John Kay

The substitution of transaction-oriented dealings for relationship contracting added to profitability in the short run; but in the long run it eroded relationships that had been the underlying source of much of that profitability.

You are the recently appointed First Minister of an independent Scotland, sitting in the elegant drawing room of Bute House, enjoying a relaxing moment after a stressful day. Then you receive an urgent call from the Governor of the Central Bank of Scotland. A few minutes later, the Governor is shown in. He explains that within a few days the Royal Bank of Scotland will be unable to roll over its facilities and will run out of cash. What do you do?

My primary purpose is to begin a debate here in Scotland, a debate which I intend to take forward in the Council of Economic Advisers, and which I hope Reform Scotland and others who are concerned with the business and politics of Scotland will also have an opportunity to take forward.

John describes the eonomic agenda for Scotland following the SNP’s latest victory, in the light of the continuing legacy of an apocryphal account of Scottish history.

Scottish banknotes are not legal tender in England – or in Scotland. What matters is not what is legal tender, but what others will accept.

The economic case for separatism is that it removes the focus of grievance and the source of subsidy and makes Scotland again responsible for its economic destiny.

The appeal of separatism in modern Scotland is linked to the country’s relative economic decline, as self- congratulation turns to grievance in response to failure.