CommonSpace columnist and Common Weal head of policy Ben Wray reviews Tackling Timorous Economics – a new book from respected economic thinkers Katherine Trebeck, George Kerevan MP and Stephen Boyd
I’VE been involved in Scottish politics in one way or another for a decade now and I can’t remember a time when the quality of debate about the Scottish economy was any good.
With infrequency and great timidity, what passes for genuine economic debate has been a sort of moderation on the more wild-eyed aspects of Tory economics, has confined itself to a narrow framing around the politics of devolution and generally stuck miserly to convention in a world where conventional economics increasingly sits uneasily with any sober look at reality.
In the world of Trump-Brexia, sticking to failed economics is increasingly the silent crisis of Scottish politics. As I’ve argued elsewhere, you cannot understand the political shock of Brexit and Trump without understanding the financial crisis and subsequent global stagnation, specifically the long decline in incomes across the western world never previously experienced in the post-war era.
In the world of Trump-Brexia, sticking to failed economics is increasingly the silent crisis of Scottish politics.
This is the petrol that has fuelled the raging rightwing populist fire, and unless it is addressed the fire will continue to spread.
We can’t defeat the radical right through fighting a culture war – the left needs to convince the majority of people that it has solutions that will make their lives better if they are not to succumb to the politics of fear and hate.
In that context, Tackling Timorous Economics by Katherine Trebeck, George Kerevan and Stephen Boyd – three writers who have made substantive contributions to debates about the Scottish economy – is very welcome indeed. Timorous is a good description of economic debate in Scotland, and the book is sufficiently provocative in challenging that stale consensus.
Trebeck, a senior researcher at Oxfam, introduces Timorous by expressing frustration at a culture of “tribalism” and “groupthink” in Scottish politics that has closed down space for a more open discourse of critical thinking on the economy that questions basic assumptions like whether we should be pursuing growth for its own sake.
“Until Scotland allows itself to discard conventional wisdom and orthodox thinking – becomes less ‘timorous’ – and until it ceases unquestioning adoption of agendas and positions, it will struggle to benefit from a vigorous, nuanced, and ambitious discussion about the purpose and structure of the economy we sorely need,” she argues.
You cannot understand the political shock of Brexit and Trump without understanding the financial crisis and subsequent global stagnation. This is the petrol that has fuelled the raging rightwing populist fire, and unless it is addressed the fire will continue to spread.
I broadly agree with this take but I don’t think political polarisation is itself the problem: indeed, I think there’s significantly more people in Scotland interested in new economic thinking now than five years ago and that is chiefly because of the engagement created around the independence referendum, especially on the Yes side.
It’s good to have positions and agendas as it means there is something concrete to debate. The task is to shape that debate in a way that creates an open and critical discourse rather than a closed off and dogmatic one.
Timorous is then split into three essays by each of the authors. Trebeck begins by outlining a broad programme for a “new economic paradigm” premised on the quality of growth and jobs as our primary success criteria, not growth and jobs as such, which is unsustainable and does not meet social need.
She proposes a wide-range of policies and practises that would make this transition happen, from creating “pro-social businesses” that are anchored locally to “shifting the tax burden to capital, wealth and harmful activities”.
Stephen Boyd, until recently assistant secretary at the STUC and now in an economics based role in the Scottish Government, asks in his essay whether Scotland is serious about wanting a more equal country, questioning in his uniquely pugnacious style whether those who rhetorically advocate addressing inequality are at all serious or even aware of what it would take at a policy level to begin to make that happen.
We can’t defeat the radical right through fighting a culture war – the left needs to convince the majority of people that it has solutions that will make their lives better if they are not to succumb to the politics of fear and hate.
The strength of Boyd’s approach is that he refuses to bow to the widespread, lazy and convenient view that the enormous growth in inequality is largely an unassailable consequence of globalisation that governments have little control over. This is not and has never been the case. Boyd helps put responsibility back onto the decisions made (or not made) by government.
Boyd’s critique is piercing but his proposals for how to change things are not always as penetrating.
For instance, while arguing that widening the tax base is essential, he is scornful of arguments “for more and better jobs” because approaches to economic development are “uncertain”. Aside from the fact that some economic development strategies are a lot more uncertain than others, it’s unclear how Boyd envisions the tax base widening without more and better jobs.
This is doubly the case at a time when there has been a historic and sustained squeeze on wages, at a time when housing costs have risen significantly: there is strict limits to how much you can increase the tax burden on lower-income earners in that context.
Boyd shares a familiar habit of framing his argument as if the burden of responsibility for substantive policy change to tackle inequality lies solely with the pro-independence side. Very rarely if ever does he skewer the pro-union side of the debate for failing to develop a UK strategy for addressing inequality.
In that context, Tackling Timorous Economics by Katherine Trebeck, George Kerevan and Stephen Boyd – three writers who have made substantive contributions to debates about the Scottish economy – is very welcome indeed.
So in a fine section analysing financialisation, Boyd rightly criticises the view that an enlarged financial sector in Scotland would be good for the Scottish economy as a whole, as the dominance of finance acts as a drag politically and economically on productive sectors of the economy (a point I have made previously here).
But if that argument holds true then surely it does so doubly for any strategy to tackle inequality within the UK, given the hegemony of the City of London over British political economy. If, as Boyd states, “inequality ultimately reflects the relative bargaining power of economic agents”, then any power analysis of Scottish vs UK political economy would see the latter as more firmly weighted against equality than the former.
Boyd draws a useful comparison between the Scottish Government’s policy agenda for addressing inequality and the proposals of Tony Atkinson, one of the world’s leading inequality experts, in his recently published book which outlines a policy programme for reducing inequality.
While the realities of governing apply pressures on policy that do not exist for an academic, the like-for-like comparison is nonetheless stinging – it’s quite clear that the Scottish Government does not have anything approaching a systemic policy strategy that could put much of a dent into Scotland’s monstrous inequality.
George Kerevan, SNP MP for East Lothian and a former journalist, does not hold back in the ambition and scope of his essay, which is an accomplished critique of global capitalism and a case for a new approach from the left internationally in order to begin trying to usher in a new economic order.
I think there’s significantly more people in Scotland interested in new economic thinking now than five years ago and that is chiefly because of the engagement created around the independence referendum.
He situates the problem of the international left as a failure of practise, not theory: “In short, the left has stopped experimenting in the real world,” he says.
“Such an experimental alternative is not only necessary but eminently possible.”
His analysis is that we can clearly see signs of the neoliberal era coming to an end in global debt deflation, financial bubbles, stagnating incomes and the rising threat of automation to skilled jobs.
He is clear that he believes this to be a fundamental problem of capitalism itself, rather than just the neoliberal expression of it. Going beyond neoliberalism means going beyond critique and being “creative rather than didactic” – something, he says, the left struggles with.
He sees Scotland and Holyrood as the perfect site for such experimentation, arguing that we should seek to “embed a non-capitalist economic practise inside the belly of the whale”.
The strength of Boyd’s approach is that he refuses to bow to the widespread, lazy and convenient view that the enormous growth in inequality is largely an unassailable consequence of globalisation that governments have little control over.
Part one of Kerevan’s essay is a quite superb critique of capitalist development. He compliments capitalism’s enormous productive efficiency over previous modes of production, but says that the current crisis is evidence of how it is now outliving its historic purpose: “The central problem is that the system is finally generating more profits than it can safely or purposefully use,” he says.
Whereas previous crises served to cleanse the system of excess capital, now the financial system has grown so obese as to be too big to fail, with states stepping in to prop it up. The political control finance exercises means the state is increasingly organised as the guarantor of finance capital, but there are clear limits to this, both in terms of indebtedness and the effectiveness of monetary policy measures like quantitative easing.
This has created three inter-related problems: too much capital not serving a socially useful purpose, too low wages and insufficient jobs. The latter of these problems is only at the start of its crisis: Kerevan applies an Oxford University model of the likely future effects of automation on different industry sectors to Scotland, and identifies one million jobs with an 80 per cent chance of disappearing.
Considering only 2.6 million people in Scotland are in employment that is a number that should make all of us sit up and take notice.
Part two outlines a series of policy proposals for how Scotland could begin going about transitioning out of capitalism. On tax, Kerevan outlines a series of measures to extract idle capital being sat on by big corporations so it can be put to use for public investment.
Kerevan’s case is directly counter-intuitive to everything spoken by First Minister Nicola Sturgeon for the past year, but I have to say reading it felt like a breath of fresh air to me.
A wealth tax on assets is proposed, but most interesting is the clarity by which the SNP MP dispatches with the case for Scotland cutting corporation tax, an argument consistently articulated by his Westminster colleague and former first minister, Alex Salmond MP, during the Scottish independence referendum campaign.
“Non-bank companies in the UK and US are sitting on historically large piles of free cash. Cutting corporate taxes only adds to this cash mountain, not productive investment … [corporation tax] should not be used as a crude bribe to secure inward investment, a policy in the post-credit crunch era will penalise tax revenues for no marginal gain,” Kerevan states.
Perhaps most intriguingly, Kerevan is willing to commit the “heresy” of challenging the virtues of “free trade”. His case is directly counter-intuitive to everything spoken by First Minister Nicola Sturgeon for the past year, but I have to say reading it felt like a breath of fresh air to me. As such, it is worth quoting the argument at some length.”
“Open economies have brought much good but also much evil,” Kerevan says. “Do not forget that the British invented the doctrine of free trade in order to force the Chinese to accept our opium production (based in India).
“In order to reflate domestically, small nations like Scotland will require a degree of protection, or see aggregate demand flow abroad. Provided we use such protection wisely to create world class firms – as the Nordic countries did in the 1950s and 1960s – it would be possible to offset higher domestic costs by charging a premium for our exports.
“This is a plea for fresh thinking and a more experimental attitude to policy making,” George Kerevan MP
“Of course a Scotland still inside the UK would not have this flexibility. Nor, indeed, would any member of the European Union. However, I remain sceptical that the free trade model (including the free movement of capital) will survive the strains and stresses of a deflationary global economy.”
Kerevan’s vision for the Scottish economy could be surmised as experimental market socialism: probing in the direction of a democratised economy of worker co-ops, still competing with one another but doing so without the entrenched monopolies and rapacious pursuit of profit at any cost that so defines corporate capitalism.
There is a gap between the ambition of this vision and the specific policies Kerevan proposes to get there, but to be fair he readily admits that his is not a fully-fledged programme: “This is a plea for fresh thinking and a more experimental attitude to policy making,” he says.
So is the whole of Tackling Timorous Economics, and amen to that.
Tackling Timorous Economics: How Scotland’s Economy Could Work Better For Us All is published by Luath Press and can be purchased here.
Picture courtesy of Luath Press
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