The SNP’s Spring conference in April is going to be a big one. Party members will probably decide the future of the party’s independence campaign, either in support of keeping Sterling for an unknown amount of time, or to create a brand new currency for day one of our independence.
I’ve already stated my view multiple times on this blog and Bella Caledonia. For an independent Scotland to grasp our full potential we must create a new currency and maintain full control over our monetary powers. You can read my full view on this by clicking here.
But it is not just me who advocates Scotland creating its own currency ready for independence or as soon as humanly possible. In fact this view is shared by many economic experts from an array of different backgrounds and schools of thought.
So, here’s a list of 18 economic experts who back Scotland having its own currency.
1) Bill Mitchell
Bill Mitchell is an Australian Professor of economics at the University of Newcastle, New South Wales, Australia, Director of CofFEE, and a leading proponent of Modern Monetary Theory.
In 2012 Bill Mitchell wrote an article titled “Scotland should vote yes in 2014 but only if…” which he argued that Scotland should vote yes, but on the basis that it had its own currency and central bank. After reading Andrew Wilson’s recommendation of keeping Sterling post-independence in 2018 the economist wrote two articles titled “Oh Scotland, don’t you dare!” You can read part 1 here and part 2 here. Both articles debunk Wilson’s currency proposals and 6 recommended tests. In his conclusion Bill writes:
“The Growth Commission recommendations are consistent with the mainstream neoliberal consensus of these issues. They are not conducive to the creation of a vibrant, progressive nation. Scotland would be exposed to British government decisions yet have no political stake in those decisions.”
2) Warren Mosler
Warren Mosler is an American economist, engineer, author and co-founder of the CFPES at University of Missouri-Kansas City.
Warren Mosler recently entered the debate online when discussing a new currency with unionist scammer and troll Neil Lovatt. Lovatt was determined to compare an independent Scotland to Turkey, but Warren wasn’t buying it and set the record straight. You can find the debate between Lovatt and Warren in the tweets below.
3) Fadhel Kaboub
Fadhel Kaboub is an American Associate Professor of Economics at Denison University and President of the Binzagr Institute for Sustainable Prosperity.
Fadhel recently weighed in on the currency debate in episode 12 of the MMT Podcast titled “Monetary Sovereignty, Colonialism and Independence“. Although accidently being informed that the SNP wants to use the Euro, when there is technically no currency policy at all, the argument still applies if Scotland used Sterling. Fadhel says in the podcast:
“Full monetary sovereignty is absolutely necessary for political sovereignty. You’re going to have a situation where the European Union (Westminster if using Sterling) is going to set its monetary policy based on its interests, and it’s not going to allow Scotland to run its own public policy and its own fiscal spending independently.”
4) Joseph Stiglitz
Joseph Stiglitz is an American economist, public policy analyst, and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences in 2001, is a former senior vice president and chief economist of the World Bank and is a former member and chairman of the US president’s Council of Economic Advisers.
Joseph Stiglitz is by far one of the most influential economists of our time, so having his support for the economic argument of an independent Scotland is certainly saying something. Whilst he originally backed plans for a Sterling union in 2014, Stiglitz has since updated his views. The National covered this change in their article “Nobel Prize winner says Scottish pound could kickstart economy, reduce deficit and help transition to EU“. Stiglitz spoke to BBC Radio Scotland and said:
“Small countries can have their own currency. The reason that Iceland, which had one of the deepest downturns in 2008, had one of the strongest recoveries was that it had its own currency. If there was a Scottish pound floating, you could help stimulate the Scottish economy. The deficit would come down to make it acceptable to joining the EU.
“I think there’s going to be, going forward, a greater willingness – I hope there is – within Europe for countries to be a member of the EU but not have the euro. Sweden doesn’t have the euro, obviously the UK did not have the euro before, so they have shown some willingness to accept countries into the EU without joining the euro.”
5) Richard Murphy
Richard Murphy is an English Professor of Practice in International Political Economy at City University London, a chartered accountant and political economist. He is an advisor to the Trades Union Congress on economics and taxation, and is a long-standing member of the Tax Justice Network.
Many of us while already be aware of Richard Murphy’s contribution to the independence debate. This includes debating with Kevin Hague on the GERS figures and talking on the finance and constitution committee at Holyrood on the same topic. You can see an extended interview with Richard Murphy by clicking here.
Richard has written multiple blog posts on why an independent Scotland should have its own currency with independence. However his blog post titled “The Scottish Growth Commission gets its economics very badly wrong” is most clear with his disapproval of Andrew Wilson’s proposals in the Sustainable Growth Commission. In his article he writes:
“The ability of a country with its own currency to issue debt to finance growth will be foregone by Scotland not having its own currency. Forget full employment then. But worse, what the Commission is saying by adopting these objectives, which will cruise all others in the report, that Scotland should welcome austerity in its place. That’s what a deficit of 3% is guaranteed to deliver. This is literally importing George Osborne’s economics into Scotland.”
“This Commission’s suggestions are a disaster for Scotland, the SNP and the cause of independence. The Commission has proved itself the slave of pre-crash economics and a proponent of everything that is oppressive about neoliberalism. It’s really hard to imagine how it could have been much worse or more out of kilter with what I sense the people of Scotland want.”
6) Steve Keen
Steven Keen is an Australian economic historian, author, Professor and Head of the School of Economics, History and Politics at Kingston University in London and a fellow at the Centre for Policy Development.
In response to the Sustainable Growth Commission, Steve Keen argued the commission’s report did not address the serious nature of private debt. In Common Space’s article “It’s private debt, stupid: Has the Growth Commission learned from the 2008 crash?“, Keen says:
“This is part of the thinking that is absent from the Growth Commission report ironically – that a growing economy over time clearly needs a growing amount of money over time. And the question is how do you create that money? I have three ways that I see have the potential to create money.”
“You export more than you import. The government can spend more than it takes back in tax. And the banks can lend more than they get back in repayments. Looking at those three ways of doing it, if you don’t have a trade surplus, which is the UK situation, then you’ve actually got to compensate for the effective reduction of money in the economy out of running a trade deficit.”
“So lets just imagine start with a zero trade deficit as a ballpark way of thinking. Then you’ve got the two other ways. The banks can create more money than they take back in repayments. That gives you an eventual private debt bubble.
“Or the government can spend more than it gets back in taxation. That gives you increasing public debt. If you have your own treasury and your own central bank and your own currency, effectively government’s getting in debt to itself. The whole performance of QE (Quantitative Easing) is an indication that actually the government doesn’t have to sell bonds to the private sector to finance stuff at all.”
When asked which was more dangerous, private debt or public debt, Keen responded:
“With the Growth Commission’s complete avoidance of the discussion of private debt, they are saying ‘oh it’s got to be public debt that’s dangerous. If you include them both, the historical record is, it’s much more dangerous to have high levels of private debt,”
7) Laurie Macfarlane
Laurie Macfarlane is a Scottish economist and writer based in Edinburgh. He is Economics Editor at openDemocracy, a Research Associate at the Institute for Innovation and Public Purpose at University College London and former Senior Economist at the New Economics Foundation.
In the same Common Space article linked above, Laurie shared Keen’s view of an independent Scotland adopting its own currency if it went for independence. He says:
“You are using the currency of the rest of the UK. The Bank of England has no mandate to set monetary policy in the interests of Scotland at all. If a crisis did hit shortly after this arrangement was put in place, and there was a significant recession or a significant downturn, there are very limited options to how the government could respond. It couldn’t devalue its exchange rate because it doesn’t have its own currency.
“It couldn’t ease monetary policy, reduce interests rates or undertake QE because it doesn’t have a central bank. It couldn’t even use fiscal policy that much because, a) it’s set out significant targets for deficit reduction, but also b) because you are basically reliant on borrowing from financial markets you’d need to say ‘ok, please can we borrow some money from you’ and they’d say ‘well you know your economy isn’t looking too good so we’ll charge you a 10 percent interest rate’ or whatever. You can end up in a very dangerous spiral of greater indebtedness and you are building up debt in a currency you don’t control. And that’s where you get really, really dangerous situations.”
8) Yanis Varoufakis
Yanis Varoufakis is a Greek economist, academic and former politician. He is former a Greek Minister of Finance, has published numerous texts on economics, game theory and formerly taught at the University of Texas and University of Athens.
In 2014 Yanis wrote an article titled “If Scotland, why not Greece?” where he argued that using Sterling would tie the Scottish economy to the city of London. He encouraged the SNP to instead support a new Scottish currency. He would reaffirm this position in 2018.
9) George Kerevan
George Kerevan is a Scottish journalist, economist, and former politician. He was an academic economist for 25 years and chair of the Economic Development Committee of Edinburgh Council, where he led the capital’s regeneration in the 1990s, including creating the Gyle Business Park and initiating the International Science Festival. He is the author of Tackling Timorous Economics, with Katherine Trebeck and Stephen Boyd. He is a board member of Common Weal.
George has written about the importance of being a monetary sovereign nation multiple times. He first expressed annoyance at the Scottish Growth Commission with his article in The National titled “Growth Report gets an A+ for effort, B- for currency“, where he argues that SNP members won’t be happy to campaign on an already failed 2014 policy. In his recent piece on Bella Caledonia titled “Replying to Andrew Wilson: a Scottish Currency is not Symbolism, it’s Power” George explains why the currency makes the real difference, saying:
“Second, it is impossible to boost growth and escape austerity unless an indy Scottish administration can set its own interest and exchange rates and borrow to invest without a City of London veto. I fully accept you can’t have a Scottish currency on day one, but you need to tell voters that’s what an SNP government wants to introduce as soon as practically possible. There is no such thing as “constructive ambiguity”, Andrew.
“And third, I’m highly suspicious of handing over the decision to create a Scottish currency to an “independent” Scottish Central Bank stuffed with the people who brought the world to the edge of economic ruin in 2008.”
10) Monique Ebell
Monique Ebel is an economist and formerly Associate Research Director at the National Institute of Economic and Social Research (NIESR). She has a Ph.D. in Economics at the Universitat Pompeu Fabra and a Master’s in Economics at the University of Bonn.
Monique and Angus Armstrong were both contributors to the paper “The Economic Consequences of Scottish Independence“, both which concluded that an independent Scotland would best seek its own currency. In the paper both economists agree:
“Having its own currency and controlling its own interest rates would provide an independent Scotland with the greatest amount of flexibility when faced with shocks. The more flexibly the Scottish government could respond to shocks, the greater the stability of its macroeconomic framework. While we acknowledge that exchange costs for trade would rise if the rest of the UK and Scotland no longer shared a currency, these costs pale in comparison to the costs of financial instability due to a failed currency or monetary union. Moreover, many countries in Europe with similar wealth and population size (such as in Scandinavia) and dependent on neighbouring markets have their own currency.”
11) Angus Armstrong
Angus Armstrong is Chief Economist Asia and Managing Director and formerly Head of Macroeconomic Analysis at HM Treasury. He has a PhD in economics and is a Honorary Professor at Stirling University.
As pointed above, Angus and Monique both worked on the same paper and agreed the best route for an independent Scotland to take was adopting its own currency. Concluding their section of the paper, both economists write:
“Governments can choose whatever currency arrangements they wish, but private citizens will decide whether or not they are stable. As we approach the referendum it appears that we are heading towards the option of ‘dollarisation’ almost by default. Yet this is an option that the Scottish Government’s Fiscal Commission Working Group does not consider a “clear option for Scotland.” While introducing a new Scottish
currency has serious transitional risks, over the long term it is the best option for prosperity for an independent Scotland.”
12) Mark Blyth
Mark Blyth is a Scottish Professor of International Economics and Director of the Rhodes Center for International Economics and Finance at Brown University.
In 2014 Mark wrote an article titled “It’s Not About the Money” on Foreign Affairs where he describes the potential problems with a currency union. He also goes on to support Scotland having its own currency and lays out the requirements to create one.
“London could turn the screws on Edinburgh further, and not without reason. An independent Scotland would have a massively oversized banking system, with assets possibly exceeding 1,000 percent of GDP. This would represent an Icelandic-sized risk to British taxpayers, who would have to stand behind the liabilities of the Scottish banks if they ran into trouble. As the Financial Times put it in a recent editorial, no British government would back those banks “unless Scotland were to accept very heavy constraints over its public finances.” In short, budgetary austerity and conservative policies would remain the only game in town, even after independence.
To get out of this bind, an independent Scotland would need its own currency, an option the Yes campaign has only recently acknowledged as a possible “plan B.” Without monetary sovereignty, a country can neither print nor devalue its way out of trouble. And if it doesn’t want to default, austerity is the only way forward.”
The following experts are on the advisory panel of MMT Scotland, a pro-independence economic think tank that advocates Scotland being a monetary sovereign country.
13) Stephanie Kelton
Stephanie Kelton is a Professor of Public Policy and Economics at Stony Brook University, chief economist on the US Senate Budget Committee 2015 and an Economic Adviser to Bernie Sanders’ 2016 Presidential Campaign.
Common Space recently covered the launch of MMT Scotland, specifically Kelton joining the group’s advisory board. You can read more by clicking here.
14) Pavlina Tcherneva
Pavlina Tcherneva is an American economist, program director and associate professor of economics at Bard College and a research associate at the Levy Economics Institute. She is also an expert at the Institute for New Economic Thinking.
15) Randall L Wray
Randall Wray is a Professor of economics at Bard College, Research Director of the Center for Full Employment and Price Stability, and Senior Scholar at the Levy Economics Institute.
16) Mathew Forstater
Mathew Forstater is a Professor of economics at UMKC and research director with the GISP. Mathew is also a research associate of the Levy Institute and was the founding director of the CFEPS.
17) Rohan Grey
Rohan Grey is Founder and President of the Modern Money Network and is also a Research Fellow at the Global Institute for Sustainable Prosperity. Rohan holds a bachelor’s degree in government and business from the University of Sydney, a J.D. from Columbia Law School, and a L.L.M. from the London School of Economics.
18) Steven Hail
Steven Hail is a Research Scholar at the Institute of Sustainable Prosperity and Lecturer in the School of Economics at the University of Adelaide in South Australia. Hail holds a BSc and an MSc from the London School of Economics, in addition to a PhD from Flinders University.
The quality of expert opinion backing a new Scottish currency is hard to beat, and we have not yet heard any rebuttals from defenders of the Sustainable Growth Commission. Nor have we had in depth arguments from mainstream unionist campaigns. So we look forward to them when they come.
If you have your own questions on a new Scottish currency you can check out MMT Scotland’s FAQs section on their website.