speri.comment: the political economy blog

‘Tartan neoliberalism’ isn’t driving the campaign for Scottish independence

There is instead the prospect of a re-awakened social democracy

Scott Lavery, SPERI Research Fellow

Scott LaveryIn his blog posted two days ago, Craig Berry states that ‘cold-hearted analysis of Britain’s political economy’ has led him to advocate a ‘No’ vote in the forthcoming Scottish independence referendum.  His argument is that the SNP’s ‘tartanised neoliberalism’ will ultimately entrench an independent Scotland’s ‘subservience’ to the UK’s finance-led growth model.

The general thrust of Craig’s argument is important and should be taken seriously.

It’s certainly not the case that independence will lead inevitably and inexorably to a flowering of progressive politics in Scotland.  Currency union – the preferred option of the SNP and one which Craig assumes will come to pass in spite of unionist claims to the contrary – will unavoidably come with a whole series of constraints on any future Scottish government.  These constraints would involve tight limits on debt and deficit levels which would limit the room for progressive economic policy in an independent Scotland.

Craig is therefore right to argue that the SNP’s strategy of ‘continuity’ nationalism will not fundamentally transform Scotland’s economic model.  However, this does not rule out the left-wing case for Scottish independence.

For one, Craig’s dismissal of the SNP as ‘tartan neoliberals’ is too hasty.  SNP governments have overseen the introduction of free prescriptions, free day-care for the elderly, the abolition of tuition fees and the ending of private finance initiatives in Scottish hospitals.  Admittedly, the economic strategy of the SNP is tension-ridden and contradictory – but a Caledonian Cato Institute it is not!

This question of motivation is important also with respect to the question of currency.  Craig argues that the SNP advocates currency union because of purely economic considerations to do with trade and finance.  In fact, the SNP’s currency position is based on a more specifically political rationale.

The SNP has had a variety of positions on currency over the years.  For example, Alex Salmond previously advocated joining the Euro, once famously describing sterling as a ‘millstone around Scotland’s neck’.  This advocacy of the Euro is now politically unpalatable, and for very obvious reasons.  As a result, retaining sterling has become the SNP’s default position as it seeks to assuage fears amongst voters and businesses that independence will represent a dangerous break with the status quo.

Again, Craig is right to warn of the potentially regressive implications of this commitment. However, the fact that the currency position is a political compromise – built around the particular context of the referendum – reminds us that this position is also revocable.

In truth, the progressive case for independence cannot rely on a permanent marriage with sterling.  If independence is to be utilised for progressive goals, Scotland will ultimately have to make the transition to an independent currency.  The reason for this is that the UK’s macroeconomic policy has been historically geared to promoting the interests of the City of London over and above the interests of the ex-industrial regions.  As such, a high exchange rate for sterling has persistently undermined the competitiveness of exports from the UK’s peripheral regions, whilst so-called ‘light touch’ regulation ensured that capital was channelled into asset-price bubbles, rather than long-term productive investment.

If Scottish independence is to deliver a ‘rebalancing’ of the economy towards value-added manufacturing and away from finance, as I believe it should, then my view is that, ultimately, it will have to rid itself of sterling.  Is this an argument the SNP is likely to make in the context of the independence debate?  Absolutely not.  Does this mean that Scotland will be tied to a sterling currency union in perpetuity?  Again, the answer is no.

This gets to the heart of my disagreement with Craig’s analysis.  His assumption throughout is that the SNP’s current economic policy will be the entrenched position of future Scottish governments.  But this confuses the issue of the referendum with the temporary positioning of party politics.  In just over a week, the Scottish people will decide whether they want to remain in the UK or not.  In 2016, they will decide who governs them.   The point is that, if the country votes for independence, this will lead – almost inevitably – to a radical re-shaping of Scotland’s political terrain.

Perhaps the main risk of focusing on the policy of the SNP – or on any other mainstream party for that matter – is that it can blind us to underlying shifts that are taking place within Scottish society throughout this remarkable period.  As Jamie Maxwell at the New Statesman and James Foley and Pete Ramand have argued, the constitutional debate is underpinned by a clear class dynamic: people from low-income households are far more likely to support independence.  Groups such as Radical Independence have been active in working-class communities, registering thousands of voters who are usually inactive in electoral politics. What we are seeing now, with the narrowing of the polls, represents in part a mobilisation of that electoral contingent.

Partly because of this, and partly as a result of SNP positioning against austerity and the threat this poses to the future of public services, we are also increasingly seeing Labour supporters shifting in favour of independence.

Add to all of this the plethora of grassroots political mobilisations – paralleled by the emergence of groups such as The Common Weal, National Collective and Labour for Independence – and you can begin to see the emergence of a new, democratic civic bloc in Scotland which is profoundly re-shaping the terms of the political debate north of the border.

This shift isn’t coming about due to a sudden upsurge in parochial nationalist sentiment.  It is the result of a growing sense amongst working-class Scots that the risks associated with independence are less threatening than the risks of remaining tied to a Westminster parliament wedded to austerity and increasingly marching to the beat of the UKIP drum.

Indeed, it is this re-awakening of previously marginalised communities that could well be the deciding factor on 18th September. The task thereafter will be to channel this energy into a new political project capable of ensuring that all variants of neoliberalism, tartan or otherwise, are effectively challenged.

 

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