Devolution and the silence of political economy

Craig Berry - Research Fellow at SPERI

But the SNP knew that the London-based elite’s ideas about how the economy works conflict with how most people experience economic life.  Rather than offering an alternative vision, it simply ignored the economy, offering a highly improbable account of currency union and North Sea oil reserves when forced to do so, but instead sought to make the debate largely about autonomy from Whitehall.   It pointed the blame at the institutions of the British state, not the political economy underpinning them.

The most disappointing aspect of the Yes campaign, however, from my perspective as a political economist, was the more diverse left-wing campaign which mobilised beyond the confines of the mainstream SNP campaign.  Its leaders similarly decided to ignore the enormous macroeconomic implications of independence and campaigned instead on the highly contestable notion that smaller polities are better democracies.

This orientation downplayed the opportunity that independence would have given the SNP to entrench its own power and ideology within the machinery of the new Scottish state. Given that the SNP’s strategy depended, fundamentally, in handing the sovereign control of monetary policy back to the Bank of England, or the anarchic bond markets, this oversight was indefensible.

My fear is that we are seeing the same dynamic in the post-referendum debate on devolution within England.  The Conservative Party quickly defined the problem as ‘the English question’, suggesting that Scottish devolution would require that issues affecting only England should be decided only by MPs representing English parliamentary seats.  Such an arrangement would offer only the illusion of greater control, given that England already dominates the UK Parliament, and that the most important economic policy powers – such as monetary policy – would still be exercised on a UK-wide basis.  English votes for English issues actually risks further depoliticising the governance of the economy under the cloak of subsidiarity.

It also, of course, does nothing to repair regional imbalances within England.   So does that mean that local assemblies, connected to regional devolution, are the answer? These would not be unwelcome, but the prospect should not automatically be assumed to be positive.  Regional devolution within England would still, by definition, leave the powers that really matter at the national level.  Monetary policy devolution is impossible without formal independence (and, as Scotland almost found out, even then it is not assured!).  Even if fiscal policy – tax and spend – was entirely devolved, it would hand greater power to the regions, but would force us to confront the thorny issue of what happens when the poorest regions are only able to spend money that their own economies and residents have generated?  This scenario reinforces, rather than alleviates, regional inequalities.

These are questions that can only be asked, let alone answered, with reference to political economy.  But there is a worrying silence in this regard.  For instance, the Cabinet Office’s Northern Futures agenda – pet project of Nick Clegg – is ostensibly focused on the right issue, that of boosting economic development within Northern England.  Yet it asks the North to look only inward when it comes to thinking about how to improve its prospects, rather than to the structural disadvantage of the North within the UK economy as a whole.  Indeed, the agenda is probably more interested in rebranding than rebalancing, as demonstrated by the simultaneous ‘brainstorm’ sessions Clegg has organised across the North:

‘The Open Ideas Days will see eight all day events running simultaneously in eight separate locations across the North, allowing experts and non-experts to come together to share ideas and develop solutions using a mixture of creative problem solving tools and design thinking methods’.

It is easy to be cynical about such outcomes, pointing to the conservatism of the political class, but in reality they are just as much a product of the paucity of cognitive resources in our everyday discourse that would enable a political economy perspective to be articulated more effectively.  We think about politics as something that acts upon the economy – with increasing trepidation – rather than something which serves to constitute economic life.  In largely abandoning the study of economies to economists, social scientists are partly to blame. Unless this changes, I fear devolution will become a red herring of democratisation.