Earlier this month the Scottish Government unveiled its new 10-year National Strategy for Economic Transformation. The much anticipated plan included the welcome aspiration to become a Wellbeing Economy. But it failed to set out how we will genuinely transform our economy to one that ensures good lives for all of Scotand’s people and protects the health of our planet. In this blog, WEAll Scotland’s, Dr Lukas Hardt, explores the substance of the Strategy and makes the case for a inclusive national debate on how we move beyond business as usual.
The day before the Strategy was published, the global scientific community issued its starkest warning yet about the disastrous consequences ahead if we fail to urgently act to avoid climate breakdown. The Intergovernmental Panel on Climate Change (IPCC) cautioned that further delay in action will miss a “brief and rapidly closing window to secure a liveable future.”
At the same time, the cost of living crisis threatens to deepen already eye-watering levels of poverty and inequality in Scotland. One in four children in Scotland is growing up in poverty. Without new approaches that reflect the realities of today, rather than the recipes of the last century, the Scottish Government looks set to miss its child poverty targets. The need to reprogramme our economy has never been more apparent.
Scotland has positioned itself at the forefront of the movement to build a new type of economy which is designed to deliver good lives for all on a healthy planet. Scotland was a founding member of the Wellbeing Economy Governments partnership – a collection of nations who are united in their ambition to redesign their economies. Nicola Sturgeon’s Ted Talk on the subject received 2.4 million views. But this rhetorical commitment to a different sort of economy has yet to be met with sufficient action.
Ahead of the publication of the National Strategy for Economic Transformation, 40 leading economists and climate change academics urged the Scottish Government to set out how it will put environmental and social concerns at the heart of financial and economic decision making. The final Strategy includes some positive commitments such as a Wellbeing Economy Monitor to measure the things that really matter to people and to review ‘how to increase the number of social enterprises, employee-owned businesses and cooperatives in Scotland’. But overall it marks a continuation of the same flawed logic that has delivered decades of inequality and environmental degradation.
The economy we have today is driven by a widely debunked logic – that continually growing the economy will automatically ‘trickle down’ to more wealth for the whole population. Yet in practice this necessitated that governments have to set aside some of this money in taxes to pay for the social and environmental casualties of our economic system. This economic paradigm has driven a cycle of paying to fix what we continue to break.
For example, the Scottish and UK Governments spend billions of pounds in Scotland topping up poverty wages, housing people who are homeless and building flood defences. Our recent report on Failure Demand has quantified the financial cost of this way of operating.
By privileging GDP growth and indiscriminate productivity, the National Strategy for Economic Transformation continues to follow this flawed logic. The most important challenge for Scottish and other economies in the 21st century is not a lack of productivity, innovation, inward investment (as important as they are). It is that they are often construed as goals in their own right. What we need to do is ask: What sort of innovation? Productivity of what and who gets the benefits? And how to ensure investment flows to those activities most aligned with a Wellbeing Economy? The key responsibility of governments in our time is to embed a new purpose into all economic and financial decision making. It is to ensure that power is shared across workers and communities so that our economy uses our resources and creativity to provide the things that really matter. Governments have to make sure that care work is valued, that we all have the basics, like safe warm homes, that we expand the economic activities we need more of, such as decarbonisation, not just those that offer the biggest profits. There is very little in this strategy to suggest that the Scottish Government is living up to this responsibility.
Businesses have a vital role to play in a Wellbeing Economy, but the Strategy fails to offer a clear mechanism to ensure the enterprises Scotland will nurture will help build thriving local communities. Fostering social enterprise, employee-owned businesses and cooperatives has to be a key part and the Strategy promises a review of how their number can be increased. But more concrete support is needed urgently.
The Government needs to set the right rules and incentives to make sure that the right thing to do for people and planet becomes the right thing to do for businesses. The many enterprises in Scotland that are pioneering fair, green and transformative ways of working would welcome moves to rectify the unfair competition they face from those businesses who are shirking their responsibilities to the environment and society.
The Strategy talks about “Team Scotland” and rightly notes that economic transformation has to be supported by all citizens, and implemented through collaboration of the public, private and third sector. But the process of developing this Strategy has not lived up to this ambition. There is little evidence that this Strategy has had input from citizens and communities across Scotland.
The reports of the Citizens’ Assembly of Scotland and the Scottish Climate Assembly clearly show that people want the Government to step up to the plate and set a new direction for our economy. Four in five Climate Assembly delegates supported the recommendation to reframe the national focus for Scotland’s future away from economic growth towards the prioritisation of a more person and community centred vision of thriving people, thriving communities and thriving climate. While the Strategy references an aim to respect environmental limits there is very little evidence of how this will be achieved nor how this squares with the thrust of the Strategy which focuses on growth.
This Strategy has failed to present solutions that are adequate for the challenges of the 21st century. Scotland now needs an urgent and inclusive national debate on how to transform our economy into one that truly delivers good lives and protects the health of the planet we depend on.