This extract from The Importance of Nation by Jim and Margaret Cuthbert is published over at Scottish Left Review (go here for the full article). See also Pat Kane on Alienation and Eurig Scandrett on Reactions to Violence. We wanted to publish an extract as it relates directly to the debates kick-started by Mhairi’s article Unite, and Paul’s response.

It is now abundantly clear that there are fundamental problems with the current world economic order – as those on the Left have been arguing for years. The key doctrine of globalisation advocated by neoliberals can now be seen as a means of transferring command of more of the world’s resources to those willing and able to play the system, while producing only limited benefits to many poor countries.

The paradox of globalisation is that, while nations have been stripped of powers under GATT and WTO, nevertheless the nation has the final inescapable responsibility when things go wrong, as recent events clearly demonstrate. We will argue that this position of responsibility without power is untenable, and that redressing the failures of globalisation will inevitably involve redefining the role and powers of the nation state. We will not presume to offer solutions to all the world’s problems: but we will give pointers as to how important progress could be made in at least one key area.

The symptoms of the current world economic malaise are frighteningly apparent. To name just a few:

• There are grotesque and increasing disparities of wealth between different social groups, in both the ‘advanced’ and ‘emerging’ economies.

• The world financial system is such that many of the major banks and institutions are technically insolvent on any realistic valuation of their asset bases – and are only propped up by government-organised cheap credit; that is effectively by governments printing money.

• Many of the states with advanced economies have levels of debt which mean that some form of sovereign default is virtually inevitable.

• The problems in the eurozone are so severe that it will either break up, ushering in an era of unfathomable chaos, or else some form of European superstate will emerge, to impose a disastrous regime of fiscal discipline upon the European periphery.

These are the symptoms: but with all this economic chaos going on, the political elite in the US and in Europe seem incapable of rising to the challenge, either of developing a coherent course of action, or of bringing the electorate with them. In the US, the body politic seems to be fatally riven into two camps. In Europe, the basic problem is that the mechanisms which have been set up would require further fiscal, social, and political integration if they were going to have any chance of working: but this was not in the original prospectus, and further integration does not address the problem of underlying structural imbalances.

We propose a charter which states that the natural resources of a nation are the inalienable property of that nation, which are held in trust for the mutual benefit of that nation, the entire world, and future generations.

While the causes of the debacle are more difficult, an important role has clearly been played by the undue trust which has been placed in some of the tenets of the neoliberal consensus: and these tenets can now be seen to be fallacious. Among these fallacies is the belief in the invisible hand, and that markets, if largely left to themselves, provide optimum outcomes. Another fallacy is that the increased volume of trade and capital flows stemming from globalisation lead to a sustainable increase in economic activity benefiting all countries. There is also the mistaken belief that monetary unions are instruments of convergence: in other words, if a monetary union is set up covering a group of countries which have achieved some adequate degree of initial convergence, then their economies will move forward in increasingly close economic harmony. (In fact, the opposite is the case – since the reduced number of adjustment mechanisms in a monetary union, which are primarily labour and capital flows, tend to be disequilibrating rather than equilibrating.)

The world economy is so fundamentally broken that it is going to be no easy task to put the bits together again in a more workable fashion. We will argue that to redress the problems an essential role has to be played by the nation state, and that there has to be renewed focus on those functions which the nation is uniquely positioned to perform. But first, it seems clear that any solution should satisfy most, if not all, of the following requirements if it is going to have a chance of success:

• That there should be protection from the corrosive effects of uncontrolled flows of capital on exchange rates and industry.

• That there should be some form of protection (not necessarily tariff protection), for local industry, so that it cannot be killed off by dumping, or simply taken over and shipped off shore. But that this should be smart protection – that is, we do not want protective measures which simply encourage inefficiency.

• That there should be suitable arrangements in place to encourage stewardship of basic resources, (that is, resources like land, water, renewable and non-renewable energy and landscape). Such stewardship should provide an appropriate balance between the needs of national and international interests: and between the needs of current and future generations.

• That monetary policy should be such that it suits the requirements of each area: that is, interest rates should be set with local (in some sense) requirements in mind, leaving aside for the moment exactly what is meant by ‘local’.

• That there should be mechanisms in place which can be called upon, if necessary, to correct imbalances in the distribution of income, either between areas, or different social groups

• And finally, that there should be an effective set of accounting arrangements in place – particularly for governments and the financial sector. These should take a prudent and conservative view on when governments and financial institutions are operating solvently.

The theme of this article is that the nation state will have to play a fundamental role if these requirements are to be delivered. But first, what do we mean by nation?