Socialist Worker

Scotland's currency row masks ruling class fears of independence

by Carlo Morelli
Issue No. 2416

Alex Salmond

Alex Salmond


The first televised debate about Scotland’s coming independence referendum took place last week between Alistair Darling, representing the Better Together campaign, and Scottish first minister Alex Salmond.

It generated a media storm over issues of “who won” and the future of the currency in an independent Scotland.

There is a level of panic setting in among the British ruling class who are desperate to avoid losing the vote in September’s referendum. This explains the media scare stories about the weakness of an independent capitalist Scotland. 

Polls show that a Yes vote is a distinct possibility. This is because each of the arguments put forward against independence fall apart under scrutiny. 

Salmond could easily have pointed out that even David Cameron recognised that an independent Scotland would remain a rich nation. Scotland would be the largest producer of oil in Europe and one of the two largest gas producers.

Even the right wing Economist magazine has had to change its tune and beg voters, “Don’t leave us this way.” 

So why is the future Scottish currency such an issue? 

Scotland already has its own currency. After independence the government could choose to fix its exchange rate to sterling or the euro or simply let it float as a separate currency. 

It could choose to set its own interest rates, or link them to those set by the Bank of England or the European Central Bank. This would not be particularly radical, nor would it be a threat to capitalism in and of itself.

But the future of the Scottish currency is symptomatic of the extent to which an independent Scotland will tackle inequality, poverty and austerity. 

If Scotland retains the pound but allows the Bank of England to set interest rates then the scope for a Scottish government to abandon Tory austerity policies will be diminished. But if it was to abandon Sterling, it could open the door to radical reforms.

Powers

Only if Scotland makes its existing currency independent of sterling will it have the powers to address taxation, welfare and government spending.

This is what prevents Salmond from answering the question of what will happen to the currency following independence. He worries that Scottish capitalists will believe they cannot continue with the attacks on working class living standards that have been taking place under the Tories. 

However the independence vote is not going to be won, or lost, on how great a capitalist economy an independent Scotland would be.

The debate is pulling in large numbers of people, overwhelmingly from working class communities, to discuss what they want independence for and how Scotland can be different. At the top of this agenda is to end austerity, inequality, oppression and war.

Opposition to Trident nuclear weapons is understood as providing the resources to develop a better society. And oil wealth as providing taxes that can be directed to the benefit of the people, rather than the profit of the City of London or Edinburgh’s financial centre.

These desires are at odds with the Scottish National Party’s (SNP) vision which seeks to embed austerity into an independent capitalist Scotland.

The SNP want to retain Sterling and have the Bank of England set interest rates.  They want to accept British government debt and stay in Nato.

All of this is to ensure that capitalist accumulation continues as normal, but under a Scottish flag. After independence there would still be Scottish bosses pushing through cuts.

But because the Yes campaign contains a strong working class demand for an end to austerity a Yes vote can act as a challenge to the current capitalist system. 

The independence campaign is currently raising expectations for change, and whichever way the vote goes in September these expectations will continue. 

The Yes campaign’s current leaflet to every household demonstrates this. It covers childcare, equality, pensions, education and community all before mentioning businesses.

This is because it is the working class vote which will determine the outcome of the referendum and why socialists should favour a Yes vote.

 


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