Reclaiming our economy

A radical industrial strategy for Scotland has been launched by the Scottish Labour Party which aims to address some of the long term and underlying weaknesses of the Scottish economy. The strategy identifies the production gap as well as the productivity gap and so the case for a properly resourced Scottish Investment Bank, a new approach to pension funds and a managed reduction in working time.

It points to the crisis in business research and development funding and the overly narrow manufacturing and so export base: ten companies in Scotland account for 45% of all business R&D with fifteen companies account for 30% of all international exports. And, it signals the manifest and immediate challenge of automation, climate change and Brexit while advocating a new era of regional policy, of economic planning for full employment with unions playing a full part, and practical steps to open up the corridors of economic power to women.

One recurring theme is the need to tackle the growing centralisation and the over concentration of economic ownership. Scotland increasingly looks like a vulnerable branch plant economy, with 35% of our economic and industrial base overseas owned. Economic ownership matters, not least because with ownership comes power. If we are to achieve a redistribution of wealth and power to the many from the few, it will require decisive action to back it up.

So, it is time we had a Scottish Investment Bank worthy of the name, working as a pro-active agent of economic change, investing patient capital and taking strategic public interest stakes. It is time we had a public procurement policy which was properly planned in order to maximise the benefit to local supply chains and good quality local jobs. Most immediately, if there is to be a major house building programme, redoubled investment in non-carbon technologies or significant public transport upgrades, then we need to educate, train, invest, and critically, plan to lock in the economic benefits.

And, it is time we looked at different frameworks and ownership structures in order to build up resilience to takeovers and build in greater democracy and accountability to the economic system.
One example, featured in the strategy, is the forceful case for promoting direct worker ownership. It is proposed that in the event of a change in ownership, or redundancy and closure, workers should have a statutory and preferential right to buy the business they are working in. Thus, not the conversion of public ownership to cooperative ownership, but the transfer of private to cooperative ownership.

In Italy, such a provision was established as far back as 1985 with the ‘Marcora Law’. Here state funding matches a contribution from the workers themselves. Over the last three decades, over 250 employee-owned businesses have been established this way, most as worker co-operatives, and over 9,000 jobs have been saved. The co-operative economy in Emilia Romagna in Northern Italy alone gives 80,000 workers an ownership stake

In France, the Social and Solidarity Economy Law passed in 2014 gives legal recognition and incentives to workers to buy their business when it is to be sold off. The social economy in France in which cooperatives play a part is well established. And, in the Basque country in Spain, Mondragon has been a shining beacon of co-operative ownership for six decades. Over 83,000 workers are employed in over 250 worker-owned enterprises, where surpluses are reinvested rather than redistributed to short-term speculative shareholders. As a result, during the current economic slump jobs have been retained and wage solidarity has been safeguarded.

So why shouldn’t this part of the world – which was home to the Fenwick weavers, where Robert Owen wrote ‘A New View of Society’ and established New Lanark – set itself the vision of becoming ‘the Mondragon of the North’, a northern European beacon of cooperation?

If we can have a community right to buy land, why can’t we have workers’ rights to buy business? It will mean a better resourced and a more powerful Cooperative Development Scotland. But why shouldn’t those who create the wealth have a right to own the wealth they create? There are sound industrial and economic reasons to promote worker ownership to boost employment and to forge an alternative to footloose capitalism. But there are underlying political and social reasons too.

A century ago GDH Cole declared that if democracy ‘is good in the State and local government, it is good … in industry also. Indeed, only in an industrial democracy can a truly democratic society be built’. We need economic as well as political democracy, with labour hiring capital instead of capital simply hiring labour. A future based on equality and common ownership is something worth striving for, and it is a future which working people 0 all too often encountering drudgery, alienation and exploitation at work – will campaign and vote for.

Richard Leonard is Scottish Labour’s Economy Spokesperson and Central Scotland MSP