The concept of the wellbeing economy has of course been around for some time. It describes an economy which is designed around satisfaction with the meeting of basic as well as quality of life needs, reducing systemic inequality and working within planetary boundaries. The wellbeing economy requires the delivery of sufficient productivity in ways which are as far as possible compatible with these aims.
The Scottish think tank Common Weal has essentially been writing about the wellbeing economy for the last ten years, covering many of the policy area reforms that contribute to achieving this. Ideas mostly for after Scottish independence, but some of which can be begun now compiled in a library of policy papers.
More recently the campaign group, Believe in Scotland has begun to champion the wellbeing economy. Polling they have commissioned, indicates that a commitment to achieving a wellbeing economy and to uplift state pensions would significantly boost support for Scottish independence.
There seems to be a general consensus that Scotland wants a wellbeing economy even from those who don’t yet support independence. The SNP government also supports a wellbeing economy. The lack of economic levers and policy powers available under the devolution settlement suggest that only after independence could significant progress be made towards creating one, across the board. Westminster based parties show no intentions of fundamentally changing our current systems.
Wellbeing economy without evidence and strategies is just aspiration
However, saying we are going to have a wellbeing economy isn’t enough. The answers need to be there in any independence campaign, for those sceptical about how it is to be delivered, to get to the point of independence. It seems foolhardy to say ”all policy decisions can wait until after independence”.
A wellbeing economy is merely aspiration unless we have identified and prioritised preparing and putting in place the optimum tools and conditions to achieve it. It isn’t sufficient to say “we will grow the economy and that’s how we will have a wellbeing economy”. We need to know whether the conditions under which our economy will operate are conducive to policy leading to wellbeing.
We need to explain the issues in straightforward, digestible terms to the electorate, bearing in mind that the aim is to convince at least 10% of voters to move to independence. We need the already convinced, to be able to articulate the plan to the undecided. A prospectus that voters can understand and trust will lead to a wellbeing economy and that only independence can deliver.
An independent Scotland must support intense public spending
After independence we will not be like most normal independent countries, we will not just be concerned with the day to day running of Scotland, we will be in ”establishing our nation” mode. It is impossible to say how long this phase will last.
However, certainly it will be a period of intense public spending: building infrastructure, putting in place Government departments, investing in our key industries as part of our national economic strategy, fully or part nationalising utilities, training our workforce, restoring our NHS and care sector, developing our own defence and international trade policies and a myriad of reforms that could support a wellbeing economy.
In order to support this public spending, Scotland must increase its productive capacity to absorb the extra currency spent into the economy; i.e. that supply is able to keep pace with demand. This is how we reduce the risk of inflation. Scotland is fortunate to have an abundance of natural resources which can be mobilised, most effectively issuing our own currency, to build and increase our productive economy. This means we can make different spending choices than some other newly independent countries with fewer resources, and we need to recognise this and utilise our advantages.
To be able to decide the stake the state will take for the people of Scotland and for our benefit, the state must have the flexibility to decide the scope and nature of that stake and issuing our own currency gives the greatest ability to do this. The alternatives are an over reliance on foreign inward investment and private/corporate sector financing. These are the very same extractive systems and inequality drivers that we are seeking to escape by becoming an independent nation. Surely, a regulated mixed economy, conducive to a wellbeing economy, is what we have stated we are aiming for, isn’t it?
Knowledge of differences in using own and foreign currencies
We need to understand the different conditions and capabilities that determine our palette of choices using our own currency as opposed to using the currency of another country.
The October 2022 SNP economic paper sets out their plans for the economy after Independence. The currency plan is to continue to use Sterling “for a period” after the transition period ends, but there is no clear timeline for how long that will be other than vague notions of testing our readiness to introduce our own currency. There is good reason to believe that the conditions they are expecting to observe before the currency is established, are the very ones that would arise as a result of introducing our own currency.
Most economists recommend that an iScotland adopts its own currency. Currency sovereignty is what enables us flexibly, and without recourse to the monetary policies of another country, to shape and invest in our economy. This would be severely reduced if we were using a foreign currency, diverting too many of our resources and distorting our economy to earn the currency to pay off foreign currency debt arising from borrowing, including interest rates we don’t control. Not to mention that without a currency issuing central bank in place after independence, our economy would have no lender of last resort which would render us vulnerable to any domestic or international crises.
There is a risk that Westminster could threaten to disconnect Scottish banks from the U.K. payments transfer system, which would seriously hobble our economy. Even if Westminster did not follow through on the threat, it may be enough to sow enough anxiety to prevent people voting for independence as did the refusal to agree to a currency union in 2014. Why take this chance again?
For all of the above reasons, it is unrealistic to believe that Scotland will be able to commit to the extra spending it needs to invest in building our nation and productive capacity, day to day governance and a wellbeing economy while using the currency of another country.
Not to mention the fact that the Scottish Government, like most governments for the last 40 years, is maintaining a narrative that fails to take into account the profound differences between the capabilities of a currency user with those of a fiat currency issuer that is overly concerned with reducing deficits and “balancing the books”. This is counterproductive to all stated aims and requirements of the early years of independence, and while pertinent to a currency user, is unnecessary for a currency issuer.
Preparedness for delivering a wellbeing economy: own currency and effective policies
To give the best chance of delivering a wellbeing economy in the shortest possible timescale, the Scottish Government should begin planning now for our own currency by preparing legislation for a central bank and currency to be passed immediately upon a vote for independence. By beginning planning for the institutions and systems to run our economy, we can make best use of the 2-3 years of the transition period to ensure we can respond to whatever decision a newly elected government of an independent Scotland takes; be it immediate introduction of our own currency or to delay.
Many reforms pertaining to a wellbeing economy need to be being formulated. Areas such as land reform, food and renewable energy development and self sufficiency, banking and finance regulation. Policy is constrained in scope by our ability to spend on behalf of Scots. Our own currency gives agency to policy under the most manageable and flexible circumstances. Obviously, our own currency isn’t enough to guarantee success on its own and good policy is essential to good outcomes.
Debate among stakeholders and campaign groups is essential
There is a lot of talk about the wellbeing economy at the moment but not enough official Scottish Government substance yet on the things we can and need to prepare now, despite much being written by various groups. We need, as a matter of urgency, to facilitate debate between stakeholders in society along with policy, expert and campaign groups to decide together our best alternatives and outcomes.
During a campaign for independence we can be sure that the questions about how we will pull off a wellbeing economy will be asked by those willing to be convinced as well as repeatedly by those who would seek to stop us. Let’s have credible answers ready, so we can win independence this time. Let’s show the world how a wellbeing economy is achieved.