Global Challenges, Rapid Change and Radical Uncertainty
We live in an age of huge global challenges, rapid change and radical uncertainty.
In the last two years, Scotland has dealt with two of the biggest economic shocks in history, the health, social and economic consequences of the Covid-19 pandemic and Brexit.
Scotland must address the immediate challenges of recovering from the economic and social consequences of Covid, learning to live with it, and adapting to a world where the UK is not a member of the EU. This is in the context adapting to the existential threat of climate change, an ageing population and rapid technological change. We also need to recognise that we are living in a world of radical uncertainty, where challenges and opportunities will emerge that we don’t currently understand. Radical uncertainty is when we have incomplete knowledge of the world or the connections between our actions and their outcomes – and where there is no means of resolving that uncertainty. The dimensions of radical uncertainty include obscurity, ignorance, vagueness, ambiguity, ill-defined problems and a lack of information. This is a world of uncertain futures and unpredictable consequences.
Ambition and Vision for a Better Scotland
The Scottish Government has an ambitious vision for a better Scotland. This is set out in the National Performance Framework, which informs Scottish Government policy development (covering all areas of devolved powers). The purpose stated in the National Performance Framework is for Scotland to:
- create a more successful country;
- give opportunities to all people living in Scotland;
- increase the wellbeing of people living in Scotland;
- create sustainable and inclusive growth; and
- reduce inequalities and give equal importance to economic, environmental and social progress.
This vision has widespread support. The December 2021 ‘Understanding Scotland Survey’ tested attitudes towards the economy and the Covid-19 pandemic. Findings included:
- “The pandemic has shown the need to re-evaluate who creates real value in the economy”: 76% agreed (strongly or somewhat) and 6% disagreed (strongly or somewhat); and
- “The pandemic has shown the need to transition to a ‘wellbeing economy’”: 62% agreed (strongly or somewhat) and 12% disagreed (strongly or somewhat).
Whilst these attitudes show that there is public support for a change to create a different kind of Scotland, the question remains as to whether the ambitious vision can be achieved in a devolved Scotland.
Addressing the global challenges and making changes will require the creation of a society with more agency and less helplessness.
So how is a society with agency different from a society of helplessness?
The field of positive psychology provides some insights that explain the importance of agency in creating a prosperous economy and thriving society. It is the science that studies human flourishing, investigating the strengths and factors that enable individuals, organisations and communities to thrive.
A Society with Agency
Agency is the foundation on which a wellbeing economy can be developed.
Martin Seligman, widely known as the father of positive psychology describes human agency as follows: “at its very fulcrum, a mind that metabolises the past and present to create the future and then chooses among possible futures”.
Human agency has three parts:
- Self-efficacy, ‘I can’: belief that the individual has some control and the ability to make decisions in their life;
- Optimism, ‘I can in the future’: belief that control will continue in the future;
- Imagination, ‘I can pursue a range of goals’: belief that there are a range of possibilities for the future and that the individual can make choices between them.
Whilst optimism is part of agency, it is not a blind optimism, rather, an optimism that comes from taking control of one’s own life. Research shows that individuals with agency are happier and more satisfied with their lives and tend to have higher levels of wellbeing.
At the individual level, research by psychologists finds a range of outcomes that are associated with the high subjective wellbeing that comes from high levels of agency:
- health and longevity;
- better social relationships;
- work productivity;
- virtuous behaviour;
- creativity; and
Understanding the benefits that flow from individual agency explains why it can lead to better economic outcomes and be good for society as a whole. However, that comes from more than a sum of the individual benefits.
A key reason for this is that individuals influence those that they come into contact with, their families, at work, with friends and in life in general. This tendency is due to our biology and neurology as social beings and shows up in all aspects of our lives from happiness and physical health to academic and work success. Encouragingly, greater levels of happiness and wellbeing, can be passed along to others. We have all had the personal experience of feeling better after spending time with someone who is optimistic and positive. These feelings are infectious.
Another outcome of having a sense of agency, and higher levels of wellbeing is greater resilience. Greater resilience leads to being better able to manage stress that may come our way. Better management of stress then leads to less neurological and physiological impacts and better cognitive functioning. We are less likely to go into ‘fight or flight’ and survival mode and are able to think more clearly and make better decisions as a result.
People who do not feel they are in survival mode will also tend to be more altruistic since they are less focuses on self-preservation and so more open to acting collaboratively.
A sense of individual agency is associated with behaviour that is altruistic, collaborative, creative, compassionate and courageous.
Individual agency entails a sense of responsibility and trust that connects individuals in families, communities, organisations and societies as a whole. It is an important part of the foundation for building social capital.
The idea that we are social beings with an innate tendency to collaborate and work in the interests of others as well as ourselves is not a new one. Indeed the opening paragraph of Adam Smith’s Theory of Moral Sentiments: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”
Individual agency is not the same as individualism. It is about taking control of one’s life but not without regard for others. Adam Smith recognised the importance of this: “Individualism is loneliness, not liberation; the shelter of the bunker ultimately fails. Belonging does not shackle us to burdens, it brings us home to our humanity.” 
Economists have long associated high levels of social capital with good economic performance. It is no accident that the countries that have the highest levels of economic output per person and rank well in international comparisons of wellbeing and sustainable development (for example, the Nordic countries), also have high levels of social capital.
More recently, developments in the science fields of neuroscience and psychology are helping to explain the link between individual agency and wellbeing and how that builds the social capital that allows successful advanced economies to flourish.
A Society of Helplessness
A society of helplessness is the opposite of a society with agency.
At an individual level, living in a state of helplessness is associated with low levels of wellbeing and poor mental health. Psychology tells us that those who are most miserable tend to feel helpless and that helplessness might even be our default state – if we don’t realise that we have agency.
There are many potential negative consequences of living with a sense of helplessness and/or a state of dependency. People who feel they have no control over their lives may be inclined to give up easily and may experience negative emotions, poor health and wellbeing.
When lack of control impacts a person’s wellbeing and they feel in survival or self preservation mode, it is difficult to be collaborative, courageous, creative or innovative. In survival mode, the focus may be on the past rather than the present and even less so on the future. This can lead to lack of imagination, a difficulty in feeling hopeful or seeing a better future. Helplessness can be associated with poor decision making if we are dependent on the decisions of others taken on our behalf.
Helplessness and the lower levels of wellbeing that go with it can be associated with poor physical and mental health, poor educational attainment, fear, inaction and the desire to escape. Furthermore, if we don’t have the agency to take action to improve the situation that we are living in, other outcomes may be to seek escape, disengaging with those around us and the world more broadly, in some cases to the extent of substance misuse or other self-harming activities.
Such feelings and behaviour are bad for those who experience them, and have a negative impact on those around them, family, friends and colleagues. Just as agency and positive emotions are contagious, so are helplessness and negative emotions.
Where is Scotland Now?
If a society with agency and a society of helplessness can be seen as two ends of a scale, where might Scottish society be on the scale?
There is no single measure that can answer that question. Economic and health indicators that are available suggest that Scotland may be closer to a society of helplessness than one with agency.
One way that a low level of agency might be reflected is in the business start-up rate in Scotland. The total early-stage entrepreneurial activity (TEA) rate measures the proportion of adults who are either involved in setting up a business or are the owner or manager of a business less than three and a half years old. In 2019 the TEA rate for Scotland was 7.2%, compared with 10.5% for England, which is not a high benchmark to assess performance against, since the UK had only the 33rd highest rate out of the 50 countries include in the global survey of TEA rates in 2019.
Deaths of Despair
The consequences of helplessness can be fatal. Angus Deaton (the Scottish born Nobel prize winning economist) and Anne Case’s work on “Deaths of Despair”, shows how deaths by suicide, alcohol related liver disease and drug overdose have risen sharply in the United States since the mid-1990s, particularly for those who have not been in higher education. This is attributed to the sense of despair that comes from declining employment prospects, unaffordable healthcare costs and declining real incomes.
In 2020, the combined alcohol-related, suspected suicide and drugs-related deaths, in Scotland were 3,334, more than 60 per 100,000 population, and so on a similar scale to that found by Deaton and Case in the United States. The rate of drugs-related deaths in Scotland is a particular concern since it is three and a half times the UK rate and higher than the rate in any other European country. It has risen by four and a half times in the last 20 years.
In a 2022 interview with Holyrood magazine, Angus Deaton spoke about how Scotland is the only other country to have a level of drug deaths comparable to the United States. He notes that poverty is not the major determinant of deaths of despair, highlighting people who don’t feel in control of their lives, feelings of disempowerment and dislocation and a democratic deficit.
UK Hyper-centralisation and Devolution
The centralised political structure of the UK does not lend itself to the development of high levels of individual and community agency.
The UK is unusual in its centralisation. Not only is government centralised in London, but the UK’s main media, business, legal and financial organisations are all concentrated in London. This hyper-centralisation (a term used by leading economists Paul Collier and John Kay) is not a static process and has increased over time. For example, there has been a growing trend for larger companies to base headquarters functions in London, close to the financial markets and consolidation in several industries (for example, banking and other financial services) which has further increased centralisation.
Whilst there has been some devolution of political power, including the establishment of the devolved Scottish Parliament in 1999, the UK’s centre of political gravity has remained in London, where the main financial decision making takes place. This is further exacerbated by the centralisation of the UK media through which the voters see the political process.
As Paul Collier and John Kay observe: “Attempts to decentralise – whether to devolved governments, academies running schools or NHS trusts running hospitals – are all constrained by the requirement that overall financial control remains with Whitehall. But responsibility and financial autonomy are inseparable, as every parent learns. Whatever the British failure… the fault is attributed to government unwillingness to provide enough money. Sometimes the claim is justified, sometimes not. But there is no need even to think about the question, or engage in self-examination, because blame always lies somewhere else. And the process is self-reinforcing and self-justifying: agencies which are not given financial autonomy do not acquire the capacity to exercise it responsibly.”
Whilst there has been an increase in the financial powers of the Scottish Parliament, the key financial decisions that relate to macroeconomic policy, the size and role of the state in the economy and the taxation system are still made in Whitehall. This was demonstrated during the Covid-19 pandemic where public health decisions were being made in Scotland (and the other devolved nations of the UK) but financial decisions on dealing with the economic consequences of public health decisions (for example, whether to provide support for businesses that were not able to operate and employees on furlough) were made in Whitehall. It has also been demonstrated by the replacement of EU funding, that had been managed in Scotland, with UK funding programmes managed from Whitehall, and increased UK Government involvement in devolved areas (for example, the levelling-up agenda which has seen UK Government directly funding Councils).
Scotland accounts for less than 9% of the UK’s economy, population and MPs and so when decisions are being made in the hyper-centralised UK, it is reasonable to not expect full consideration of Scottish needs and opportunities. The strategic economic decisions made by the UK Government are therefore unlikely to be based on Scotland’s economic opportunities, assets, strengths, needs or preferences – unless by luck or coincidence.
Moving from Helplessness to Agency
How can Scotland make the move from a situation of dependency and helplessness to one characterised by a recognition of agency at the individual, organisational and societal level?
Whether a society is characterised by helplessness or agency, the feelings and behaviours that result are contagious. Individuals who recognise that they have agency spread that recognition in the families and communities, in the organisations they work in and interact with and in society more generally. Similarly a society characterised by agency encourages individuals, families, communities and organisations to recognise that they have agency and take control of their lives.
As everything is connected: at the individual, relational, organisational and societal levels, the trigger for virtuous cycles of increasing agency (or vicious circles of increasing helplessness) can come from a number of places.
This includes at the societal level, stimulated by change at the national level – such as shift in the political culture from helplessness and dependency to agency. Political independence can be expected to provide such a spark, since it will mean an inevitable change in the political culture. All of the key decisions on economic policy and governance will be taken in Scotland, by political leaders directly accountable to Scottish voters.
Independence will mean that Scottish political leaders and institutions will need to take responsibility and control, to recognise that they have agency.
There will be a need to take strategic decisions, to decide what is important.
This will require analysis of Scottish needs and opportunities and what can be done to pursue them. There will be no limit or constraint to what can be prioritised and pursued, beyond what voters in Scotland support.
At the individual level agency has three components, and these apply as well at the national level. They are efficacy (the belief of control and the ability to make decisions), optimism (the belief that efficacy will continue in the future) and imagination (the belief that there are a range of possibilities for the future and choices that can be made between them).
Political independence for Scotland would be associated with a move to agency at the national level and since everything is connected at the individual, relational, organisational and societal levels, it would be expected that such agency would be spread beyond the political world, as a virtuous cycle, which would also feedback to further boosting agency at the national political level.
Both psychology and economic history give us good reason to believe that this shift would make us wealthier and happier, since it requires us to engage with and take responsibility for the strategic economic decisions that would need to be made.
Independence would just be the starting point for a process that moves Scotland from a state of helplessness to a society of agency. However, the contagious nature of agency and the virtuous cycles that would be sparked means that change can happen rapidly.
Supporting and accelerating such a positive cycle will require institutional support and change, to ensure that organisations, families, communities and individuals also move along the spectrum away from helplessness and towards agency.
At the government level, this will mean avoid replicating a centralised UK state. Replacing a state and economy centralised in London with one centralised in Edinburgh, would do little to increase agency and would result in an overheated Edinburgh economy and increased regional inequality.
The principle of ‘subsidiarity’ is consistent with a country that recognises the importance of agency. That is, the principle that decisions should be made at as local a level as possible.
At the organisational level, national and local governments showing imagination and ambition, as greater agency is realised and behaviour changes, will attract others to show some confidence in the future, including the growth in indigenous organisations and attracting investment from elsewhere.
Agency and the Size of Nations
Institutional structures that recognise the importance of agency will be required, to ensure that individuals, organisations and communities effected by decisions are not remote from the decision making process.
The economics profession has paid little attention to the effect that the size of nations has on economic performance and social outcomes. It has generally been assumed that since there are successful large nations and successful small nations, just as there are unsuccessful large nations and unsuccessful small nations, that the size of nations does not matter much.
A notable exception to this is work by Alberto Alesina and Enrice Spolare which explored what determines the size of nations, how the size of nations changes over time and whether a country’s size matters for economic success.
They noted that the size of nations varies between China with 1.2 billion in 2002 when they wrote (now almost 1.45 billion) and Tuvalu with 11,000 (now 12,000) and that the number of independent countries increased from 74 in 1945 to 193 in 2002.
They note that if size brought only benefits, there should be a tendency for the entire world to be organised in a single country, the opposite of what has happened in the last century. There were 51 member states when the United Nations was formed in 1945. By 1960 that had increased to 99 and there are now 193 members, as well as another dozen or so countries that have disputed status.
Alesina and Spolare argued that the optimal size of a country is determined by a cost-benefit trade-off between the benefits of size and the costs of heterogeneity.
The benefits of size include economies of scale in providing public goods, military defence, the size of the economy or “domestic market”, the potential to provide regional “insurance” that can smooth the business cycle and the ability to redistribute from richer to poorer individuals and regions). The costs of heterogeneity of preferences over public policies provided by government favours smaller nations since it is easier to get agreement on what the government should provide in smaller countries than in larger diverse countries.
In a large country, per capita costs may be low, but the heterogeneous preferences of a large population make it hard to deliver services and formulate policy. Smaller countries may find it easier to respond to citizen preferences in a democratic way.
Amongst the main conclusions is that in a more integrated world economy, the trade-off between heterogeneity of preferences and economy of scale tilts in favour of small scale, as in a world where trade is global, small nations can prosper.
Individual and Societal Agency
At the individual level, agency can also be associated with good quality, meaningful jobs. An economic system based on agency will create such jobs and will also be built from a strategy that prioritises the creation of good quality jobs. Such jobs would be well-paid, interesting, challenging, non-routine, outcome (rather than process) focused and based on discretionary learning.
The increase in good quality jobs and the promotion of individual agency requires a focus on personal development and a growth mindset.
The idea that we look to personal development as the foundation of a successful economy and society is not a new one. The success of the Nordic countries is a useful case study with the role of personal development known as “the Nordic Secret”.
The Nordic countries are amongst the wealthiest in per capita terms, and the people who live there have the highest average life satisfaction rankings in the world. However, in the mid 19th century they were the poorest countries in Europe, each developing in the late 19th century and early 20th century to join the richest and most socially successful countries in the world (with Finland starting later, after independence and the first world war).
One of the features of the Nordic countries is their high level of social cohesion and trust. There is more to it that this, since this comes from a underlying shared sense of responsibility (and a high level of agency).
While it might be easy to assume that this is something intrinsic to the Nordic countries, it has been nurtured and encouraged, as part of a process of personal development and nation building, and so can be replicated. This did not happen by chance in the Nordic countries it was a strategic choice they made, a long term investment in people and the contribution they could make to the nation. An independent Scotland could follow such an approach, building on the principles already established in the Scottish education system in a series of reforms over the last 25 years.
Agency and Independence
Moving from a state of helplessness to a society characterised by agency, can be the driver and result of Scottish independence. High levels of agency help explain why the small advanced economies have overtaken the UK in the last century and in the last two or three decades in particular, have been accelerating ahead of the UK’s performance.
Scotland has a choice to make. It can settle for a state of relative dependency and helplessness, hoping that the UK can find a way to reverse its decline. Or it can embrace the idea of agency and take responsibility for shaping a new future, emulating what has been achieved in other small advanced economies, like Denmark, Sweden, Norway, Finland, Switzerland and the Netherlands.
 John Kay and Mervyn King (2020), Radical Uncertainty
 The first version of the National Performance Plan was developed in 2007, to track Scotland’s performance across a range of measures. It has evolved into the framework for assessing progress towards creating a wellbeing economy. https://nationalperformance.gov.scot/
 Diffley Partnership and Charlotte Street Partners (December 2021), Understanding Scotland: A New Survey For Scotland – Economy
 Martin Seligman (2018), The Hope Circuit: A Psychologist’s Journey from Helplessness to Optimism
 Martin Seligman (2018), Flourish: provides good summary of the academic literature on the benefits to the individual of human agency, as well as practical advice for what individuals might do to increase their own sense of wellbeing.
 Adam Smith (1759), The Theory of Moral Sentiments
 Adam Smith (1759), The Theory of Moral Sentiments
 See quantitative analysis of comparative measures of economic performance
 GEM Consortium, University of Strathclyde, Aston Business School and University of Ulster (2021), Global Entrepreneurship Monitor Scotland 2020 Report
 Although there are some indicators in the GEM research which may be grounds for optimism: the TEA rate for 18-29 year olds in Scotland considerably lagged the rest of the UK a decade ago but is now higher than the other UK nations
 Global Entrepreneurship Research Association (2021), Global Entrepreneurship Monitor 2020-21 Global Report
 Angus Deaton and Anne Case (2020), Deaths of Despair and the Future of Capitalism
 National Records of Scotland publications on Alcohol-specific Deaths 2020 (August 2021), Probable Suicides 2020 (August 2021) and Drugs-related Deaths in Scotland (July 2021)
 National Records of Scotland (July 2021), Drugs-related Deaths in Scotland
 Holyrood (April 2022), Sir Angus Deaton: ‘A lot of people feel they’re not in control of their lives anymore’
 Paul Collier and John Kay (2020), Greed Is Dead – Politics After Individualism
 Paul Collier and John Kay (2020), Greed Is Dead – Politics After Individualism
 Alberto Alesina and Enrice Spolare (2003), The Size of Nations
 The contribution of that discretionary learning jobs could make to the Scottish economy and society was set out in the 2014 Working Together Review, and Independent Review chaired by Jim Mather and commissioned by the Scottish Government (Working Together Review (August 2014), Progressive Workplace Policies in Scotland
 Lene Rachel Anderson and Tomas Bjorkman (2017), The Nordic Secret: A European Story of Beauty and Freedom
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