Arc of calamity.
Scottish politics and the economic crisis

Nick McKerrell looks at how the financial earthquake has caused tremors in Scottish politics.

The early hours of Friday November 6th. No one expected this – New Labour had won the Glenrothes by-election. Defying many political predictions and perhaps more significantly the bookies’ odds Gordon Brown’s party had beat the SNP. Following their stunning defeat in the summer in Glasgow East where the SNP gained a 22.5% swing and won the 3rd safest Labour seat in Scotland many thought a Labour loss was a racing certainty. The Nationalists held the seat at Scottish Parliamentary level, ran the local council and Salmond as First Minister dominated Scottish politics.

The election, however, took place in the midst of the maelstrom of the economic crisis of neo-liberalism where unprecedented state action was being taken to prop up finance capital. The credit crunch had been bubbling away for 18 months or so but it was in the autumn of 2008 that all hell broke loose.

Does the combination of these factors – electoral defeat for the SNP and economic uncertainty with recession an actual reality and outright depression a possibility mean that the “bubble has burst” for Salmond’s SNP? More importantly, though, what is the impact for the national question in Scotland – is independence or even a referendum off the agenda?

GLENROTHES IMPACT

The first thing to note is that it is folly to draw far reaching consequences from one event. There is a current trend amongst mainstream political analysts to view things in a bi-polar way: black or white. When Brown was elevated to PM in 2007 he could almost walk on water six months later he was facing annihilation. In a sense this short-termism is a reflection of the way capitalism operates at the moment as shall be shown later.

Particularly in by-elections there is always a combination of local and national factors to be taken into account. In the Glasgow East election for example every candidate was keen to stress their local roots and connections at every opportunity.

Equally in Glenrothes local issues were to the forefront. The SNP led-council in the area had imposed cuts on care services for vulnerable sections of society. An issue mercilessly and hypocritically exposed by the New Labour propaganda machine. Breaking with electoral convention Lindsay Roy the winning candidate mentioned this issue in his winning speech – even before thanking the police and returning officer!1

Roy, himself was a local headmaster with no electoral experience – Labour then could portray him as a newcomer to politics unlike the slick council leader who was the SNP candidate. Fairly bizarre for a capitalist party of government that has been in power for over a decade but one which is increasingly being adopted across the globe – Sarah Palin as the Republican Vice Presidential candidate being one of the more recent examples

To emphasise this New Labour constantly portrayed themselves as the “underdog” of the election. Despite having a 10,700 vote majority at the 2005 election and representing the party of the British Government.

In some ways there were parallels in Scottish politics twenty years ago. Jim Sillars won Glasgow Govan in 1988 with a 33% swing. Reflecting a visceral and deep anger in the Scottish working class at the continual rule of Thatcher’s Government, the impotence of the Labour opposition particularly in the face of the imposition of the poll tax the result announced the SNP’s return to Scottish politics following a decade or so of relative wilderness years. One of Sillars’ slogans was SNP: Say No to the Poll Tax.

Eight months later in June 1989 there was an election in the neighbouring seat Glasgow Central where despite a major increase of 20% for the SNP and their candidate Alex Neill – now an MSP – Labour held the seat with a 6000 majority. Indeed in that election a big issue was made of the SNP controlled Regional Council in Tayside that had announced a spate of redundancies of domestic staff during the election campaign. A piece of graffiti in the area announced Sacked Ninety People.

However though despite losing that specific election this period between the British General Elections of 1987 and 1992 was the time that the SNP became the main opposition to Labour in Scotland. It also saw the re-elevation of the Scottish national question to centre stage – for example, it was at this time that the Constitutional Convention drew up the proposals for devolution which were implemented ten years later – where it has remained more or less ever since.

So socialists should look at the bigger picture when examining Glenrothes and indeed the Glasgow East by-elections. While it is an unusual result for a governing party to win a by-election like Glenrothes with a relatively large majority and some of the shine has come off Alex Salmond and the SNP administration the overall impact is less clear-cut.

Electorally, though, it does indicate a dominance by the two main establishment parties. Between them SNP and New Labour got 91.6% of the vote – even the other mainstream parties the Liberals and Tories who got fairly equal media coverage lost their deposits. In Glasgow East the combined vote was 84.8%.

Unfortunately even at a time of capitalist meltdown and mayhem the SSP could only manage 0.6% of the vote – Sheridan’s Solidarity did even worse with 0.2%. Although these results are a little magnified because of the squeeze in a by-election it does expose the difficulty of the electoral terrain for socialists and indeed most other parties at moment.

This is a very different situation from even a few years ago where there were more splintered electoral battles in Scotland where we could be confident of getting a respectable vote and even saving our deposits as could other smaller parties like the Greens and the Pensioners’ Party. For the time being at least there is a two horse race in most elections in Scotland.

But what of the claim that it was the turmoil in the world capitalist economy that caused New Labour to win the election? Moreover that one of the results of this economic disaster is the sidelining of the independence question. On the same day as Glenrothes two council by-elections were held in Glasgow and Edinburgh– both expected SNP gains were won by New Labour.

ECONOMIC CRISIS

One of the unusual phenomena of the current economic crisis is the extent to which governments worldwide can take a backseat and claim it is nothing really to do with them. This is reflective of the dominance of globalisation in capitalist society where nothing or noone can question the free market.

In previous recessions the Government were held responsible to a degree. In the early eighties the Tories imposed savage cuts to public spending, cut tax rates for the wealthy and destroyed the manufacturing sector. On Black Wednesday in September 1992 the hapless John Major and Norman Lamont raised interest rates to 15% in a single day. Politically the Tories never recovered from that – though they did in the eighties from a combination of the Falklands War and the weakness of the Labour leadership.

Now, however, there is almost a privatisation of economic crisis. One of the first acts of Blair’s New Labour government was to give independence to the Bank of England. This underlined Blair and Brown’s commitment to neo-liberal economics and emphasised essentially that New Labour would not intervene in the capitalist economy. Bizarrely this hands off approach led Brown to claim that he had abolished boom and bust – a fundamental part of all capitalist economies.

Such talk has now been banished as the relative stability of the British economy has been exposed as being built on a mountain of debt both personal and at a macro level in the economy. But what New Labour can now claim is that the global market has caused this crisis rather than the political interventions of the government.

This has worked in the short-term as electoral results have shown and may be a factor in determining when Brown calls the British General Election. However this may be superficial and when the economic slowdown really hits in terms of mass unemployment and spending cuts there could be no escape for New Labour or any capitalist politician.

Trotsky always pointed out that there is always a time lag between economic developments and their political impact. The Wall Street Crash of 1929, which in some regards closely reflects the current economic crisis, did not really hit home politically until 3 or 4 years later with the turmoil of the thirties which saw the coming to power of Nazism, the election of Roosevelt in America, the Spanish Revolution, the Stalinist show trials and eventually the outbreak of a world-wide war.

In Scotland the political impact will probably be reflected in an intensified battle over the national question. This runs contrary to current comment from unionist politicians which claim that the crisis has shown the resilience and strength of the British State. As the capitalist commentators at the Economist put it “An independent Scotland could not afford the £20 billion ($35 billion) earmarked for RBS and the £11.5 billion for HBOS, thundered Mr Brown on October 14th: the bill for these capital injections in exchange for shares is bigger than the devolved Scottish government’s entire budget of £31.3 billion.”2

The fate for Scotland, the claim goes, would have been similar to Iceland, a country previously promoted by Salmond as a viable small state, which almost went bust such was its investment in debt. Such comments have not been helped by comments from Salmond and the SNP leadership who ironically had been trying to ally themselves much more to finance capital in the run up to the economic crisis.

In a speech to the Global Financial Services organisation in May of this year Salmond emphasised the importance of financial capital to his vision of Scottish capitalism. “Scotland is already a major player in financial services - one of Europe’s leading centres for banking, pension funds and life assurance. And our financial services sector has deep roots. A banking tradition that goes back at least four centuries. An industry that today directly provides 9% of Scottish jobs”3 Incidentally, at that meeting he also speculated that the worst was over for world banking!

By tying the SNP so closely to a model of an independent capitalist idyll Salmond has painted himself into a corner. He has had to talk up the Scottish economy using language that is pretty indistinguishable from New Labour rhetoric. “Three weeks ago we had the lowest unemployment figures on the ILO measurements in Scottish history at 4.2% - we were doing extremely well relative to other places.”4

Such words contrast sharply with the reality facing many ordinary people in Scotland. A report commissioned by the BBC and published in December shows that the West of Scotland in particular has consistently remained the poorest area in the UK since 1970. In 2000 38% of the population of Greater Glasgow were classified as “breadline poor”. Scotland as a whole had a rate of 32% much higher than the rest of the UK.

Incapacity benefit subject to sweeping reforms and brutal cuts recently by the New Labour Government is claimed by more people in Glasgow than in any other city in Britain with around 62,000 claimants. To quote the opening line of a World Health Organisation report on life expectancy published in 2008, “A child born in a Glasgow, Scotland suburb can expect a life 28 years shorter than another living only 13 kilometres away”5.That gave an estimated life expectancy of a male in Calton of 54! This contrasts to a UK average of 77.

This polarisation of wealth and deep entrenchment of poverty is pretty endemic in Scottish society. In short it shows how deeply capitalism and the more recent neo-liberal agenda of Brown and Blair have failed society.

Yet, Salmond cannot fully exploit this stark data because of his belief in capitalism and his attempt to over-state the achievements of his new administration in Edinburgh. In his annual statement to the Scottish Parliament outlining the Bills that will be promoted that year, Salmond quoted research which apparently showed that “Scotland reported the third highest level of ‘life satisfaction’, or happiness, of any nation in Europe.”6

In speech after speech Salmond and the Scottish Government state that the “confidence” of the Scottish people is sky-high. This is normal capitalist political rhetoric but the problem for the SNP is this ties them to a system which in the last few months seemed to be crumbling around their eyes.

During an interview with the BBC Salmond blamed the threatened collapse of HBOS on “spivs and speculators”7 – rogue individuals rather than the system itself which bred such reckless gambling. Such a position was inevitable given the courting of finance capital which the SNP leadership have carried out since being elected to government.
Another problem for Salmond is that most of the response he developed to the financial crisis has been taken by Brown. “There is an unanswerable case for a Keynesian response to the threatened deep recession” said Salmond to an audience in Glasgow8 on the eve of Brown raising tax rates for the super wealthy and bringing forward public spending projects.

In truth, Brown’s remedies are a pale imitation on previous Keynesian fuelled expansion in capitalism. The tax increase on the very wealthy is tokenistic to the extent that not even the Tories will oppose it. The public spending is low and tied in many ways to private industry. But the problem is for the SNP leadership so are there plans.

Rather than highlighting the poverty and destruction foisted on working class communities by being part of the British state which could mobilise big numbers behind the independence banner Salmond instead focuses on the prospects for capitalism within the country.

Even the proposals to abolish the hated council tax in favour of a local income tax have come with the caveat that the SNP leadership want a flat tax. All wage earners will pay the same rate of tax rather than a progressive rate – as developed by the SSP with the Scottish Service Tax. A basic principle accepted in all income tax schemes. Such a flat rate is beloved by the right wing Adam Smith Institute and has never been introduced on income in an advanced capitalist economy

These quandaries of Salmond and the SNP leadership are to some extent nothing new. There have always been contradictions within the SNP but to a degree they are starting to be brought to a head by the combination of the SNP being in government and the current crisis of capitalism.

On paper the SSP should be powering ahead with its vision of an independent Socialist Scotland – attacking the dead weight of the British state and the very economic system on which it is built: capitalism. But as is often said about football it’s not played on paper it’s played on grass. As discussed elsewhere for a number of reasons particularly subjective ones we are very weak and cannot fully exploit this. Also it is not immediate that once recession hits working people move directly into struggle and looking for alternatives as discussed above.

Even the left of the SNP – some of whom are MSPs and promote themselves as socialists – are quiet at the moment. They have decided not to “rock the boat” whilst their party is in government. This, though, may alter as the economic crisis hits.

Referendum: 2010?

But what of the game-plan for independence – is a referendum now likely in 2010?

It was long the plan for Salmond that his ability to run the Scottish government in an effective way. That is from his perspective acceptable to capitalism. Following this the last year of his rule 2010 would coincide with a referendum on independence. This would also be aided if the Tories won the Westminster election whilst doing badly in Scotland bringing back memories of the torrid time of the Thatcher administration.

Such a perspective even now cannot be ruled out. The Tories have not performed particularly well during the current crisis. Hardly surprising given they are also bolted onto the same economic system in New Labour. Ian Duncan Smith ex-Tory leader and spokesperson for social inclusion in a recent speech said the solution to poverty in Glasgow was to promote home ownership! Obviously unaware of the meltdown in the mortgage market. Yet as previously mentioned when the impact starts to hit of the recession all political oppositions even the Tories may gain support.

There could be other obstacles, though, facing the referendum. The SNP are obviously a minority party in the Parliament and it is unclear if the other parties will support it. If the SNP were riding on the crest of a wave as seemed the case after the Glasgow East by-election such a move would be a political gift. The Unionist parties would be seen as blocking the democratic will of the Scottish people.
However if the current situation continued with Salmond focusing on the wealthy and powerful in Scottish society such an argument whilst still being true may be more difficult to stick.

There are other legal restrictions on the potential referendum which are not often discussed. The Scotland Act 1998 which created the Scottish Parliament has a list of issues which the Scottish Parliament is expressly banned from making laws on – “reserved matters”. One of the first of these is the Union of the Parliaments of Scotland and England.
The devolution scheme follows almost identically the plan drawn up by the Constitutional Convention in the eighties and nineties. This was dominated by the Unionist parties – Labour and Liberal – the SNP did not participate. So unsurprisingly the Parliament is not allowed to legislate for independence.

For this reason the question in the referendum is not the expected one it is rather Yes or No to the question “I want the Scottish Government to negotiate a settlement with the Government of the United Kingdom so that Scotland should be an independent state”9. A much more convoluted question.

This is ostensibly to get round the reserved matters issue – the argument goes that rather than declaring independence this is merely the extension of the Parliament discussing it; much like the debates that have been had on the war in Iraq, pensions and nuclear weapons: all reserved.
However it is still sailing close to the wind and the Referendum Bill could be stopped legally before it is presented to Parliament by the Presiding Officer – a Tory MSP , after it is passed by the British Government and the Scottish Secretary or challenged in court at any time by a member of the public.

There is a sense in some ways here where law would give way to politics. In a sense it would be a strategic decision as much as anything else if the Labour or Conservative government sought to block legislation or use the courts.

But there is definitely a more aggressive approach being put forward by defenders of the Union. The position of Secretary of State for Scotland in Westminster was thought defunct as recently as 2004 where Blair toyed with scrapping it. Instead it became a part time role held by any cabinet minister who happened to be Scottish latterly Des Browne MP for Kilmarnock and Defence Secretary.

However in the October re-shuffle Brown re-launched it as a full-time Cabinet position with life long Labour apparatchik Jim Murphy filling the role. It is clear his sole mission is to counter balance and attack the SNP administration. Essentially a non-job in political terms Murphy will be able to concentrate on promoting the Union and New Labour in Scotland with the authority of the British Government.

Alongside this a Commission headed by Kenneth Calman – the Chancellor of Glasgow University – to examine devolution and whether the Scottish Parliament should have any more powers. It explicitly is not dealing with independence and indeed emphasises the importance of the Union.

Backed by the three main unionist parties – New Labour, Liberal and the Tories – and funded by the Scottish Parliament despite the SNP’s opposition the vote to fund it was carried. It is likely this will report in 2009 with some meagre proposals to alter devolution. Steering away from controversial measures like tax raising and perhaps arguing for more powers in areas like broadcasting and firearms.

Therefore there is likely to be a major Unionist propaganda onslaught in the next year. The financial crisis has given a little taste of this but that would pale into insignificance if the referendum bill jumps the hurdles of the devolved Parliament.

What would really counter this would be a grass-roots campaign in defence of democracy and in favour of independence. Direct action, demonstrations and mass meetings across the country in favour of a referendum would terrify the British Establishment. Unfortunately the SNP leadership is going in exactly the opposite direction.

It would be shameful if the referendum plans were dropped in the face of either political blocks of legal shenanigans. Even with the question posed in a more difficult way it would be a step forward. But what would be worse would be if they are dropped with only a whimper of protest by the Scottish Government.

The SSP should try working alongside other forces in communities and trade unions – perhaps as part of the newly constituted Scottish Social Forum to organise a grass roots campaign in support of the referendum. This would seek to defend the proposal from attack, mobilise forces if it is blocked and organise a Yes vote if the campaign goes ahead. Such a campaign could be a beacon of attraction for many including the left of the SNP.

It may be a little abstract at the moment to mobilise many people to this banner but it could be a decisive battle for the forces of Scottish Socialism in the years ahead.

Notes

Speech can be seen at http://news.bbc.co.uk/1/hi/scotland/7714669.stm
The Economist, October 16th 2008.
Alex Salmond speech to the Global Financial Services organisation, May 29th 2008.
The Politics Showm October 12th 2008.
http://www.who.int/mediacentre/news/releases/2008/pr29/en/index.html
Alex Salmond MSP, Statement to Scottish Parliament September 3rd 2008.
Alex Salmond MSP interview on BBC Scotland, September 17th 2008. See full interview: http://news.bbc.co.uk/1/hi/scotland/edinburgh_and_east/7621153.stm
Alex Salmond MSP, speech to Glasgow Chamber of Commerce, November 18th 2008.
As written in Choosing Scotland’s Future: A National Conversation. The Scottish Government, August 2007.