Yves here. The way that England’s leaders, as well as pundits and investors generally, failed to recognize that Scotland really could vote for secession, is even more significant than it seems, and as Ilargi tells us below, it’s plenty significant. As NC readers have noted, the fact that Scots have swung in favor of secession is certain to embolden other separatists. But at least as important is why events have reached this juncture.
Readers regularly discuss, with considerable enthusiasm, the need to relocalize, to force government operations and economic networks to be more robust and self-sustaining on a smaller scale of operation. While it is possible that relocalized social units could be well-networked with each other, and thus preserve many of the advantages of a larger scale, more centralized society, this could also represent a path of disintegration, in the adverse sense of the word.
Jospeh Tainter, in his classic The Collapse of Complex Civilizations, argues that complex societies require more and more in the way of energy to support them. As the costs of obtaining incremental energy rises, these cultures lurch towards failure.
But the wee problem with Tainter’s thesis is that he rejects culture as playing any role in these unravelings, yet is forced to acknowledge that sometimes the ruling classes manage to pull at-risk civilizations out of their nosedive.
But one might ask how did these complex societies manage to succeed in the first place? They have to manage the desire of individuals and groups to seek safety and resources, and to be loyal to those tight alliances: families, tribes, small communities. Complexity introduces new levels of integration and potential loyalty: states, nations, institutionalized religion, businesses, and workplaces. Enlightened and merely competent leaders understand that a big part of their job is to find compromises among these various subsidiary power centers and reject (or better yet, press these groups to discourage) illegitimate or potentially destructive claims for resources and authority. One of the reason that growth is so popular a selling point among politicians is that it is much easier to work out these compromises if the collective pie is getting bigger.
The current crop of leaders in the UK, Europe, and US, appear to think that the question of how states and societies are ordered (at least in advanced economies) is so obviously advantageous to everyone that fundamental challenges to the status quo won’t go very far. But the post crisis era of sustained low growth, combined with elites who are far too visibly not sharing in the general pain and in many ways are making matters worse, is producing new and unexpected fissures in the political arena. Scotland should be seen as a serious wake-up call to those in authority, but they are likely to see it as just another problem whose answer is better propaganda.
By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at Automatic Earth
Got a mail from a friend in Scotland late last night that got me thinking. “Unfortunately, using Ireland as a model of fracture, we may start blowing up each other.” I’ve been reading a lot lately, in between all the other things, about Scotland, as should be obvious from my essay (Jim Kunstler tells me I can use that word) yesterday, Please Scotland, Blow Up The EU, and sometime today a thought crept up on me that has me wondering how ugly this thing is going to get. I think it can get very bad.
What I get from it all is that if anything is going to win this for the independence side, it must be the arrogance the London government has exhibited. That alone could seal the deal. But now of course London has belatedly woken up. Even David Cameron is scheduled to – finally – visit Scotland in the course of the contest. And if push comes to shove, they’ll throw in a royal baby. Or a Queen. Mark my words.
Cameron’s visit is funny in that he never thought it necessary until now because he thought he would win no matter what until a few days ago, and also funny because he must easily be the least popular person in all of Scotland, so a visit is a substantial risk. He had his bellboy Alistair King do a TV debate recently, and King flunked that thing so badly he may have single-handedly propelled the Yes side into the lead.
The knifes are being sharpened and soon they will be drawn – there’s only 9 days left. Question is, who will end up hurt? Bank of England Governor Mark Carney picked today of all days, 9 days before the referendum, to at last get more specific about his rate hike plan: it’s going to be early 2015. Because the UK economy is doing so great…
Only, wages will have to rise, and that will have to happen through British workers ‘earning’ pay hikes by ‘boosting their productivity and skills’. These workers have about 6 months to do that. You’re pulling my leg here, right, Mark? In any case, it seems obvious that Canadian Carney will be used as a tool against the Scottish independence movement. That’s just more arrogance.
Carney also spoke out directly on Scotland, saying there can’t be a currency union between the Scots and the Brits. Oh yeah, that should scare ‘em!
The pound sterling is falling, but that doesn’t mean much. What does is that the entire financial world, of which the City is a large part, was caught on the wrong foot as much as the UK government. And both will now, until September 18, pull all the stops to cover their – potential – losses. With all means at their disposition. Some of which will be brutal, or at least appear to be.
Billions of dollars have already been lost in just a few days, since everybody realized the UK may actually split up. Many more billions will be lost in the coming week, as measures of volatility go through the roof. Neither the Yes side nor the No side have gone into this thing terribly prepared; there are a zillion questions surrounding the independence issue that won’t be solved before the vote takes place. Passports, currencies, central banks, monetary unions, there’s too much even to mention.
Somewhere, emanating from the old crypts and burrows in which Britain was founded, I fear a hideous force may emerge to crush the Scottish people’s desire for self-determination, if only because that desire is a major threat to some very rich and powerful entities who found themselves as unprepared as Downing Street 10.
I don’t know if, as my friend fears (though he’s much closer to the action than I am, so who am I to speak), it will lead to people blowing up each other, but then also, who am I to rule that out? The UN charter on self-determination looks good on paper and in theory, but when reality comes knocking, there’s mostly not much left of the lofty ideals and intentions, or is that just me, Catalunya?
Still, there’s an added dimension in Scotland: the fact that the City of London is the number 1,2 or 3 (take your pick) most important finance center on the planet. If and when anybody rattles that kind of cage, other forces come into play. It’s no longer about politics, but about money (and no, I’m not too think to see how the two are linked).
So I hold my breath and my prayers for both my Scottish and my British friends – and I happen to have lots of them – and I hope this is not going to get completely out of hand. The reasons I think it may get out of hand regardless is that 1) there is not one side that was ever prepared for the situation in which they find themselves today and 2) there is an enormous supra-national interest that resides in the UK financial world which is in a semi panic mode about how much money can be lost not just because of a UK break-up, but because of the uncertainty surrounding that potential break-up.
And there’s something in all of that which is definitely scary. London, and the Queen, will do all they can not to lose part of their ‘empire’. The City of London will do even more not to lose a substantial part of their wealth. And this time around I don’t think they properly hedged their bets: the surge of the Yes side is as close to a black swan as we, and the City of London, have seen.