On the road of relative decline? Two books on Scotland’s economic prospects

Mike Danson reviews two books on Scotland’s economic prospects:

After Brexit. The Economics of Scottish Independence, by Gavin McCrone (Edinburgh: Birlinn, 2022). ISBN 978 1 78027 762 2. £8.99. pp 188. The Bargain. Why the UK Works So Well for Scotland, by Tom Miers (Edinburgh: Birlinn, 2022). ISBN 978 1 78027 769 1. £8.99. pp. 191.

During the 1970s, 80s and well into the 90s, there were precious few books published on the Scottish economy. Since then, we have seen an increasing flow of volumes, sometimes like these two as single-author short and accessible publications, and others as edited collections of short chapters from a range of contributors. As with the two books reviewed here, and for most of the latter collections, analysis is secondary to commentary and opinion. These by McCrone and Miers offer their respective authors the opportunity to rehearse many of the economic arguments that we can expect to hear over the coming months in the lead up to the next independence referendum, Scottish or UK elections. Because of the scheduled times of their release, neither book engages with the Scottish Government’s recent paper: Building a New Scotland: A stronger economy with independence, nor really with complementary and competing views of Scotland’s potential futures, discussed at the end of this article. Both therefore present their own arguments with relatively few references to other scholarly or independent work; this is especially ironic in the case of Miers who claims that his text is based on ‘facts’ and ‘evidence’ – many of these being his own opinions and beliefs (he compounds this with an ‘Afterword’ which makes ‘A plea for Honesty’: if only!). McCrone has a long history of published economic analyses and so builds his more balanced considerations of the choices facing Scotland on previous papers and volumes which have been open to wider scrutiny. Both books are relatively short, quite repetitive, with limited indexes and bibliographies so unlikely to be on many reading lists in January.

The limited contextualisation of their respective publications means each work is restricted merely to considering changes in Scotland subsequent to independence from the status quo with the incorporation of no significant restructuring, reorientation or revision of fundamentals of economic relationships. Thus, they are written simply in the context of Scotland within the current UK with all understanding and analyses reduced to comparisons between that ‘reality’ and the implied consequences of independence ceteris paribus (other things staying the same, as ‘positive economics’ requires to make its descriptions and forecasts operational). Further, both are written from a macroeconomic perspective in that neither offers an insight into how enterprises, people and policymakers might react to the challenges following a democratic ‘Yes’ vote in an independence referendum. They do not have the tools nor methodologies to gauge the direction nor strengths of such reactions, but changes in attitudes and behaviours would be inevitable as a result of such a constitutional development. With no suggestions from either author as to what these changes might be, apart from departures from the static equilibrium of today where costs and barriers might both rise and so negatively impact Scotland’s economy, they can but predict recession and worse. 

In other words, there is no attention paid to the drivers of this nation’s relative decline which have continued to reduce the state of Scotland within the UK, with ever diminishing shares of population, GDP and power. Over the period since the late nineteenth century, Scotland has suffered progressive underdevelopment with its relative wealth, income and most other key performance indicators deteriorating compared with every other northern European small open economy. The reasons behind this are ignored in these two books and no such comparisons are made; rather they focus on what would happen to Scotland given any consequences of independence. 

As we know from past dire warnings on the consequences of the introduction of the National Minimum Wage, on achieving the end of boom and bust, on the promises of Brexit, and with regard to so many other analyses, those who accept neoclassical economics without an appreciation of the implicit assumptions embedded into their beliefs often misinterpret and mislead. As here, their apparently impartial objective research relies on assumptions that economic relationships are stable and predictable; outwith these narrow restrictions, they don’t know. The analyses proffered in these two publications therefore is predicated on everything staying the same apart from the inevitable negative impacts of changing from the necessary conditions for this static equilibrium. Why does this matter to the independence debate? Because changing the constitution changes how workers, entrepreneurs, policymakers in the state and private sectors operate; their books are built on a very essentially conservative world where any change by definition must be for the worse. 

Nevertheless, sometimes McCrone hints at different potential paths for Scottish business and policy. In discussing North Sea oil and gas, industrial structure and energy (Chapters 5-7), he proposes building a Mittelstand here, improving supply chains and procurement strategies although without acknowledging which powers are reserved to Westminster and implemented contradictory to Scotland’s potential. He correctly perceives that there are ‘exciting’ opportunities to (re)build the energy sector to be a positive part of the future, but then doesn’t follow his own logic and have the courage to make that conviction concrete unfettered by the demands of London capital. It cannot happen under the UK governments we have had since the 1960s. His analysis of the banking crisis is partial and follows the misinterpretation of institutions having ‘Scotland’ or ‘Scottish’ in their titles as being the responsibility of the Government here; others are responsible for ‘New Scotland Yard’ and ‘Scotch Corner’, and it was the same with the banks. Notably, he also dismisses the notion of a federal UK as being unworkable and unwanted by England, and effectively agin their understanding of the constitution of their country. Miers, by contrast, sees this as the way to secure the Union, with Scotland disappearing as a nation to be reduced to towns and regions merely supporting the football team and the Kirk. 

Who are these books for, and who are they aimed at? Well, not workers, nor trade unions. There is no mention of labour nor its organisations anywhere in either book, which is interesting given the apparent differences in how the respective governments, and indeed societies, of Scotland and the UK consider the roles of the different elements of the corporate state, business and people. Similarly, these volumes – and Meirs’ in particular – are not for those who rely on foodbanks, who are threatened with or are unemployed or in poverty, for each ignores or indeed celebrates the UK we live in. Meirs especially, but also McCrone, offer no critique of the current position of the economy or society that is the UK; you would think this is paradise that the rest of Europe and the world envies rather than this failing country of inequality, deprivation and endemic decline. Class is not mentioned nor introduced as a means of understanding or analysing this long path of relative decline, described by Dan Atkinson and Larry Elliott in Going South Why Britain will have a Third World Economy by 2014 a decade ago. Although some commentators elsewhere in Britain have recently discovered the Nordic countries as possible alternative economic, political and social models, the Scottish Left Review and Nordic Horizons have led on exploring and considering application of these to Scotland as another small open economy with similar social democratic characteristics and tendencies, there is no discussion of lessons from our neighbours in either Meirs or McCrone. The latter prefers to cite the Czech Republic and Slovakia as parallels, especially regarding currencies, while the former mentions ‘Nationalists’ in Scotland (who obviously are never ‘British nationalists’) as being similar to Nazis, the IRA and other fellow travellers. 

Focusing on Scotland currently, without recognising its underdevelopment as part of the UK (which applies equally to Wales, Northern Ireland, Cornwall and the northern regions of England), establishes a false basis for assessing what is wrong with the UK, who is benefitting from massive and growing inequality and poverty, how the lives of the big majority could be improved, what fiscal and other interventions might be introduced. Meirs has nothing to comment on any of this, but as an indication of where he argues benefits from the Union do matter he notes that Scotland would lose influence and its ‘moral obligations’ over ‘places as disparate as the Falkland Islands, Gibraltar and Northern Ireland’. That is: all is right with the world, particularly the UK and Scotland’s place within it, and any change away from this must be costly and to be resisted. Who would have thought that a Conservative would not have wanted to propose the ways for Scotland and indeed the whole of the UK to reverse seemingly inevitable decline with prescriptions for change? For indeed, his book is aimed at those who are comfortable with the status quo, not workers, the poor, the vulnerable or those who live in the C21st. Protecting and preserving the English (sic) ancien régime dominates his volume and arguments, denying a Scottish (and so also Welsh, Yorkshire or any other) identity and culture in favour of the ‘natural’ and persevering ‘UK’.    

Overall, McCrone offers a sober – though restricted – analysis of the short-term possible implications of independence, though crucially he does not forecast the impacts of staying in the Union. Generally, he presents a credible analysis according to neoclassical economics and critically proposes how the negative impacts of independence might be addressed to moderate these. Occasionally he approaches such challenges hinting at how different scenarios could open the curtains on a better future, but these tend to be downplayed or closed off. Examples of evaluating such options include the consideration of the Acorn project – the proposal for ‘a low cost, low risk carbon capture and storage project’ where he calls the UK Conservative Government’s failure to support this as ‘unfortunate’, despite industry backers seeing this as a purely political decision. 

In contrast to the restricted horizons, analyses, and solutions offered by these two books, other publications are offering realistic and well-founded roads to a socialist, inclusive and sustainable Scotland. Within the current constitutional settlement, and addressing both short term and more structural problems, in earlier SLF articles I and others have demonstrated better ways forward; recently, Landman Economics in a report commissioned by the STUC have identified how to fund fair public sector wages and to start to make real reversals to the progressive concentration of wealth and power in the hands of the elite. Adding in what could be achieved through independence for the working class in Scotland (and many of their proposals could be applied in Wales, and the northern regions of England for example), Common Weal has undertaken a class-based analysis of what is fundamentally wrong with the UK and how we might get it ‘Sorted’ with A Handbook for a Better Scotland . In contradistinction to the Miers’ book in particular, this reveals how the philosophy, assessment and proscription of the state of the UK relies upon a Conservative, elitist and continuing belief in the Empire and so in inequality and exceptionalism; it argues instead for ‘a fundamental and irreversible shift in the balance of wealth and power in favour of working people and their families’.

Mike Danson is Emeritus Professor of Enterprise Policy at Heriot-Watt University and a Fellow of the Academy of Social Sciences