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Jettison conventional wisdom

Bill Butler MSP on prospects for a new Scotland

T

he malaise affecting the world economy is complex and threatening. There is no ready made policy prescription which can offer an obvious cure. Radical treatment will be required if the patient is to be restored to a healthy state.

There can be no doubt that the world is in the grip of the most severe economic crisis since the Great Depression. The Labour Party and wider Labour movement must fashion a response which protects the immediate interests of working people, and starts to shape a popular, distinctively Labour policy programme to meet the colossal challenges which lie ahead. Unemployment is rising, homes are being repossessed, house prices are plunging and consumer spending is waning. Confidence in an unregulated market economy is at rock bottom. And with good reason. The globalisation of a largely unrestricted free market has produced an increasingly insecure and unequal society. As Professor Prem Sikka of the University of Essex notes:

“Income and wealth inequalities have condemned many to a life of perpetual insecurity. The most recent government survey showed that in 2003 the country's wealthiest 1% owned 21% of the wealth and the wealthiest 50% owned 93%.”

It has not proved possible for the 'credit crunch' to be contained within the financial sector; instead the crisis has spread across the real economy and the living standards of working people are now under unprecedented pressure. Mervyn King underlined the scale and severity of the crisis on 21st October last year: 'It is difficult to exaggerate the severity of…events. Not since the beginning of the First World War has our banking system been so close to collapse.'

Radical measures have been taken by the UK Government: billions have been spent to bail out the banks. Many in the Party, such as John McDonnell MP, have called for an even more fundamental change of tack. He calls for 'a new structure of global economic governance….an end to trade policies which are tied to deregulation, liberalisation and the privatisation of public services. And…agreement that every nation signs up to the ILO conventions on…Labour standards…so workers have the basic protections needed as recession sweeps the globe.' I tend to agree that such a profound change of course is needed. Labour must jettison the 'conventional wisdom' of the past fifteen years. This is an orthodoxy which has at its core a belief in the primacy of the market, the 'inevitability' of economic growth based upon the easy availability of credit, and the promotion of a reckless level of lending on an unsustainable scale.

Given an SNP administration uninterested in combating poverty and promoting equality and the global scale of the crisis, what can Labour in Scotland do in the short to medium term to develop a practical, socialist policy programme capable of winning a broad base of popular support for radical social and economic change? The suggestions sketched below are neither prescriptive nor exhaustive. They are merely a starting point for discussion as we prepare for the electoral challenges to come.

Firstly, although regulation is a reserved matter Scottish Labour must play a part in rebalancing the economy. The STUC stated in 2008 that: 'Finance should support the wider economy, not destabilise it. Despite light touch regulation, the UK financial sector has become no better at supporting the productive sector. The share in domestic lending going to manufacturing declined from 5.2% in 1999 to 2.3% in 2007.'The STUC and STULP have both argued that a Scottish Investment Bank should be established to overcome market failure and stimulate new investment. Such a fully fledged industrial development and reconstruction bank could, and should: Provide grants, loans and equity to fill funding gaps; Assist in unlocking funds from private providers of capital and tailor U.K. and European programmes to fit Scottish needs and economic conditions. Policy guidelines for the Bank should be set by a management board reflective of Scottish society. Manufacturing must be central to economic recovery.

Secondly, there must be a reversal of the SNP's funding squeeze on local government which has resulted in a pattern of service reductions and job losses during 2008-09, and is set to intensify in the coming financial year. The scale of savings is much greater than the 2% target built into the SNP's spending plans, and may well result in crude short-term controls given the lack of budget flexibility caused by the council tax freeze, the consequence of which will be further cuts in jobs and services.

Thirdly, we need a drive towards greater investment in affordable, public sector rented housing to allow tenders and contracts to be put in place with Scottish builders.

Fourth, is a national skills strategy which will deliver a resilient framework to support Scottish workers, a strategy which will include restoring adult apprenticeship numbers to at least 2007-08 levels. We also need the re-regulation of the bus network, the implementation of strategic transport projects such as Glasgow Crossrail, a public building programme which relies on traditional procurement practices and develops alternative strategies to PFI/PPP, a root and branch reform of the Council Tax and the taking back into public ownership of the railways.

The above policy proposals do not represent a panacea. However, they would make a positive difference, in very difficult times, to the lives of ordinary people across Scotland. They would provide in the short-term a basis for an alternative way of organising society, one which favours working men and women. The late Bernard Crick put it well. He said 'serious [socialists] should not promise more than they can fulfil in the short term. The short-term is the period of building a base and support for social change. Short-term legislative measures must respond to immediate problems and be popular…but short-term measures should be consistent with middle-term theories about how to achieve long-term goals, such as an egalitarian society.'