I want to ask two questions in my short contribution.
First, how did we get into this economic mess where the so-called leadership of most of major parties think it is acceptable to cut welfare, but increase military spending?
And secondly why do those leaders believe that spending on defence is in any case, somehow a good thing?
The answer to both these questions lies in the management or more accurately mis-management of the Scottish economy.
First, how did we get into this economic mess where the so-called leadership of most of major parties think it is acceptable to cut welfare, but increase military spending?
And secondly why do those leaders believe that spending on defence is in any case, somehow a good thing?
The answer to both these questions lies in the management or more accurately mis-management of the Scottish economy.
50 years ago, the 1975 Red Paper on Scotland made a powerful case that unless there was a challenge to the dominance of global market forces, Scotland was and would remain in a weak economic position, despite, in those days, the increasing flows of revenue from North Sea oil. As Gordon Brown’s introduction put it:
‘Scotland … for the past ten years has been engaged in turning its economy into one akin to that of a colony, i.e. one with a high level of external control, absentee decision makers and subsidiary technology.’”
That was fifty years ago and since then, it has got worse. In Keep Left The Red Paper 2025, Costas Lapavitsas outlines why those deep structural problems of capitalism outlined by Brown in 1975 have deepened, especially in the wake of the financial crash of 2007-08, a crisis, hastened by the then Chancellor, Gordon Brown’s desire for “light touch” regulation.
The crisis, which was created mainly through an excess of speculation by unregulated banks, was “resolved” in the core capitalist countries by state intervention — a bailout — leading to a massive expansion of the public debt.
In the UK, the incoming Conservative/Lib Dem coalition in 2010 denied the real nature of the problem, pointed their fingers at “unaffordable” public expenditure under the previous Labour government and used it as an excuse to introduce austerity.
As Costas Lapavitsas also points out, this occurred while financialisation of the economy steadily increased, including the rise of “shadow banking” — organisations that provide services similar to traditional banks but are not covered by tight regulations. In an age of austerity these functioned, among other things, to increase private household debt, especially as social housing became harder to access. Meanwhile multinationals, primarily, but not exclusively from the United States, Europe and Japan expanded their control global production chains in which they had a dominant interest while domestic productive capacity in core capitalist countries declined – our capacity to make things.
What did that mean for Scotland? In Keep left the Red Paper 2025, Richard Leonard points out that control of our economy by foreign owners has intensified and that the creation of the Scottish parliament has had no significant impact on stopping this process. Indeed, under the SNP, attracting foreign direct investment has remained a priority. This includes newer sectors like renewable energy. These too are dominated by multinationals whose headquarters are overseas. Furthermore, as the recent leasing of ScotWind demonstrates, if anything, the Scottish government is accelerating the sell off of Scottish energy assets to private corporations and overseas state-owned utilities. Richard points out that our manufacturing base still remains massively important to us. As recently as 2023, it accounted for 53% of the value of all Scotland’s international exports. Since then, of course we have lost of the Petro-chemical plant at Grangemouth. As a result of the closure, manufacturing output in Scotland fell by 4.1% in May and 100 jobs have been lost. Whether any of the schemes promised by both the UK and Scottish government to help create new jobs in Central Scotland, will bear any fruit, we will need to wait and see.
So to answer my first question we are in an economic mess because we have allowed and continue to allow our manufacturing capacity to collapse or be bought over by multinationals who have no interest in Scotland or the Scottish people beyond the profits they can generate. We need democratic control of our economy.
To my second question. Why is it that defence expenditure is so welcomed by both Scottish and UK governments?
Keir Starmer gave us the answer in February 2025 when he said that increasing spending on defence to 2.5% of GDP from April 2027, with an ambition to reach 3% in the next parliament, would drive economic growth and create jobs across the UK, as well, of course, as enhancing our security from largely imagined military threats.
Is that true? Will increasing defence expenditure kick start economic growth? Not according to analysis undertaken by the Scottish government. Their analysis shows military spending has one of the lowest ‘employment multipliers’ - the capacity to create jobs - of all economic categories the Scottish government listed. It ranked 70th out of 100 in terms of the employment it generates. Health is rated number 1. Agriculture, energy, food, manufacture, chemicals, iron and steel, computers, construction, and many, many more have greater ‘employment multipliers’ than military spending. Investing in health, for example, is two and half times more ‘jobs rich’ than investment in military spending.
Why is this? Because defence employment is highly concentrated in specific regions as opposed to evenly spread across the UK. 31.1 percent is in the north-west of England, for example.
And it isn’t only geographically concentrated. It is highly concentrated in a relatively small number of large firms. Small and medium enterprises secure only 5 percent of orders. And because many of the defence industry’s employees are bound by regulations that require secrecy, innovation through knowledge sharing is near to impossible. The biggest player in the sector, BAE, effectively a joint US and UK company, enforces strict barriers against knowledge transmission to its British section, in case of “leaks” to the enemies of the US.
The real reason for increased defence spending is that the British state and its Western allies the need to sustain the dominance of NATO in Europe in a period when US economic support is wavering as Trump turns his attention to China. It is not about economic growth.
So, to answer my second question our leaders say that they believe that defence expenditure will create employment when the truth is they know it won’t. What they are doing, they are doing their geo-political reasons, not to benefit working class people through increased employment opportunities.
Can I conclude on a positive note. In Keep left 2025 Sara Cowan argues that there needs to be rapid change in economic policy to tackle the ingrained inequality and poverty, that women suffer most from. Central to that policy shift, Sara argues, is care, which is essential for a successful economy. Sara’s analysis is based on a consideration of recent evidence on women’s economic position, as well as an assessment of the role of care both in women’s position in the labour market and the economy more widely.
The Scottish Parliament could take immediate action on this. We must also expose the lies about the so-called benefits of defence spending and begin the difficult but absolutely necessary struggle to take our economy under democratic control and end the tyranny of big business over our lives.
If you want to know more about the Red Paper why not come along to this event at the Edinburgh Fringe on Thursday 7th August:
https://www.eventbrite.co.uk/e/scotlandsfest-keep-left-red-paper-on-scotland-2025-tickets-1504837582719
‘Scotland … for the past ten years has been engaged in turning its economy into one akin to that of a colony, i.e. one with a high level of external control, absentee decision makers and subsidiary technology.’”
That was fifty years ago and since then, it has got worse. In Keep Left The Red Paper 2025, Costas Lapavitsas outlines why those deep structural problems of capitalism outlined by Brown in 1975 have deepened, especially in the wake of the financial crash of 2007-08, a crisis, hastened by the then Chancellor, Gordon Brown’s desire for “light touch” regulation.
The crisis, which was created mainly through an excess of speculation by unregulated banks, was “resolved” in the core capitalist countries by state intervention — a bailout — leading to a massive expansion of the public debt.
In the UK, the incoming Conservative/Lib Dem coalition in 2010 denied the real nature of the problem, pointed their fingers at “unaffordable” public expenditure under the previous Labour government and used it as an excuse to introduce austerity.
As Costas Lapavitsas also points out, this occurred while financialisation of the economy steadily increased, including the rise of “shadow banking” — organisations that provide services similar to traditional banks but are not covered by tight regulations. In an age of austerity these functioned, among other things, to increase private household debt, especially as social housing became harder to access. Meanwhile multinationals, primarily, but not exclusively from the United States, Europe and Japan expanded their control global production chains in which they had a dominant interest while domestic productive capacity in core capitalist countries declined – our capacity to make things.
What did that mean for Scotland? In Keep left the Red Paper 2025, Richard Leonard points out that control of our economy by foreign owners has intensified and that the creation of the Scottish parliament has had no significant impact on stopping this process. Indeed, under the SNP, attracting foreign direct investment has remained a priority. This includes newer sectors like renewable energy. These too are dominated by multinationals whose headquarters are overseas. Furthermore, as the recent leasing of ScotWind demonstrates, if anything, the Scottish government is accelerating the sell off of Scottish energy assets to private corporations and overseas state-owned utilities. Richard points out that our manufacturing base still remains massively important to us. As recently as 2023, it accounted for 53% of the value of all Scotland’s international exports. Since then, of course we have lost of the Petro-chemical plant at Grangemouth. As a result of the closure, manufacturing output in Scotland fell by 4.1% in May and 100 jobs have been lost. Whether any of the schemes promised by both the UK and Scottish government to help create new jobs in Central Scotland, will bear any fruit, we will need to wait and see.
So to answer my first question we are in an economic mess because we have allowed and continue to allow our manufacturing capacity to collapse or be bought over by multinationals who have no interest in Scotland or the Scottish people beyond the profits they can generate. We need democratic control of our economy.
To my second question. Why is it that defence expenditure is so welcomed by both Scottish and UK governments?
Keir Starmer gave us the answer in February 2025 when he said that increasing spending on defence to 2.5% of GDP from April 2027, with an ambition to reach 3% in the next parliament, would drive economic growth and create jobs across the UK, as well, of course, as enhancing our security from largely imagined military threats.
Is that true? Will increasing defence expenditure kick start economic growth? Not according to analysis undertaken by the Scottish government. Their analysis shows military spending has one of the lowest ‘employment multipliers’ - the capacity to create jobs - of all economic categories the Scottish government listed. It ranked 70th out of 100 in terms of the employment it generates. Health is rated number 1. Agriculture, energy, food, manufacture, chemicals, iron and steel, computers, construction, and many, many more have greater ‘employment multipliers’ than military spending. Investing in health, for example, is two and half times more ‘jobs rich’ than investment in military spending.
Why is this? Because defence employment is highly concentrated in specific regions as opposed to evenly spread across the UK. 31.1 percent is in the north-west of England, for example.
And it isn’t only geographically concentrated. It is highly concentrated in a relatively small number of large firms. Small and medium enterprises secure only 5 percent of orders. And because many of the defence industry’s employees are bound by regulations that require secrecy, innovation through knowledge sharing is near to impossible. The biggest player in the sector, BAE, effectively a joint US and UK company, enforces strict barriers against knowledge transmission to its British section, in case of “leaks” to the enemies of the US.
The real reason for increased defence spending is that the British state and its Western allies the need to sustain the dominance of NATO in Europe in a period when US economic support is wavering as Trump turns his attention to China. It is not about economic growth.
So, to answer my second question our leaders say that they believe that defence expenditure will create employment when the truth is they know it won’t. What they are doing, they are doing their geo-political reasons, not to benefit working class people through increased employment opportunities.
Can I conclude on a positive note. In Keep left 2025 Sara Cowan argues that there needs to be rapid change in economic policy to tackle the ingrained inequality and poverty, that women suffer most from. Central to that policy shift, Sara argues, is care, which is essential for a successful economy. Sara’s analysis is based on a consideration of recent evidence on women’s economic position, as well as an assessment of the role of care both in women’s position in the labour market and the economy more widely.
The Scottish Parliament could take immediate action on this. We must also expose the lies about the so-called benefits of defence spending and begin the difficult but absolutely necessary struggle to take our economy under democratic control and end the tyranny of big business over our lives.
If you want to know more about the Red Paper why not come along to this event at the Edinburgh Fringe on Thursday 7th August:
https://www.eventbrite.co.uk/e/scotlandsfest-keep-left-red-paper-on-scotland-2025-tickets-1504837582719
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