I
In Germany Gerhard Schröder's government came in for stick by handing over awkward policy areas to consultants. This was called the Beraterrepublik - a joke only understandable in German because the word resembles Räterepublik, German for 'Soviet'. McKinsey Man had taken over from the commissars. Similar stick has been flung at 'Wendy's Magnificent Seven', tempted over the pond by fat fees to prescribe for the Scottish economy before an - invited - audience at the Fraser of Allander Institute at Strathclyde. The exercise was probably less expensive than the exactions of Ernst and Young or McKinsey, but does it replace a general survey on the lines of Sir Alec Cairncross's, now over fifty years old, or prescribe for the sweep of economic and social policy, as James Bowie did in The Future of Scotland (1939)?
The price at £29.95 is deterrent, though the whole thing is available online at <www.fraser.strath.ac.uk/Allander> with the bonus of a response by Adair Turner, former chair of the Confederation of British Industry. In fact, the on-line version is the better bet, as you can use the search function on your computer to pull out information. Alexander's funding, from Scottish Power, has not run to an index, surely essential in this sort of book.
II
First we have Paul Krugman of New York, the nearest US economics has to Michael Moore, doing a quick tour d'horizon. Scotland is no better and no worse than other industrial regions, although it has evidently missed the bus that the Irish caught, and should not expect it to turn up again. Its advantages lie in the social overhead capital deposited by the older industrial order, notably the public transportation system. Not so, says the second contributor, Edward Glaeser of Harvard. Public transport only encourages losers to cluster round rust belt cities doomed anyway. Scotland is too northerly, too cold. (So are thriving Stockholm and Helsinki. We are paying money for this?). Glaeser's answer lies in low-density sprawl, the 'exurbia' which is creeping from Chicago westwards to Denver. Adair Turner, unsurprisingly, recoils from this in the English south-east though admits it may have its advocates among the SUV-fans who will descend on the proposed M74 extension. He does however emphasise the fact that increases in US productivity have little to do with manufacturing, or indeed innovation, and a very great deal to do with thinning down - 'Wallmarting' - the labour force/middlemen in retail services, something which Gordon Brown is notably coy about admitting.
Central to this book - yet unanalysed - is the definition of growth. A qualitative definition of growth was central to economic theory from Smith to Marshall, and stimulated the critiques of Ruskin and Shaw. Keynes' argument for Mandeville - useless expenditure could be positive in that it boosted the economy - has not suffered the destructive critique levelled at his other ideas. An expansion in casinos, in security services, in hospital A & E treatments of natives carving one another up: all these would currently register as 'growth'. Yet their net effect would be negative. Much of British 'growth' - as Prof Ian Oswald, another non-appearer, has pointed out - is this sort of thing, and pretty illusory. 'Real' growth still means in Smithian terms a net addition to social capital, to the life-chances of individuals and groups.
III
Much the longest essay is that of James J. Heckman (Professor of Economics at Chicago and thus inevitably a Nobel Prize-winner) on work-skills. Most of this is devoted not to a smart successful Scotland but what seems a dim and disorganised one, for which, according to Heckmann, little can be done apart from giving the rich more money and more freedom to spend it. Do I exaggerate? On page 139, a paragraph attacks the conventional compensatory means of equalising opportunity, stressing
… another type of borrowing constraint: the inability of a child to buy the parental environment and genes that form the cognitive and non-cognitive abilities required for success in the school and labour market.
Roughly translated, this means: 'the poor have it in their genes and there's little we can do about it'. Unsurprisingly, Charles 'underclass' Murray has already popped up, arguing that nature matters more than nurture and dim girls will breed. As to the fate of their offspring, though Heckmann does not follow Murray to his conclusion in a recent Telegraph article, he implies the same: 'the only thing to do is to build more prisons.'
That wise old Tory James Bridie in A Sleeping Clergyman in 1933 took apart such eugenicist pretentions, usually used to conceal removable causes of disadvantage: poverty, low wage jobs or unemployment, and the pervasive culture of institutional dysfunction produced by ghettoisation on one side (from the loathsome culture of hip-hop to oor very ain Old Firm's merchandising of hate) and the increasingly antisocial behaviour of the USA's and UK's megacorporations on the other. But defensiveness seems to transfer itself to Heather Joshi and Robert Wright in their study of Scotland's birth rate, where they see the qualified failing to have children and the losers being unhelpfully fecund. Single mothers are linked to social disadvantage/disturbance, but is this case proven? Matriarchal societies, like the Afro-Caribbeans in London, have registered great success with female offspring. Bill Clinton, Karl Rove and David Davies are from single-parent families. The problem is much more likely to radiate from feckless or distracted males. 'In Scotland the golf club is as big an enterprise-killer as the baseball cap. Discuss.'
IV
With Jeffrey Baumol's essay on innovation and technology transfer we get real, perhaps because he seems to have worked through it with the Strathclyde team. He identifies Scotland's relative advance in university-driven research, and the failure to influence the private SME sector to advance at a similar rate. He is no less forthright about the negative consequences when the market, left to itself, favours 'rental' occupations rather than enterprise. By this he does not only mean Scotland's notoriously obese public sector. The bureaucracies of big firms - law, accountancy, the banks - are equally absorbent, and probably have been so since the traumatic collapse of war-swollen industry in the early 1920s. What he argues for is a pro-active state role in acquiring technological know-how and expertise from abroad, guaranteeing against this being exported by retaining the graduates thus assisted to work in Scotland for a period of up to five years after their return.
This is sensible, but does he go far enough? Scotland has a severe, perhaps fatal, deficit in the process-engineering area in which high technology (computer-direction) can be combined with conventional technology in areas like transport and the environment. In this, there is no substitute for having well-trained flexible manpower to hand. But this is something we have not got, not because of some impersonal forces but because so much of it went offshore in the oil boom. Repatriating it, with all the expertise it has gained, ought to be a priority, but Paul Hallwood and Ronald MacDonald in their study of 'Fiscal Federalism' dismiss out of hand any precepting of oil revenues for Scottish purposes. They were speaking before oil prices went through the roof: something that might make a hard-wired 'independence plus Scots-Norwegian North Sea oil monopoly' strategy plausible.
V
Dream on? But the trouble is that New Wealth's coverage of the Scottish economy is too narrow to sustain strategic debate. There is nothing on our elephants - the giant companies nominally housed in Scotland, such as the Royal Bank, Standard Life, Scottish and Newcastle - and their effect on the economic landscape. Nor of such post-privatisation outfits as First or Stagecoach or the power concerns: though major confrontations are looming over the replacement of the ageing nuclear plants which supply 60% of our electricity, and over our overloaded transport infrastructure. Nor is there an audit of 'non-market' Scotland. Nicholas Crafts is properly critical of a lazy public sector, and of the 'quick fixes' of targets and task forces which usually make matters worse, but surely attention ought to be given to the potential of local government under PR, co-operation (which has done pretty well, in retail practice as well as internet principle), and the trade unions.
As to the downside, no mention whatsoever is made of our black economy, largely stemming from a drug problem which is three times the European level, and its commercial spin-offs, which may add up to more than our income from agriculture and fishing. Most worrying of all, not a single one of the contributors comes from a European background, despite our dependence on EU institutions, EU tourists, EU investment and EU export markets. At best this will deny us a few brownie points in Stuttgart or Grenoble; at worst it shows the crippling nature of our language deficit, and hints that the orientation of our élite to the USA stems from intellectual laziness, not enterprise. English is not, repeat not, the lingua franca of the skilled technicians who transform mass-produced components into a TGV train or combined-cycle generator, but we have an élite which seems to believe this, and whose itineraries confirm it. A Scottish Enterprise insider told me that of the two last directors, the first had been across the pond fourteen times and to Europe once, and the current one had yet to cross the Channel.
The ultimate irony is that our own people are more original than those so expensively engaged, only their distance from orthodoxy rules them out. Joanna Blythman, surveying in Shopped (2002) the mess that supermarkets are making of the food chain - and think of them as a huge chunk of the service economy - presents as vivid and compelling an argument from fact as great Adam Smith himself. Pat Kane's The Play Ethic(2004) goes back to the roots of the Enlightenment sociology of Adam Ferguson and the humanism of Patrick Geddes to argue that play - Schiller's spieltrieb - as much as work ought to determine our life-choices. One could even throw Ian Rankin in, to show the dominance of crime within Scottish social life, at perhaps 3% of GNP. There are individual successes in the Allander lectures, but they are trapped in a mid-Atlantic conformism which is ultimately stultifying. It is high time we got out.
August 2005
Christopher Harvie, Professor of British and Irish Studies at the University of Tübingen and Honorary Professor of History at Strathclyde, was not invited to Wendy's party, and accordingly sat in a remote turret, preparing his poisoned spindle. It is called Mending Scotland (Argyll, 2004, £6) - an exercise in gonzo economics which he thinks hits more buttons on the Scottish predicament than the above, and costs a fifth of the price …
(online 21 August 2006)
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