Scotland: What “social and economic development” do working people need?

A contribution to the debate ahead of the 2014 Scottish independence referendum

The run-up to the Scottish independence referendum in 2014 has seen the emergence of a debate about the possibility of creating a "new" Scotland, one that rejects the huge inequality and savage austerity that is blighting the lives of millions. The Common Weal Project (CWP) has been launched by the Jimmy Reid Foundation which argues for a "programme for a different sort of social and economic development for Scotland." In this article Socialist Party Scotland outlines some of the differences we have with the CWP and argues for clear socialist policies.

A group of left wing writers, academics and political activists centred around the Jimmy Reid Foundation think tank have launched the Common Weal Project (CWP). It has set itself the task of developing a "vision for a better Scotland". Socialist Party Scotland welcomes this discussion. We also fight for a "better" Scotland based on an end to the profit system of capitalism and its replacement with a democratic socialist society both here and internationally.

This article is a contribution to the growing interest among many, including trade unionists and young people, about the type of society Scotland should become in order to end austerity, poverty and inequality.

While we will take up what we believe to be fundamental weaknesses of the approach being taken by the CWP, one that effectively proposes a continuation of capitalism in a different form, we will also put forward our alternative socialist programme.

We think that it would be a mistake to simply be uncritical cheerleaders for the CWP. Many, including on the socialist left in Scotland, will unfortunately take such a view. In our opinion, there is no solution to the economic crisis and savage austerity without building a movement that inscribes on its banner the clear need for a complete break from capitalism.

A socialist planned economy, based on public ownership and working class control and management of the all the major sectors of the economy from oil and gas, to banking and finance to construction and renewable energy is necessary. What is clear is that there is no way out for the majority under the current system.

Is a fairer capitalism possible?

While still under construction, the predominant idea behind the CWP has been clearly outlined. In short it calls for an end to the neo-liberal, free market capitalist model that has predominated since the early 1980’s.

In its place they propose a transition to the so-called "Nordic" model that, they say, would deliver higher wages, low levels of inequality and poverty, good public services and high levels of social cohesion.

The project has also pointed to what it sees as other positive international examples to follow, including "the German economy, Spanish cooperatives, Venezuela’s development policies and Singapore’s approach to innovation." They claim that these elements, if adopted, would all offer a template for a better Scotland.

The CWP’s biggest weakness is its lack of clarity on the character of the crisis facing world capitalism. In essence it’s a belief that a better, more equitable form of capitalism is possible. It’s a desire for a mixed capitalist economy, partly socially owned, partly privately owned, that would shift the balance of power away from finance driven capitalism and the huge levels of inequality that have exploded under the era of neo-liberal capitalism.

In many ways this view is a throwback to the reforms won during the period of the post war economic upswing of 1950 to 1974/75. During that time, at least in the advanced capitalist countries, the working class won important concessions on welfare, public services, full employment and relatively speaking improvements in wages and incomes. The Nordic countries, Norway, Sweden, Denmark and to an extent Finland were the pinnacle of this Keynesian model, delivering relatively high levels of taxation on profits and wages, high government spending and quality public services.

The economic crisis in the mid 70’s brought this period to a crashing end. A crisis of profitability and the emergence of hyper-inflation meant that the capitalist class could no longer afford full employment and decent public services.

The bourgeois abandoned Keynesianism and embraced a new orthodoxy – monetarism – whose disciples included Thatcher in the UK and Reagan in the US. Mass privatisation, casualisation of work, attacks on wages and welfare provision followed as the share of income going to the working class was undermined.

There was a massive explosion in financialisation – as the capitalists increasingly sought more "profitable" investment in the "casino economy". Globalisation – in essence the mass exploitation of cheap labour in the neo-colonial world, China and Eastern Europe was used to boost profits. Economic growth was sustained increasingly through unsustainable levels of credit, ensuring a crash at a certain point.

The great recession, the worst since the 1930’s, and the partial financial collapse of the world’s financial system in 2007/2008 was prepared by the previous policies pursued by world capitalism. Today, savage austerity is the dominant policy of governments across the world. The social gains made in the Nordic states have been eroded and in the case of Sweden, obliterated. There is no possibility of a return to the "golden era" of a growing capitalist system that could tolerate, for a time, improved conditions and rights for working class and middle class people.

The CWP rightly calls for an end to the failed policies of neo-liberalism, financialisation and the horrendous levels of inequality that exist. However, their solution is unworkable, predicated as it is on a continuation of the same profit system that is tearing apart the lives and living standards of the majority.

Should workers and bosses work together?

Robin McAlpine, the director of the Jimmy Reid Foundation sums up the mission of the CWP thus; "The last thing we need to do is create more division. We have got into the habit of thinking that what is in the interests of business is against the interests of people."

He goes on, "we need to bring domestic business interests and the genuine interests of people together." The CommonWeal website declares, "our wellbeing is common to us all." So Scottish capitalists and the working class should sit down and agree a plan to share out wealth more equitably to reduce inequality and improve living standards for the majority.

McAlpine explicitly comes out against the idea of a struggle against capitalism and for a new society when he poses the question: "Is your solution predicated on we’ll hold the jackets and may the strongest win philosophy ?" Then it isn’t Common Weal. Is it predicated on can we find a way to work together for win-win? Then it is"

But since when were the interests of business compatible with those of workers? Capitalism is constantly looking for ways to increase the rate of exploitation of their employees, to keep wages down and to use new technology to speed up production and to increase what Marx called the surplus value extracted from the working class.

Any increase in workers wages comes at the expense of a lower profit for the capitalists. That is why, in particular today, when facing a weak and diseased economy the bosses will fight tooth and nail to oppose increases in wages and incomes. Only making temporary concessions when faced with the threat of determined strike action by workers, which, of course, all socialist support.

It wasn’t the individual or personal whim of a Thatcher or a Ronald Regan that drove the neo-liberal policies that were embraced by the bosses and their system from the 1980’s on. These policies were a reaction by the capitalists to the cul-de-sac that their system had been driven into following the exhaustion of the post war Keynesian fuelled boom. In effect the authors of the CWP are proposing a return to a form of very mild Keynesian policies – short term wealth taxes on the rich and some businesses to fund job creation and training in higher skilled jobs.

The CWP does not raise the central need for the bringing into public ownership of the major sectors of the economy. At best it’s an option put forward as part of a mixed economy, including private ownership, cooperatives and other forms of ownership. Robin McAlpine, writing in the Scotsman newspaper, has even come out against the nationalisation of the oil industry in an independent Scotland. In that he makes common cause with the SNP leadership who oppose public ownership of oil and gas. Alex Salmond and co are wedded to the idea of an independent Scotland stacked in favour of big business.

The SNP leadership want to achieve an independent Scotland, not to end class exploitation but to ensure its continuation. The fallacy at the heart of the Common Weal is the idea that "we’re all in this together."

In contrast, Socialist Party Scotland understands the need for the working class to retain its independence from the rich elite, build its own mass workers’ party and fighting trade unions.

Investing in the Good Society is a paper from the Jimmy Reid Foundation and Compass Scotland and provides the economic underpinning of the CWP. It argues that job creation policies will create high quality employment and therefore a higher tax takes for the government. This would then allow increased spending on public services. The report points to "computer modelling" which shows that if the Scottish employment rate were to increase from the current 69.5% to 80% the tax take would rise by £4.1 billion. Thereby allowing an evening out of inequality and greater public spending. This, even if it were achievable, would be a relatively paltry amount of money in fiscal terms, less than 3% of the current annual Scottish GDP, including oil revenues.

Moreover, mass unemployment and underemployment is a permanent and growing feature of life under capitalism. The jobs that have been created have overwhelmingly been in the lowest paid sectors of the economy. Workers’ wages are falling across all sectors of employment, particularly in the public sector, which accounts for 23% of all employment in Scotland.

The very limited programme contained thus far in the CWP in reality falls way short of the gains won by the labour movement in the post war boom. This timidness reflects the dead-end that capitalism finds itself in, with no prospect of sustained economic growth. By seeking to stay within the limits of what capitalism can afford, the CWP is inevitably forced to lower its sights.

On the basis of a diseased and weakened capitalist system there is no prospect of a major job creation programme being sustained unless decisive measures were taken against it..

The capitalists would not even willingly agree to such mild reformist measures as proposed by the CWP. Big business is used to screaming the house down if any encroachment is proposed into their riches and wealth. Threats of taking their money abroad are commonplace, as are a refusal to invest when threatened with higher taxes. So how do we challenge this blackmail and dictatorship by the markets ?

Job creation and a socialist Scotland

In contrast to the idea from the CWP that capitalists and workers put aside their irreconcilable differences for the common good of the nation, Socialist Party Scotland argue that the rich should be the ones who pay for the crisis.

We support dramatically increased taxes. For most of the 1970s the tax rate for the highest band of income was 83%.

Likewise, for most of the 1970s, big corporations paid 52% of their profits in tax. But that percentage has been reduced step by step to 24% today, and is due to go down to 20% by 2014. If the SNP get their way in an independent Scotland it would be cut even further to 17% or below.

We also argue for an immediate levy – of at least 50% of the un-invested funds of the big corporations – so that it can be used to develop a massive programme of socially useful production, job creation and public services.

But we would not stop there. A socialist government would take urgent steps to solve the economic crisis by taking into democratic public ownership the major corporations that control the economy, including finance, oil, transport, and manufacturing.

This would need to be combined with government control of foreign trade which would enable a democratically elected government – and the working class, not the market – to control imports and exports including capital. In turn it would provide the possibility of developing a democratic, socialist plan of production that could very quickly transform the lives of millions.

Without doubt such policies would incur the hatred and determined opposition of the bosses and their political mouthpieces. For the capitalists, democracy is only a means to an end. They are quite prepared to use brutal undemocratic methods to hold onto power. That is why we need to build a mass workers’ party with fighting socialist policies, allied to combative trade unions prepared to oppose all cuts and for an end to the profit system.

To be successful in the long term, a socialist Scotland would seek to build a united movement with the working class in the other nations in the UK, Europe and internationally. This would lay the basis for a voluntary socialist confederation of states, an international plan of production. The Common Weal – well being for all – provides few answers for those looking for an alternative to crisis ridden capitalism. By seeking to achieve a society of "well being" for both capitalist interests and those of the majority, the CWP falls between two stools. To end poverty, low pay and inequality needs a struggle for socialism.

A socialist programme for Scotland

  • Socialist Party Scotland is supporting a Yes vote in 2014 and that the powers of independence be used to:

  • Nationalise, under democratic workers’ control, the oil and gas industry, the renewable energy sector and the major sectors of the Scottish economy. This would release billions to invest in a massive programme of job creation and to rebuild our public services.
  • Bring the banks and finance sector into public ownership under democratic working class control
  • Renationalise gas, electricity, transport and the privatised sectors of the economy.
  • Tax the rich and big business. Increase the minimum wage and end the attacks on welfare
  • No to Nato. Trident and all weapons of mass destruction out of Scotland. Invest in socially useful jobs.
  • Abolish all anti-trade union laws
  • Trade unions should break from Labour and build a new mass working class party
  • Reverse the cuts. For a Scottish government representing working people, the unemployed and the poor that defends jobs, wages, public services and pensions and refuses to make cuts to pay for the crisis
  • For a socialist plan of production in an independent socialist Scotland as part of a voluntary confederation with England, Wales and Ireland as a step to a socialist Europes

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September 2013