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9 March 2022

Why the SNP’s economic strategy offers continuity not transformation

The muddled, contradictory shopping list is a consequence of the deep-rooted defensiveness of Scotland’s political economy.

By Rory Scothorne

Scottish writers were once preoccupied with the idea of a “Caledonian antisyzygy”. This has come to mean a general spirit of doubleness in the Scots psyche, expressing all manner of contradictions: British and Scottish, Highland and lowland, Jekyll and Hyde, native and cosmopolitan. George Gregory Smith, who coined the term in 1919, meant something specific – a tension between passive realism and runaway fantasy that left Scotland’s intellectuals trapped between worlds.

The term has become unfashionable among critics, who increasingly see it as a propagandist cliché, while the constitutional middle way of devolution briefly promised a route out of such antinomies. Yet the independence referendum and its aftermath have brought the old binary-brain back to the surface: “Yes” and “No” are now, to almost everyone’s frustration, the unshiftable poles of Scottish politics. The debate over independence is dominated by endless angry confrontations between actuality and imagination.

Scotland’s economy is another place where extremes meet. In 1977, Neal Ascherson wrote that “Scotland is not really within the category of ‘capitalist’ economies as they are usually classified. Neither is it socialist. It lands somewhere between Eastern and Western Europe, a statist economy without a state.”

Today, Scotland is more obviously a capitalist economy. Yet there are still two identifiable tendencies within it, opposed and inextricable. One of these is the sprawling domain of public-sector Scotland, forged over a century of state expansion and compensation as the old heavy industries declined and enfranchised Scots demanded security. The other tendency is harder to pin down. Decades of globalisation, combined with a nationalist mythos forged in opposition to Thatcherism, have made it hard for red-blooded capitalism to wear an identifiably Scottish expression.

When it does, it tends to overcompensate, and Scotland now boasts a whole range of products bedecked in the kitsch “tartanry” that its left-wing intellectuals have learned to mistrust. Irn-Bru, Tunnock’s tea cakes and the whole tourist sector – infamous for the tartan-tat merchandise that increasingly dominates Scottish high streets – have made a boil-in-the-bag patriotism central to their branding. There is a more substantial capitalist heritage to draw on, but Scotland’s famous banking and mercantile traditions were badly tarnished by the financial crash, and industrialists such as Tom Farmer and Jim McColl have struggled to revive the grandeur of those 19th-century bourgeois titans who, thanks in part to the British Empire, found themselves at the heart of globalised manufacturing.

Tensions between these two tendencies – big-state Scotland vs “Caledonia PLC” – have generally been contained by a system that the political economists Chris Moore and Simon Booth once called “meso-corporatism” – a “negotiated order”, in which devolved administrators brought industry, labour and wider civil society around the table for the sake of social peace and economic stability. This has served Scotland fairly well, keeping the nation’s head above water through turbulent times, even if it wasn’t able to hold back the tide of deindustrialisation. It remains, however, a defensive posture – designed to navigate changes imposed from the outside, by Whitehall or global markets, rather than forging ahead with a world-leading agenda of its own.

There are also signs that the strategy of treading water is beginning to fail. In January, the Scottish parliament’s Finance and Public Administration Committee – convened by an SNP MSP – noted the “deeply worrying” failure of Scottish employment and earnings to keep pace with the rest of the UK, amid the stubborn long-term challenges of especially low productivity and an ageing, low-immigration population. Because income tax is devolved, the revenues from Scotland’s relatively progressive rates are struggling to keep up with public spending. The resulting financial void is set to widen, from £190m next year to £417m in 2026-27.

This poses problems for the governing SNP, whose goal of independence requires the kind of swashbuckling economic self-confidence that is lacking from the country’s defensive political economy. The task of solving this has fallen to Kate Forbes, the Scottish government’s 31-year-old finance secretary, whose long-awaited National Strategy for Economic Transformation (NSET) was published last week. Forbes was thrust into office in 2020 to replace the former rising star Derek Mackay, whose tenure in the role was cut short by revelations that he had sent inappropriate messages to a 16-year-old boy. Mackay was something of an interventionist – nationalising Ferguson Marine Shipyard, reforming the tax system and fighting for public-interest conditions in the sale of wind farm licenses – but Forbes is different.

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Last June, Forbes made her first speech since the May elections, setting out the economic agenda of the new government. “Our mission,” she declared, “is this: to create the best conditions for entrepreneurs… to produce, to invent, to scale up, and in so doing, create secure and satisfying jobs which pay a fair wage.” Entrepreneurship, she argued, is “the foundation stone of our society”. For years now, the Scottish government has been toying with the idea of a “well-being economy”, finding common ground with the Scottish Greens, who now have a place in government via a “cooperation” deal. Yet for Forbes, a well-being economy could only be built on “a resilient, innovative and growing business base. That is why this government is absolutely committed to being pro-prosperity, pro-growth, and pro-business – a true champion for our job creators.”

[See also: Why Scottish nationalism is simultaneously safe and stuck]

This wasn’t just a sop to businesses disgruntled by Scotland’s especially restrictive Covid-19 rules, or merely an effort to soothe anxieties over the deal with the “de-growth” Greens. In a glowing profile of Forbes for the New Statesman last month, Chris Deerin noted that some colleagues view her as “a bit right-wing”, even if Forbes describes herself as “centrist”. “Reform requires difficult decisions, but difficult decisions offend people,” she told Deerin; “with every decision, the more radical it is, the more people you offend. It is a tension.” Such banalities are the speciality of a certain kind of “centrist” – the kind who sneers at the term “neoliberal” precisely because it describes them uncomfortably well.

Thanks to Forbes’s guidance, the NSET is bursting with the kind of platitudinous enthusiasm for entrepreneurship that was fashionable in late-1990s New Labour circles. It promises to “establish Scotland as a world-class entrepreneurial nation founded on a culture that encourages, promotes and celebrates entrepreneurial activity in every sector”. Not only will entrepreneurship be encouraged in business; civil servants and even third-sector workers will also be expected to unleash their animal spirits, which – the ancient dogma goes – will solve everything. In The New Way of The World (2017), the philosophers Pierre Dardot and Christian Laval argue that neoliberalism pursues a style of “entrepreneurial government” in which “the market is not imposed simply because it ‘eats into’ state or community sectors, but because it has become a universally valid model for thinking state and social action.” It’s worth wondering whether Forbes, who has spent her entire adult life in the age of “capitalist realism”, is capable of imagining anything different.

She is certainly up against people who are. The most obvious context for her remarks about “tension” and “difficult decisions” was the fraught production of the strategy, which had to make its way through a commission that included – alongside various sympathisers – the Scottish Trades Union Congress (STUC), and which required the involvement of the Scottish Greens. As the strategy’s publication date approached, the Times reported that Forbes’s ambitions had been “heavily diluted” and “hamstrung” by the Scottish Greens, who had forced the inclusion of “green and other pseudo-social policies which don’t have much to do with economic growth”.

What kind of policies might these be? Insiders have suggested to me that early drafts of the strategy were far weaker than the final product when it came to things such as fair pay for public contracts, the role of trade unions, investment in the Scottish supply chain and social ownership models, all of which were expanded thanks to pressure from the Greens and the STUC. “The NSET is not a green economic strategy,” said Maggie Chapman, the Greens’ spokesperson for justice, equality and human rights; though she suggested that, thanks to Green pressure, it does “takes some significant steps forward”. Dave Moxham, the deputy general secretary of the STUC, told me that Forbes’s more general approach “signals a shift to the right, there’s no question about that”.

In trying to please everyone, the NSET has also faced plenty of discontent from corporate and establishment quarters. Tom Hunter, Scotland’s first billionaire, has described it as “a long wish list with no magic wand to deliver it”. The Fraser of Allander Institute, a mainstream economics think tank, has criticised the strategy’s “vague promise of good things to come with little evidence of thought over why or how”.

If the strategy was Forbes’s big opportunity to make her mark on Scotland’s future, it’s not a particularly impressive mark. As is always the way with the SNP, big problems are kicked into a dizzying thicket of future reports, strategies and action plans, which only promise to further overwhelm an already exhausted civil service. As the STUC noted in its criticism of the strategy, there is little mention of the “foundational economy” – things like transport, housing and healthcare, where many people work and experience the economy most directly. As the economist Laurie MacFarlane argued in his analysis, for all the talk of entrepreneurship there is not much appreciation of the role of the interventionist “entrepreneurial state” – despite the involvement in the commission of the economist Mariana Mazzucato, who has popularised the term.

Perhaps this is all ungenerous to Scotland’s young finance secretary. Scotland’s deep-rooted defensiveness is, after all, a serious obstacle to the thrusting entrepreneurial spirit she so clearly admires. That small-C conservatism is reinforced by constitutional limits on the Scottish government’s room for fiscal and monetary manoeuvre, not to mention the immigration powers that would be required to address the demographic challenge. The kind of “difficult choices” that Forbes clearly yearns to make are inhibited by the absence of a big state that can impose things on people. In the absence of sovereignty, Scotland’s elites have to govern through consensus, which always tends towards continuity over transformation. Hence the muddled, contradictory shopping list of ideas, in which both capital and labour should get everything they want.

The result of all this is that, once again, Scotland will end up following rather than leading the global trend, torn between grumbling about it and embracing it. But beneath the waffle and compromise, the strategy does hint at something bolder. If it wasn’t for the constraints and necessary compromises of devolution, Scotland could well provide a laboratory for something more ambitious – a “big bang” independence that plunges the nation head-first into the new century of green capitalism and big-tech servitude. But to really break free from the British economy would mean first building up our own class of national capitalists. To do that without becoming dependent on foreign investment would require a sizeable transfer of existing national assets from public to private hands. Scotland has old and new public resources in abundance, whether public services or renewable energy potential, and these would be vital for the all-important “primitive accumulation” stage of endogenous capitalist growth.

Such a prospectus is politically unfeasible for now – too many Scots remain wedded to the rhetoric of social democracy, or even socialism, for anyone to articulate that agenda quite so openly. But the SNP have always been masters of the long game, and there may now be three forms of “gradualism” at play. The first is the classic slow-build to independence, working its way through the British state and public opinion until everything quietly clicks into place. The second is the gentle loosening of the left’s outsized grip on the Scottish imagination, as Labourism, communism and the trade unions fall victim to what EP Thompson called “the enormous condescension of posterity”. Then, finally, comes the real prize for the SNP’s long-submerged “tartan Tories”, revived in the form of Kate Forbes: a post-independence bonanza for a renascent McBourgeoisie, as Scotland’s vast environmental wealth takes the place of coal and oil as the basis for a new, nationalist ruling class. But if that is what it takes to resolve Scotland’s old contradictions, it may be better to stick with the antisyzygy you know.

[See also: Why support is emerging for a “third option” on Scottish independence]

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