On Sept. 18, Scotland will vote whether or not to be independent. So far, we can distill the most important pros and cons of Scottish independence into the following:
Most Important Pro
Most Important Con
- No Scottish Currency Yet
On the surface, it seems odd that a simple problem of having no currency could ever be put in the same league as the problem of not having the freedom to choose one’s destiny. It is like being prevented from venturing out of one’s house simply because one’s own shoes are borrowed from someone else and it wouldn’t be right to risk dirtying or degrading the shoes of other people. All the supporting parts of the shoe — socks, shoelaces, insoles, footpowder — would threaten to leave because without a shoe they themselves will be dirtied or made useless. Somehow, ‘No’ voters seem convinced that Scotland is incapable of making its own shoe or currency, which is odd.
Adam Smith To The Rescue
Adam Smith was undoubtedly pro-union simply because it gave many commercial benefits to Scotland:
“Of all the commercial advantages..which Scotland has derived from the Union with England, this rise in the price of cattle is, perhaps, the greatest. It has not only raised the value of all highland estates, but it has, perhaps, been the principal cause of the improvement of the low country.”
However, the union was not all rosy even back then:
“The wool of Scotland fell very considerably in its price in consequence of the union with England, by which it was excluded from the great market of Europe, and confined to the narrow one of Great Britain. The value of the greater part of the lands in the southern counties of Scotland, which are chiefly a sheep country, would have been very deeply affected by this event, had not the rise in the price of butcher’s meat fully compensated the fall in the price of wool.”
The main reason for the union was to increase the market and consequently the free trade of Scotland. Why was this increase so important? This is because of a forgotten maxim of the Political Economy — That the Division of Labour is Limited by the Extent of the Market.
Having more customers means having more reasons to increase the quantity or quality of work on goods and services sold. Increasing the quantity and quality of work leads to better chances of properly mobilizing Scottish capital and even foreign capital, leading to further investment which would then lead to further improvement and wealth of Scotland. If Scotland’s market expands and its productivity increases, then foreign capital will flock to it in a similar way it flocked to China, though at a much smaller scale.
The main reason for the union with England was because, back then, England had control of the biggest market in the world through its many colonies. Nowadays, those colonies are free and the US, Euro, and China instead control the biggest markets. An independent Scotland can choose to integrate with any of those three big markets as it sees fit. For example, it could integrate closer to the EU for the long-term, just as Scotland was closely integrated with France during the time of William Wallace. Or it could integrate closer with the US and other more distant English-speaking countries through outsourcing. Lastly, it could seek better links with China and other Asian countries which needs its oil, metals, and industrial goods.
The second biggest reason for Scottish independence, after freedom, is a more extensive market. Currency is not much of an issue because Scottish banks have experience creating and inventing currency. With the pros strengthened and the cons weakened, I’m sure Adam Smith himself would vote yes.