Last week, Labour suffered its most crushing by election defeat yet by losing the Glasgow East constituency to the Scottish National Party.  The result owes more to the British government’s unpopularity everywhere than a desire for independence.  Polls continue to show that a referendum in Scotland would produce a substantial majority against.

But the existing measures which established a devolved assembly in 1999 have changed Scotland’s economic agenda in ways that are only beginning to emerge. The powers of the Scottish government are limited, but its freedom of action is constrained more by past habit than legal restriction.  In many respects, both the Scottish Executive and the UK Treasury continue to behave as though Scotland were still another English government department

To gain freedom of action is almost as difficult as to give up power. A Scottish childhood is a lifelong education in the ready acquisition and dogged pursuit of grievance – a trait that has, ironically, proved so damaging to Gordon Brown. Impotent resentment has for long been the dominant theme of Scottish politics.  For Labour, Scotland’s economic and social problems have been the fault of international capitalism.  For Scottish nationalists the blame lay squarely with the English.  Both claims are absurd.

The culture of victimhood has not served black Americans, or the Irish, or the Indians, well:  better for blacks to run for President, for the Irish to embrace the structure of a modern European state, and for India to release entrepreneurial energy than to brood on the past.  But at least black Americans, the Irish, and the Indians can claim to have once been victims.  The Scots can not.  In the southern United States, Ulster and India, people of Scottish origin were the oppressors, not the oppressed.  Few countries benefited as much as Scotland from globalisation and imperialism.  

The tragedy of deprived Glasgow East is that its present condition is the result of measures which appeared for a time to represent the triumph of municipal socialism.  But the decanting of poorly housed inner city residents to planned modern estates proved a disaster in Scotland as it did almost everywhere else.  The apparent functionality of these projects was based on a misunderstanding of the complexity of life in real communities and was ultimately not functional at all.

Experience elsewhere confirms that the resulting decay is not easily arrested.  The British government has funded urban regeneration programmes and schemes to attract footloose industry to West Central Scotland.  In the end, there is not much to show for its expenditure though public spending in Scotland remains well above the UK norm.  Overall income per head today is broadly in line with the UK average thanks to two booming cities in Edinburgh and Aberdeen and the partial revival of the Scottish highlands.

The recent surge in the fortunes of the SNP, based on recognition of these economic realities, is associated with a shift from a culture of complaint to a more constructive agenda.  The once barely concealed Anglophobia has been suppressed.  The demand for unjust enrichment in the slogan ‘ it’s our oil’ has at least partly given way to analysis of a more substantive economic question.  Why has Scotland’s growth rate not matched the record of other small states in north-west Europe – the ‘arc of prosperity’ that stretches from Ireland to Finland?

But Margaret Curran, Labour’s candidate in Glasgow East, offered no sense of this change in mood when she pledged to continue the fight against injustice despite defeat.  Outcomes in Glasgow East are indeed unjust, but that injustice is not the fault of multinational companies, the WTO, the UK government, or other agencies outside Scotland.   Scotland’s economic problems, like its opportunities, are of its own making.

The important economic challenges ahead for Scotland are not to fight Westminster for resources, or to obtain a larger share of temporarily buoyant North Sea oil revenues.  A Scottish government cannot protect the country from the vagaries of the global economy and should not try.  The need is to develop and exploit the competitive advantages of Scottish businesses on an international scale.  If Scotland seems to be drifting towards independence, it is not because of the economic logic of that outcome, but because, like Margaret Curran, opponents cling to a tradition of Red Clydeside which values heroic failure above pragmatic success.

John Kay is a member of the Scottish Government’s Council of Economic Advisers.