The Constitutional Debate

One of the questions that those who want an independent Scotland seldom address is how ‘independent’ Scotland would actually be. This of course refers to the key theme of this issue of SLR – who runs and who will run Scotland? This is closely related to who owns Scotland and Scottish industry and the political and economic muscle that Scotland will have as an independent nation.

From a strategic point of view will independence strengthen or weaken Scotland’s capacity to deal with the political and economic concentration of power located in London and Brussels and Washington? This is surely a critical question for the left and socialists because the delivery of a more equitable, less bellicose set of international and national arrangements is directly dependent on the extent to which democratic control can be exercised over the power of capital. In this regard a separate Scotland will be more dependent, not less on the power of capital. As Eric Hobsbawn explains in his observations about separatist nationalism, such states are :

”…economically dependent in two ways: generally, on an international economy they cannot normally hope to influence as individuals; and specifically – in inverse proportion to their size – on the greater powers and transnational corporations… The optimal strategy for a neo-colonial transnational economy is precisely one in which the number of officially sovereign states is maximized and their average size and strength… is minimized.”

It is here that we need to factor in the actual state and comparative weakness of the Scottish economy in relation to the question of ownership. Over the last four decades there has been a continuing drift of economic power out of Scotland. By 2002 as many as 80 per cent of large scale Scottish registered enterprises (those employing 250 plus employees) were externally owned. They had a turnover of 69 per cent of the big business sector, employing 53 per cent of employees. Ten years on 82.5 per cent of these corporations, which constitute the commanding heights of the Scottish economy, are externally owned with 77.5 per cent of turnover, and now employing 64 per cent of employees.

The privatisations of the 1980s and 90s stripped away any semblance of meaningful regional ownership and control. To take just one example the South of Scotland Electricity Board turned first into Scottish Power and Scottish Nuclear (later British Energy) before being taken over by the Spanish and French transnational corporations Iberdrola and the EDF Group respectively.

With a few exceptions, all the biggest employers in Scotland are either UK-owned and controlled, quoted on the London Stock Exchange or highly dependent on the whole UK market of 60 million, compared to the Scottish market of just five million for the sale of their goods and services. Indeed the Scottish Government’s own most recent data (for the year 2007) shows that Scotland exports almost twice as much to the rest of the UK (£34 billion) as it does to the whole of the rest of the world put together (£19 billion).

Nowhere is this state of economic and industrial integration more apparent than in the financial services sector. In particular the 2008 collapse of Scotland’s biggest two banks RBS and HBoS and the takeover of their loan books by the UK Government and Lloyds has brought into sharp relief the branch plant nature of these leviathans of Scottish life.

It is clear that even the big business figures operating within the SNP’s own orbit like Sir George Mathewson, Sir Brian Souter, Sir Tom Farmer, Sir Angus Grossart, Peter de Vink, and Martin Gilbert are all ultimately dependent for their business success on external institutions, not least the investment banking networks which operate in the City of London. This is where much power lies now, and where it will remain irrespective of any future referendum vote for a separate Scottish state.

Indeed it is therefore highly misleading to claim that ‘independence’ as projected by the SNP and others in the pro-independence camp would somehow amount to a break up of the British State, with opportunities for forging a very different economic path. The fact is that Scotland is in a highly advanced state of economic and monetary union with the rest of the UK.

Independence on these terms would simply mean abandoning any democratic avenue by which working people in Scotland, jointly with those in England and Wales, could seek to impose socially-accountable control. Corporate power is organised at British level. It would remain so. SNP independence would thereby place Scotland’s economic and monetary policy, the great bulk of its production and its biggest market beyond its democratic influence. So the question is: would such independence in any way free Scotland’s people to meet, on socially progressive terms, the severe challenges of economic and social development they now face?
Vince Mills and Richard Leonard are part of the Red Paper Collective which is developing a Labour Movement response to the current debate on the referendum on independence.

There is no historical or contemporary correlation between the size of state and the influence of private money in its various forms on the decisions of the state – although big states are obviously a magnate for big money. We just have to look at the influence of finance capital or the military-industrial complex in the US and the UK, the kleptocracy in Russia, the corruption in the Italian state, to see blatant examples in larger states. We have seen very questionable relationships between private money and state in Ireland but on the whole the smaller European states have a better record. What we should be looking at are issues of socio-economic structure and culture and it is these issues which should make the disaggregation of the British State an attractive objective for everyone on the left, including in England.

The concentration of elites in the UK, the efficient reproduction of privilege, the high levels of inequality, the desperation to hold on to the remnants of great power status, the huge influence of the City – all of these have been factors making the UK very difficult to reform and a very easy location in which to evade reforms which nominally take place. With all its imperfections, Scotland does not have the intensity of these factors. There are cultural and structural differences that offer greater potential for reform. But ‘potential’ is the important word. We do have to recognise the need to work on the agenda for creating a real social democratic relationship with private capital.

Since devolution there have been some important respects in which Scotland has taken policy decisions which have resisted private finance pressure for change and this has differed from those taken in England by both Tory-Liberal and Labour Governments. The creeping privatisation of health provision in England has not been followed in Scotland. Water has remained in public ownership despite a very strong lobby for change. The opening up of the school sector to private control in England (for now, not for profit but that will change) has never even been considered as acceptable here. This was a process started by Labour. The present Scottish Government stopped the private prison programme and the big Southern General new build has not gone to PFI. So the Scottish political system has shown significantly greater willingness to reject the pressures from corporate expansionism. These are grounds for satisfaction but not complacency. The outsourcing process has gone on but not without important reverses as in Edinburgh Council. Serco, that aspiring shadow state, did get the Northern Ferries contract but I would guess that it would never have been allowed to take over the asylum seekers housing contract in Glasgow had this been a Scottish responsibility.

Why should Scotland (and within its more limited powers Wales) be different and would this continue with independence? We have to go back to structure and culture to explore explanations. The dominance in London at senior levels in politics, business, media, the professions of elites drawn from the public school system and Oxbridge creates integrated power networks from privileged backgrounds and this is an ideal basis for group-think, shared ideologies and opaque decision-making. It is the perfect operating field for vested interests to flourish. And all of this is in the context of a society with high levels of inequality where the distance between the majority and the privileged elites grows ever wider.

Of course Scotland has its networks and certainly its privileged elites but it is on a different scale. How many Scottish ministers since 1999 were privately educated? Some of the more influential networks here are on the left. The influence of the City on policy-making in London has been overwhelming. Yes, Scotland had bankers doing the same things with disastrous consequences and financial services are important to Scottish GDP but there are fewer in the ‘casino’ sector. Would a Scottish Government with full fiscal powers stand up to finance capital? I would say with confidence that they wouldn’t be any worse than Westminster Governments but that may not be saying much.

An independent Scotland would certainly not be a vulnerable supplicant. We have the advantage that some of the economically important development sectors are ‘immobile’. Oil, tourism, renewable energy projects can’t be closed down and transferred elsewhere. Add to that other location-tied sectors like higher education, food and drink, culture and recreation and of course all the public services, and what emerges is a Scottish state with some strong cards to play in any dealings with private capital.

The British state is not going to produce real egalitarian change; the most we can hope for is two steps forward and one and a half back. And that’s optimistic. Why anyone on the left, given the experience of the past thirty years, should be seeking to sustain it is difficult to understand. Scottish independence would shake it up and give the left in England an opportunity to develop a different narrative of what England should be The left in Scotland would be operating in a more open and accessible political environment where they would have a real chance to shape a role-model Scotland.
Isobel Lindsay