A moral economy

The economy will be at the centre of our politics as Labour attempts to win back electoral support from the SNP and starts to rebuild credibility and authority in Scotland. Labour needs a social democratic agenda that illustrates the importance of the social investment state and the social partnership model, which has been very successful in a number of European countries and, in particular, the Nordic experience where “happiness, humanity and hope” are more evident than in Scotland. 

Can Labour in Scotland develop a coherent social democratic governing philosophy of the economy? It can, by reaffirming that it is a social democratic party and should embrace a number of political, essentially ethical, principles. Labour’s approach to the economy should be based on the politics of moral engagement which are not only more inspiring but a more promising basis for a just society. The common good, based on fairness, equality of opportunity, inclusion and realising potential, is a combination of traditional Scottish values.

This idea rejects the view that society merely comprises atomised individuals; instead it accepts we should live as citizens, deeply embedded in social relationships. Within this context and the fairness, justice and equality agenda, Labour has to have a national debate about the moral limits of markets. Their role in public life and personal relations as well as which goods should be bought and sold are key questions that require discussion. Otherwise, we are in danger of drifting from a market economy to a market society. 

"Scotland and its economy cannot prosper unless we recognise that our 80/20 nation is not sustainable." 

For far too long we have failed to recognise that most so-called economic issues are moral and political questions. We can’t continue to expand markets and market reasoning into spheres of life traditionally governed by non-market reforms. Markets are useful instruments for organising productive activity. However, unless we want to let the market write the norms that govern social institutions, we need a public debate about the moral limits of markets and market-orientated thinking and reasoning. 

In Scotland the gap between the rich and poor has grown in recent decades. Yet inequality has not loomed large as either a political or economic issue in contemporary politics despite the great gap between rich and poor undermining the solidarity that democratic societies need to remain stable and cohesive.

Labour needs to develop an economic model as an alternative to the market liberal strategy of coalition thinking at Westminster. Scotland has scope to develop the model of the social investment state. While the SNP has espoused many of its aspects, Labour is well-placed to argue for a comprehensive approach to a moral economy, especially if it contains a greater commitment to tackling inequality, the most divisive issue in Scotland and potentially the most destructive.

The SNP has embraced social justice, reflected in the First Minister’s very public statements on the issue and the creation of a cross-departmental ministry to oversee how this can be tackled more effectively. A revitalised Labour Party in Scotland could argue for a deeper philosophical embrace of social justice, running with the grain of Scottish society and promoting their case as inspired progressive centre-left politics rather than the more centrist populism of the SNP.  

Labour needs to establish the links between social and economic policy in the wider context of social democracy and social partnership and reject the market logic of low wages, low taxes and light regulation which, inevitably, leads to low levels of public service and growing income inequality. It needs to construct a new narrative for the economy, combining the values that fired Labour over a century ago with the ethics and values of a new and progressive era.   

However, let’s not underestimate the progress that has been made in Scotland and the positive divergence from Britain that has occurred in our approach to the economy. Rightly, we remain committed to the idea of building a sustainable economy, the importance of this being based on renewable resources and the need to tackle the growing inequalities of income, wealth and opportunity. Education and learning are crucial to maximising our economy but we need to tackle educational inequalities too, particularly the very uneven provision of educational opportunity, the impact of generational inequality, the lack of social mobility, and the obvious geography of modern-day poverty. 

Scotland and its economy cannot prosper unless we recognise that our 80/20 nation is not sustainable. We are wasting our talent and the hopes and aspirations of us all if we carry on as we are. The Scottish Government is right to prioritise social justice and an economy based on fairness. But at a time of punishing austerity, hostile attacks on public expenditure, little debate on the morality of markets, an increasingly selfish and atomised society and a grotesque low wage economy, we need new thinking and more investment, though we also need new political ideas, a greater sense of urgency and inspired leadership. 

Education, learning and the development of human capital are the driving forces behind any concept of a modern, successful and fair Scotland. Our greatest renewable resource is human capital. Our long-term future as a nation depends on how serious we are about embracing this idea, increasing our investment in the development of human capital and acknowledging the common sense belief ‘that a mind is a terrible thing to waste’.