> Is the implication that an independent Scotland should take control of of its currency and interest rates?
I don’t think Michael Roberts directly says so, but many if not most Greeks, Italians, Spaniards and others who have seen their former currencies replaced by the euro and have been subsequently savaged by a ruinous economic crisis would loudly answer in the affirmative. If their governments had been beholden to them rather than the big European banks and corporations, the possibility would have long ago presented itself of opting out of the euro, taking control of their central bank and financial systems, restoring their sovereign currencies, and reviving economic growth and living standards through monetary and fiscal policies aimed at restoring export competitiveness and mass purchasing power. Instead, they’ve been subjected to austerity and vicious “internal devaluations” which have worsened the crisis, destroyed jobs and incomes, and plunged tens of millions into misery.
It’s not an easy question to answer in the abstract, however, because the process of replacing an established currency with an untested one can be a very painful and disruptive one for weaker economies with trade and commercial ties to larger neighbours, and who are subject to the vagaries of the international market. In the short term, they face the prospect of capital flight, collapsing banks, bankrupted corporations, and even worsened conditions for the mass of the population whose sustained support would be crucial during the transition period. This is why Syriza, the only left-wing party poised to take power to date, has been divided on opting out of the euro, as have been two leading Greek economists widely read on the left, Costas Lapavitsas and Yanis Varoufakis.
My impression is that there is much less concern about Scotland’s ability to abandon the pound in favour of its own free-floating currency. Even mainstream economists polled by the Financial Times seemed to agree it could weather any short term storms. The article is behind a paywall, but a few short quotes should suffice:
“An independent currency – let’s call it the 'Scottie’ – could work for an independent Scotland and it is the only available option that would allow the country to set its own monetary policy and make its own trade-offs with fiscal policy” (Dame DeAnne Julius, former Monetary Policy Committee member and Bank of England court director). "The option of an independent Scottish currency has been unfairly maligned. A free-floating currency would indeed be at risk of speculative attack but with the right mandate it could have substantial benefits as well” (Sam Bowman, research director at the Adam Smith Institute). "An independent Scotland could issue its own currency, supported by its own central bank. Many successful European countries of a similar scale have chosen this option, for example, Sweden and Denmark” (Tony Yates, Reader in Economics at University of Bristol). “If Scotland had its own currency, this would provide the greatest economic sovereignty, which the Fiscal Commission acknowledges” (Angus Armstrong, director of macroeconomics at the National Institute of Economic and Social Research). “This is the only option that offers an independent Scotland an adjustment mechanism to address unfavourable movements in its competitiveness and provide maximum freedom of monetary and fiscal policy” (Ronald MacDonald, professor, Adam Smith chair of political economy, University of Glasgow).
> On Sep 6, 2014, at 9:27 AM, Marv Gandall <marvgand2 at gmail.com> wrote:
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>> Below a link to a detailed analysis by the British Marxist economist Michael Roberts of the economic challenges which would face an independent Scotland if it votes to secede from the UK on September 18th. Roberts concludes that "at best, the majority of the Scottish people will find little difference under Holyrood than under Westminster and it could be worse if a global crisis erupts again. Scotland as a small economy, dependent on multinationals for investment, still dominated by British banks and the City of London and without control of its own currency or interest rates, could face a much bigger hit than elsewhere in terms of incomes and unemployment."
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>> But as Roberts also notes, “the decision on independence is not just a question of the economy and living standards". The political consequences of such a dramatic rupture with the status quo in Scotland could be far reaching - not only on independence struggles in Catalonia and elsewhere, but as encouragement to a wide range of other social movements everywhere.
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>> http://thenextrecession.wordpress.com/2014/09/04/scotland-yes-or-no/