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Stories from the Scotsman
The whole world in Scottish hands

Who owns the global economy? It lacks human ties, shows no loyalty to any country, workforce or product.

Like the Proteus of Greek myth it takes what shape it wants, at what time it wants, in what place it wants. And it does so with little reference even to those who hold shares in the multinational companies. Everything is in the hands of managers, of chief executive officers who themselves seem to think a couple of years with one company is quite enough before they shoot off for still more stupendous rewards in another. The global economy is a metaphysical entity, everywhere and nowhere at once.

It is mainly American. But as with many American things we can seek Scottish origins for it, and find that the metaphysical Scotland of old has left in it some tangible traces. By metaphysical Scotland we mean Scotland after the Union of 1707, the country which had ceased to be a state but had not become a province. The nation itself was colonised while colonising others; the people wandering the world but rooted in their native earth, with big ideas which they could not realise for themselves but made real through humanity. Metaphysical Scotland, too, was everywhere and nowhere at once.

Adam Smith makes its perfect patron saint. He spent much of his life at home with his mother in Kirkcaldy, so perhaps was not diverted by too many excitements. Anyway, there is nothing in his books to tell us where they were written or what prompted their writing. Except for the odd, brief reference, not just Kirkcaldy but Scotland altogether are missing from The Wealth of Nations. It is a disembodied argument addressed to mankind.

Yet it does reflect the history of a nation which before 1707 had been closed in on itself, but by 1776 was open to the world. Scotland offered an exemplary case of the blessings of free trade, even if too small a case to be worth mentioning. What had happened in Scotland helped to lay down the intellectual framework for the global economy we live in more than 200 years later.

Metaphysical Scotland was good at these mental constructs. In 1707 most people, and most states they belonged to, were convinced that to be rich they had to have gold. They devoted immense energy to accumulating gold, without necessarily always feeling rich in consequence. Scots had no gold, so did not have to bother about this.

They had other things, perhaps unimpressive to foreigners: land, produce, brains and hands, as well as ideas of how to create wealth. Some value could be assigned to these, the value could be written down and then traded. This was how Scots invented modern paper money and the credit underpinning it. Without a credit system, we would have no global economy.

Until metaphysical Scots took a hand, a man was inseparable from his business. He founded a factory with his own money, and prospered with it. But if it went bankrupt, so did he. The problem waxed with the scale of capitalist enterprise, and the demands for more investment than any one person could provide. In crises, whole communities could be ruined.

It was Scots law that proposed a distinction between a business and its owners, so it could go bust but they need not. This allowed the formation of partnerships into and out of which the partners moved as they wished, so the partnerships might long outlive their original founders. Some are still with us - James Finlay, the oldest, dates from about 1745. There are others disguised today as joint-stock companies, which is just a statutory form of that novel type of economic organisation the Scots first invented. Without it, again, there could be no global economy.

Equity is a form of property, and rights to property are normally exclusive. When the Spaniards conquered Latin America, they took it as their right to keep all foreigners out - that was one of the problems for Scotland’s Darien Scheme in 1700. The English also kept foreigners, including Scots, out of their North American colonies. This was not behaviour Scots could hope to emulate. They had no armed forces equal to conquering territory overseas, and no surplus of people to occupy it. Their answer was Darien: an emporium where anyone could come to trade and nobody was excluded. Darien failed. But Scots still liked the idea.

Once the Union solved the political problem, they tried it elsewhere. Hong Kong was founded for the sake of Jardine Matheson, the original drug barons, and Singapore for the sake of Guthrie’s, today the world’s largest owner of plantations. Calcutta and Montreal were already there but Scots built them up as huge emporiums for manufactured products and raw materials. Hong Kong is the most metaphysical of these. It now belongs to China, but in a sense it also does not. Perhaps it is better to think of all such cities as successful Dariens. Without commercial centres of that kind, we would have no global economy.

A global economy needs not just commercial centres but also links among them. Until Scots moved in, the world’s shipping was run on naval principles. Convoys brought the wealth of South America to Spain, or of India to England; goods to enrich the mother country, again exclusively.

It was Scots that first hit on shipping lines, metaphysical lines that any schoolboy could find on a map (Glasgow to Cape Town, 5739 miles) though no sailor could see them on the oceans. The concept entailed regular runs to distant ports by vessels which were theoretically empty, but therefore open to everybody - for traders to buy space or passengers berths. All the great imperial shipping lines of the Victorian era - Cunard, Peninsular & Orient and British India (now Inchcape) - were founded and run by Scots who, in turn, made Clydeside the world’s biggest builder of ships. Without those shipping lines, we would have no global economy.

So to the question who owns the global economy? It would by no means be ridiculous to answer that Scots own it, in the sense of having furnished many of its basic ideas, ideas which we now take for granted but which were brilliant innovations in their time. It has to be said, all the same, that the global economy seems to have let us down lately. It no longer brings us the material rewards we consider as our due. Other nations prosper far more from the ideas we gave them. What has gone wrong?

Is it just a matter of Scotland being a small country? That can hardly be so when many of our richer rivals are no bigger, or only a bit bigger. One measure of success for a country in the global economy is how many headquarters of multinational corporations operate from its soil. In Scotland, we have none, except one or two financial institutions, even if a couple of privatised companies display ambitions. Holland, Sweden and Switzerland all house major corporations which compete with any American or Japanese counterpart.

It would be fair to point out that, unlike Scotland, those are independent countries. Yet it is unclear why this could cause their companies to flourish, when nearly all the companies which made Scotland an economic power a century ago - a greater one than contemporary Holland, Sweden or Switzerland - have somehow declined and often died. Perhaps we need to be more metaphysical and think of independence not as anything so concrete as sovereignty, but as the opposite of dependence.

Scotland in the guise of thrusting junior partner in the general business of AngloScottish imperialism left an ample legacy which has been squandered. Once the Edwardian high noon passed, and depression between the wars thinned the corporate ranks, it became standard practice for hard-pressed Scottish capitalists to throw themselves on the tender mercies of the state. From then on they sought reward in peerages rather than profits, and Scotland at large followed them in seeing the dependency culture as the remedy for the nation’s ills.

The consequence was disaster. To cycles of sectoral decline was added a permanent economic sluggishness compared with England, while markets in the Empire vanished and foreign competitors reappeared whom we thought we had beaten in war. Nationalisation was the last straw. As a Tory leader, Walter Elliot, remarked, for Scotland it meant denationalisation. In other words, it removed the last vestiges of economic authority to London.

Not until the 1980s were the frontiers of the state rolled back somewhat. The economy did then regain a certain impetus, marking up higher growth than England’s, not least through the contribution of two industries, oil and finance, depending not at all on largesse from the state. Privatisation raised native capitalism from the grave, although the skeleton has yet to put on much flesh. Some vim is injected through foreign investment lured by subsidy. And on the whole Scotland remains a colony of new economic empires.

Here is perhaps reason enough for Scots to share in the impotent rage against the global economy rising round the world from Seattle to Genoa. It can take a farcical form in this remote corner, as in Tommy Sheridan’s canonisation to secular saint by the quondam Bishop of Edinburgh. But there do seem to be more serious consequences in the popular consciousness, where the idea persists that a real Scot cannot be working unless he is wearing a boiler suit and carrying an oilcan; whereas in actuality a real Scot wears a designer suit and stares at a computer screen. The damage is done when the myths cause Scotland to resist change.

It is understandable for Scots to feel they have had their fill of change. Over and over again Scotland has been transformed beyond recognition. We see that everywhere, from the empty glens of Sutherland to the silent shipyards of the River Clyde.

The late Enoch Powell once made a speech about England in which he claimed her essence had remained unchanged right through the Empire and through the other epochs that the English had witnessed. For Scotland, such a claim would be nonsense. The Scotland of today is utterly different from the Scotland of 1700 or 1800, and I think we will before long understand that it is utterly different from the Scotland of 1900 too. The difficulty of distilling any national essence may direct our thoughts away from selfconscious inertia induced by nostalgia.

The Union was in a certain sense Scotland’s way into the expansion of Europe, and that expansion produced today’s universal culture, in which people, goods, money, fashions, ideas and creeds submerge frontiers and erode the distinct marks of nations, even of civilisations - even of the original European civilisation, now recolonised from America.

We face a phase in which people may fear this process more than they welcome it. But the central dilemma of our age, of how to sustain community amid globalism, Scots have faced since 1707 - and, we may say in retrospect, not without success. Whatever has been lost, at the end of those three centuries Scotland remains Scotland, recognisably different from all other countries .

The differences may be hard to pin down. The essence of Scottish nationhood may just lie in a history of surviving against the odds. Certainly what survives may not be, indeed seldom is, tangible, not this glen or that shipyard. Rather, it is metaphysical and protean, a Caledonian antisyzygy (as the poet Hugh McDiarmid put it), an interplay of opposites, captured only in hopes and dreams.

But there is Scottish history. Political and economic conditions have always rendered Scotland’s sense of herself strangely intangible, compelling Scots to search elsewhere for promises of fulfilment. There is something new now in that the promises perhaps lie, for the first time since 1707, within Scotland.

If there is a fulfilment, a sense of community strengthened in openness to the global economy, it could make our history something exemplary again.

Thursday, 13th September 2001
The Scotsman

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