Scotland’s Independence Referendum: What will Hayek Say?

What would be the likely insight of the great Austrian economist and Nobel Prize winner Friedrich von Hayek on the coming Scotland independence referendum? 

At the Lew Rockwell Blog, Austrian economist Thomas DiLorenzo lifts a quote from Mr. Hayek’s masterpiece the Road to Serfdom (Chapter 15, pp. 257-258) for a cue:

We shall not rebuild civilization on the large scale.  It is no accident that on the whole there was more beauty and decency to be found in the life of the small peoples, and that among the large ones there was more happiness and content in proportion as they had avoided the deadly blight of centralization.  Least of all shall we preserve democracy or foster its growth if all the power and most of the important decisions rest with an organization far too big for the common man to survey or comprehend.  Nowhere has democracy ever worked well without a great measure of local self-government, providing a school of political training for the people at large as much as for their future leaders.  It is only where responsibility can be learned and practiced in affairs with which most people are familiar, where it is the awareness of one’s neighbor rather than some theoretical knowledge of the needs of other people which guides action, that the ordinary man can take a real part in public affairs because they concern the world he knows.  Where the scope of the political measures becomes so large that the necessary knowledge is almost exclusively possessed by the bureaucracy, the creative impulses of the private person must flag.  I believe that here the experience of the small countries like Holland and Switzerland contains much from which even the most fortunate larger countries like Great Britain can learn.  We shall all be the gainers if we can create a world fit for small states to live in.” 

(Emphasis by Mr. DiLorenzo).

Economics Drives Politics: Scotland’s Independence Referendum

Will Scotland secede from the United Kingdom? This will be determined by a referendum in September 18th. 

As for a background on this, Sovereign Man’s Simon Black explains: (bold mine)

Anyone who’s ever seen the movie Braveheart has heard of William Wallace, one of the original heroes of Scottish independence.

Though Mel Gibson’s highly fictionalized account was one of the most historically inaccurate movies in modern cinema, Wallace did, in fact, lead Scottish rebels against English invaders. And he died for his cause.

Wallace was severely tortured after being convicted of high treason against King Edward I; he was dragged by horses, hung nearly to the point of death, revived, relieved of his manhood, ritualistically disemboweled, made to watch his entrails set ablaze… then finally beheaded.

Not the way you want to go.

That said, the movement for Scottish independence lived on, and England folded in 1357, ending a 60-year war between the two nations.

For the next 350 years Scotland remained an independent state until… go figure… a financial crisis.

In a desperate attempt to become (almost overnight) a major world trading power in the 17th century, the government of Scotland backed a comically ill-fated attempt to colonize Panama.

It failed miserably. Yet the investment in the Darien Scheme (as it was known) amounted to up to half of Scotland’s total money supply.

When it went bust, Scotland was nearly broke.

There had already been a push to reunify with England for some time. And with the country’s economy in shambles, unification seemed like a good move.

Today Scotland again finds itself debating the question of its independence, fueled once more by economics.

It’s easy to point to a number of different causes of rebellion, revolution, and dissent. But ultimately it’s economics that matter more than anything else.

When times are good and everyone is prosperous, few people want to rock the boat. No one has an incentive to change the system when it’s working so well. 

Only when the prosperity begins to collapse do people have a strong motivation to change the status quo. 

Suddenly the jobs are less plentiful, the taxes are higher, the standard of living is lower, and the costs are greater. And people demand change. 

The greater the pain, the greater the desire to shake things up. And it’s happening across the world.

In Europe, separatist and extreme parties are gaining ground on the heels of an economic depression that has besieged the continent for several years now.

In France, Spain, Italy, Greece, etc., people are fed up with the current state of affairs, and they are agitating to split off from their current political leadership.

Likewise, Scottish voters are going to the polls in just over a week to decide if they should break away from the UK.

And from the looks of things, the independence movement has a very strong chance of winning.

A wave of secessionist movements around the world have been underway.

Crimea has just seceded from Ukraine, early this year.

There is one is Venice (from Italy), in Catalonia (from Spain), in Quebec (from Canada) and in Transnistria (from Moldova). 

Secessions (political decentralization) have been part of the growing political trend brought about by the ongoing and deepening failures of political economic centralization which has been a product of the (top-down) industrial era. The coming crisis will magnify such transition.

And secession trends will likewise be reinforced by the deepening of the information age (bottom-up) where connectivity via social media networks facilitates the enhancement of community (net lingo: tribal) based non-contiguous relationship