Just as heavy industry had played a key role in shaping Scotland’s modern identity during the Victorian era, so the shifting fortunes of this sector continued centrally to influence 20th-century Scottish history. The legacy of one-time global pre-eminence in this sector has in many ways been a bitter one, exacerbating the difficulties of adaptation and modernisation at both a structural and an emotional level. At the same time, Scotland’s redoubtable strength around the turn of the century in fields such as shipbuilding, steelmaking, mining and engineering was the original substrate for its recent tradition of left-wing radicalism. With half of Scottish families then living in one or two rooms, and a one in six mortality rate among under-fives, the early Scottish labour movement campaigned vigorously for improvements in both working and social conditions, leading to the 1915-19 upsurge of rent strikes and industrial militancy, centred in Glasgow, known as 'Red Clydeside'.

The scale of Scots’ contribution to World War I – 74,000 soldiers killed, 150,000 badly wounded, 250,000 workers employed producing munitions – was a major factor behind these waves of agitation, which saw Labour being returned as Scotland’s biggest single party in the general election of 1922. By this time, though, those vital industries were once again in decline, with the combined effects of long-term structural weaknesses and deflationary UK policies soon to be followed by worldwide depression. Between 1920 and 1930, with unemployment levels reaching towards 30 per cent, well over half a million people left Scotland in search of work, further undermining the country’s economic base.

Partly in response to declining Labour Party fortunes, and partly in parallel with the literary-based 'Scottish Renaissance' of the inter-war years, the same period witnessed the political birth of modern Scottish nationalism, with the founding in 1928 of the National Party of Scotland. Following the failure of successive Home Rule bills in 1924 and 1926, it drew most of its members from Labour Party ranks, and was originally regarded with suspicion by many wealthier nationalists, who formed their own Scottish Party in 1931. Although the two groups joined forces as the Scottish National Party three years later, their amalgamation marked the beginning of a long (and continuing) history of internal dispute, with the departure of several leading left-wingers helping to stymie the new party’s electoral fortunes for well over a decade, despite its significance as a rallying-point for debate.

From 1938, the exigencies of rearmament and then wartime production, together with the siting of military bases around the Highlands and islands, finally brought about a degree of economic recovery throughout Scotland, assisted by the effective reorganisation of planning and social administration, delivered from the new governmental seat of St Andrew’s House in Edinburgh. Although 34,000 Scots soldiers died during World War II, the civilian population escaped lightly compared to England, apart from heavy bombing of Clydebank and intermittent raids on Aberdeen.