We are living through an era of profound change. Really? Capitalism is dead, socialism is dead, the nature of work is changing. Are you sceptical yet? Soon everything will be bought online, technology will become wearable, integrating with our everyday clothing. Drugs will interact with and change our genetic code, eradicating inherited health problems and, apparently, artificially intelligent machines will destroy us and take over the world. All those statements may turn out to be true but they all have one thing in common – they are examples of the white heat of technology type hyperbole that has been doing the rounds in one form or another since the industrial revolution.
Futurologists always exaggerate the short term change and significantly underestimate the longer term change that new technologies and even global economic and environmental trends can have on our society.
The problem with predicting the future is how little understanding we have of the way that our world actually changes. To get people interested, the futurologists massively overestimate the short term change that a new technology or behavioural trend will drive. This gets articles published, conference speaking gigs confirmed and often contracts from big companies to advise on managing this change – after all, there is nothing big companies hate more than change, especially if they are making big money without change. That creates a change bubble and when none of the short term predictions come to pass the bubbles burst, the hype calms down and the real slower, more gradual and often more radical change begins often unnoticed by the masses.
Sudden changes do happen. In my lifetime I saw socialism crumble as the Berlin Wall came down and without a credible opponent to keep it true, capitalism morphed into global consumerism and casino capitalism. The bubbles inflated, then burst, and as there was no alternative to free market economy the neoclassical economists who held sway in Westminster and Washington, concluded that if the markets were not growing at an optimum pace the only answer was to make the markets even more free. Every dip was a warning, every major fraud (Enron / Arthur Anderson) was a warning, but successive Westminster governments (blue, red and then blue again) saw those warnings as an excuse to deregulate, to privatise, to relaxed capital controls, to stick the regulators in the dentist’s chair and pull their teeth out one by one. As a result, a falsely extended boom became an even bigger bust than ever seen before, and just as the fall of Berlin Wall and Glasnost signaled the beginning of the end for socialism, the credit crunch and bank bailout signaled the end of global consumerist capitalism – it’s just that the powers that be are still in denial.
For generations Westminster went all in, betting the UK’s future prosperity on the narrow minded approach that was global consumerism, and so felt they had no option but to build the economy around the companies that drove global consumerism. As a result the UK economy became dominated by the City of London; one of the most powerful and unregulated financial centers in the world began to call the shots and governments of all colours, found the City able to exert more influence even than elected politicians, altering the balance of economic power and setting the Westminster economic agenda.
As a result, UK economic policy focuses on growing large existing business, on extracting taxes from existing large businesses who ironically have significant influence over what the laws regarding taxation are. This means that the companies that dominate our economy are those who extract value rather than build value. Politicians are fond of quoting Cargill’s “it’s the economy stupid” but Westminster has failed to realise that it has invested in the wrong economy. Germany invests in its middle sized companies (the Mittelstand). The engine and stabilizing power of Germany’s manufacturing and export led success are family owned middle sized innovative manufacturing companies.
In Scotland the mid market companies only amount to 1% of the company base but 20% of private sector employment. Scotland suffers from the branch office effect of the Westminster PLC focus, larger companies don’t employ directors of marketing, finance directors, operations or HR directors in Scotland, the sort of people that after a successful mid sized company career often start their own high growth potential companies that join and refresh the Mittelstand. To get those high power jobs people often have to go south and so has our economy, slowly but surely the London drift has sucked people, wealth, power, influence and economic growth potential out of Scotland (and the English Northern regions).
There is no guarantee that more powers to Scotland or even an independent Scotland would allow us to plough a different path, but at least we would have the opportunity to attempt to forge a better path towards the real, sustainable and productive economy that Westminster is blind to.
It will be a few years at least till we have a another independence referendum and in that time we must remember that independence is not an end in its self but a means to an end. Rather than obsessing about when the next plebiscite will be be, we need to focus our national, political, social and economic awakening on the creation of a new economic policy approach. We need to focus on setting our nation on a more inclusive, fairer, greener, confident and economically successful path. Futurists will go on exaggerating the changes in the short term but the longer term economic changes are likely to be far more focused on medium sized company growth, on added value production, on ways to significantly increase spend on research and development, on ways to drive high value exporting and increase productivity leading to increasing wage levels and employee engagement. In Scotland our focus must be on the middle sized companies with rapid growth potential that will add value to Scotland rather than take from it.
If we achieve that then we will possess a more compelling, detailed Vision for Scotland that is impervious to scaremongering and the people of Scotland won’t be discussing whether or not to have another referendum – they will start demanding one. Last year, those of us that hoped for a yes vote overestimated the short term change but we may have underestimated the longer term change, and with it how fundamentally beneficial those changes will be for our shared prosperity.
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