Sail Away


From Susan Stockwell: Sail Away, at the Tate, coming soon. Debts and assets?

In a recent interview in the Sunday Herald, Blair McDougall of the No campaign makes a series of claims about the British economy. The pound, he says, is “the tangible expression of the strength and security of the UK”. He goes on: ‘Our message will always be the economic risk and gamble of independence versus the safer, better way to create a better Scotland through devolution, which offers you distinctive decision-making with the back up of the UK.’ Such invocations of economic strength and stability fly in the face, of course, of the recent report from a range of charities which conclude that Scotland faces a humanitarian crisis.

The No campaign is based on the repetition of two basic messages. Firstly and most obviously, it seeks to spread fear of the ‘unknown’. Secondly and intertwined with this, is the projection of the ‘broad shoulders’ of the British economy as a security blanket. But the public is being deceived in the process. The reality is that Britain is undergoing a long political and economic decline which is undermining to the brink of destruction the very idea of social security. This long-run decline is punctuated by acute crises. Britain’s economic performance since 2008 has in terms of jobs and living standards been the worst of all leading nations.

The economic model of the British economy run from the City of London is unstable, and the political paradigm in which it operates knows only one way: more privatisation and cuts. The only conclusion that can be drawn is that the leadership of the No campaign are either deliberately misleading the public on the economy or they are pursuing ideological goals to the detriment of the majority of the population. In the era of food banks, and at a time where no less than a million people live in poverty in Scotland , only the most cynical can argue that UK is OK. As Graeme Brown, director of Shelter Scotland, says: “People across Scotland are being battered by welfare reforms, stagnant wages, rising utility bills, higher living costs and job insecurity.’ It is a strange world that the leadership of No inhabit, where economic strength is cited as a reason to stay in a union of increasing rates of poverty.

The Financialisation of the UK economy

But to nail the argument we need an explanation of how we got here, and why it feels like we are moving backwards instead of progressing. Understanding the financialisation of the British economy is fundamental to explaining the insecurity of its economic framework and the worsening living conditions of the mass of its people. Financialisation and associated privatisations of formerly public enterprises are the primary mechanism by which there has been achieved a huge transfer of wealth from the public purse to private hands, laying the foundation for social injustice on a massive scale.

Financialisation is the increasing mediation of all social interactions by financial institutions and the extraction of fees from such interactions. Costas Lapavitsas, a professor of economics at the School of Oriental and African Studies puts it simply (‘The financialisation of everyday life must be confronted‘):

The term reflects the ascendancy of the financial sector. Even more important, it conveys the penetration of the financial system into every nook and cranny of society, including housing, education, health and other areas of life that were previously relatively immune.

Financial services dominate the British economy. And right now the Tories are making and implementing decisions that entrench that dominance. The greater the profits of the financiers, the greater their influence on government policy becomes and the more the state is rendered dependent on creating the conditions for future financial profitability. The profits extracted by private healthcare providers, privatised universities and over-charging energy companies are not only great news for a tiny minority, they also set the framework for economic decision making. It is crucial then to recognise British economic mismanagement not simply as the result of the poor decisions of a given Westminster government, but rather as an expression of fundamental contradictions and as part of an overall economic trajectory.

It means that the British economy is enslaved to big finance. Thatcher’s victory over working people in the 1980s set the course for a reorientation of the UK economy, away from production and manufacturing and towards a titanic financial industry. This has resulted in a permanent economic re-structuring which means the economy is based on financial transactions more than it is on the production of goods.

In addition to fostering inequality, financialisation is inherently crisis-ridden because it creates ‘bubbles’ as the value of financial assets departs from the value of concrete things produced in the real economy – these bubbles inevitably burst. But the blowback for these crises is not felt at the commanding heights of the economy. In fact, paradoxically, the great institutions of finance can actually make more money in a crisis as they handle the increasing debts of workers, businesses and ultimately states.

As Saskia Sassen explains: ‘Finance has created some of the most complicated financial instruments in order to extract the meagre savings of modest households: by offering credit for goods they may not need and (even more seriously) promising the possibility of owning a house. The aim has been to secure as many credit-card holders and as many mortgage-holders as possible, so that they can be bundled into investment instruments.’ (‘Too big to save: the end of Financial Capitalism’).

It is through this and similar processes that profits are generated. Whenever you hear Osborne et al talk about retaining the ‘leading lights of industry’ or the best brains in business, don’t for a second believe that they are referring to actually productive growth. They mean big finance, and big financiers. Only in a world where peoples lives are left out of economic analysis does this make sense. James Meadway of the New Economics Foundation concludes: ‘As investment in financial assets and property has risen, investment in the sort of assets that create jobs – infrastructure, machinery, equipment – has fallen and fallen. Our financialised economy privileges financial returns at the expense of real prosperity. Real wages for most people have fallen for the last five years, and this current ‘recovery’ looks sustainable only with increasing debt.’

This is the trajectory of the UK economy, and this is what the No campaign are defending as economic strength.

A productive economy: Labour, class and democracy

Not only does a No vote give an undeserved extension of life to a decaying British political-economy, it prevents us from bucking the economic trend internationally. By voting Yes we will have economic choices to make. We can go down the same road of British failure or we can make the decision to invest in industry, re-establish productive and manufacturing sectors and move towards public ownership of our key utilities. That we will go in this direction will be contested, but a No vote guarantees more of the same – and worse. Most of the cuts are still to come, and Labour will not reverse them even if they do come to power in Westminster.

Instead of our assets, such as North Sea oil, remaining an insurance policy for big finance in London, we can use its revenues to plan a massive scheme of investment in long-term, socially useful jobs. By doing this we not only increase the living standards and prospects of the majority, but we can start to counter-act the toxic dominance of the corporate lobby on political decision making, and ensure political independence from the US, who are needed to augment the power of the City. By building a real economy, not only can we get people into well paid, and long term jobs rather than low paid, precarious work, but we can build the power of working people throughout. Our industries should be run by trade union labour – to provide an increased representation for workers who have for decades been trampled on by the corporations and their governments, and who are now more often than not working in non-unionised, temporary conditions.

Independence must be about power. It is about the power to change the road the current status quo have been driving for decades. It is about democracy. But democracy must be fought for society wide, just as its opposite – financialisation – has dominated every sphere of our economic and social reality today. A productive economy means that instead of being held hostage by big finance, that we can raise through taxation the money necessary not only to defend, but to extend a holistic framework of world class social security. A productive economy, based on social use rather than on a quick buck can reverse the downwards spiral of decay, poverty and worsening living standards.

The ‘lost generation’ of young people can be at the fore of this revolution. Instead of hopelessness and despair, given the right economic framework they can pioneer new industries. We can harness the wealth of Scotland and focus it on our education system. As well as an intensified programme of apprenticeships, we would encourage people to under take study in the University departments currently being shut down in UK academia because such subjects are not direct feeders to the market: sociology, history, philosophy. Scotland really can lead the way if we genuinely develop an economy which is based on the needs of people. The sort of initiatives outlined here really would represent a beacon of progressiveness.

We stand on the verge. The options on the table are clear. a Yes vote gives working people the chance, if we fight for it, to redress decades of economic injustice. A No vote in that sense, is a disaster for the working people of Scotland, and in fact England as well. Scotland is unmistakeably on the frontline not in the battle of ideas. We should embrace that challenge, rather than fudge its outcome. We should stand strong in the face of the City and corporate elite, and present a people’s prospectus for lasting social change. Its time to start thinking independently of the economic dogma that has driven millions to poverty and despair. McDougal and company need to face up to reality. They must accept that the British regime has failed the people, or provide an argument to the contrary that paves a way out of the present situation. Both are impossible for the forces behind No to accomplish – it’s why they rely on Shell. Remember this when they assert the merits of the UK economy.

Thanks to Gregor Clunie and James Meadway for comments on this article.


Comments (13)

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  1. Steven Grubb says:

    Right on brother…

  2. A thoroughly over complicated analysis of Westminster power (extreme capitalism) followed by an unsubtle recommendation of extreme socialism and unionism. It’s like removing cancer and offering heart disease.

    The problem is that we are a society of extremes, right wing / left wing, Capitalist / Socialist, Management / Union, Protestant / Catholic, Rich / Poor and so on. This way of thinking needs to change.

    A progressive future has to be a balanced one that is not based on extreme ideology of politicians or political anoraks. More extremes from Radical Independence or Socialist Workers party? No thanks.

    By all means support a YES and encourage the poor and disenfranchised to seek a New Scotland but don’t over compensate this disgusting right wing ideology with an equally destructive socialist / communist ideology.

    And if you don’t understand what I am saying, then its likely that you have never come from a working class background AND worked at top management level in a progressive blue-chip organisation who balance workers, management, and community needs.

    1. barakabe says:

      I think your interpretation of this article is way off kilter- & a tad hysterical- as the proposals made by Shafi are in no way ‘radical’ or even communist at all. I think maybe this is a classic case of projection. I would describe myself as a radical, leaning toward Anarcho-Syndicalism, & the proposals put forward here are far from any of that or even communistic. Is this now how far we’ve moved to the Right that even fairly common sense proposals & reasonable suggestions for us to consider modest rebalancing of economic inequalities ( thinking here mainly of moving some utility companies back into public ownership) is viewed as Marxism? This is the most insidious reactionary nonsense; insidious as it always caricatures any suggestion of alternatives to market fundamentalism as some form of Marxism- & of course we all know Marxist ideas are evil ( I mean look at the Soviet Union).
      One thing I do agree upon is this pathological habit of ours to take on extreme views in either direction ( although I do think you let yourself down by taking on that very attitude yourself)- it’s plainly just immature & lazy ( & unfortunately never very far from our nature). We humans react with immaturity because we don’t understand how emotion works nor what it’s true function actually is ( but that’s for another day)- but what Jonathan Shafi says here concerning ‘Unionism’ is important as workers need representation & they need protection from vested interest groups, but that doesn’t mean old school socialism. One only has to look to the Scandinavian nations & their incredible robust & successful industrial model to see that alternatives do exist, are workable & combine high productivity with active union participation- maybe I’m wrong, but nowhere here do I read a manifesto for revolution.

    2. Dan Huil says:

      “A progressive future has to be a balanced one that is not based on extreme ideology of politicians or political anoraks.”

      I agree, although achieving a perfect balance, socially and politically, will always be extremely difficult, if not impossible. However, we must always continue to try to achieve such a balance.
      The union between Scotland and England has always been unbalanced: the physical differences of geographical size and population totals are obvious starting points.
      I believe the union, after three centuries of “trying”, has done little to address the imbalance within Scotland itself; indeed it has exacerbated it. I also believe a Yes result will give the people of Scotland the best chance of achieving a fairer, more balanced society.
      A No result will put an end to all hope.

    3. Muscleguy says:

      Ah yes, a moderate proposal to do what those terrible communist German companies do: have union reps on the board of the company. They are such an economic basket case the Germans, aren’t they?

      1. You’re ignoring the problem of the “extremist centre” – the result of the disappearance of politics because of the fundamental agreement between left and right over the last generation. They both agree that markets (including to a large degree financial markets) must mediate all aspects of our lives.

        The unipolar debate leaves us with no attempt to carry on the productive tension between left and right – the ‘class war’ – which produced the social democracy of the 50s and 60s, and which is the only way any change has ever been achieved.

        You cannot have ‘a balance’: trying to submerge the differences of competing interests in favour of some sort of ‘balance’ terrifies me more than the competition between rich and poor. Do you want a ‘government of national unity’? A new national party which follows the will of everyone? Because where I come from, the destruction of ‘politics’ (however horrible it is) is a form of fascism. Better we politicise the poor – rather than making excuses for continuing the rule of the rich because any alternatives are ‘extreme’. From the “extreme centre” all alternatives look like madness, when they are in fact the only way out visible.

  3. barakabe says:

    Where I live in East Kilbride, a fairly affluent town, it’s certainly very noticeable just how parasitic this form of capitalism is: endless procession of gambling establishments, from amusements to betting shops; banks, payday loan companies, or Brighthouse like shops with exorbitant APR’s; cheap takeaways peddling garbage like Greggs or Subways; Ramsdens or other cash for gold; poundlands & charity shops ( no offence to charity shops)- but none of this is anything but a visible manifestation of a take take take model of economics that put’s nothing back into society. Invariably it’s a matter of businesses organizing themselves to take advantage of the most vulnerable in society & wrestling away the little money they do have for corporate gain. That’s not to mention the privatization of every day essentials & biological necessities like heating/energy, water, basic transport, postal services etc- unfortunately we know ( after the Royal Mail fiasco) what will happen with the NHS & other public services: under the market fundamentalist orthodoxy of Westminster politicians nothing is safe.
    The scary thing is just how many apologists the mainstream orthodoxy of market fundamentalism still has in the media & the wider society- you cannot have a rational conversation with these indoctrinated extremists despite vast amounts of hard evidence that it’s a model that doesn’t work. These are people who have a near total data resistance & a pathological aversion to empiricism- it’s like having a debate with a religious fanatic. You never get anywhere.

  4. Douglas says:

    We need wealth redistribution, a citizen´s polity, and degrowth not more growth…what is all this growth nonsense about? That is not the question. The question is: who gets the “growth” there is? And if we redistributed wealth and actually got some degrowth, would anybody outside the richest 1% notice?

    No, of course not…

    Ergo….growth is a meaningless term, it says nothing: some rich people get richer and can afford to hire a butler while the poor get poorer. Great….Growth is an idealogical term.

    But of course, it is also a legacy of the past. When the post war societies emerged in Europe, the emphasis was all on consensus, not making the mistakes of the past by turning society into an arena of winners and losers, and so growth was really for all, albeit not in equitable proportions. And then came the glorified shopkeeper to power and everything changed, the one whom Gordon Brrrrrroooooooon of the former Labour Party. the man who abolished boom and bust just before the biggest financial meltdown in 80 years, argued should be given a State funeral.

    Let´s remember, the huge sacrifices that were made when the Welfare State was established. The country was bankrupt, there was food rationing in place, but most importantly, there was a social ethic abroad, even in America. We should be proud of our grandparents. They were smarter than we are…And now the Tories and Labour are telling us “we can´t afford it”.

    The British press are a coterie of serial liars and crooks; half the press corp and almost all our politicians should be put on trial for systematically misleading the public ….is serial lying in public a crime? If not, why not?

    Cancer is a form of growth, and so, of course, is growing up. ´

    We know fairer societies make people happier. What are waiting for?

  5. G. P. Walrus says:

    “Our industries should be run by trade union labour”

    Er, no. While I agree with the author’s identification of the problem, trade union labour running our industry is not the solution. Trade unions are unrepresentative power blocks run by exactly the same sort of unaccountable oligarchies running big business. Why change one lot of useless bastards for another?
    We need flexible participative communities running all our institutions at all scales. No more vested interests in charge of social and common capital resources.
    Common Weal comes closest to what I see as the way forward but the language of left and right is outdated and unhelpful. Nineteenth century ideologies do not cut it for 21st century problems.

    1. Thanks for all the comments on this. On trade union labour – the point is that every worker has the right to organise as part of a union, including in the private sector. In-fact this is not simply about economic leverage but about democratic rights, healthier working practices and increasingly better conditions. It is an argument for a re-birth in a genuine labour movement as part of a process of creating an economy based on need and long term planning/investment. Reading the article back, I must admit to the fact that a very significant factor has not been dealt with properly – green and renewable energy. Investment into this industry could form a ‘green new deal’ which could overhall our thinking about our environment and use of resources as well as providing well paid jobs. That’s an article for someone far better qualified than me to write – but the over riding message here is that big finance is contradictory to increasing peoples real living standards.

  6. An interesting analysis of difference in household spending differs between the ‘regions’

  7. evan says:

    All Scots need to read Jane Jacobs’ book titled “The Question of Separatism, Quebec and the struggle over Sovereignty”, Montreal,1980,Baraka Books….Especially chapter 3, titled, “The Secession of Norway from Sweden”!!!

    Do not let them use the fear argument…Scots, look around you and find the socio-political examples of societies that the mainstream media do not refer to, in case all the other societies wake up!!!

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