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05/11/13 18:00

Scotland and China: Wealth and Wellbeing of Nations

Rt Hon Alex Salmond MSP, First Minister
Tsinghua University, Beijing
5 November 2013

It’s a pleasure to be here at Tsinghua – one of the most prestigious universities in the world.

It’s also a university which demonstrates the growing friendship between China and Scotland.

Robin Williams from Edinburgh University is an honorary professor here, while two years ago Wang Hui, your Director of Advanced Studies, was a visiting professor at the University of Edinburgh.

In total, 18 Higher Education Institutions in Scotland have links with Chinese universities. Last year, more than 8,000 students from China came to Scotland to study.

Scotland is now the most successful Confucius institute location of any country in Europe – added to only this morning by Hanban, in an agreement signed where a fifth Scottish university - Heriot Watt - will also become a Confucius university. And that adds to the lustre of growing agreements between Scotland and China.

Yesterday afternoon, as First Minister I witnessed seven separate agreements between Scottish and Chinese companies. With the agreement signed this morning, of course that makes eight agreements – which is of course a very auspicious and lucky number in China

This stunning campus here is a reminder of another link between Scotland and China – quite an unusual one, which is based on the past, as well as the present. When this university was established in 1911 it was on the site of the Qing dynasty’s royal gardens.

Historic Scotland – our main heritage agency – signed an agreement two years ago to provide digital scans of the Eastern Qing tombs. We presented the first results of that work at a reception last night. It’s a fantastic example of using 21st century technology to document key and important aspects of our heritage.

It’s actually quite important for Scotland as well, because the digitalisation techniques we use, we like to demonstrate that we don’t devote our entire digital expertise and time to producing excellent games such as Grand Theft Auto - important though that is! We spend a little time, in our digital expertise, doing things like digitalising the Eastern Tombs of the Qing dynasty.

A year after the second Qing Emperor died and was buried in the Jingling tomb, one of Scotland’s greatest philosophers was born, Adam Smith. And that is going to be the focus of my speech today, because he marks another link between the past and the future in both Scotland and China.

Adam Smith was born during a time called the Scottish Enlightenment, a period which saw an astonishing torrent of intellectual and scientific discourse and achievements. And that era, above all, marks out Scotland’s reputation for invention.

Just as huge, important advances and inventions in the ancient world - paper-making, the compass and printing – were invented here in China, so Scottish inventions and discoveries helped to create the modern world – things like the television, the telephone, penicillin and the steam engine. Indeed, when Premier Li Keqiang visited Edinburgh in 2011, I can tell you that he endeared himself enormously to the people of Scotland by saying that he was delighted to be in Scotland, describing it as “the land of invention”.

In philosophy, the legacy of the Enlightenment has been far-reaching, and occasionally unexpected. Among other things, it influenced another Scot, James Legge from Aberdeen, almost a century after Smith was alive, in 1861. Legge published the first English language translation of Confucius in 1861, and in doing so, did a huge amount to open western eyes to the richness of Chinese culture.

However I want to focus today on the enduring influence of Adam Smith in instructing the affairs of nations.
On my last visit to Beijing, I spoke in the Communist Central Party School about Adam Smith and his influence and the lessons he had to teach us on modern-day issues such as climate justice – about how his ideas illuminate the need for countries in the developed world to address climate change, and to help countries which are being severely affected by its consequences. I presented the school with a maquette of Adam Smith – designed by the sculptor Sandy Stoddart, whose full size statue of Smith stands on Edinburgh’s High Street.

I also gave a speech about Smith at Princeton University earlier this year. I’m talking about him again today because his work reflects universal values. It is relevant to both east and west, to the 21st century as well as the 18th.

Now, most people, certainly for all economists, the most famous of Adam Smith’s works is The Wealth of Nations. This book is the foundation text of economics. This is the first economics textbook, because Adam Smith founded the science of economics. Most people are aware of the pioneering and extraordinary influence and insightful nature of the work. But it has often been cited by people who don’t truly understand the full range of Adam Smith’s contribution to philosophical thought.

In The Wealth of Nations, Smith pointed out, in a famous passage, that: ‘It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their self-interest.’

What people don’t realise is that Adam Smith had written an earlier- and to my mind equally significant work - The Theory of Moral Sentiments which gives a broader view of the foundations for his moral philosophy. He expressed the opinion that the basis for our judgements was sympathy – or empathy, as we would now call it.

Some people argue that there is an essential conflict between the ideas expressed in The Wealth of Nations – that is, the theory of self-interest and monetary reward to produce a service – and the ideas expressed in The Theory of Moral Sentiments, which argues that human beings are motivated by something beyond self-interest, like empathy, by concern for other people.

But actually, what Smith was arguing, and the appeal of The Wealth of Nations in particular, was not just self-interest but what he called ‘enlightened self-interest’, and that is a self-interest which recognises these responsibilities to, and feelings for, other people.

So, what is enlightened self-interest? In China I hear people trying to express enlightened self-interest all the time. I hear it in just about every business deal where people talk about a ‘win-win’ situation. But enlightened self-interest is about more than identifying just ‘win-win’ situations. It’s about understanding that there are wider gains for society as a whole or the individual within society when society is strong and prosperous.

So my contention is that The Theory of Moral Sentiments and The Wealth of Nations, taken together, don’t contradict each other. They balance each other. The moral philosophy of the first, and the science of economics of the second, supply many of the insights we need to confront the challenges of today. In particular, enlightened self-interest helps us to reconcile individual desires and collective needs.

One of Smith’s closest friends was another great philosopher of the Enlightenment, David Hume. They are buried within half a mile of each other in Edinburgh, not far from the Scottish Parliament.

David Hume said: “The greatness of a state and the happiness of its subjects… are commonly allowed to be inseparable with regard to commerce.”

Smith himself said in the Wealth of Nations: “What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole . No society can be flourishing and happy, of which the far greater part of the members are poor and miserable.”

That emphasis on individual and collective wellbeing is echoed in the motto of this university – “self-discipline and social commitment”.

The idea that wealth has a purpose; the importance of human happiness and a flourishing society alongside a growing economy; these things are as important to us in the 21st century, as they were to Hume and Smith in the 18th century.

That’s why the present Scottish Government has had as its Purpose since 2007: “To focus government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth”.

While Smith and Hume’s Enlightenment values resonate far beyond Scotland to this day, they have weight and relevance here in China in the 21st century.

At Aberdeen University in Scotland earlier this year I heard a lecture by Professor Lai Desheng of Beijing Normal University.

He summarised the Chinese Government’s approach to economic development, with a slide showing the covers of the Chinese translations of The Wealth of Nations and The Theory of Moral Sentiments.

He argued that the Chinese Government aspired to “make the moral man have a sense of economy, and to let the economic man have a sense of the moral”.

Professor Lai was clearly well aware that former Premier Wen Jiabao used to carry a copy of The Theory of Moral Sentiments with him wherever he went across the world.

Premier Li said last week that “our people want not only a better material life, but also a richer cultural life and social justice”. And President Xi Jinping’s “Chinese dream” captures the common thread in all of this – the link between collective progress and the prosperity, wellbeing and rights of individual citizens.

There’s an important and interesting point here. China’s astonishing economic growth in recent decades is leading you to think about the quality of that growth.

China has achieved some amazing results. In the same speech that Premier Li Keqiang gave on Friday, he estimated that China has reduced its population living below the poverty line by more than 600 million in the last 30 years.

Several years ago Professor Joseph Stiglitz – the US economist and Nobel Laureate, who sits on the Scottish Government’s Council of Economic Advisers – referred to China’s economic policies as creating “the largest reduction in poverty in history”. The United Nations earlier in the summer also highlighted China’s success at poverty reduction.

But inevitably, China is now considering fundamental issues about that economic growth - who benefits from it, what outcomes it brings, what sort of society it creates.

It could be argued that over a similar period, some countries and institutions in the west – starting from a different position – stopped considering those questions deeply enough. They lost sight of the importance of reducing poverty and paid too little attention to social inequality in society.

President Obama in a speech over the summer was frank about the effects this has had. As he pointed out “growing inequality is not just morally wrong, it’s bad economics”.

The President was making the economic point that in the USA, rising inequality has curbed the spending power of the majority of families and individuals. If left unchecked in the longer term, it will further debilitate the ability of low-income families to contribute their talents, their skills and their innovations to society.

The United Kingdom is seeing similar problems. It is now one of the ten least equal countries in the Organisation for Economic Co-operation and Development – it ranks 28th out of 34. And inequality in the UK is likely to rise in future years, as a result of welfare cuts which will affect the most vulnerable members of society.

Adam Smith said that it was “basic equity” that those who helped to provide food, clothes and housing for others should themselves be able to afford food, clothes and housing.

Yet in recent years, the UK’s minimum wage has not even kept up with the cost of inflation, at a time when the UK Government has cut tax rates for the very highest earners in the country.

In Scotland we are trying to take a different approach. In the Scottish Government, its agencies and our health service, we guarantee our employees what we call a “living wage” – which is around 20% higher than the minimum wage.

We encourage private sector employers to do the same. In an independent Scotland, we would like to go further, by ensuring that the minimum wage keeps pace with price rises.

Scotland is a slightly less unequal society – that is a more equal society than the UK, but far too many people in Scotland suffer the consequences of inequality: reduced educational attainment, poor health outcomes and shorter life expectancy.

For example, in the most deprived parts of Scotland men and women are likely to enjoy good health for 18 years less than men and women in the wealthiest parts of the country.

In recent years, a mechanism has been established which allows countries to consider and compare how they promote collective wellbeing and individual rights. It’s called the Universal Periodic Review, and it’s run by the United Nations’ Human Rights Council.

It means that all UN member states are assessed by fellow members of the UN – it’s a system which recognises that we’re all on the same journey towards developing human rights; all of us can learn from each other.

Scotland is part of this journey. We have some way to go – as the health inequalities I mentioned a few moments ago illustrate. But we are acting now take part in the international dialogue on human rights, and to promote the rights of our citizens and the wellbeing of our society.

Next month in Scotland we will launch our first Action Plan for Human Rights – setting out how Scotland will meet internationally agreed standards. The action plan will make clear that each of us has a responsibility to build a community in which every individual can flourish. It attracts international attention already and its principles, I would submit, can be traced right back, in Scottish terms, to the Enlightenment of Adam Smith.

It epitomizes this Government’s ambition for Scotland; to build a fairer society at home and to make a positive contribution to the wider world.

The international dimension to all of this is an important one. After all, the idea of enlightened self-interest, of interdependence, doesn’t just apply within nations – it also applies between nations. The prosperity of one nation or region should matter to us all.

When I spoke to the Communist Party Central School in Beijing two years ago, I announced that Scotland would establish the world’s first climate justice fund.

Climate justice is based on a simple principle – that countries like Scotland, which have benefited from carbon emissions in the past, should help those countries which are now being affected by climate change.

This subject is also attracting interest in China. Prof Pan Jiahua, of the Chinese Academy for Social Sciences, is on the High Level Advisory Committee to the Climate Justice Dialogue established by the Mary Robinson Climate Justice Foundation.

Scotland’s own fund and contribution to climate justice focuses on water projects in Malawi and Zambia. The feedback we have received from partners who are delivering our projects is that the impact of some of these projects on some of the world’s poorest communities has already been substantial.

It is enlightened self-interest in action – a powerful statement from Scotland, a nation determined to live up to the best traditions of its past.

So, with that in mind, we doubled the size of the Climate Justice Fund last month. But I would emphasise that the fund is still small in relation to the global scale of the problem – infinitesimal, in fact, in terms of the challenges that are faced internationally

It Is important for us to understand that in the developed world climate change is causing substantial inconvenience and tragedy. In the developing world it is causing enduring crisis and unremitting chaos.

It is perhaps, in collective terms, the greatest economic, social and moral issue facing the planet – one where there is a real need for urgent action.

At a time when millions of people around the world are already losing their rights to life – or a sustainable livelihood – through no fault of their own; transformational leadership on climate justice from China or the USA – or better still, both acting in concert - would be an immensely powerful statement.

It would be one of the most important expressions, by any Government at any time, of the principle of enlightened self-interest. And perhaps a move in this direction is signalled by State Councillor Yang Jie Chi’s indication that China intends to play an ever more proactive role in world affairs.

Ladies and gentlemen, I want to close by making a reference to, and then a presentation of a digitalised document from the Scottish Records – a copy of a letter sent by Adam Smith to his great friend, David Hume, on 5th July 1764.

Smith at the time was in Toulouse in France, Hume was in Paris. Smith was acting as tutor to a young Scottish nobleman called the Duke of Buccleuch.

Anyway - and here I paraphrase – Smith says to his friend, David Hume: “I am bored out of my mind and therefore have begun to write another book”. The first book he was talking about, of course, was The Theory of Moral Sentiments. The book he wrote to Hume about became The Wealth of Nations, and became the foundation text for economics.

I hope this letter will serve as a symbol of the growing friendship between Scotland and China, and as a reminder of Scotland’s contribution to the world- the intellectual and scientific discoveries and innovation for which we are famous.

But I hope the letter will have a wider message, which is why I also presented a copy of it to Princeton University earlier in the year.

I hope that it will remind you of the enduring and universal values which Adam Smith articulated – sympathy, solidarity and enlightened self-interest.

Because if more of us – in west and east – can keep those values in mind in the challenging years and decades to come, it will do much to secure, not just the wealth, but the wellbeing of Scotland, of China, and indeed of all nations.