Winner of the New Statesman SPERI Prize in Political Economy 2016

Friday, 5 September 2014

Utopianism and Scottish Independence

In case any of you thought that yesterday’s post seemed way too speculative and a bit too 'lefty' (I think it was just - admittedly rather speculative - political economy: trying to explain an empirical phenomenon involving beliefs by thinking about self interest and ideology), here is an antidote that takes another look at Scottish independence. My cue comes from the excellent George Monbiot, who I always look forward to reading. The quality of most of Monbiot’s writing is so good because it is well researched, and this sometimes leads him to conclusions that are politically uncomfortable for him.

This, as you might have guessed, is a preamble to saying that occasionally he can get things very wrong. In a recent column, Monbiot describes a No vote to Scottish independence as “an astonishing act of self-harm”. What he does is list all the things that are wrong with governance in the UK. It is a long list, and I agree with quite a bit of it. Then he says, in effect, why not vote to be free of all that?

This seems to me like utopianism at its worst. Why should we presume that an independent Scotland would be free of all the things we dislike about the UK? He talks about the UK economy being about “speculation and rent”, “beholden to a corrupt financial centre”, compared to a Scottish economy based on “enterprise and distribution”. Does this assume that much of the Scottish financial sector leaves on independence? If they do not, how long will it be before they use their influence (and the threat of leaving) at Holyrood?

I do not want to suggest that an independent Scotland would not be different from the remaining UK in some ways. But to understand what these ways might be, you need some serious analysis of why the things you do not like in the UK happen, and why they would not happen in Scotland. I would be interested to see analysis of this kind, and I hope I would be prepared to change my view about what is in Scotland’s interests as a result.

But there is an uncharacteristic lack of analysis in this article. He writes “The monetary policy committee is based in London and bows to the banks.” That really is nonsense. He is right that plenty of small countries with their own currencies thrive, and I have argued that an independent Scotland would be better off with its own currency. But that is not the policy of the Scottish government. Are they lying to attract votes, or do they want to be beholden to the interests that Monbiot derides? Either way, that does not reflect too well on Scotland’s future rulers.

Or what about newspapers? The UK “is dominated by a media owned by tax exiles, who, instructing their editors from their distant chateaux, play the patriotism card at every opportunity.” I have a lot of sympathy with that view. But in Scotland the largest selling newspaper is the Scottish Sun, owned by guess who. And no Scottish political leader would play the patriotism card, would they?!.

But surely Scotland is much more left wing than England? More, probably; but much more, unlikely. As John Curtice notes here, attitudes on inequality are not that different between the two countries. He writes “what emerges is a picture whereby the balance of opinion in Scotland is only a little more social democratic than that in England, and certainly to nothing like the extent that the relative weakness of the Conservative party north of the border might lead us to expect.” 

I think it is possible that some of those intending to vote Yes are reasoning in a similar way to Monbiot’s article. The question to ask is not could things be better in an independent Scotland. Of course they could. The relevant questions to ask is are there reasons to believe things will be better. That involves taking a realistic rather than romanticised view of its people and institutions, together with an honest assessment of the constraints an independent Scotland would face.  

18 comments:

  1. Scots are famous for playing downtrodden socialist while in Scotland and becoming successful capitalists when they emigrate. Come independence we might see a similar phenomenon: Scotland becoming a country of capitalists, like Switzerland.

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  2. Was at an event last night where 'own currency' option was favoured. Obvious concern is to what extent a small open economy can expect a favourable exchange rate without speculative attack leading to the need for unhelpful interest rates domestically. Following conventional economic logic, one suggestion was 'capital controls', but presumably this would require leaving the EU (although Cyprus got away with it for a year)!

    Di you have any thoughts on these issues?

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    1. a speculative attack; would that not depend on how much they borrowed and if they borrowed in their own currency.

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  3. Across at the LRB: 'Reflections on the Scottish Referendum' by Tariq Ali, John Burnside, T.J. Clark, Linda Colley, David Craig, Tom Devine, Norman Dombey, Anne Enright, Colin Kidd, Ross McKibbin, Ferdinand Mount, Tom Nairn, Glen Newey, Hugh Pennington, David Runciman.

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  4. Utopianism isn't the right label if the main motivation is a sense of hopelessness with the current system.

    But it is correct that there hasn't been enough reflection within the Yes movement on the common assumptions on how an iScotland would be different.

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  5. "The relevant questions to ask is are there reasons to believe things will be better. "

    Good point. Reading your article, I was thinking that Scotland should plan to adopt a direct democratic system like Switzerland. It is not perfect, but it would make a difference once the Scotts have got used to it. So far, it has served Switzerland well.

    Ask almost every Swiss citizen, and he/she will agree that indeed, direct "democracy is the worst form of Government except all those other forms that have been tried from time to time."

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  6. Some thoughts on why things might be and stay further to the left in an independent Scotland.

    As you say, Scottish attitudes aren't that far left of the UK average. But voting patterns are. There's often a disconnect between the two. For example, social attitudes in Scotland wouldn't predict the tories doing as badly as they currently do.

    This raises the question of whether a new Scottish right wing party would do much better? I expect they would do a bit better but not much better. Even with a major rebranding exercise it'll take a while for people to forget.

    Add this to the fact that we would have proportional representation and the SNP, Labour and the Lib Dems are all the left of the UK center, and I think you have good case that things would be, on average, significantly to the left of the UK average for some time. (As they would if we had PR in the UK which would have given us a LibLab coalition at the last election)

    Also, I think Scottish people take a bit of pride of being more progressive than the rest of the UK. Politicians will be able to make political capital from the comparison.

    Finally, my feeling as a Scot who’s lived in England is that the social attitudes survey probably under estimates the difference. (I’ve no evidence for this, just my gut feeling)

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  7. Very accurate observations in my opinion, although of course "utopianism" could equally be read as "nationalism".

    All separatist movements typically function on this basis. They assemble society's existing problems and present independence as the solution while 1) being suitably vague about how these problems would actually be solved and 2) pinning all of society's ills on an external target (in this case London/Westminster) and arguing that merely ridding ourselves of this target's influence will automatically improve our lot. That's the only way a party calling for a 3% cut in corporation tax (the SNP) can sit on the same platform as old left socialists (Tommy Sheridan) or the Green Party.

    The argument then becomes about merely citing existing gripes rather than explaining how independence (as opposed to any other constitutional proposal) would solve them. The currency of this type of politics is always victimisation: our group is actively discriminated against under the current system, our resources are being siphoned off to external regions/countries, the media is biased, the polling is biased, all of society is against us.

    Now in certain contexts these arguments may well be true, but the argument would be identical regardless of the actual situation. One of the greatest achievements of the SNP in the referendum campaign has been to pretend that the vote isn't about nationalism - it's about all of the policy agendas (fairness, democracy, ending inequality, getting rid of nuclear weapons) that they've attached to the principle as window dressing. But it is fundamentally about nationalism and we should be under no illusions that it has any broader goal beyond simply cutting ties with Westminster.

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    1. For some people it's about nationalism. Including of course the SNP and a lot of the more vocal supporters. But for most it's not though. It's about not liking any of the main parties in Westminster.

      Also, the media is bias in favour of no. It really is.

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    2. Perhaps reality has a media bias in favour of no? I say this rather flippantly. But it's possible to be objective and still conclude that one side has the better argument. A false balance is really no balance at all.

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  8. Scot Macro 101 Course.

    Class, you have spent three years studying this subject from the Scottish point of view mainly. Little work has been done on the affect of Scottish independence on the Pound Stirling that will remain in use in the rest of the UK.

    Please answer the following questions. You have three hours. Calculators can be used. Marks will be given for not quoting any know-nothing politician. You may phone two friends, one from each "yes" or "no" camp but they won't have a clue either.

    Your time starts now.

    Q1: Try and gauge what is happening to the pound as the polls swing from "No" to "Yes" and vice versa? If Scotland, overnight switched to its own currency, would the pound drop or rise against a basket of major currencies or the SDR, based on long term economic fundamentals; not sentiment?

    Q2: Scottish printed Pounds are still not legal tender in the UK or outside it; assume that Scottish retail banks would not be able to print new Pounds once independent, as now, with the permission of (and an IOU to) The BoE. So if Scotland continued to use the Pound unofficially, and tax its populace in Pounds Stirling, how would the Scottish Treasury and its Central Bank, inject new financial assets into the Scottish economy to support GDP growth?

    Q3: Scotland does not have a proper Sovereign currency Treasury or a Central Bank and will probably need the IMF to set them up and connect them to the international clearing and settlement system and prepare to "float" a new "Scottish Pound" How would you then test the markets, using widely accepted financial instruments, to gauge what the exchange rate of your new Scottish currency might settle at.

    Q4: In 1707, the English Pound was worth 12 Scottish Pounds. For some time after that date the English Pound was still used to "price" the "worth" of goods and services in Scotland. For instance, the price of employing an Economics Professor. Would this "internal" valuation, conflict with the "external" valuation in your answer to Question 3 above? ATB Acorn.

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  9. The British banking system was destroyed by the loan books of the Royal Bank of Scotland and HBOS, in practice the Bank of Scotland. This suggests that speculative finance is not an entirely English activity.

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    1. Speculative finance isn't a particularly English activity. But it does seem linked to the neoliberal economics of the UK over the last thirty years.

      (Also, I think I'm right in saying that the speculative arms of both RBS and HBOS were largely based in the city)

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  10. This comment has been removed by the author.

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  11. One other thing that suggests things might be better in an independent Scotland.

    There's been some work done comparing countries' transition to democracy and their inequality now. It uses two categories of transition.

    a) Revolution where the ruling elite had no or little say in the countries constitutional arrangements.
    b) Situations where the elite agreed to democracy and had a significant influence on constitutional arrangements. There now tends to be less inequality in the former.

    Obviously Scotland isn't having a revolution and to some extent a UK elite would just be replaced by a Scottish elite. But what the work does suggest is that constitutional arrangements matter and that in the UK - which was very much not in the revolution category of transition to democracy – they aren't working for the people.

    So that raises the question - would constitutional arrangements in an independent Scotland be better?

    If you look at the SNP's proposed constitution and compare it to the UK’s unwritten constitution and then compare PR to first past the post, I think there's a strong case that it would be.

    (I'll try to dig out a link to the work I mention, I think it was by a Carles Boix)

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  12. All things considered, choose freedom.

    Dico Tibi Verum, Libertas Optima Rerum Nunquam Servili Sub Nexu Vivito, Fili.

    'I tell you the truth, my son, that the best of all things is freedom. Never live under the bondage of slavery'.

    William Wallace Memorial

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  13. Monbiot was also wrong on system justification - you could dismiss anyone sceptical of any change of suffering from system justification. The most pertinent social psychology in this debate is in-group bias...

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  14. "In case any of you thought that yesterday’s post seemed way too speculative and a bit too 'lefty'"

    It seems that the orthodoxy have successfully made it an embarrassment in economics to talk about income distribution issues - like they do trade barriers for infant industry, or up until about five years ago, capital controls.

    Whatever the evidence it seems that things have to get very bad before people start questioning sacrosanct economic theory.

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