Gregor Gall: Justice and prosperity can go together

MONDAY this week saw the awakening of former prime minister, Gordon Brown, from political hibernation.

Neither Mr Brown nor Ms Sturgeon set out a social democratic perspective on Scotland's future. Picture: Getty

As one of Labour’s big guns, he entered the fray on the independence debate substantially for the first time by speaking at Labour’s own “save the Union” campaign called “United with Labour”.

Later the same day, Nicola Sturgeon, deputy First Minister and, in effective, minister for the Scottish government’s independence campaign also made a significant contribution to the debate.

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In making the case for the Union, Brown argued: “There are equal social, political and economic rights for people no matter which community you live in, no matter whether you are in a poor area or a rich area of the country… pooling and sharing of resources [means we can be] in a position to tackle poverty, unemployment together.” He cited pensions, national insurance contributions, funding of health care and the minimum wage as examples of what is possible under the Union.

But he also warned about an independent Scotland competing with other parts of Britain and elsewhere in a “race to the bottom” on corporation tax and attracting overseas investment.

Addressing an SNP gathering, Sturgeon made the case for that the current welfare state in Scotland can only be saved by independence. In other words, Scotland could escape the clutches of Westminster and the Tories. She argued that a fairer and more prosperous Scotland could ensue whereby no tax rises would be needed because economic growth would – on its own – raise additional revenue to pay for welfare.

So, on one single day in the independence debate, it seemed that social democracy was alive and well. Indeed, no matter the outcome of the referendum on 18 September 2014, it would seem social democracy would win as both the main political parties, Labour and SNP, set out their social democratic stalls.

But looks can be deceptive. Neither Brown nor Sturgeon set out a social democratic perspective on Scotland’s future. What may seem like social democracy was, in fact, merely a tinkering around with a deregulated market system called a liberal market economy.

Social democracy is quintessentially defined by the state intervening in the processes of the market in order to ameliorate the inequalities of its outcomes . In addition to public ownership of natural monopolies like transport and utilities, the market would not be allowed to operate in education, health, and childcare.

This doesn’t mean there is no longer a market operating that produces the good and services that we consume. But it does mean that even here there is regulation.

Further instances of what social democracy could entail include maximum wages, for example. Even at John Lewis and Waitrose, where all employees are partners in a partnership, the chief executive earns 60 times more than the average employee. A maximum wage would see a ratio of, say, the top earner’s income being no more than 20 times that of the lowest. A wage policy based on solidarity would be another, where the tax system is used to redistribute wealth within society.

The return of mutuals like building societies and retail co-operatives could also play a big part in reconfiguring the economy away from domination by finance capital and the big supermarkets. Of course, supportive public policy would be needed to affect this change.

In other words, a myriad number of steps would be taken to socialise the economy in order to make it more civilised and democratic. These would comprise structural changes to processes and institutions.

What Mr Brown and Ms Sturgeon envisage – in their different own ways – is a means of making existing markets more competitive and productive so that the cream can be skimmed off the top and spread around to the less fortunate in society.

Laudable though that is, it fundamentally leaves powerful vested interests unchallenged. It is these very interests that determine the how and why of the economy we all live under as well as who benefits from it.

And there is nothing in Mr Brown’s or Ms Sturgeon’s ideas to stop the economy from operating like a casino with great highs and great lows. In the times of great lows like the current prolonged period of recession, the vested interests will not allow their wealth to be taxed in order to provide the means of reflating the economy. Instead, they will compel the worse off to make sacrifices.

Both Brown and Sturgeon have submitted to the managerialisation of politics on the economy. Issues of redistribution have been taken off the table and growth is now the only one left.

They are not alone in this. David Cameron’s “big society” was based on the same premise. Ed Miliband’s “responsible capitalism” was cut from the same cloth. Both came and went.

This is what makes the work of the Jimmy Reid Foundation so apposite and, potentially, influential. Since its launch in 2011 – a year after the death of Reid, it has set out a range of political and policy alternatives to those of the mainstream.

These have come together in its idea of a “Common Weal”. This is a model for the economic and social development in Scotland based on co-operation and mutual benefit and not competition and social exclusion.

The “Common Weal” seeks to look at the success of the Nordic countries in balancing economic prosperity with social justice – or social justice with economic prosperity – and relate them to Scotland.

• Gregor Gall is a professor of industrial relations and a member of the Jimmy Reid Foundation.