Bill Mitchell-en Australia and Scotland and the need to escape neoliberalism
Today’s blog post considers the Australian election and some issues that arose from my recent trip to Scotland – all of which bear on the progress of our work in the public debate. (…)
For Scotland, as they debate independence in the lead up to another referendum (as yet unscheduled) they have been struggling with the choice of currency issue and whether the new independent nation should join the EU. After initially thinking they would stick with the British currency for some time, the debate has swung heavily in favour of introducing their own currency as soon as is possible after the independence is achieved. Clearly, I have favoured that option for several years. But the overwhelming thinking is that the new nation should join the EU. That is a choice that I think would bring grief. And given the fact that the rUK will retain “continuing nation” status, a newly independent Scotland would be under significant pressure to use the euro. In other words, the currency choice and EU membership trends at present are incompatible. During my visit there I urged the activists to ditch their pretensions for EU membership and become truly independent.
Scotland – currency and the EU
My visit to Scotland was very interesting – there were two events I spoke at in Edinburgh and Glasgow. Both were well attended and the discussions were fruitful.
My conclusions are my own perceptions only.
When the Scottish independence thing was first pursued by the SNP and they appointed the so-called Sustainable Growth Commission to come up with a blueprint, the resulting report was neoliberal in intent.
The so-called six rules would have locked the new nation into using the British currency and being constrained by British monetary policy settings indefinitely. In other words, no independence at all.
I have been following the debates closely since then and it is now clear that the idea of sterlingisation (as it is called) is dead in the water.
The recent SNP conference passed (reluctantly from the perspective of the leadership) the so-called Amendment D, which set in place a path to an independent currency as soon as possible after independence.
The conference failed to jettison the six tests but that will come in time I suspect.
So from an MMT perspective the outstanding issue is their continued desire – even among progressives in Scotland – to be part of the EU.
The discussions I had on that topic while there were interesting and I sensed that there was a shift going on among the pro-EU thinkers to question that position in the light of our visit. I may be seeing what I want to see though!
(i) Independentzia eta Europar Batasuneko partaidea? Batera?1
(ii) Informazioa? NATO?2
(iii) Europar Batasunarekiko partaidetzaz, 49. artikulua3
(iv) 2014ko erreferenduma, 48. artikulua. Eskoziako gobernua eta EBko Komisioa4
This means two things:
1. Scotland would not be able to exploit the current UK Opt-Outs and accept the euro as its currency.
2. Scotland would have to go through a convergence process to ensure its fiscal and other economic parameters were consistent with the EU Stability and Growth Pact rules.
(v) Defizit fiskala eta EBko neurri fiskalak5
(vi) Eskozia aurrerakoi bat eta MMT Scotland
A progressive Scotland has no place among a corporatist, neoliberal cabal that will impose rules and that is the challenge that the progressive groups such as MMT Scotland should work through next now that the currency issue has been resolved (or mostly so).
(vii) Moneta propioa eta EB-ren aurkako ‘nazionalismoa’6
PS. Afera horiek guztiok eta askoz gehiago zenbait euskaldunek konpondu nahi izango lituzkete beren neoautonomismo eta neokarlismoarekin (https://twitter.com/tobararbulu/status/1130239763670294529 eta https://twitter.com/tobararbulu/status/1130242927039537153).
Ezjakintasuna ausartegia da!
1 Ingelesez: “The point that is fairly clear is that the two ambitions currently shared by progressives in Scotland – to have their own currency and to become members of the EU are incompatible upon my reading of the situation.
I am not sure how many people really understand that point.”
2 Ingelesez: “First, I wonder how many people have read and absorbed the report from the Sixth Report from the Foreign Affairs Committe of the British Parliament – Foreign policy considerations for the UK and Scotland in the event of Scotland becoming an independent country – released on April 23, 2013.
This Report aimed to clarify legal status of the rUK (remainder of UK) and Scotland should the independence vote succeed.
The Report expressed concern that:
… the Scottish Government is strenuously advocating legal positions without the benefit of official legal advice from its law officers.
In other words, the Scottish people were not being informed on the likely legal status of the new nation relative to rUK and the rest of the world.
An important point is that the Committee concluded that:
There is an overwhelming body of evidence that endorses the UK Government’s view that the RUK would be considered by the international community to be the continuing state and that it would inherit the vast majority of the UK’s treaty obligations, while Scotland would essentially start afresh at an international level.
This “continuing state” status would mean “that the RUK would retain the UK’s permanent seat in the UN Security Council”, which is clearly a motivation.
The rUK would assume the NATO membership status that UK currently has. Scotland would not immediately be admitted.”
3 Ingelesez: “On EU membership, the Committee concluded that in light of the “continuing state” status of the rUK, Scotland would have to seek membership under Article 49 of the – Consolidated version of the Treaty on European Union.
It also noted that:
The impression given by the Scottish Government that treaty change would be a mere technicality seems to us to misjudge the issue and underestimate the unease that exists within the EU Member States and EU institutions about Scottish independence
It also doubted that if Scottish accession was successful, that the new Member State would be able to “retain the UK’s EU opt-outs”, which include maintaining a separate currency from the euro.
Article 49 says:
Any European State which respects the values referred to in Article 2 and is committed to promoting them may apply to become a member of the Union. The European Parliament and national Parliaments shall be notified of this application. The applicant State shall address its application to the Council, which shall act unanimously after consulting the Commission and after receiving the consent of the European Parliament, which shall act by a majority of its component members. The conditions of eligibility agreed upon by the European Council shall be taken into account.
The conditions of admission and the adjustments to the Treaties on which the Union is founded, which such admission entails, shall be the subject of an agreement between the Member States and the applicant State. This agreement shall be submitted for ratification by all the contracting States in accordance with their respective constitutional requirements.
So a new state has to apply for admission and be accepted by all the current Member States.
This is no small issue.”
4 Ingelesez: “In the period leading up to the referendum vote in 2014, the Scottish government has assumed that it would be able to use Article 48 of the TFEU as “a suitable legal route for Scotland’s continued membership of the EU as an independent member state” (Source).
Article 48 is about existing member states seeking variations in the terms of their membership.
The Commission disputed this assumption and pointed to Article 49. In other words, they were following the guide of the 2003 Parliamentary Commitee by asserting that the rUK was the ‘continuing state’ which held EU membership (including the Opt-Outs) and Scotland as a newly created independent state would have to seek accession according to that status.”
5 Ingelesez: “Given the current fiscal deficit is around 8 per cent of GDP and would more likely go to around 10 per cent in the event of independence or risk a major recession, it doesn’t appear likely that Scotland would ever satisfy the harsh and irresponsible fiscal rules.
I am no constitutional lawyer or political strategist. There are other political issues involved – such as Spain’s suspicion of allowing an independent Scotland to join the EU given the sensitivity over the Catalan issue.
But if Article 49 prevails in this case, which is highly likely, Scotland would struggle to have its own currency and would also be forced to scorch its economy to meet the convergence rules.
At any rate, all this is moot if Scotland takes the more sensible path after independence and stays out of the EU altogher. This is especially the case should the UK finally leave itself before the independence issue is resolved.”
6 Ingelesez: “The last point I would make relates to the false claim that I see in social media that, because I support the reclaiming of currency sovereignty, I advocate anti-EU nationalism.
Anyone who makes this type of allegation only displays their ignorance.
What I advocate is currency sovereignty. That just means that I want the government that is elected to serve the people of that state to have the full fiscal capacity to advance public interest. I also dislike neoliberalism in all its forms and the EU is the exemplar of that sort of ideology – having embedded it in its core legal structure.
I do not support notions of cultural supremacy, patriotism, religious hierarchies, language hegemony, and all the rest of the characteristics that typically define ‘nationalism’ as an ideology.
Further, while I want the currency-issuing government to advance the well-being of that nation I also want that nation to look outward and ensure that other nations, particularly those without adequate resources, can also prosper.”