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DLS Referendum Statement

Here is a message from Stuart Fairweather:

“Tomorrow 97% of people over the age of 16 living in Scotland have the right to vote. We should encourage and support all friends, family, neighbours and workmates to use their vote. Democratic Left members and supporters will be amongst those that take part in this huge democratic event.
DL members have been involved in the campaign in many different ways. We are unlikely to all vote in the same way. Accordingly Perspectives has given coverage to the Yes and No positions.
A Yes vote looks likely to many to provide the potential for progressive change. For other a No vote is seen as a route to equally important outcomes.


DL’s National Council plans to meet on September 20th to discuss the result of the vote and consider the possibilities it creates. All members and supporters are welcome to use the e-mail group to express their views and contribute to what will be an ongoing discussion.”

In 2012 Democratic Left Scotland commissioned Sandy Moffat to paint a portrait of Scottish political theorist Tom Nairn. It was unveiled at the launch of a collection of his work “Old Nations, Auld Enemies, New Times, Selected Essays” on Monday 15th September 2014 in the Martin Hall, New College Edinburgh. The collection was compiled by Pete Ramand and Jamie Maxwell and is available here.

There’s a drawing for the portrait currently on show in Peacock Visual Arts. Aberdeen as part of Sandy’s exhibition “Paintings as Arguments”.

Nairn

After Falkirk and Grangemouth, where next?
The article below should be seen as a contribution to an ongoing discussion. It draws on discussions with members of Democratic Left Scotland and others in late 2013. Any comments would be very welcome.

“… we represent the only real organised challenge in society to the values and views of our bankrupt establishment.” States Len McCluskey in relation to the events of 2013. Events we are told that help illuminate ‘the nature of power in society today’. A telling assertion that suggests that the Labour Party, as it is now at least, offers little in terms of taking on neo-liberalism and the interests of capital. Additionally Unite’s General Secretary also states that globalisation renders our politicians and governments weak in the face of the ‘almost unlimited power of private ownership to act as it pleases’.
Few on the Left would take issue with the general thrust of these comments and it is easy to see how they were informed by the events at Falkirk and Grangemouth but given the outcome some discussion is required.
Falkirk: At one point Falkirk was represented by the popular and effective MP Denis Canavan. That was before New Labour and boundary changes. Then the disastrous Eric Joyce prompted a selection battle. Unite unlike other unions Public Commercial and Services (PCS), Fire Brigades Union (FBU) and Rail Maritime Transport (RMT) have emphasised the recapturing of the Labour Party. Unison and GMB are more agnostic. This leaves Unite alone with an active strategy of ensuring more working class and anti-austerity MPs get elected to Westminster. A strategy that means taking on the Labour Party career machine where Lord Sainsbury supported candidates are pushed up the ladder of patronage. Interestingly many in Falkirk and elsewhere within the Labour Party opposed this challenge from Unite. For many in Miliband’s Labour Party Unite are seen as ‘the other’.
Conversely the fact that our biggest trade union feels the need to open up this second front to take on the bosses as a class, not just as employers, is remarkable. This is because Labour are considered, as suggested above, as ideologically and practically redundant when it comes to supporting legislation and action that will allow workers to challenge the power of private ownership.
In Falkirk this saw Stevie Deans, Unite’s leading lay official, divide his time between defending workers at INEOS and as he saw it promoting their interests via a changing Labour Party. Whilst the likelihood of Westminster passing laws that can effectively challenge globalisation can be debated the tactic of a ‘political’ as well as industrial strategy is understandable. Working to raise people’s political consciousness in a way that supports them to take part in the democratic process is a desirable proposition. Whether that is entirely what was happening is another question. However what is apparent is where the Labour Party establishment are challenged in selection battles for relatively safe seats; things can become very competitive and very mucky. More energy and money would appear to get spent on securing a favoured candidate rather than building political understanding and engagement of new and potential members.
All this effort is premised on Unite’s belief that the Labour Party is the only realistic potential political vehicle for change with all other options being considered fanciful or unworthy of consideration, this side of the UK general election in 2015. In this context Unite’s actions on the electoral front seem understandable. The connection between workers and all political parties is distant and becoming increasingly so. Labour retains a historic link to working people in realms of recoverable memory but the reality is different particularly out with the public sector.
Grangemouth: The private sector is different. As for all workers it is hard to hold onto gains but in the private sector asserting ‘moral guardianship’ over the relationship between the production process and a community is fiercely contested by the need for ever growing profit. In spite of this and the dirty and dangerous aspects of the work at INEOS the workforce were considered well organised and relatively well rewarded. The recent attacks by the owners on the workforce’s pensions had been resisted back in 2008; wages this year were increased against a background of erosion elsewhere.
But nothing stays the same. Changes to the ownership, access to raw materials, competition, the balance sheet, and scope of future production were taking place. This impacted on the workforce’s leverage over the manufacturing processes. Labour could still be withdrawn but INEOS had repositioned itself in relation to the chain of effects. It could control the turning on and off of the tap, the timing of this and to a degree the consequences.
Given Stevie Deans involvement in events in Falkirk they went for him too. Whether this provocation was simply vindictive or calculated is largely academic (except of course for Stevie as an individual). INEOS created a situation where a straight-forward strike was of little consequence to them. They were challenging the UK government, Holyrood and the workforce to fund the costs of the modification of the plant and their continued and increased profit margins. A bi-product was further reducing the terms and conditions of the workforce and taking on the union at the plant.
At that juncture retaining the jobs was important. INEOS had argued that Grangemouth without investment was becoming a liability. Its threat to close the refinery needed to be taken seriously. By the end of October it was too late to call their bluff, irrespective of the reality of Jim Ratcliffe’s bank balance, without having adequate local and national alliances in place to do so.
Where next: Hindsight is a wonderful thing and it is perhaps too easy for those at a distance to ask what if? But it is important that learning takes place.
Governments in London and Edinburgh had already agreed in principle at least to fund Jim Radcliffe and INEOS in their venture to re-fit Grangemouth with the capacity to process shale gas shipped from the USA to the Forth. The environmental and economic rationale for this only makes sense in the context of supporting the globalised tax avoiding pursuit of ever increasing profit. Whilst the media and others to some degree acknowledged the questionable moral position of Jim Radcliffe and INEOS they did little to fundamentally challenge his position. The plant have morally been ‘ours’ But the profit was Ratcliffe’s.
David Cameron compounded this by attacking, Unite, Ed Miliband and Stevie Deans. Labour in London appeared largely compromised by its electoral ambitions. Johann Lamont said nothing. Attempts were made by Unite to ensure the ‘bad bosses’ had nowhere to hide but the alliance between Britain’s political class and INEOS remained intact. Ideologically, globalised profiteering might not be considered pretty but right to exploit Grangemouth was not contested. Whilst people spoke about employment and the local community, the Scottish economy, or with Britain fuel needs no concrete alternative people’s alliance was formed.
For Unite, and other unions, industrial relations are informed by the right to withdraw labour. But little seems to be done to strengthen control and influence over the productive forces when advances have been made and negotiations are taking place. Jim Ratcillfe would appear to have been in sole control of the information and decision making relating to the future of Grangemouth. Does direct workforce involvement in the management and ownership of manufacturing needs considered? Limitations need to be taken into account but waiting for reluctant politicians to effectively legislate equally seems like a long haul. Strikes, occupations and work-ins must remain part of the equipment of challenging exploitation but ways need to be found to consolidate and expand control over wages, conditions, but also the means of production as part of the wider economy. However controversial this would appear to be, a more direct route to limiting and transforming relations with global capitalists is not on the horizon.
The European elections, the referendum and the 2015 general election result could provide us with a renewed political landscape upon which to build the strength of our movement. This will take hard work and imagination. However there also remains the need to find an effective political party that does not prioritise profiteering. It would be welcome if the Labour Party as an institution could be moved in that direction. Working people however cannot remain still whilst real wages are being reduced and the economy and environment are being continually exploited for the needs of the few. Unite needs to connect to this resistance if it wishes to contribute to an effective challenge to the values and views of our bankrupt establishment.
stuartfairweather@ymail.com

Scotland’s Other Union

In the debate about whether Scotland should be an independent country, three major topics have proved to be both predictably contentious and genuinely problematic:

  • Scotland’s relationship with the EU in a context where the institutions of the EU are being reshaped in response to the ongoing crisis in the euro-zone, and where, once a new settlement emerges, an in/out referendum on EU membership seems likely to be held, either in the UK as a whole or, if Scotland is independent by then, in the rest of the UK;
  • The monetary and financial options open to an independent Scotland and their implications for fiscal policy;
  • The defence and foreign policies of an independent Scotland, with particular reference to nuclear weapons, the intelligence services and membership of NATO.

In the current issue of Perspectives, we review the first of these topics. In the autumn and winter issues, we shall cover the other two. Thereafter, we plan to commission an article setting out the constructive case for maintaining the Union and to convene a roundtable discussion on the substance, conduct and quality of the referendum debate, inviting participants to reflect on what it tells us about the state of our society and the condition of our democracy.

37-Su13

Independence in Europe: a reality check

Until last year, Alex Salmond and his ministers repeatedly claimed that an independent Scotland would automatically inherit all the UK’s ties and treaty obligations. By analogy with the “velvet divorce” between the Czech Republic and Slovakia, they assumed that once the Union had been dissolved, Scotland and the residual UK (rUK) would inherit the same legal status as successor states. At a press conference in September 2012, José Manuel Barroso, president of the European commission, confuted both claim and assumption, explaining his views at greater length in an interview for the BBC given in December.

Barroso’s intervention should not have come as a surprise: he was merely repeating the position set out by his predecessor Romano Prodi, who in April 2004 told the European parliament that:

“When a part of the territory of a member state ceases to be part of that state – for instance, because the territory has become an independent state – the treaties will no longer apply to that territory. In other words, a newly independent region would, by the fact of its independence, become a third country with respect to the Union, and the treaties would, from the date of its independence, not apply any more.”

The legal basis of Prodi’s view is unclear, but this hardly matters. There are no precedents for the Scottish case. The velvet divorce occurred in 1993, long before the Czech Republic and Slovakia applied to join the EU as separate states. No existing member state has ever split into two, so the question of what happens if both parts want to stay in the EU or if one wants to stay and the other to leave, has never arisen. The political reality is that an independent Scotland would not automatically be a member, but would have to go through the same accession process as have all but the original six member states, and would need to gain the approval of all 27 existing member states (28 after Croatia joins on 1 July).

After some initial huffing and puffing, the SNP sought to play down the difference between their previous assurances of a seamless transition to “independence in Europe” and the prospect that now beckoned of potentially fraught three-way negotiations between Edinburgh, London and Brussels, followed by formal ratification in each member state. John Swinney, for example, declared:

“Assuming there is a yes vote as a result of the referendum, Scotland will still be at that stage a part of the UK. We have always accepted that there has to be negotiation about the details and terms of Scotland’s membership of the EU. Crucially, that would take place at a time when we are still part of the EU, of which we have been members for 40 years.”

(The use of the plural “members” in Swinney’s final sentence reveals his reluctance to accept, or at any rate admit, the difference between being part of a member state and becoming a new state, the central point – of law or Realpolitik, as you prefer – that Barroso, and before him Prodi, had insisted on.)

A timetable for transition

In a bid to restore credibility and regain the initiative, on 5 February 2013 the Scottish government unveiled a timetable that begins immediately after a presumed yes vote in the referendum – then still expected to be held in October 2014, but subsequently set for 18 September – and runs through to independence day on 31 March 2016, followed by the Holyrood election in May. A decision about whether Scotland would participate in the Westminster election due in May 2015 will be taken after the referendum. This schedule raises two questions: Will the EU authorities be willing to open talks with Edinburgh before Scotland achieves formal independence, while Edinburgh and London are still haggling over the terms of independence? And if so, could both sets of negotiations be concluded in the space of 18 months (in practice, only 17 months, allowing one month off for the Westminster election campaign)?

The answer to the first question is almost certainly yes. Neither London nor Brussels will address any of the issues to be settled by negotiation as long as they remain hypothetical, so the Scottish government cannot expect to start talks prior to the referendum, a fact of political life that voters, demanding more information before making up their minds, will simply have to live with. But assuming a yes vote, there is nothing in EU law that precludes a territory that has voted for independence negotiating its accession, while still sorting out the terms of a divorce settlement. And it would clearly be in the interests of all member states to avoid the legal and commercial disruption that would ensue if, on independence day, Scotland were to be removed from the EU until its application to join is approved. Provided everyone co-operates, much of the groundwork could be done before secession. But formally, Scotland would have to be a state before it could accede. Thus, a gap opens up between secession and accession. The formalities take time: accession negotiations with Croatia, for example, were completed in 2011, but national ratification, which is entirely a matter for individual member states, took two more years.

Complications and delays could also arise from the fact that during the transition period, Scotland would continue to be represented in the European Council by the UK government. Barring his unexpected demise or defenestration, at least until May 2015 that government will be headed by David Cameron, whose policy of “less Europe, not more” runs counter to the efforts of EU leaders to resolve the crisis in the eurozone by pressing on with further integration in the form of a banking union and a fiscal union. Negotiations over Scotland’s accession could fall foul of attempts by London to secure a revision of the EU treaties or to start the process of withdrawing from the EU after an in/out referendum in the rUK. I shall return to this problem later.

Whether the trilateral negotiations could be completed on the timescale envisaged no one knows. In their legal advice to the UK government on the consequences of Scottish independence, Professor James Crawford of Cambridge University and Professor Alan Boyle of Edinburgh University express scepticism, opining that three years would be a more realistic estimate. Certainly the scale of the challenge is considerable. The Scottish government would be negotiating with London over Scotland’s share of the UK’s national debt, public assets and oil and gas revenues, along with currency and financial regulation, pensions and social security, defence and foreign affairs, energy and telecommunications, and other, lesser matters At the same time, it would be negotiating with Brussels over the terms of Scotland’s accession to the EU. That said, since the UK has been a member state for forty years, Scotland is clearly not in the same position as Croatia or Turkey, so presumably its commitment to democracy, the rule of law and human rights could be taken as read.

The road to accession

How difficult would accession negotiations be? As John Kerr points out, much would depend on the stance of the Scottish government itself. It would be unwise for Scotland, as a prospective new member, to seek changes in, say, the Common Agricultural and Fisheries policies, however desirable such changes might be from Scotland’s point of view. The best course would be to stress from the outset that its sole aim is to reinstate the rights enjoyed and obligations accepted when part of the UK. This would make it difficult for EU governments uneasy about Scotland’s accession – notably, Spain, wrestling with the aspirations of Catalans and Basques – to raise objections or cause delay.

But there would still be problems over UK opt-outs from the acquis communautaire, the accumulated legacy of EU policies which new members are required to adopt. In ascending order of difficulty, the three main stumbling-blocks are: the Schengen Agreement on border controls, originally organised outside the framework of the EU, but incorporated into EU law under the Amsterdam Treaty of 1999, with opt-outs for the UK and Ireland; the budget rebate secured by Mrs Thatcher at Fontainebleau in 1984; and the opt-out from monetary union negotiated for the UK by John Major at Maastricht in 1992.

The borderless Schengen Area operates very much like a single state for international travel purposes, with external border controls for travellers entering and exiting the area, and with common visas, but no internal border controls. The UK has not signed up, but neither has Ireland, which maintains a separate travel area with the UK. So Scotland could follow the Irish precedent, thereby avoiding border checks at Gretna Green, and could signal its willingness to fall into line with continental member states as soon as London and Dublin do so.

The UK’s budget rebate repays two thirds of the difference between the UK’s contribution to the EU budget and EU reciprocal payments to the UK. Over the past thirty years it has saved the UK some £70 billion at today’s prices, or roughly £2.3 billion a year. The UK now contributes 10% of the budget, far less than Germany, which contributes 20%, and somewhat less than France and Italy. The rebate, originally secured by strong-arm tactics and regarded ever since by the Tory right and the tabloid press as a symbol of national virility, is deeply resented by other member states, not least because the EU budget is a zero-sum game: the less the UK pays, the more all the rest must pay. There is little chance that Scotland would be able to retain the Thatcher rebate, even if it wanted to. Better, therefore, to offer to give it up as a gesture of goodwill. This is, in effect, the price to be paid for joining the club.

New members of the EU now take on a commitment to join the euro when they have satisfied the conditions for doing so. This is not an insuperable barrier to Scotland’s accession. Sweden has no formal opt-out, but retains its own currency and though still committed in principle to joining the euro, is unlikely to do so any time soon. Most Swedes, like most Britons, want to keep their own currency and central bank. For a while, after the successful launch of the single currency between 1998 and 2000, Swedish opinion shifted from “No, not now” to “Yes, but not now”, but since the financial crash of 2007-8 exposed deep flaws in the design of the euro, dividing the northern “core” of the euro-area from its southern “periphery” and plunging half of Europe into depression, the issue has died. In the more benign global conditions of the early 1990s, Sweden made a full and relatively rapid recovery from its own financial crisis and has weathered the recent storm better than most other European countries. Thus, until the euro-area resolves its crisis, no Swedish government would dream of holding another referendum on whether to join it.

So is a commitment to join the euro at some “appropriate”, but unspecified juncture a token gesture, with no real consequences for Scotland? Not entirely, for it sits uneasily beside the SNP’s current policy of retaining the pound and seeking to form a currency union with the rUK. This might be presented as an interim arrangement, to be superseded one day, if and when Scotland and the rUK jointly decide to give up the pound and embrace the euro, presumably after a referendum in both countries. But what if Scotland votes for independence in 2014 and the rUK subsequently votes to leave the EU? The tension between membership of the EU and protecting Scotland’s ties with the rUK would then become apparent, as the prospect of bureaux de change along the Tweed passed from the realms of fantasy to the horizon of possibility.

More generally, in the hurly burly of the referendum debate, even the formal admission that Scotland might some day switch from one currency union to another gives SNP policy a provisional, makeshift appearance, adding to the irreducible uncertainty that the prospect of secession poses for business and financial interests. (The same applies to the proposal that, after a suitable interval, an independent Scotland should create its own currency. This proposal also carries the further risk of provoking conflict with the EU. It is one thing to retain your historic currency, pending a switch to the euro, but quite another to introduce an entirely new one, in preference to the euro).

An invidious choice?

Until now, the working assumption has been that an independent Scotland and the rUK would both remain in the EU. All Scottish parties, pro- and anti-independence, take it for granted that Scots are committed to Europe or, at least, have no wish to leave it. Bizarrely, this includes the Eurosceptic Scottish Tories, who try to scare voters with the threat that an independent Scotland would be forced out of the EU. But with the rise of Ukip in England and the growing likelihood of an in/out EU referendum in the next Westminster parliament, Scots now have to reckon with the possibility that they might end up there alone. Indeed, the SNP has started urging people to vote for independence in order to stay in the EU.

According to Angus Roxburgh, a former BBC Europe correspondent:

“Scots now face an invidious choice: vote next year for independence (and, it is assumed, membership of the EU) and risk the collapse of links with England if it then votes to leave the EU; or vote to stay in the UK and risk being taken out of the EU anyway, courtesy of voters down south.”

This dilemma, he notes, falls into a familiar pattern in British politics. In 18 general elections since the Second World War, the Conservatives have won a majority in Scotland only once (1955), yet they have formed the government at Westminster nine times. Despite voting consistently for the left, Scotland has been governed by Labour for only 30 years out of 68.

How serious is the danger that if Scotland votes to stay in the UK, it could end up outside the EU? Asked how they would vote if an in/out referendum were held today, the British public is evenly divided. According to a Guardian/ICM poll conducted in mid-May, a majority of 43-41 favours withdrawal, with the rest undecided, and this at a time when Europe is in the doldrums and hardly anyone has a good word to say for it. Moreover, only one voter in ten regards Europe as the most pressing issue facing the country.

The meteoric rise of Ukip as an English nationalist party has spooked the Tories because it threatens to split the right and let Labour back into government, whether alone or in coalition with the Lib Dems, just as thirty years ago the rise of the SDP split the left and handed Mrs Thatcher a landslide victory in 1983. But the root cause of Ukip’s success is less antipathy to the EU – 40% of Ukip voters want to stay in Europe – than general disgruntlement with the political class and the decline of Britain. In this respect, their views are a more extreme version of attitudes held by English voters as a whole. Indeed, while the Ukip threat to the Tories is real, it may have been overstated, for though the Tories have suffered most from defections to Ukip, England’s fourth party has also taken votes from Labour and the Lib Dems.

As an “island-race” that once ruled a global empire which has left its mark on the UK’s constitutional arrangements, foreign policy, military posture, trade links and financial system, Britons have always been reluctant Europeans. However, recent history suggests that when questions of geo-political alignment are seriously debated, British voters have no time for “splendid isolation”. In 1975, only months before the referendum on whether to accept the terms of a cosmetic “renegotiation” conducted by Harold Wilson for reasons of party management, opponents of the “Common Market”, as it was then generally known, were well ahead in the polls. In the event, they were decisively defeated by a majority of 2 to 1.

By calling a national referendum at a time of intractable economic crisis – with recurrent strikes, double-digit inflation, dwindling profits and rising unemployment – the wily Labour leader managed to rout his critics on the left, who shared with the Tory right the illusion that Britain could somehow solve its problems by going it alone as a sovereign power, free from continental entanglements and constraints. David Cameron may be hoping to emulate Wilson’s example. It is, however, salutary to recall that though the Labour government of 1974-9 won this particular battle, it went on to lose the war. Just over three years later, its Herculean efforts to manage industrial conflict, control inflation, restore profitability, boost investment and reduce unemployment on the basis of a social contract with the unions, fell apart in the “Winter of Discontent”. With this disaster, responsibility for tackling the crisis passed to the neo-liberal right, which seized the opportunity to emasculate the unions, dismantle the post-war settlement and establish a “free economy” under the aegis of a strong state.

The crisis we face today is different from that of the 1970s, but no less daunting. Besides recovering from depression and rebalancing our economy, we need to repair the fabric of our society and regenerate our democracy within the framework of a new constitutional settlement that gives greater responsibility and fiscal powers to local authorities, as well as extending and strengthening the powers of devolved national governments. And beyond these shores, the historic nations of the UK should all be actively involved in efforts to reform the EU, helping it to regain popular legitimacy. For the moment, this is a project in search of agencies with the will, strength, patience and skill to see it through in the face of organised resistance, structural bias and institutional inertia. In broad outline, we know what needs to be done. The problem is to work out how to get it done and who is going to do it. Nevertheless, in thinking about the coming spate of parliamentary elections and national referendums – in Scotland, the UK and the EU – we should do well to keep both project and problem in mind.

Saturday 29th June 2013, 2pm. Augustine United Church, George IV Bridge, Edinburgh.

The Counting of Votes is Only the Final Ceremony of a Long Process” – Antonio Gramsci

We believe that the political situation in Scotland offers a real opportunity to change the way in which our country functions, whatever the outcome of the referendum next September. The long process of the campaign is as important as the outcome of the referendum.

We have three speakers who will spark a discussion about what Scotland we want and how we can create it.

Sign up on Facebook here. Or through Eventbrite here.

Speakers:

Maggie Chapman – Scottish Green Party lead MEP candidate

Maggie Chapman is Green Councillor for Leith Walk and is the top European candidate for the 2014 European election. Maggie also teaches cultural geography and environmental philosophy at Edinburgh Napier University and is an EIS representative. Originally from Harare, she has worked in environmental management and community care.

Janet Paisley – Poet, Playwright, Author

Janet Paisley is an award-winning writer, poet and playwright from Scotland writing in Scots and English.

Her first play Refuge won the Peggy Ramsay Award in 1996. She was awarded a Creative Scotland Award to write Not for Glory a collection of interlinked short stories in Scots. set in a small village in Central Scotland. Not for Glory was one of the ten Scottish finalists voted for by the public in the 2003 World Book Day ‘We are what we read’ poll. The short film Long Haul, written by Paisley, won a Bafta nomination in 2001.

Robin McAlpine – Director: Jimmy Reid Foundation

Robin McAlpine is amongst other things the editor of Scottish Left Review and the founding director of The Jimmy Reid Foundation. Previously he worked as a journalist and as press officer to George Robertson, then Leader of the Scottish Labour Party and Shadow Secretary of State for Scotland. He was Deputy Director of Universities Scotland and is the author of “No Idea: Control, Liberation and the Social Imagination.”

This will be an opportunity to discuss the type of Scotland we would like to see and how we get there.

by Willie Thompson

 

Eric Hobsbawm, who died at the beginning of October aged 95, was the last representative of the remarkable generation of Marxist historians who comprised the Communist Party Historians’ Group of the late forties and early fifties. An article to appear in a forthcoming issue of Perspectives will examine his remarkable achievement as a political, economic and social historian as well as commentator on historical theory, and also discuss his life history and autobiographical writing, along with his often controversial politics.  The latter revolved around his unyielding attachment to Marxism and the Communist Party – for which he was excoriated by the right ­– and his critique both of labourism and romantic leftism, which drew fire from the further left.

 

The Perspectives article will take as the centrepiece of his historical legacy the series of four volumes covering the years from the French Revolution to the end of the Soviet Union, The Age of Revolution, The Age of Capital, The Age of Empire and Age of Extremes, but also consider his other historical writings.  It will deal also with the the media reactions since his death, both sympathetic and hostile, and conclude with an overall evaluation of the great historian.

David Purdy

In what follows, I take up three of the issues raised by Stuart Fairweather in his recent posting Two Years of Crisis: What Potential for Change: the prolonged economic depression induced by the financial crash of 2007-8; the current state of British politics; and the referendum on Scottish independence to be held in the autumn of 2014 under protocols finally agreed this week by Alex Salmond and David Cameron.

 

Escaping from depression

 

At a meeting in London organised by NPEN (New Political Economy Network) to consider responses to the current economic crisis, the Tory MP for Hereford, Jesse Norman, asked: Where is the left? It is a fair question. For some nine months after the banking collapse of September 2008, the right was in disarray, but since the financial crisis morphed into a fiscal crisis, the right has dominated policy discourse. To be sure, the crash toppled a central pillar of the neo-liberal temple – the notion that the financial system needs nothing more than “light touch” regulation – but the edifice still stands and in the name of repairing our public finances and rebalancing the economy, Britain’s coalition government has set about dismantling what remains of the welfare state.

 

We should not despair. Sometimes it is better to swim against the tide than to go with the flow. In any case, there are signs, discussed below, that the tide may be turning. The important thing is to keep on challenging the combination of monetary activism and fiscal austerity that both in the UK and across much of the eurozone has either stifled incipient recovery or plunged the economy deeper into recession. In some cases, the resultant fall in tax revenue and rise in social security outlays has more than offset savings from tax hikes and public spending cuts, widening the budget deficit that these fiscal adjustment measures were intended to reduce.

 

However, the perverse consequences of fiscal orthodoxy should not blind us to the scale and make-up of the UK’s budget deficit, currently equivalent to about 8 per cent of GDP, down from 11 per cent when the coalition was formed in May 2010. Roughly half the deficit is structural in the sense that it would still be there even if the economy were operating at full employment. At some stage, therefore, any government, whatever its political complexion, would need to cut public spending or raise taxes by about 4 per cent of GDP. There is no need to make the structural adjustment all in one go: better to build up to it gradually over three or four years. But in any case, adjustment should not begin until recovery from recession is assured. In other words, the alternative to coalition policy is not no cuts or tax rises ever, but a policy of short-term fiscal expansion, focused on public investment, complemented by cheap money, and followed, once recovery is under way, by a period of sustained fiscal restraint. In the long run, this measured approach to deficit reduction will do far less damage to our economy and society than gung-ho fiscal overkill.

 

As it is, private spending is still insufficient to ensure that the European and US economies produce and employ at their full potential. Accordingly, those governments that can still command the confidence of bondholders and/or are running persistent trade surpluses – the US and UK qualify on the first count, China qualifies on the second, while Germany and Japan qualify on both counts – should act as spenders of last resort, not hesitating to finance any temporary (widening of their) budget deficits by issuing new bonds and adding to the stock of public debt.

 

Provided governments act in concert, taking care to explain in advance what they are doing, there is no reason why internationally co-ordinated fiscal stimulation should spook the bond markets, driving up interest rates and “crowding out” private spending. In point of fact, there has never been a better time for creditworthy governments to finance public investment by borrowing, for long-term interest rates have never been so low. The nominal rate of interest on ten-year bonds currently paid by the German government is around 1.5 per cent per annum. Since prices in Germany are rising by 2 per cent per annum, the real rate of interest is negative: investors are actually paying the German government to put their money in German bonds. The corresponding rate of interest on UK government bonds is 1.7 per cent per annum. With the annual rate of consumer price inflation currently running at 2.2 per cent, the real rate of interest is minus 0.5 per cent.

 

There is nothing particularly left-wing, let alone “socialist”, about an “invest now, adjust later” policy. It seems plain common sense that a global crisis calls for a co-ordinated global response. And spending on any kind of public investment produces both immediate and longer-term benefits. In the short run, it creates new jobs and stimulates higher household spending as newly employed workers spend some of their additional income on consumer goods. For both reasons, as economic activity revives, tax revenues grow and social security outlays fall, offsetting any temporary rise in the budget deficit. And when the investment is complete, society benefits from the assets created. What specific projects should be undertaken is a matter of priorities. In Britain today, as advocates of a Green New deal have long argued, we urgently need to build more social housing and to improve the energy efficiency of the existing housing stock, as well as developing renewable energy sources and implementing other measures to combat climate change.

 

It is, though, important that the fiscal stimulus should come from the government’s capital budget, not from current public spending on wages and consumables. The current budget should continue to be restrained, partly because we need to shift the allocation of national resources from consumption to investment, and partly because the government has to convince its creditors that it is serious about eliminating the structural component of the budget deficit as soon as the economy is strong enough to take the strain. The left should not, therefore, support calls from public sector unions for strikes over wages. (Short demonstrative stoppages to protest against government policy are a different matter).

 

In current circumstances, sectional wage militancy, though understandable, is misguided. Politically, it plays into the hands of fiscal conservatives and even if the government were to concede inflation-busting pay rises for public sector workers, in the absence of any compensating increase in departmental budget allocations, the result would simply be more public sector redundancies and higher unemployment. Since the first post-crash recession levelled out towards the end of 2009, the number of people wholly unemployed in the UK has oscillated around 2.5 million, about 8 per cent of the workforce. This compares with 5 per cent when the economy was at its pre-recession peak. Some 900,000 people have been out of work for 12 months or longer, and the youth unemployment rate stands at 20 per cent. In addition, some 1.5 million people are working part-time either because their hours have been cut or because they are unable to find full-time jobs. In these conditions, reducing joblessness and underemployment must take precedence over pay rises for full-time jobholders.

 

 

The turning of the tide

 

Since Britain re-entered recession in the last quarter of 2011, there have been growing signs of unease among the business community. Employers’ organisations such as the CBI (Confederation of British Industry) and the Institute of Directors have been pleading with the government to ease up on fiscal austerity and to promote infra-structural investment, though in common with the Bank of England (which is supposed to take no view on fiscal policy, a convention that the current governor, Sir Mervyn King, has flouted several times during his term of office) they are still reluctant to endorse straightforward deficit-budgeting, instead proposing various convoluted forms of public-private partnership. The idea of temporarily adding to the national debt in order to promote economic recovery is still anathema.

 

Last week, however, the IMF (International Monetary Fund) acknowledged that it had previously underestimated the impact of fiscal austerity on economic activity. Two years ago, it reckoned that other things being equal, every dollar of fiscal adjustment would lead, over the following twelve months, to a fall in GDP of fifty cents. The IMF now believes that the true impact is more like one dollar thirty cents. Thus, unless in any twelve-month period total private spending – the sum of consumer spending, business investment and net exports – rises by enough to add 1.3 per cent to GDP, fiscal adjustment equivalent to one per cent of GDP will cause overall output and employment to fall. This finding clearly reinforces the case for postponing fiscal austerity until the world economy is in better shape. 

 

The reasons for the IMF’s change of mind have not yet been reported, but two factors are likely to be at work. Like all governing institutions, the IMF is a site of struggle between rival theoretical standpoints and general views of the world. Hence, its reports and pronouncements often reflect an uneasy compromise between opposing positions. As the crisis has unfolded, the balance seems to have shifted from hard-line fiscal conservatism to pragmatic managerial realism. In addition, the initial, over-optimistic estimate of the effects of cuts was based on experiences such as that of Sweden in the early 1990s when the government, faced with a threefold banking, budgetary and foreign exchange crisis, introduced a tough, but even-handed programme of fiscal adjustment against a relatively benign background of global economic expansion. But when most Western governments launch austerity packages simultaneously, the result is a mutually ruinous depression.

 

This is one of the lessons of that governments were supposed to have learned from the 1930s. That it has been forgotten is testimony to the continuing grip of neo-liberal ideas over the minds of political leaders and opinion-makers, doubtless influenced by the fact that nowadays Western governments spend much higher proportions of GDP on public services and social transfer payments than their counterparts eighty years ago, while taxes absorb a correspondingly higher share of national income. We must, however, insist on disentangling arguments about how to cure depression and stabilise the economy from disputes about the “proper” size of the public sector. The case for active fiscal policy applies just as much to countries like France where the cyclically adjusted ratio of public spending to GDP is nearly 60 per cent as it does to those like the US where the figure is closer to 30 per cent.

 

One-nation politics

 

To his credit, Ed Balls has consistently opposed ill-timed and over-zealous fiscal austerity, whether imposed in London, Brussels or Frankfurt. Austerity is hurting, but not working and Europe’s governments need to change course. This is indeed “a consummation devoutly to be wished”. But how is it to be achieved? Neither Labour nor the Conservatives contemplate international action to tackle the crisis. The horizons of both parties appear to stop at Dover. Labour, of course, has just rebranded itself as the one-nation party. From a Westminster perspective, this is a smart move, neatly disposing of yesterday’s quarrel between Old and New Labour by laying claim to the mantle that the Tories discarded in the 1980s when Mrs Thatcher purged her government of one-nation Conservatives, contemptuously denouncing them as “wets”. It also enables Ed Miliband to proclaim the politics of the common good and to disavow sectional interests, whether in the City or the unions, while insisting, against the SNP, that what matters in Britain is the division between rich and poor, not the border between England and Scotland.

 

Whatever one thinks about the future of the UK and relations between its constituent nations, from a wider European or global standpoint, one-nation politics is obtuse. These days, of course, few people can find a good word to say about the EU. Nevertheless, we need to draw two distinctions: between the euro and the eurozone; and between a currency and a continent. My own view is that the best or at any rate least bad way to rescue the euro is to slim down the euro area to a central core comprising Germany, Austria, the Benelux countries, Finland and other small northern European states which are closely integrated with the German economy and are willing to embrace Germany’s social market model, including the budgetary discipline implied by further fiscal integration. The so-called peripheral members – a suitable term, perhaps, for Greece, Portugal and Ireland, but hardly apt in the case of Italy and Spain – would revert to their old national currencies, at least for the foreseeable future. France would have to decide whether to cling to the old Franco-German axis, albeit in a subordinate role reflecting its diminished competitive strength, or to join its “Latin” neighbours outside the new “euro nord”.

 

Larry Elliot, the Guardian’s financial columnist, recently expressed the hope that the euro would be “smashed to smithereens”, comparing the single currency to the ill-starred attempt to revive the gold standard after the First World War. This is irresponsible talk. An orderly reconfiguration of the eurozone is one thing, but a disorderly break-up could easily wreck the EU itself, risking a resurgence of the currency and trade wars that followed the piecemeal demise of the gold standard and helped to inflame international relations in the “low, dishonest decade” before the real fighting started in September 1939. Certainly, the institutional design of the euro was flawed and its geographical coverage over-extended, while the conduct of crisis management has been, by turns, indecisive, dogmatic, myopic and fractious. But none of these failings provides any reason to give up the attempt to build trans- and supranational forms of government. Some problems in today’s world, from the protection of the environment to the regulation of banking, cannot be adequately handled by “sovereign” but separate nation-states. Similarly, while policy- and decision-making in the EU, as it is currently constituted, enjoys little democratic legitimacy, simply repatriating powers and responsibilities to member states, as demanded by UKIP and the Tory right, will do nothing to resolve the inherent contradiction between national democracy and global capitalism.

 

The Tories have no European strategy: they simply want to leave the EU. As Martin Kettle wrote in The Guardian (11th October, p. 33), “The Cameron government’s guilty secret is that it understands withdrawal would be undesirable for Britain. Ministers know this, but won’t say so. They dangle the prospect of a referendum, but not the in-out one that the party or the Europhobes crave. As a result, the UKIP threat to the Tories steadily rises.” A large part of Cameron’s “sink or swim” speech to last week’s Tory party conference was predicated on the assumption that Britain can somehow go it alone. Like Miliband, he offers a one-nation strategy: Britain against Europe or even Britain against the world. This may win short-term popularity, but it remains an illusion and thus, in the long run, a source of weakness. In a world where the balance of economic and political power is shifting from North America and Western Europe to China, India, Russia and Brazil, isolation is not “splendid”, just stupid.

 

Scotland’s Referendum

 

While Europe burns and Cameron fiddles, Scotland prepares to decide whether to remain part of the Union or to become an independent state. It was always more likely than not that Scottish voters would eventually have to choose between these polar options: in negotiations over whether there should be a third option in the shape of devo max (maximum devolution short of independence), Westminster’s legal prerogative in constitutional matters trumped the SNP’s electoral mandate. For almost nine months, Alex Salmond held out for two questions, but in the end, although this proposal was backed by civic Scotland and proved at least as popular in opinion polls as the other two options, it was not taken up by any political party and thus lacked political clout.

 

Even so, from a democratic standpoint, the Edinburgh Agreement is a disgrace. Those voters whose first preference is devo max – roughly a third of the electorate – must now decide whether Scotland will be in a better position to govern itself by staying in the Union or by becoming independent. Given that the SNP wants to retain the monarch as head of state, to form a monetary union with the rest of the UK and to stay in NATO, this is tough call. But at least “undecided” voters know more or less what the SNP is offering, even if many details remain unclear. The same cannot be said for the Unionist parties. Having succeeded in squeezing the referendum debate into a narrow frame, they would do well to explain what further powers they wish to see devolved to the Scottish parliament, how they envisage using these powers to help make Scotland a better country, and what, for them, “a better country” looks like. Would it, for example, be one that is fairer, happier, greener, less divided, more cohesive and more democratic than it is now? In the absence of such a forward offer, “undecided” voters will surely be drawn into the nationalist camp.

 

Provided the three Unionist parties can see where their best interests lie and can agree on a sufficiently attractive forward offer – both strong assumptions – current polling evidence suggests that the Better Together camp will carry the day. Since devo max will not now appear on the ballot paper, perhaps the democratic left should keep it alive as an unofficial presence in the referendum debate by spelling out answers to the three questions posed just now: What would devo max entail? How would it help to build a better Scotland? And what, in this context, does “better” mean?

 

Why bother explaining and defending an option that is not on the table? Because the exercise would set an example to the Unionist parties and provide a benchmark against which to judge their efforts. And because if the result of the referendum is close, allowing neither side to claim a decisive victory, it would provide a focus for further discussion and negotiation about the governance of Scotland and the future of the Union.

 

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