between material, labor and market. The result is a compounding increase in national productivity and the multiplier of civilization.

In the pre-rail age of canals and wagons, the cost of hauling a ton of goods one hundred miles could equal the cost of producing the goods themselves. Railroads reduced the cost of transportation by more than 90 percent. 

During the Civil War, Abraham Lincoln signed the Pacific Railway Acts of 1862 and 1864. This transcontinental railroad project was completed in 1869 and unified the U.S. continent. Although it is often seen narrowly as a domestic pioneering feat, the transcontinental railroad represents the U.S. oriented toward continental productive unity.

The building of rail across the continent allowed raw materials, labor and markets to co-locate and mobilize inland creating domestic value chains that previously relied on coastal imports and exports. 

When rails flourish, so does industry, agriculture and the living bond between city and countryside. When rails decay, the arteries of production harden and the nation loses its rhythm and unity.

Railroads and the Political Economy of Value

Rails Increase the Real Rate of Profit: r = S′ / (C + V − S). In the Political Economy Project’s physical-economic framing:

• S′ (Surplus) - The real physical surplus — new wealth produced above what is required to sustain production and labor (C + V − S).

• C (Constant Capital) - Fixed costs of machinery, infrastructure and materials — what must be maintained or replaced.

• V (Variable Capital) - Wages and the reproduction of labor power — the living human input.

• S (Overhead) - All unproductive costs including necessary administration and legal and unnecessary costs like rent-seeking, speculative finance and bureaucratic friction.

The higher the S′ the stronger the productive economy — not just in accounting terms, but in physical efficiency. Railroads, uniquely, raise r, the real rate of profit.

How Railroads Reduce Constant Capital (C): They minimize the replacement cost of infrastructure and machinery.

• Durability: Steel rails and electrified systems last decades with minimal maintenance compared to asphalt and rubber of 18-wheel lorries thereby lowering depreciation rates of fixed capital.

• Synergy: A single rail network is equivalent to thousands of independent road systems.

• Capital reuse: Rail systems encourage domestic steel, machine-tool and electrical industries, recycling capital internally rather than losing it to imports or logistics waste.

• Maintenance efficiency: Electrified or high-speed systems centralize repair and maintenance under industrial standards, avoiding the high constant capital turnover of dispersed, fossil-fuel-based systems.

Thus, railroads compress C, freeing resources for new investment.

How Railroads Raise the Productivity of Labor (V): They elevate the qualitative power of human work.

• Labor leverage: A single train crew can move what would take hundreds of truck drivers, multiplying the productive power of each worker.

• Skill concentration: Railroad work, from engineering to electrification, demands high technical expertise, raising the moral and intellectual level of labor.

• Reduced waste of time: Faster, predictable transport reduces downtime across all industries meaning workers spend more of their time on value-creating labor rather than slowing goods with traffic lights and speed limits.

Thus, railroads lower the relative burden of V while raising its quality, the very definition of human capital development.

How Railroads Minimize Overhead (S): They collapse waste, speculation and duplication.

• Energy overhead: Rail uses less than 2% of national transport energy while carrying 40% of freight ton-miles — an order-of-magnitude reduction in fuel overhead compared to trucks.

• Logistical overhead: Fewer trucks, fewer roads, fewer distribution hubs — each a drain of capital and administrative cost.

• Financial overhead: A public or semi-public rail investment system resists speculative pricing — it’s built for long term use, not quick return.

• Ecological overhead: Less congestion, less road damage, less pollution — reducing hidden costs that drain long-term wealth.

In physical-economy terms, railroads reducing S, turning the wasted margins of the old system into productive capacity.

How Railroads Increase Surplus (S′): They multiply productive output per unit of time and energy.

• Energy conversion: Rail is one of the most energy-efficient transport systems in human history. One gallon-equivalent moves a ton 470 miles. This amplifies surplus by reducing the energy cost per unit of output compared to road travel.

• Temporal surplus: Every reduction in travel or delivery time expands the number of productive cycles per year with more rotations of labor and capital without increasing total input.

• Spatial surplus: Railways integrate raw materials, factories and markets into one continuous circuit. The economy becomes synchronized — less idle inventory, fewer bottlenecks and more real output.

• National multiplier: Each mile of new rail potentially creates increases in agricultural yields, industrial throughput and settlement patterns when the surplus is not speculatively but invested in the physical economy.

In short, railroads raise S′ by expanding the physical and temporal productivity of the entire economy.

The Combined Effect — Rails Raise r: When viewed through the lens of r = S′ / (C + V − S):

Component	Effect of Railroads	Direction of Impact
S′ (Surplus)	Increased productivity, speed, and energy efficiency	↑ Increases
C (Constant Capital)	Longer lifespan of infrastructure, capital reuse	↓ Decreases
V (Variable Capital)	Greater output per worker, higher skill productivity	↓ Relative
S (Overhead)	Reduced energy, logistics and financial waste	↓ Sharply Decreases

The net result is a higher real rate of productive return, not through exploitation, but through optimization of the physical economy.

Railroads convert the potential of a nation into motion. They raise the surplus of civilization itself — the margin between what humanity consumes and what it creates.

The Global Mirror

The completion of the U.S. transcontinental rail was an engineering triumph knitting a nation together through physical infrastructure.

Yet by the mid-20th century, the nation shifted course. Eisenhower’s Interstate Highway System was a marvel of automotive mobility but a drain on physical efficiency. Oil interests and suburban expansion favored asphalt over steel.

Special interest policy design favored oil, suburban expansion and asphalt over steel production, resulting in greater fragmentation, lower transportation efficiency, industrial decline, urban sprawl and a transport sector that now devours 70 percent of the nation’s petroleum.

While America dismantled its rail industry, others took the mantle. China, once a symbol of colonial extraction, turned rail into the backbone of national sovereignty.

Since 2008, China has built more than 25,000 miles of high-speed rail, connecting every major city with trains exceeding 200 miles per hour. Its Belt and Road Initiative exports this rail model globally.

China’s physical-economic policy echoes what Friedrich List, the German-American economist, urged in 1841: nations must build their own productive powers before exposing themselves to global competition.

Today, List’s argument is expressed along Chinese steel made tracks while the U.S. debates potholes, toll roads and regressive gas taxes.

The U.S. predicament is not destiny but policy choices by short sighted leaders advancing certain interests against others.

The United States, once the world’s rail leader, now builds less track per decade than it did in a single year of the 1880s. Factories that once produced locomotives now import them. The physical infrastructure of the republic has been outsourced.

The slow-motion collapse of U.S. rail infrastructure mirrors the ascendancy of speculative, short-term finance and quick profits at the expense of the physical economy. A civilization that prizes speculation over construction cannot move efficiently, because transportation projects are long term investments.

Policies Promoting Rail

Build High-Capacity Development Corridors Centered on Rail 

Focus on developing a wide swath of land (approximately 100 km) that pairs rail development with new power, water, communications and industrial nodes.

Identify major rail corridors (freight + passenger), which aren’t just transport links but economic arteries including electrified track, adjacent industry‐parks, associated power generation, housing and urban hubs. 

Example: Re-design a U.S. “Mid-continent” rail corridor (Chicago to Kansas City to Dallas) as one such integrated axis of electrified freight, high-speed passenger trains, power stations and manufacturing clusters.

Prioritize Electrified / Maglev / High-Speed Rail as Drivers of Productivity

Shift federal rail policy from incremental maintenance to next-generation rail technology with a focus on electrification of freight corridors with magnetic levitation (maglev) for major commuter intercity links and dual‐use lines for freight and high-speed passenger trains.

Example: A national program to convert major freight rail corridors to 25 kV AC electrification, with dedicated high-speed passenger tracks alongside dense corridors (e.g., Northeast, Midwest). Rail tech becomes not just transport but productivity infrastructure.

Use Rail Investment as Anchor for National & Regional Re-industrialization

Infrastructure investment (rail + power + water) is the foundation of a productive economy and goes beyond mere transportation. Design rail projects that link raw-material regions, manufacturing hubs and export nodes, thereby increasing the productive value chain rather than just moving goods.

Example: Upgrade rail links from resource-rich interior regions (e.g., Appalachia, Great Plains) to industrial hubs and ports, paired with manufacturing modernization—steel rail production, electric locomotives and rail‐serving manufacturing plant expansions.

Financing Rail via National Credit & Long-Term Public Investment (not just private PPPs)

Use national banking (Federal Reserve credit) for infrastructure (American System style) rather than purely speculative finance. The Federal government should issue dedicated infrastructure bonds and/or establish a national rail investment bank, with 30-50 year maturities at low interest, focused on rail corridors, electrification and grid integration.

Example: A “National Rail Infrastructure Bank” offering credit lines for states/regions to build electrified rail corridors, linked to manufacturing investment with repayment tied to productivity gains.

Integrated Planning of Rail + Power + Communication Systems

Infrastructure corridors using rail lines must go hand-in-hand with power lines, waterways and telecommunication. When upgrading rail, coordinate with grid upgrades (e.g., bring in nuclear power to electrify rail) and fibre-optic communications alongside industrial parks along the rail node.

Example: In a corridor build and run new high voltage lines along rail right-of-way, place data centers and manufacturing clusters beside rail stations, and integrate supply‐chain logistics hubs all under one corridor plan.

Restoring the Republic’s Productive Power

The steel rail is a straight line against chaos. It provides a map that harmonizes workers and engineers, farmers and cities, into one productive rhythm. 

Where railroads thrive, society learns to think in terms of long-term transportation, investment, maintenance and coordination — the very virtues that sustain a republic. Where they decay, so do those habits.

Follow the conversation on Substack at https://politicaleconomyproject.substack.com.