TONY Perridge (Letters, November 6) wrote: “Michael Fry’s free-market capitalism doesn’t work for the majority of the population. Lack of regulation has resulted in financial collapse and the misappropriation of vast sums of money. Think RBS, PFI and Carillion. Sensible nationalisation of basic essential services, together with a constitutional currency and reasonable government oversight, will give us a more equitable society. Independence is the opportunity to carry out this programme for the benefit of all.”

Michael Fry responds: I can tell Tony Perridge one place where free market capitalism does work, and that is his home town of Inverness. I still remember when I first visited it, sometime in the 1970s. It was a dump. After the gruelling drive up the unimproved A9 in pelting rain, we arrived to find nowhere open for

lunch except a greasy spoon caff or a dubious Chinese. The pubs were squalid. There were no pedestrian precincts or shopping centres in those days, no chain stores overflowing with consumer goods or chic boutique restaurants offering exotic snacks.

There were no ring roads lined with office blocks and drive-in supermarkets. There were no traffic queues. There was no Inverness Caley with a brand new stadium. There were no trim housing estates full of well-heeled young families driving four-by-fours, on private estates that stretch up the braes to Westhill and Culloden. This is now the fastest-growing community in Europe, and it shows.

As I delve into my memory, I can readily suggest why so much in that Inverness of old was lacking: the ground between the River Ness and the Beauly Firth remained a malodorous mudflat, without the fuming chimneys and the tangles of pipeline and the chemical reek it offers the passer-by today. A friend of mine calls it Dolphinsludge, Queen of the Highland Fleshpots. But this is the pock-marked face of the market forces that formed those fleshpots. Though there is always a downside to economic growth, we are still better with it than without it.

So I have a question for Tony: where does he believe this transformation of his hometown has come from? Has it all been brought about by what he favours, by “sensible nationalisation together with ... reasonable government oversight”? I don’t think so. It has come about by private enterprise and by the normal operations of the capitalist system.

If it had been done by socialism, Inverness would have ended up like Glasgow.

PETE Rowberry (Letters, November 7) wrote: “Here we go again. Michael Fry parroting the political dogma of the ruling party down south, saying that Scotland has the characteristics of a socialist state ... Scotland is not taxed too much, but the Westminster Parliament has voted to reduce tax for the richest members of society. It has also failed to address large-scale tax avoidance by UK businesses.

“This is the result of a belief in ‘neo-liberal’ economics, which was tried out during the reign of Margaret Thatcher as PM, when it was described as the ‘trickle down’ theory. It was discredited then, but still looms large in the economic policy of our Westminster government.

“I do not advocate a return to the days of ‘supertax’ of 90%, but I believe Scotland has it about right.”

Michael Fry responds: Pete Rowberry wrote in from Duns at the other end of the country. Scotland has large regions of sparse population where the provision of roads and schools and so on is always going to cost a lot, and I don’t disagree with any of this. The case made in my latest column was not about high or low taxation as such, because there is always something to be said on both sides according to circumstance.

If you read me again, you will see I was arguing instead about productivity, about getting the best outputs from our inputs into the economy, about identifying improvements in technology, about making the right investments, about employing our workers most effectively.

Without higher productivity there will be no wage rises in real terms and no permanent overall improvement in living standards, regardless of how the tax system may work.

To the Scottish Government I’d say they are wrong to regard higher taxation, and the extra current expenditure it may allow, as an end in itself. They seem to me to pay no attention to productivity at all, but if they read my columns they will find they have a lot to learn.