The Transformation of Scotland: The Economy since 1700

Published by EH.NET (August 2005)

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T.M. Devine, C.H. Lee and G.C. Peden, editors, The Transformation of Scotland: The Economy since 1700. Edinburgh: Edinburgh University Press, 2005. vi + 279 pp. ?17.95 (paperback), ISBN: 0-7486-1433-8.

Reviewed for EH.NET by Christopher A Whatley, Department of History, University of Dundee.

This book will be welcomed by economic historians of Scotland and should be of interest generally to academics and students of economic development, regional economics, and the role – and limitations – of governments in economic management. The book is an edited collection, but a strong narrative runs through the nine chapters (eleven including the Introduction and the Conclusion), and the reader unfamiliar with the economic history of Scotland over the past three centuries is provided with sufficient signposts with which to follow the main phases and features of Scotland’s development since 1700. From being a relatively under-developed economy, Scotland after the Union was transformed into a heavily industrialized society underpinned by a remarkably efficient agricultural sector. The Victorian and Edwardian economy, however, was encumbered by low pay, underemployment and the widespread use of casual labour and piecework, with resultant social inequalities that would continue to have an adverse effect on both the economy and Scottish society well into the twentieth century. From the later Victorian period the foundations of earlier achievement began to be loosened and in some cases swept away altogether – or mined out – and the country has had to rely rather more heavily than much of the rest of the UK on state support, in a variety of guises but mainly transfer payments and microeconomic policy – designed to assist Scottish industry and create employment.

Seven chapters have been written by senior economic historians, one of whom, George Peden of the University of Stirling, is better known for his admirable work on the British Treasury. Two of the contributors are more recent recruits to the field. Ewen Cameron has bravely tackled the comparatively little-investigated subject of Scottish agriculture in the twentieth century; his focus and theme is ‘modernisation,’ for which we can read a massive drop in employment, and, by and large, the marginalization of rural issues in Scotland, although the development of tourism and the retreat from the towns on the part of those seeking a quieter life but little direct involvement in agricultural pursuits are the exceptions. The thrust of David Newlands’ chapter is that, contrary to neoclassical economic theories about ‘the equalising role of prices within the market mechanism,’ regional differences in Scotland were more strongly marked at the end of the twentieth century than in the immediate post-World War Two period, an observation based on employment structures, unemployment rates and sharp variations in the incidence of poverty.

The editors have written the most substantial sections of the book. Some of this work is new or consolidated from monographs, journal articles and chapters in edited works. Aberdeen-based Clive Lee’s chapter on the financial network in the eighteenth and nineteenth centuries throws up much important information that might otherwise be concealed from the non-specialist. The place and importance of financial institutions like Standard Life and Scottish Widows, and of firms such as the Scottish American Investment Trust are explored and emphasised. Notwithstanding the depiction of the Scottish Victorian economy as ‘flawed’ (p. 64), throughout the period investigated, there is ample evidence of the capacity of Scots to follow and exploit market opportunities. An age-old problem has been that these opportunities were often to be found overseas, and thus the ‘enterprising Scot’ of the eighteenth century was harder to find in Scotland in the later nineteenth century, and in fact the rate of new firm formation is still less than the UK average. Nor, until recently, did investment opportunities include working class housing. The housing deficit in Scotland runs like an open wound throughout modern Scottish history, with the much lower level of owner-occupancy in Scotland (a function of lower wage levels) being reflected in the small proportion of the UK’s building societies founded north of the border. George Peden’s chapter on the managed economy successfully places Scotland within the wider UK and international contexts, and traces the efforts of the central government and the Scottish Office, aided by the work, for example, of the influential Toothill Report (1961), to tackle Scotland’s economic and social difficulties of the twentieth century. This they did with a fair measure of success during from the 1940s through to the 1970s. It will be salutary for Tories in Scotland in 2005, with their political influence having been reduced to virtually zero, and who under Margaret Thatcher retreated from direct involvement in economic development, to read of the interventions in Scottish economic affairs of the Conservative governments of the later 1950s and early 1960s, and the real if modest achievements of the then Secretary of State for Scotland, John Maclay.

Readers looking for the promised fresh interpretations of ‘key and controversial issues,’ such as the impact of the Union of 1707 and the Highland Clearances, may be a little disappointed. The chapters that deal with these topics are largely based on the substantial work of their author, Tom Devine, completed some years ago, although the newly-appointed University of Edinburgh historian does incorporate some recent scholarship (there is less formal acknowledgement of this, however, than with the other contributors). His ‘speculative counterfactual’ (p. 27) – what would have happened if England had invaded Scotland in 1706 – is interesting enough, but is an odd question about an unlikely scenario. The Union did open up new markets, legally, even if the Scots sometimes needed state assistance to enter them. The period during which this happened was short, but crucial in creating the platform for future development. But whatever the effect of the Union in the short-run, and if there is agreement that it was economically neutral from the later eighteenth century through to the early 1900s, Lee (and Peden) are pretty certain about the value to Scotland of the country’s UK status in the second half of the twentieth century, particularly through the operation of the so-called Barnett funding formula, devised in 1978.

This is a useful book that, by and large, brings the historiography of the post-1700 Scottish economy up to date. As usual with surveys of this nature, it reveals under-researched topics and debates that are still unresolved, but that is no bad thing.

Christopher A Whatley (University of Dundee) is Professor of Scottish history and the author of Scottish Society, 1707-1830 (2000). He is currently working on The Scots and the Union, a study of the political, economic and religious causes and immediate consequences of the Union of 1707, which formed the United Kingdom of Great Britain. This is to be published by Edinburgh University Press in 2007.

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