Dilemmas of Over-Development: Scottish Nationalism and the Future of the Union
At the height of the crisis of the 1970s Tom Nairn, the Scottish historian and theorist of nationalism, published his collection of essays The Break-Up of Britain, which soon became a key intellectual reference point for the Scottish and British left. The book’s central argument was that the crisis of post-war British capitalism had deep historical roots which stretched back to Britain’s ‘unfinished revolution’ of the 17th Century. Nairn predicted that Britain’s trajectory of post-imperial decline would be paralleled by the rise of ‘peripheral nationalism’—reflected in rising demands for Scottish self-determination—which would increasingly challenge the archaic character of the British state and civil society.
The union did not, of course, unravel in the decades following the publication of Nairn’s book. But a process of constitutional reform did gather pace throughout the 1980s and 1990s, culminating in the re-establishment of the Holyrood parliament in 1999 and the emergence of Scottish nationalism as a pivotal force within British politics. Today, Britain is once again entering into a phase of acute constitutional and economic upheaval. The uncertainties which Brexit has unleashed, in combination with the deep structural weaknesses which continue to characterise British capitalism, echo the paroxysms of the 1970s. Economic fragility, political polarisation, and on-going constitutional agitation within the periphery again threaten to pitch the British state and capitalism into turmoil. In order to understand the present constitutional moment, it is necessary to place the rise of Scottish nationalism into historical perspective. There is no better place to start than with the historical sociology of Tom Nairn.
Nairn places the Scottish national question within a wider theory of nationalism and uneven development. Modern nationalism emerged during the great upheavals of the 19th Century following the shockwaves unleashed across the continent by the French and industrial revolutions. In this context, an emergent class of commercial interests, urban elites and reformist intellectuals within relatively ‘under-developed’ societies, such as Germany and Italy, were faced with a formidable task. These societies were increasingly subject to the intense pressures of capitalist modernity: to increase agricultural productivity; to industrialise; and to dispense with ‘backwards’ social relations which acted as ‘fetters’ on their economic development. However, the project of ‘modernisation’ was persistently frustrated by the archaic character of the absolutist state which predominated across the European continent.
In response, Europe’s rising commercial elites sought to mobilise the mass of the population behind a programme of industrialisation and constitutional reform. These ‘modernising’ forces drew upon the range of ‘national’ traditions particular to their host territory in order to mobilise the masses for development. As Nairn put it, ‘the new middle-class intelligentsia of nationalism had to invite the masses into history; and the invitation card had to be written in a language they understood’. The rise of nationalism was therefore deeply entangled with the uneven development of industrial capitalism in Europe. Nationalists drew on a mythic past in order to mobilise for the challenges of modernity.
Scotland did not experience an upsurge in 19th Century nationalism in line with this standard European model. On first sight, this was quite peculiar. After all, Scotland had all the characteristics of a nation state in-the-making, ripe for political and constitutional reform. Not only had Scotland’s position as an independent state had only recently been relinquished through the Act of Union in 1707, but it retained a series of autonomous civic institutions, including the Kirk, Scots law and its distinctive education system. Within its ancient universities in Edinburgh, Glasgow and Aberdeen, Scotland had established itself as a key centre of European enlightenment, brimming with cosmopolitan intellectuals committed to social reform and moral improvement. Furthermore, Scotland had a wealth of national popular myths and folk memories to draw upon, built-up over centuries of fractious relations with its southern neighbour. Why, then, did Scotland not experience an upsurge in demands for sovereignty in the nationalist 19th century, in line with other European societies?
Nairn’s answer was that Scotland was a highly peculiar case, shaped by its idiosyncratic historical development. With the Act of Union Scottish civil society had been effectively integrated into the first capitalist state and society. This had profound implications for the subsequent development of Scottish nationalism. It meant that Scotland’s economic structure and civil society was already well-adapted to the wave of modernisation which unfolded in the 19th century. Scottish nationalism was peculiarly ‘absent’ in the classic era of nationalism for the simple reason that it did not face the dilemma of ‘under-development’ encountered by its continental European neighbours. In place of an organised politics of self-determination, residual ‘national’ sentiment came to be expressed in a primarily cultural form. This was symbolised most obviously in the romantic literature of Walter Scott, the proliferation of ‘tartanry’ and through the fetishization of a ‘lost’ Highland and Gaelic culture, suitably sanitised and stripped of its Jacobite connotations for the polite bourgeois society of Lowland Scotland.
The British state consolidated its global role from the mid-19th Century onwards, through the international status of sterling, the rise of the City of London as a hub of global finance and the expansion of the British empire. Scottish elites and civil society came to be increasingly intertwined with this internationally-oriented imperial state form. Scotland was an active partner in, not a victim of, British colonial adventurism. The participation of Scottish elites in the empire was enshrined through colonial business ties (one in four elite administrators in the East India Company were Scots), through the famed role of the ‘Highland regiments’ as the shock troops of British militarism, and through the economic integration of industrial Scotland – Glasgow’s shipyards, Dundee’s jute factories, the coalfields of Fife and south western Scotland – into the ebbs and flows of imperial trade. Scottish nationalism remained quiescent throughout the first half of the 20th Century because the ‘external supports’ of the British state – the global projection of its imperial power and its international economic role—secured consent north of the border.
With the post-war decline of Empire and the onset of Britain’s economic crisis in the 1970s, these external supports rapidly crumbled. Sterling’s status as the leading international reserve currency was lost in the inter-war years, the Second World War decimated Britain’s industrial base, and the Suez debacle confirmed Britain’s subordination to American geo-political leadership. The British imperial state was unravelling; its global economic role was contracting. By the 1960s, profitability began to decline sharply. Britain’s technology and infrastructure creaked amidst years of under-investment. The country experienced chronic economic under-performance relative to other advanced capitalist states, most notably Germany, Japan and the United States. British decline intensified in the 1970s, as rising ‘stagflation’ – high unemployment combined with rampant price increases – led to a rising tide of industrial militancy and social unrest.
Amidst these convulsions, huge oil reserves were discovered off the Scottish coast in the North Sea. The discovery of ‘black gold’ provided a possible escape route for Scotland from Britain’s economic, social and political malaise. Nairn saw this moment as emblematic of a shift to what he termed the ‘new nationalism’. This form of nationalism was evident across a number of Western capitalist societies, most notably in the Basque and Catalan regions of Spain. The ‘new nationalism’ was quite distinct from the ‘old’ nationalism of the 19th Century. While the ‘old’ nationalism involved mobilisation in response to the dilemmas of under-development, the ‘new’ nationalism involved galvanising support for self-determination on the basis of the promise of future over-development. The ‘new’ nationalism emerged in areas which sat on a source of potential future prosperity—in Scotland’s case North Sea oil—which would allow them to insulate themselves from the dysfunctions of their sclerotic metropolitan partner.
Scotland’s putative ‘over-development’ played a key role in the political imaginaries and strategies of Scottish intellectuals in this era. In The Red Paper on Scotland, (a collection to which Nairn contributed), Gordon Brown, then a young student radical, wrote, “the rise of modern Scottish nationalism is less an assertion of Scotland’s permanence as a nation than a response to Scotland’s uneven development – in particular to the gap between people’s experiences as part of an increasingly demoralised Great Britain and their (oil-fired) expectations at a Scottish level”. The ‘promise’ of Scotland’s vast oil reserves grew as an issue of pivotal political importance in the following decades. By the early 1980s, Thatcher’s government had initiated a huge wave of de-industrialisation, wiping out large swathes of Britain’s industrial base, including in Scotland’s central belt. Britain began accumulating huge trade deficits with the rest of the world. The cruel irony was that oil revenues helped to counteract the decline in Britain’s balance of payments and helped to finance the increase in the unemployment payments which occurred amidst this Thatcherite restructuring.
Uneven development intensified. The abolition of exchange and capital controls and the subsequent ‘Big Bang’ of 1986 saw the City of London re-emerge as a global financial powerhouse. Within the de-industrialising periphery – the North of England, the West Midlands, Wales, Scotland – unemployment surged and decline sharpened. Many of these areas never recovered. Within Scotland, Thatcher’s programme set in train a series of pressures for greater devolution and self-government from within civil society. Devolution as we know it today emerged out of this context. The constitutional convention, the Claim of Right and eventually the formation of the Scottish parliament were all reflections of an increasingly assertive civic Scotland, determined to insulate itself from the worst excesses of unchecked Westminster power. The policymaking powers of the newly-formed Scottish parliament in turn fostered greater divergence between Scotland the rest of the UK during the first decade of the 21st century. Distinct social policies and political dynamics took hold. From 2007, the Scottish National Party assumed control of the Scottish parliament and built itself as the hegemonic political force north of the border, securing a majority in the 2011 Scottish parliamentary elections and driving through, as a result, the 2014 independence referendum.
The emerging politics of Brexit within Scotland should be understood within this wider historical context. The rise of Scottish nationalism has been shaped by two long-term structural processes: Britain’s relative economic and geo-political decline and the on-going intensification of uneven development within the Union. Brexit re-poses the ‘dilemmas of development’ which Scottish nationalism has faced in the past, but in a new form. Whether Brexit will ultimately lead to a second independence referendum and to the long-anticipated ‘break-up of Britain’ remains to be seen. However, drawing on Nairn, we can outline the strategic terrain which Scottish nationalism will face in the coming period.
Brexit threatens to further intensify structural weaknesses within British capitalism. Regulatory divergence from the EU will increase trade barriers between the UK and the Single Market. Striking trade deals with non-EU states is unlikely to compensate for the consequent decline in economic activity. The UK currently trades more with Ireland than it does with the BRICs combined, while a ‘trade deal’ with the United States is expected to add only 0.2 per cent to GDP in the long term. As well as limiting access to the Single Market, Brexit will lead to a loss of influence over EU regulations, confining Britain to the status of a ‘rule-taker’ in relation to future EU legislation. Attempts to reduce net migration are likely to have a negative impact on future economic growth, further compounding demographic pressures on Britain’s already embattled welfare state. In combination, these pressures are likely to negatively impact upon economic growth and tax revenues, further intensifying pressures on Britain’s ailing economic infrastructure.
Crucially, these dynamics are all likely to intensify internal uneven development within Britain. London and the South East have a far more internationalised export base than the rest of the country. While seven per cent of London’s GDP is associated with exports to the EU, the figure is between 50 and 100 per cent higher in regions outside of the capital. In these peripheral regions, dependence on EU demand has increased over the recent decades, in contrast with areas in the South East—most notably London—where this dependence has declined. European structural funds are similarly concentrated in regions and nations outside of the capital. The upshot is that regions outside of the capital, including Scotland, are more vulnerable to the economic shock unleashed by Brexit. Scotland is projected to experience an 9 per cent decline in GDP growth under a ‘no deal’ scenario compared to only 2.5 per cent in London over the next 15 years. Under a free trade ‘Canada-style’ deal, the figure is projected to be 6 per cent in Scotland compared to 2 per cent in London.
These pressures re-pose the dilemmas of Scottish development which Nairn identified in the Break-Up of Britain. However, while it was the discovery of North Sea oil which initially fuelled demands for Scottish sovereignty, today it is the untapped potential of Scotland’s distinct institutions and political culture which have emerged as the resource ready to be mobilised for future development. Scottish elites, its parliamentary institutions and its civil society are far more amenable to continued integration into the EU and European capitalism, as reflected in the 62 per cent vote for remain. The strategy of the SNP leadership since the June 2016 referendum result has been to leverage Scotland’s ‘Remain’ vote as a means to build support for a second independence referendum.
The first element of this strategy is rooted in the claim that Brexit lacks a democratic mandate north of the border. Unionists retort that Scotland’s 2014 ‘no’ vote undermines this claim. But during that same referendum, the ‘Better Together’ campaign claimed that only by remaining in the Union could Scotland guarantee continued membership of the EU. Brexit has undermined that central premise, bringing about the ‘material change in circumstances’ which justifies a second plebiscite on the independence question. Crucially, this approach has been advanced amidst a wider shift in SNP strategy. The Party’s key calculation since 2014 has been that to secure independence, a large section of ‘Middle Scotland’ – the university educated, generally better-off section of the electorate—must be persuaded that its interests are better served by sovereignty lying in Holyrood rather than Westminster. Amidst the uncertainties of Brexit and the wider instability in the global economy, Sturgeon has tailored her message to this electoral constituency. Scotland is projected as an ‘open’, ‘cosmopolitan’ and ‘economically responsible’ member of the international community, in contrast to a beleaguered British state increasingly driven by the delusions of the Tory backbenches and the atavistic impulses of little England.
There is of course a clear political logic behind this approach. Independence as an escape valve from the chaos of Brexit has the potential to resonate with a certain section of 2014 ‘No’ voters. But this strategy also comes with grave risks. The first independence campaign—bolstered by the small but well-organised network of left-wing groups such as the Radical Independence Campaign—has given way to a prospectus of ‘responsible’ economic policy, tailored to the anxieties of Scotland’s business community and constitutionally conservative middle class. This pivot threatens to erode the working class base of support which was in place during the first independence campaign.
The SNP’s ‘Growth Commission’, published in May 2018, is emblematic of this shift. This report, chaired by corporate lobbyist and former SNP MSP Andrew Wilson, and shaped by extensive consultations with Scottish business groups (and, notably, without the input of trade unions), outlines the economic policy of a future independent Scotland under an SNP government. Its headline proposal relates to the issue of currency. Upon assuming independence, Scotland would continue to utilise sterling over a lengthy ‘transition’ period. This would assuage fears of devaluation and currency volatility—key concerns for ‘middle Scotland’ sitting on savings and assets denominated in sterling.
There are a number of severe downsides to this proposal. First, adopting a policy of ‘sterlingisation’ would mean that Scotland would have no control over its future monetary policy. The Bank of England would set interest rates according to conditions in the rest of the UK, irrespective of economic conditions in Scotland. Second, Scotland would have to secure currency reserves—channelled into the new ‘Scottish Central Bank’—which it would have to secure through running large current account surpluses. This would involve restraining imports, an objective which would likely have a severe impact on living standards, particularly amongst low earners. Third, in order to build international confidence en route to an independent currency, the Commission recommends that a future SNP should reduce its budget deficit from to 3 per cent while maintaining public debt at or below 50 per cent of GDP – a level which outstrips even the draconian fiscal criteria of the Eurozone. In order to do this, growth in public expenditure would be held below the rate of growth - at 0.5 per cent per annum - over a period of five to ten years. In a context of rising costs of public service provision, this would result in severe real terms constraints on expenditure. The Commission also recommends that a future independent Scotland should lock its corporate tax rate at the UK’s (internationally low) level.
This strategy of catering to the preferences of the business community and middle Scotland is also reflected in the SNP’s recent domestic policy. In the current session of the Scottish parliament, the SNP has only tinkered with income tax while council tax reform – once a core SNP policy – has been delayed. The Party has dragged its feet on more radical proposals such as a land value tax or reform of landownership. This cautious approach comes with considerable risks for those sympathetic to the cause of independence. The ‘Yes’ vote in the 2014 referendum was underpinned by the mobilisation of traditional non-voting groups and working-class communities. Opting for a decade of expenditure constraint, combined with the Growth Commission’s ominous promise to embrace “the discipline of international competition” is unlikely to mobilise high levels of support amongst low income, precariously employed Scots. In the 2017 election, low turnout of working-class SNP voters contributed to considerable seat losses. The Party would do well to learn from this chastening experience.
The rise of Scottish nationalism has been intimately tied to two long-term historical processes: the erosion of the ‘external supports’ which maintained the British state and capitalism until the post-war era and the intensification of internal uneven development, which gathered pace in the 1980s. From its initial ‘absence’ in the 19th century, to its oil-fired emergence in the 1960s, to its status as an established force within British politics today, the fortunes of Scottish nationalism have been closely related to the uneven development of British capitalism. Brexit is likely to further undermine Britain’s status as a geo-political power and is also likely to deepen regional economic divergence. The promise of independence lies in the prospect of charting a different course. But the SNP’s present economic strategy ties independence to the petard of sterlingisation, low corporation tax and a decade or more of tight fiscal constraint. If Scottish independence is going to deliver material social change and command the support of those constituencies at the sharp end of British decline, it will have to do much better than this.
Dr Scott Lavery is a Research Fellow at the Sheffield Political Economy Research Institute (SPERI) at the University of Sheffield.