Growth Commission report: No to Scottish Capitalism, For a Workers’ Republic!

By Marios Kalomenopoulos, IMT Edinburgh

The publishing of the Growth Commission report, “Scotland – A New Case for Optimism” has raised the question of whether independence can work under capitalism clearer than ever before. This paper has received criticism not just from raging unionists, but importantly large elements of the YES campaign and indeed within the SNP itself and mostly from the left. The discussion around this document is a very welcome development, and with the SNP promising to hold public meetings over the summer on the report, it is likely to provoke a debate where socialists should present a clear alternative.

Back in 2014, the independence referendum dramatically changed the political situation in Scotland. Thousands of ordinary people, who for many years had been alienated from politics, came to the fore. Massive rallies and local discussion meetings erupted in every town. After a decade of austerity policies dictated mainly from London, the case for independence presented a practical way out, and many voted YES in the hope that an independent Scotland, free from the hated right wing policies of the Tories and Labour Blairites, would be able to focus on progressive legislation for ordinary people, implement social demands and raise living standards of the poorest layers of society.

However, the leadership of the pro-independence movement, and the SNP in particular, has not always shared this vision. In September 2016, Nicola Sturgeon set up a commission to investigate and produce a renewed economic blueprint for an independent Scotland. Two years later, the highly anticipated document was finally published, but despite presenting “a new case for optimism”, in reality the document offers no alternative to the capitalist system and the crisis and austerity which comes with it.

Financial Independence

To start with, a major contradiction of the document is the lack of financial independence of the new state. Although political independence would be achieved, and the plan would be to follow a different economic model, Scotland would continue to follow the main financial policies of the Bank of England, with the new state only trying to intervene here and there, but in essence without any real powers. At the same time, while beginning with a zero debt of its own (which is a big question mark in itself), an independent Scotland will continue to contribute to UK debt. This will depend on the policies of the rest of the UK and mainly the Westminster’s government, which the commission team claims to oppose.

The same ambiguity exists in the currency question: British sterling, Scottish pound or euro? The commission deals with this issue by resorting to the good will of the country’s neighbouring governments or the negotiating power of Scotland. It is a terribly naïve position to assume that the transition would be a smooth process. The recent examples of the oppression of the Catalan movement and the SYRIZA government show how willing our neighbouring governments within the EU are to cooperate with anything other than their own capitalist interests.

As the Scottish-born Marxist, James Connolly, warned long ago (for the case of an independent Ireland then): “If you remove the English army tomorrow and hoist the green flag over Dublin Castle, unless you set about the organization of the Socialist Republic your efforts would be in vain. England would still rule you. She would rule you through her capitalists, through her landlords, through her financiers, through the whole array of commercial and individualist institutions she has planted in this country and watered with the tears of our mothers and the blood of our martyrs”. In other words, there is no true independence without independence from capital.

Austerity, but not “austerity”

The growth commission team, predicts that the economy will have a deficit of around 5-6% at the beginning of the transition to an independent Scotland, but it would be easy to bring under control by “sensible budgeting”. However, on a capitalist basis, and especially in a period of deep crisis, the only way to achieve this is by a big austerity programme of cuts to vital services and public sector wages. This has been the recipe used by the ruling class the last 8-10 years.

Nicola Sturgeon immediately tried to distance herself from this fact, tweeting:

For those who haven’t read the #GrowthCommission report before commenting on it – it recommends above inflation spending growth and explicitly rejects austerity. If only we’d had that in last few years! Look forward to debating all the recommendations over summer.

We look forward to this debate too! We’ll be making the point that the independence movement must take radical socialist measures, including nationalising the banks and main businesses, and cancelling the debts to the international loan sharks. Without these, what the growth commission calls “sensible fiscal adjustment” will simply lead to cuts in public services, health, education, social housing, tuition along with and further privatisation of education and jobs losses.

The “Nordic Model” and similar myths

The report tries also to draw analogies with other “successful” smaller or bigger capitalist countries, such as the Scandinavian countries, Ireland and New Zealand. These are portrayed as “good” and “sustainable” economies, with a more human-faced capitalism. However, this couldn’t be further from the truth.

Starting from the Nordic countries, the so-called “Scandinavian socialism”, became a reality only because of the specific conditions after the World War 2. The post-war boom creating massive expansion and profits, particularly in Europe, meant the ruling class could give significant concessions. Also, with fear of the expansion of USSR which, despite it bureaucratic degenerations, had support from significant layers of the working class, they had to grant reforms in order to stave off “the threat of communism”.

However, based on capitalism, these countries still have a lot of inequality. Today, the richest people in Sweden for example, Stefan Persson, CEO of H&M, have more wealth than half the Swedish population. According to the Organisation for Economic Cooperation and Development (OECD), Sweden is the country in which inequality has increased most in the last three decades. In fact, since the 1980s, Swedish governments have passed cuts of billions of SEK per year, resulting in many jobs lost and widespread privatisation of the economy. Youth unemployment, at the beginning of the world capitalist crisis of 2008,reached 25% and today stays above steadily 15%.

The case of New Zealand is no different. Its huge development before the 1980s was largely due to the expansion of world trade. After the entrance of the UK in the EU, the situation changed with New Zealand losing one of its main export markets. This came in addition to the oil crisis of the 1970s which plunged the country’s economy into a slump. Soon a reverse programme, similar to the one described above, of cuts in public spending, privatisation and relaxation of controls on the financial sector, created a country full of inequalities and a magnet for tax-avoiding parasites. Nowadays the situation is far from ideal, especially for the poor. The OECD has found that New Zealand has by far the worst homelessness crisis of all the advanced economies, with 40,000 people homeless, nearly 1 per cent of the population. At the same time, the New Zealand “Salvation Army” (a charity organisation) reports that it cannot cope with the demand of the food banks. Finally, the prospects of New Zealand’s economy, to those of declining Australia and China, are not looking good at all.

Ireland however is one of the most dependent economies in the world. As we argued in Ireland on the tracks of a brexit “train crash”, “It is completely in thrall to foreign capital. A tax haven island, it has become a stepping stone into Europe for multinational tech and finance giants. Such companies are deeply intertwined with financial centres like London, and their British and Irish operations are completely fused. Furthermore, Irish exports to the rest of the EU are reliant on many part-finished goods originating in Britain”

What are the lessons from these “models” then? This can be seen from the reaction of the working class and youth in such countries. In New Zealand the NZNO nurses’ union have just voted to go on all out strike. In Ireland we have had a number of strikes including in public sector and have just seen a huge earthquake against the establishment with the Repeal the 8th vote. Sweden has seen the rise of the far right but more significantly mass demonstrations of radicalised workers and youth preventing far right mobilisations, and in Denmark we came close to a very large public sector strike. In other words, these models mean crisis. Crisis means class struggle. A government who tried to implement the policies of the Growth Commission , regardless of their current popularity, could not escape the crisis and the fightback from the workers and youth in Scotland.

Scotland – the case for socialism

“Scotland – the new case for optimism”, similarly to its predecessor, “The White Paper”, remains a highly speculative document. It is not good enough for the workers and youth of Scotland and many within the YES movement know this. Pro-Independence sources such as The National and Commonspace have been filled with debate and criticisms from the left. The SNP conference this month has a range of left-wing motions on issues such as a Maximum Wage and a Scottish National Infrastructure Company are likely to pass and will put pressure on the leadership, exposing their pro-capitalist policies. The size of the recent “All Under One Banner” March show a potential resurgence in the movement and these divisions could well become much more significant.

This is why it is important for the left in the YES movement to be bold! The only programme for Scottish independence is one that rejects capitalism altogether. A Scottish Workers Republic: a revolutionary government that would reject the debt and diktats of banks and big business and could mobilise masses of workers and youth against any attempt at austerity and blockades; and an internationalist government, which would call out to workers and youth throughout the world to do the same. That’s programme we’ll be fighting for within the upcoming debates within the YES movement.

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