A Class Approach to the Independence Debate

by Vince Mills

Socialism First, like the Red Paper Collective has adopted a class approach to the independence debate arguing that ultimately what we should be asking is what is the best way to bring about an irreversible shift of wealth and power in favour of working people.

Although many on the Left agree with that there is disagreement with those advocating a Yes position because our position seeks to outline an analysis based on what we argue will be the actual dominant forces that shape a new Scotland that a Yes vote would give, as opposed to the arguments of those who believe that voting yes will by itself release revolutionary new forces. Instead we pose the necessity of a British wide strategy for challenging the power of neo-liberalism.

The independence that is on offer is that driven by the SNP, a party which has the highest share of the popular vote in the European and Scottish Parliament elections and the greatest number of councillors. It is by any measure the dominant political force in Scotland and is not about to disappear any time soon.

There are two major concerns for the Left in the independence debate. The first is the necessity to defend public services and second is the second is the longer term strategy necessary for winning socialist advance.

Let us look more closely at the economic case for independence. In his recent book: Seventeen contradictions and the end of Capitalism David Harvey writes: “The world is broadly polarised between a continuation (as in Europe and the United States) if not a deepening of neo-liberal, supply side monetarist remedies that emphasise austerity as the proper medicine to cure our ills; and the revival of some version, usually watered down, of a Keynesian demand side and debt-financed expansion ( as in China) that ignores Keynes’s emphasis upon the redistribution of income to the lower classes as one of its key components. No matter which policy is being followed, the result is to favour the billionaire’s club that now constitutes an increasingly powerful plutocracy both within countries and (like Rupert Murdoch) upon the world stage.”

Both of these strategies are being offered by key supporters of the independence project. On the one hand there is the commitment to lower corporate taxation and straight forward rejection of any strengthening of workers’ rights as advocated by the SNP leadership and on the other hand there is Commonweal strategy as outlined by the Jimmy Reid foundation that seeks to build on the limited welfarism of the Scottish Parliament posing at its core the need for partnership between Capital and Labour. It hardly needs stating that since neither advocates a fundamental challenge to the basis of class society nor a significant transfer of ownership in terms of wealth, they do not constitute the basis for a secure public services in Scotland.

And yet those arguing for independence, left and right believe that they can end austerity, although they may disagree about how they would do that.

The SNP argues that they can challenge austerity by growing the Scottish economy through a combination of sustaining the existing economic staples like oil and gas and food and drink and by borrowing money.
This growth depends on increasing the working age population through higher levels of immigration leading to better productivity leading to 2.5% growth per annum. The Finance Secretary, John Swinney also recently set out proposals to borrow heavily in the first three financial years after the planned formal split.

This, like all capitalist strategies is excessively rosy about the capacity of the market economy to deliver economic stability. For example, in relation to oil and gas as you know this has been the subject of raging arguments but no-one is saying that oil and gas reserves are not declining; the argument has been about the rate of decline and what we might expect as likely tax take from an industry that is notoriously fickle in rates of return.

In relation to borrowing, Swinney’s plans would see Scotland’s deficit rise to around 7 per cent, based on Holyrood estimates. This ignores three things. Firstly the cost of borrowing given Scotland’s standing as a new country without a track record is likely to be enormously expensive. Secondly , if there were a currency pact with the UK, any plans for such borrowing would have to be agreed with the Rest of the UK, hardly likely in the current climate and finally the EU, which the SNP is determined to join has instructed member states not to allow their deficits to exceed 3 per cent, never mind 7%. It is difficult to see Swinney’s promise as something other than a gamble for the swing in the electorate that they believe is necessary to win the referendum rather than a serious economic strategy.

In this situation without any recourse to the current Barnett formula, which allows the transfer of funds from the UK to its constituent parts, there is a strong likelihood that we would face cuts in public expenditure in Scotland because demographic change and the level of inequality mean need will grow, but the SNP want reduced levels of corporate taxation and the status quo in relation to personal taxation.

But there is another and just as important argument from a left perspective related to the issue of the economy. The level of productivity and the benefits that come from that depends on who owns the economy and what influence we, trade unionists and socialists can bring to bear on that ownership.
Scotland’ economy heavily externalised. The following statistics are based on data published by the Guardian. Nearly all Scotland’s North Sea oil and gas production is licensed to foreign firms. There is only one significant Scottish firm, First Oil. It produces just 6,000 of the total 1m barrels of crude produced every day.

• 90 banks and finance companies operate in Scotland with no Scottish registered office, including global firms such as Barclays, HSBC and Morgan Stanley. Their earnings flow directly to London or overseas.
• More than 70% of Scotland’s total economic output – excluding banking and finance and the public sector – is controlled by non-Scottish-owned firms.
• Of the large firms in Scotland, those employing 250 or more people, 83% are owned by non-Scottish companies.
• Well over 80% of Scotland’s whisky industry – the UK’s largest food and drink export – is owned outside Scotland. Nearly 40% of total output is in the hands of one London-based company, Diageo.
• More than 80% of Scottish farmed salmon, Scotland’s most valuable food export, is foreign-owned. About two-thirds of it is controlled from Norway.

What independence would mean is that Scotland would be subject to power of corporate capital vested largely in the City of London without any say in how that power is exercised because we would not have a vote for the UK politicians who have political jurisdiction over those institutions.

We did not create our history. Our forebears did and because of that the Scottish economy, and the Scottish people and the Scottish Labour movement are deeply integrated into the British economy. We need a strategy built on that reality, on existing working class institutions, primarily the trade unions, but growing beyond that into a British wide People’s Movement like the People’s Assembly, that is ultimately capable of winning the case for social ownership of the banks and financial institutions, the energy companies and the communication and transport infrastructures. That kind of advance will give us the basis for ending inequality and bringing about an irreversible change in the balance of wealth and power in favour of working people.

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