SNP Stability = Austerity

The Growth Commission document has many flaws but the most glaringly obvious is that it has woven into its fabric a belief that global capitalism with its free markets and neo-liberal policies is the only possible economic structure for a future Scotland.

It seems to forget that this is the very system that Scotland has been operating under and that is responsible for most of its economic woes.

Some SNP supporters may have believed that once it was free of the iron grip of the UK Treasury it would take a different course, but Nicola Sturgeon’s endorsement of the Growth Commission’s report has made it loud and clear that we can expect nothing but more of the same from a future SNP government.  Sturgeon claims that the report explicitly rejects austerity. And right enough it does include that statement. But those words are merely inserted within a document that has, running through every page, an approach that will almost certainly require it to use turbo charged austerity to meet its fiscal targets.

The Commission fails to analyse some basic weaknesses in the Scottish economy. It would have done well to consider the work of John Foster for the Red Paper Collective since 2005.

In March 2018 John Foster describes how the ownership of the Scottish economy had changed in the past 30 years. He details the steady erosion of the number of major companies owned and controlled from within Scotland. He shows how the past 10 years has seen an acceleration in this process in both the manufacturing and finance sectors. Many well-known ‘Scottish’ companies are owned by international investment companies. Today only four significant financial institutions remain under broadly Scottish control. All the Scottish registered banks are owned and controlled from outside Scotland.

This process of externalisation has resulted in a loss of manufacturing jobs and a huge increase in low paid low skilled precarious work. As John Foster states “the main thrust of the SNP developmental strategy has been with the neo-liberal grain of EU policy: that of offering financial incentives to footloose capital, such as Amazon and Hewlett Packard, or, in terms of a post-independence future, cutting corporation tax on the Irish model to draw in firms from outside”.  The Commission totally endorses this approach.

The main thrust of the document is that Scotland can emulate other small countries that appear to have more successful economies.  The flaws in that approach are numerous including differences in history, culture, geography, politics, level of exposure to international capital, etc. But the lesson Andrew Wilson, the main author, draws is that countries that run tight, prudent economies are doing better than Scotland within the UK.  “Overall, small economies tend to be a more prudent in their approach to fiscal policy.  A sustainable (desirable) level of public debt is lower in small economies than in large ones.  The immediate implication for Scotland is that it should aim to be more prudent than the UK and that it has the opportunity to do this.”

In essence, the Growth Commission would enable current austerity policies to be locked in for decades with appalling consequences for public services and jobs.

The main role model is New Zealand. It spends several pages regurgitating a 10-year-old New Zealand Government paper, presenting it as if it was written for the Growth Commission. It merges an unimaginative prudent capitalist approach with a cut throat approach to business failure.

The authors probably had not noticed but the New Zealand Prime Minister who introduced many of those policies has now denounced them. He says: “They have failed to bring economic growth and what growth there has been has gone to a few at the top”.

In the employment sphere, the commission looks to “flexicurity” as one of its magic wands. It has failed to recognise that there is no universal agreement of what it means in different national and institutional contexts but the shift in emphasis from job security to notional employment security is one which is likely to please employers more than it will workers. Indeed, the focus on Denmark’s version of “flexicurity” is a cause for concern. This is the model which has now been adopted by the EU as an acceptable model for member states. Way back in 2012 Dalibor Rohac of the neo-liberal Legatum Institute wrote: “Nordic countries demonstrate that in order to make the welfare state work, we need a large dose of free-market economics. The left is right: the UK should indeed aspire to be more like Scandinavia – in liberalising its markets and bringing public spending under control”.

Denmark is the Scandinavian country that has gone furthest in abandoning the welfare state model those who are unemployed lose benefit after three months and required to work on workfare, retirement age is now 69, welfare provision pared down to a minimum, statutory rights of trade unions eroded and work contracts massively diluted.

Not surprisingly, the STUC is unhappy about the contents of this report. But mostly it is unhappy that it was excluded from the work of the Commission while welcoming “the recognition of the need for government, businesses and trade unions to work together”. It should, rather, be grateful that its name does not appear on it and that it doesn’t have to defend it.  Much as STUC General Secretary Grahame Smith may think he could have influenced its findings, it is hard to believe that he could have persuaded them to include greater diversity of economic ownership, public ownership and an increase in collective bargaining within this report.

The publication of this document may well signal the end of the broad ‘Yes’ alliance that allowed disparate groups from revolutionary socialists to conservative business people to project onto an independent Scotland the kind of future their perspective demanded. The very exclusion of the trade unions from the process of creating the document, while simultaneously calling for partnership with them as a necessary condition for economic success, exposes the contradictions at the heart of the nationalist project, a contradiction centred on class.

Scottish Labour’s policies are now taking it in a very different direction and exposing how similar the SNP and Tories are when it comes to fiscal and industrial policies. Richard Leonard’s commitments to different forms of ownership, investment for growth and workers’ rights give the basis for a growth that will benefit the many.

The Red Paper Collective has always argued that class and not nation should be at the core of our concerns. The SNP has never based its policies on class. So no one should be unduly surprised that it has allowed itself to drift to the right in an effort to regain ground ceded to the Tories. It has always been thus. The nationalists have never been anchored in a belief in the rights of working people to have democratic control of the economy.  This document clearly exposes that truth.