‘WRITE about productive investment.” It sounded easy. But it has turned out to be a surprisingly tricky task.

First, though, a word of thanks. When he was the editor of The National, Callum Baird gave me the opportunity to write a regular column here. All that writing was a productive investment: NUJ members will no doubt be appalled that I did it for free.

The payoff came when I started to plan my book, How To Think Like An Economist, which has just reached bookshops. To show the publishers that I could explain complex economic concepts in straightforward language, I used some of those articles. So, I owe a large debt of thanks to this newspaper for giving me two years in which I could hone my style, breaking me of the habit of writing like an academic.

In such a short book, I had to cut out plenty of material. I’m now planning a spin-off based on Franklin Delano Roosevelt’s famous declaration declared at the start of his first inaugural address: “We have nothing to fear but fear itself.”

When Roosevelt spoke, hoarding had started to replace investment across the US. Poor people tried to withdraw cash from banks, causing runs when they all tried to do it at the same time. Wealthier people started to buy gold.

As an investment, there’s nothing less productive than a gold bar. It just sits in a vault – it doesn’t even corrode. It’s a purely speculative investment, held on the basis that the price of gold is going to increase, on the assumption that there will always be people who will want to buy gold.

In contrast, productive financial investment channels funding to people or organisations who create the capacity needed to make goods and services in future. That could mean making machinery, or building roads, or providing education and training, or – especially in poor countries – improving healthcare and food security.

Every investment involves some degree of speculation. No-one knows what the future will hold. That’s why expertise in scrutinising investment plans, and deciding which ones have a good chance of providing an adequate return, has always had a central role in banking and investment management.

When Roosevelt was campaigning during the depths of the Great Depression, the financial sector had stopped playing that role effectively. The New Deal was about government stepping in to the investment process because the private sector had become frozen with fear.

READ MORE: Tories target Michael Matheson with campaign event in his constituency

There is also a problem of the financial sector failing to channel funds into productive investments because pure speculation is always easier. All that’s needed to succeed in speculation is to anticipate price changes more quickly than anyone else.

That’s why trading companies will spend freely so they can respond to news milliseconds faster than their competitors. It’s also how the financial sector ended up in a morass of inter-locking contracts in the run-up to the global financial crisis, with businesses doing much business within the sector. And when fear paralysed markets in 2007-08, again governments had to step in.

Simply considering funds flowing from the financial sector to organisations planning to undertake investment, the inevitable uncertainties make it very difficult to say which ones will increase productivity. We are really reduced to telling plausible stories about what might happen.

When I encounter people who tell me that we need to increase productive investment, that’s really beside the point – I have yet to meet anyone who has set up in business with the objective of making unproductive investments.

I have also never come across a clear, decisive argument to guide us in choosing between the use of public and private funding. Nor is there any obvious reason for preferring domestic to foreign funding. How to utilise these channels effectively is a profound political challenge for every democratic country.

While we should have made better use of the crisis to ensure that the financial sector would concentrate on funding investment, rather than engaging in pure speculation, any supply of investment funds needs to meet demand for them.

When money is footloose and can flow around the world, we would expect the supply of investment funds to flow to where there is demand. Stagnant labour productivity confirms that Scotland – like Britain – has been poor at generating that demand since 2008.

Exploring why would take another article. We know that Scotland has a very low business birth rate. Even more than in the rest of the UK, business founders sell out quickly before businesses have reached a large scale. This may reflect lack of capacity to meet the needs of businesses at birth and at critical stages of development. For such deep-seated problems, there are no easy, quick fixes.

Dr Robbie Mochrie is from the Scottish Currency Group