Where tectonic plates collide

<em>New Statesman Scotland</em> - Scotland, argues Christopher Harvie, lies on the fault line betwee

At a drinks party just after the Scottish Parliament election, Ian Rankin remarked that the Scottish crime novel - which he and Frederic Lindsay, Christopher Brookmyre and William McIlvanney have made into a growth genre - was post-imperial. Discuss, and don't write on both sides of the paper at the same time.

Rankin meant that the evil-doing investigated by Inspectors Rebus, Laidlaw, and so on, arose from the "permeability" of the state, flowing along labyrinthine links formed in an earlier and perhaps more melodramatic epoch. The English murder was parochial - body in the library, isolated village, detective off the London train; continentals like Maigret sleuthed in known, even stiflingly familiar, environments. But the Scottish gumshoe went down mean streets with something quite outre at the end of them, the Giant Rat of Sumatra or whatever - reminding one that Edinburgh's Conan Doyle was the son of an Irish Catholic immigrant, and Sherlock Holmes operated at the heart of Empire, with Adam Smith's "luxury and corruption" all around him.

Permeability seems an apt theme for the current Great Scottish Political Mystery. Where is the place going? The Scottish executive is less than popular, the relationship with Westminster vague, the ideology all over the place. If - just supposing - the SNP were to win the Hamilton by-election caused by the ennoblement of George Robertson pending his departure to run Nato, independence would move centre-stage and probably stay there. But the fact is that the country is already on its own. It has leaked out of the British political landscape, along with the implications of the decisions that its parliament will have to take in the near future.

To turn back to the pre-devolution record is to restore the world of the old left. In the 1980s - I have my yellowing copies of Radical Scotland by me - we didn't know much about geography, Europe, or semi-conductors, or financial services, but boy did we empathise with grand old industries steaming down the Swannee, and with Nicaragua. Around 1988, the Scottish question took over. While it fulminated away, the old left themes were in abeyance. No longer. They're back and they're puzzled.

Mention of Hamilton recalls George Robertson while shadow Scottish secretary, 1994-97, being Alex Salmond's punchbag. Atlanticists didn't come more fervid than the imminent Saviour of Nato, but luckily Labour put nice Donald Dewar in charge in May 1997. And even better, the economic chances of an independent Scotland caved in before 6 May 1999. Oil was bumping along at $10 a barrel and semi-conductors, farming, shipbuilding and financial services were all unhealthy. The SNP was guesstimating a post-independence deficit of £2 billion annually, even before Salmond went heretical over Kosovo.

But the game - if perhaps no more favourable to the SNP - has moved on. The turf war between the Scottish Parliament's First Minister, Donald Dewar, and the Secretary of State for Scotland, John Reid, might get ratcheted up if Reid is replaced by "union man" Brian Wilson; constitutional relations between Westminster and Holyrood, and the Barnett public expenditure formula (which is used to reckon the amount of cash Westminster will allow Holyrood to spend) remain untouched mines. Their possible explosiveness can be inferred from a recent Fabian tract about Holyrood legislation, Now's the Hour. It comes with good ideas, but a distinction remains between (1) "competitive" industry, which will deliver resources, and (2) a co-operative social state, which will allocate them.

For (1) read Whitehall as the deliverer of public expenditure resources, for (2) read Holyrood. Is someone staging a Secretary of State/First Minister split along the (quite clever) lines of Thatcher's rigging of her cabinet: supply ministries commanded by united "us" against spending ministries under competing, and wet, "them"?

The notion that the market is the problem rather than the solution lurks around, accompanied by real doubt about where Scotland actually stands. To use a geological image, this seems to be where two "tectonic plates" - European social marketism and Atlantic neo-liberalism - collide. The Scottish centre-left was social-marketist. "From London to Brussels" was the theme of the later 1980s, intoned by many prominent Scottish politicians - both Labour and SNP.

This fitted in with the social-democratic politics of the smaller European states, their disproportionate political influence and economic success. Bodies like the Scottish Development Agency pondered Italian microcapitalism and the German mittelstand and their small and medium-sized industries, although the relation of these to the Scottish problem was inspirational rather than actual.

David Steel once said: "How do you run a small business in Scotland? Well, you start with a big one . . . " Scottish industry had always been "big" and international. Continental's closure of its Newbridge tyre factory near Edinburgh, little noticed south of the border, ended the career of Scotland's first transatlantic inward investment, the American-owned North British Rubber Company, set up in the 1850s.

But there had been financial traffic flowing across the Atlantic out of Scottish banks and institutions for many decades before and after 1850. In time, capital exports gave way to American direct investment after the second world war, but with privatisation the crossovers have recently resumed. Scottish Power is trying to buy a generating company in the north-west, First Bus is running school trips in Texas, while Americans carry freight on Scottish railways, growing for the first time in decades. If Silicon Glen is currently torpid, Scottish Enterprise has hopes of attracting high-value-added software and "designer chip" businesses because of Scottish "intellectual property culture", though the Bank of Scotland's brief entanglement with the American evangelist and entrepreneur Pat Robertson suggested that some very odd cultural values could come into play.

Ireland has had a high profile in all of this. Once used by Unionists as an awful warning, it became an SNP totem (helpfully appealing to west-central Scottish Catholics) because it grew from 56 per cent of the UK's GDP in 1976 to parity in not much over 20 years. Yet it now seems less a European success story than the "51st state", attracting over 25 per cent of US outward investment. And its demography - unique in western Europe - means it'll be three decades before it runs into the pensioner mountain. Scotland is already there.

Out of Scotland's dwindling manufacturing core and luxuriating, barely comprehended, service sector come the malfunctions that preserve native obnoxiousness. The anti-Catholic prejudice the composer James MacMillan recently protested about is given its salience by the sectarian lines along which much of Scottish football is organised and by the general overvaluation of sport among underemployed men. The Scots spend £40 million-odd on football, well over the English per-capita level. Other, even more sinister recreations now bulk large: drugs were scarcely worth mentioning in the early 1980s; now they cost Glasgow alone £600 million-plus a year. No way is the satanic world of Irvine Welsh MBA an adequate recompense.

The protean quality of global capitalism has a lot to do with transport, which covers only about 30 per cent of its global costs. Europe's sensitivity to such factors chimes in with the "greenish" tone of the Fabian tract's proposals, and new forms of public, mutual and microcapitalist enterprise. This is important both as a means of minimising social disruption, and using energy-saving policies on transport, power and education to promote local employment and industry.

If 18 per cent of Scottish family expenditure goes on transport (it was 10 per cent in the 1960s) the sort of public-transport-based reforms that the Scottish transport minister, Sarah Boyack, envisages can release funds for urban and environmental reconstruction. These in turn can sell Scotland's educational and cultural resources, particularly to a well-heeled European generation approaching retirement.

Tourism, slated by a recent Scottish Select Committee report for bad planning and organisation, could earn much more than its current £2.5 billion. Edinburgh is an object lesson in this: congested in Festival time, yet only 30 miles away from a failing Borders economy that only good public transport - in short, the reopening of its railway - can turn into a valuable resource. Minimising the dysfunctions of Scottish society - the 30 per cent of kids reared in poverty, the awful health record, the landownership lottery - is less of a bother than letting inward foreign investment be lean and mean, and having to clear up after them.

At the end of Alasdair Gray's novel of the early 1980s, Lanark, it's the "makers, movers and menders" who save the doomed, ex-industrial town of Unthank. If the book has iconic status in Germany, it's because it pierces the postmodern fog of "projects", "focus groups" and "third ways". And this candour does form a challenge for new Labour. Behind the fog, Gordon Brown may be achieving socialism by stealth, but the Scottish system demands explicit principles. If these aren't forthcoming, or are frustrated, the tectonic fault will run through Labour itself.

Christopher Harvie is professor of British studies at the University of Tubingen and honorary professor of history at Strathclyde. His latest book is "Travelling Scot" (Argyll)