What do we finally draw from this comparison of Norway and Scotland over the past two hundred and more years? The evolution of public institutions and values, including what Adam Smith calls the ‘just rule of law’, seems to be a critical and fairly obvious factor: governments in democracies must ultimately be tested by the way that they manage a rather wide range of public and semi-public goods that they, and only they, can manage in the interests of the people that they are elected to represent. We are referring here in particular to the management of Polanyi's triad of natural resources, human beings and money, but also to education, health and the security of the individual. The goal of this management is deeply connected to the social contract that underpins the relations of people to the State and the notions of justice and equity that are linked to that. Only the State can guarantee such things, and the desired outcomes of freedom, equity and justice for all. The ‘market’ cannot do so, and nor can individuals acting alone.

Scotland's place within Britain and its globally dominant Empire during the first 150 years after 1800, and the hundred or so years before that, gave it a completely subordinate position in British politics within which, for most of the period, people were disenfranchised and the governments in Westminster neither secured people's interests in Scottish public goods, nor delivered freedom, equity and justice for all. The Scottish elite broadly went along with this because, being better motivated by greater poverty and better equipped by education, they were able to take considerable personal advantage from the British Empire, as capitalists, traders, military men, educators and administrators. But, as we see in Chapters 6, 7 and 8, the great wealth that was accumulated by the elite in this period did not filter down to the majority of workers who were less well paid, living in poor and unhealthy housing, and with lesser access to education when compared to their counterparts in Norway or indeed England. There was no government in Britain, and far less in Scotland, with the kind of representation given to Norwegians after 1814, while the Ancien Régime retained considerable direct and indirect political clout.

INTRODUCTION

The question I address in this chapter is how our findings on the long-term development of Norway and Scotland relate to some key themes in the Theory of Development. I approach this question in the first instance from a Classical economic standpoint. That is to say, I examine the key resources and the means by which these are transformed into improved economic welfare for people. In using a comparative approach, I look for explanations of the different development paths ‘chosen’ in Norway and Scotland first in ways in which land and natural resources are owned and managed through time, next in issues of human labour, ingenuity and reward for effort, then in capital and accumulation, and last but not least institutions. Within the rubric of institutions, I believe that our findings show that the State and State policies have played a key role in the processes of allocation, distribution and transformation of both resources and of rewards. Secondly, we find the notion of ‘path dependency’, as used by Bratburg and Brandal in Chapter 4, very helpful in thinking about the linkages between politics, resources, institutions and outcomes over relatively long periods of time.

LAND AND NATURAL RESOURCES

The first proposition is that the distribution of land was a founding factor in the emerging political, social and economic development of Scotland and Norway after the seventeenth century. While the roots of the market and fundamental differences in land ownership and rights between Scotland and Norway go far back into the mists of history, for practical purposes it is the period after the Reformation that is particularly important because, as Chapter 1 argues, the destiny of the land owned by the pre-Reformation Church was quite different in the two countries, and set a pattern for the following 400 years.

Adam Smith wrote that ‘a man born to great fortune … is very seldom capable’ of improving land with profit. The great landowners were more interested in land as a source of power and high office, in luxury expenditure to aggrandise (part of) their estates, and in dependent bondmen who both worked the land and formed the lord's military capacity.

INTRODUCTION

In this chapter we look at the history of money and banking in Scotland and Norway, and make some comparisons between the monetary experience of the two countries in the period up to the recent financial crisis and its immediate aftermath, with the main focus being on Scotland. We then consider the options facing small open economies like these two countries at a moment of dramatic change in the global organisation of money. This in turn allows us to open up important questions about the future that as yet are hardly being considered in the debates over Scotland's possible independence.

The referendum debates have identified three main monetary alternatives in the event of Scottish independence: to remain in the sterling area; to join the European Monetary Union (EMU); and to issue an independent currency, with or without a peg to sterling or the euro. There has been no discussion so far of a dual or multiple system where the national currency coexists with others as legal tender – as in Zimbabwe today or indeed Scotland before the late seventeenth century, Scandinavia between 1873 and 1914, and the Hanseatic city states between the thirteenth and fifteenth centuries. Indeed, we will argue that national monopoly currencies were an invention of the mid-nineteenth century and are now in disarray, as are fixed-exchange rate currency unions. Throughout history the circulation of several independent currencies within a territory has been normal and this situation is being restored now. It would be a shame if the debate concerning Scotland's money system after possible independence were limited to models that are already anachronistic.

Both the reports cited above agree that the optimal solution is to stick with sterling in a monetary union after independence. The UK Government report, however, emphasises that effective ‘supervision’ will limit Scotland's fiscal policy independence. Many other observers have made the same point, while some have ruled out such a solution even before negotiations.5 However, a recent paper by Angus Armstrong and Monique Ebell on ‘Monetary Unions and Fiscal Constraints’, argues that ‘any negotiation to form a monetary union between two sovereign states substantially different in size, and each acting in their own self-interest, is likely to result in a currency arrangement that resembles “dollarization” in practice’, and that fiscal control by the larger partner is neither necessary nor feasible.

ABSTRACT

Scotland and Norway started the nineteenth century as political cousins with seemingly similar structural features with regard to the political unions in which they took part. Yet from that point onwards their national development diverged. Norway turned out to become a rapidly developing, consensus-oriented and egalitarian nation-state, where democratisation ran parallel with the pursuit of national autonomy. Its Scottish cousin, meanwhile, remained embedded in the Union of Great Britain. It was characterised by adversarial politics and sharp social inequalities and saw its national aspirations run awry. How and why two countries with a shared point of departure evolved into entities that differ so profoundly today provides the puzzle for this chapter. We assess the perceived similarity between Scotland and Norway at the start of the period, analyse the differences in the social and political models today and trace the factors that may account for how the gap appeared. Finally, we consider the implications for an independent Scotland with this historical backdrop.

INTRODUCTION

The longue durée of Scottish and Norwegian history gives ample reason to place the two under the same light of scrutiny. Both nations were unified as seaward empire-nations in the Middle Ages, only to move towards peripheral status under a stronger neighbouring centre during the phase of accelerated nationbuilding from the sixteenth century onwards. They both turned Protestant in the Reformation and concentrated heavy responsibility for cultural development and education in their State Churches. Both Norwegians and Scots, furthermore, maintained − even during the peak periods of political integration under the dominant external centre − distinctive legal traditions and institutions as well as urban corporations with some independence in their external trade relations. Finally, in cultural terms, both countries harboured progressive rural movements with the potential to forge links with an emerging industrial working class.

In the run-up to the referendum on Scottish independence in 2014 an argument has been made − especially by proponents for independence − that Scotland should regenerate its relations across the North Sea. However, as we will argue in this chapter, in social and political terms Scotland and Norway have diverged widely from a seemingly similar structural position, thus complicating any claim to familiarity today.

NORWAY–BRITAIN RELATIONS AFTER THE SECOND WORLD WAR

In the autumn of 1956, the Norwegian Prime Minister, Einar Gerhardsen, and his wife Werna were invited to the United Kingdom for an official visit. The invitation was a direct consequence of the Gerhardsens having paid a State visit to the Soviet Union the year before. British sources reported that the Norwegian premier had been much taken in by the Soviet system, hence the invitation to London to counteract these impressions and influences and to strengthen Norway's adherence to the Atlantic alliance. The Norwegian premier had strongly indicated that he saw himself as a kind of bridge-builder between the East and the West. Gerhardsen belonged to the Norwegian Labour Party, Arbeiderpartiet, which had excellent relations with its British counterpart Labour. But Labour had been out of power since 1951. The Conservative government in Britain wanted to strengthen and maintain good relations with Norway, also to show that the Tories had no intention of dismantling the British welfare state, but rather to maintain and strengthen it. The planners in London took great care to showcase for Gerhardsen different aspects of the successful British welfare state. Interestingly, apart from these more general considerations, the absence of genuine Anglo–Norwegian relations is striking. The interlocutors simply did not have much in common or much to talk about. But this is not only the case for 1956, for the whole period under consideration here there was little in terms of real-life alliance politics and relations, despite much official rhetoric to the contrary.

It was standard operating procedure in Whitehall that prior to State visits, the Foreign Office mandarins provided background material and briefing papers for the ministers. This material routinely consisted of a summary of the most important bilateral relations between the United Kingdom and the country of origin for the visiting head of state, a discussion and analysis of the state of affairs, and suggestions for the politicians on how to handle the issues. Going through the material in the National Archives in Kew, it is quite astonishing that there are hardly any Anglo–Norwegian issues that should warrant high-level political discussions.

INTRODUCTION

The contrasting evolution of landownership in Scotland and Norway is discussed in Chapter 1, as it affects so many social, economic, political and other processes between the Reformation and the present day. One of these concerns agriculture, especially changing agricultural structures, agrarian politics and policies, and rural settlement.

This chapter focuses on four main processes that we consider to have underpinned the important differences in the structure and nature of agriculture and rural settlement and indeed in policies between the two countries today. These four processes are firstly, the timing and nature of the ‘first’ agrarian revolution which to a large extent followed the reorganisation of land ownership and rights and was a much earlier and more powerful movement, and, significantly, driven by different hegemonic ideas about ‘improvement’, in Scotland than in Norway. Secondly, the free trade period and wartime food shortages in the second half of the nineteenth and early twentieth centuries. Thirdly, the development of agricultural policies and extensive State intervention in the inter-war period and immediately after the Second World War. Finally, the ‘second’ agrarian revolution, mainly after the Second World War, involving large-scale mechanisation and the application of artificial fertilisers and chemicals, and new plant- and animal-breeding methods and objectives, and its subsequent consequences and policy responses after the implications of this form of agriculture became clear.

Before moving on to discuss these themes in greater depth, we present some comparative data that illustrates some of the differences between agricultural structure, production, incomes and their evolution over the past two centuries or so.

In terms of land area and its utilisation, Norway is roughly four times larger than Scotland, but has a lower proportion of land used for agriculture and more than twice the proportion of land in forests and woodland. Farming in Norway extends well north of the Arctic Circle, especially near the coast which benefits from the Gulf Stream. However, average temperatures are lower.

Although commodities grown are similar in Norway and Scotland, Norway has a higher proportion of oats in cereals grown, and a lower proportion of barley. The proportion of wheat is almost the same.

INTRODUCTION

There are striking differences between the respective stories of industrial development in Scotland and Norway since the eighteenth century. These especially concern the timing of the shift from ‘proto-industrialisation’ to ‘modern industrialisation’ based on the factory system; the relationship between agrarian, rural, urban and industrial development, especially concerning the peasantry, migration streams and urbanisation; working-class divisions and alliances; attitudes and policies concerning foreign interest and capital in relation to basic resources; the source of energy for modern industry and its impacts on the location of industrial development; the importance of domestic and overseas markets and industrial protection; different ideas on the role of the State and protectionism; and the differential impact of neo-liberal policies after 1970. Mainly as a result of these rather deeply rooted differences, but also because of Scotland's constitutional position within the UK, the story of the development and exploitation of North Sea oil after about 1970 is also quite different, as are its social and economic consequences.

Between 1750 and 2010, Scotland gained and lost a world-class – and worldscale – manufacturing industry. Scottish textiles, iron and steel, coal, ships, railway engines, and the steam engines to drive them all, together with a host of interconnected industries, were the engines of industrial development. At the beginning of this period and for nearly a century, this industrial development was mostly rural, involving pluriactive farmers and their households, based on power from water, charcoal and wood, iron ore from the hills, and linen and wool from Scottish farms and crofts. Until the later stages of the twentieth century, it was also mainly Scottish-owned. At its peak it was largely based on export-orientated ‘heavy’ industry, and for this reason Scottish manufacturing and the people who worked in it suffered disproportionately in recessions. By the middle of the twentieth century, the experience of recessions filled the memories and future thoughts of many. The increasingly hegemonic idea among decision-makers was that Scotland was far too dependent on heavy industry, and that what was needed were more consumer industries. Government policies focused on this task periodically after the Second World War, and traditional industries were either propped up or left to die. When North Sea oil appeared in the early 1970s, neither Scottish nor UK heavy industry was in a position to participate to any real extent.

INTRODUCTION

Local governance is one of the key areas flagged up whenever the ‘Nordic model’ is being compared to the UK or Scotland. In this chapter we discuss the main political, social and economic factors and processes that explain the very different structures of local governance and powers and autonomy of local government in Norway and Scotland today.

Our story starts in the medieval period, when functions of local governance in both Scotland and Norway were essentially divided between the monarch's secular local supporters and appointees, and the organs of Church government, centred around the parish. Local governance was very important in this period because communications by land and sea were slow, difficult and dangerous, and centralised governance was impossible. The kingdoms were also fragile, and support from local powerholders had to be won, and kept.

The Reformation did not greatly change the nature of local governance, especially those functions accorded to the Church, which included providing subsistence to the poor and maimed, and in the later period schools as well as certain quasi-judicial matters, especially before the Enlightenment when moral offences were punished by the congregational ‘courts’, the most severe punishment being banishment or exile.

However, the nature of local government changed in the late eighteenth and nineteenth centuries, in Scotland following Union with England in 1707 and nineteenth-century extensions of the franchise, and in Norway after independence from Denmark in 1814. Our focus in this chapter is mainly on this period and subsequent major reforms, partly associated with the extension of the franchise in the later nineteenth and early twentieth centuries. However, we also examine and describe the structure, functions, powers and financing of local government in Scotland and Norway today, highlighting some of the key differences, and the political, economic and social consequences of these differences in the context of devolution and the independence referendum.

MEDIEVAL LOCAL GOVERNANCE IN SCOTLAND AND NORWAY

Although accounts of early local government and governance in Scotland and Norway are rare, the available historical evidence suggests that they had similar origins. Both countries were founded when central monarchical governments were weak and contested, both had large and difficult terrain and geography, and sparsely settled and small populations, implying difficulties of communication and central control, and both were experiencing emerging nationhood and national identity.

The comparative approach is one of the most useful in the intellectual toolkit of the historian. It enables the scholar to determine what is distinctive and what is commonplace about the country he or she is primarily interested in studying. It encourages an analytical rather than a descriptive discourse as questions, paradoxes, problems and puzzles arise which would otherwise remain hidden or dormant without such a broader context of investigation. The pitfalls of exceptionalism, introspection, parochialism and navel-gazing in national histories can be avoided to some extent at least. Invaluable also is the fact that some features which domestic historians take for granted can often immediately seem striking and intriguing to the outsider.

The historiography of modern Scotland has already benefited significantly from the approach. In the final three decades of the last century a series of conferences, followed by publication of their proceedings, was organised to explore the comparative historical development of Ireland and Scotland. At the heart of the discussions was a central issue. Around 1700 the social, economic, resource and demographic contours of both countries seemed probably similar. Indeed, there was some evidence that Ireland showed more promise of material progress than Scotland. Instead, however, Scotland experienced rapid industrialisation from the middle decades of the eighteenth century and eventually a position of global economic hegemony while Ireland's tragic fate culminated in the horrors of the Great Famine, the most terrible human catastrophe in nineteenth-century Europe. Scholars on both sides of the Irish Sea learned much about the causes and nature of the development paths of the two societies until the project finally came to an end more than a decade or so ago.

Now in this important book we can read another exciting attempt to examine through the comparative lens the modern histories of Norway and Scotland. A team of interdisciplinary experts drawn from both countries and elsewhere in the UK have been assembled to consider the radically different historical paths of two small nations and the social, political and economic consequences from c. 1800 to the present day.