Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

UK conservative says it: financial capitalism is out of control

by Jerome a Paris Tue Mar 21st, 2006 at 05:46:41 PM EST


How the City of London came to power

The political and cultural con sequences of the City of London's hegemony over British life are as important as the financial and commercial ones.

For here is an elite of the elites whose power has grown to a dimension that is truly imperial in the modern world - stretching across countries and continents, able to ignore the previous constraints of national sovereignty.

This is written by Hywel Williams, a former advisor to John Major, the conservative UK Prime Minister in the early 90s (after Thatcher but before Blair). It's written about the City of London, the financial heart of Europe, but it has lessons for everybody.



The fact that money markets can whisper and shout to political power, that they can determine the policies of governments and the strategies of armies, is as old as politics itself.

(...)

The ability of the British political elites to cut a good financial deal as a result of their power arrangements has been a constant theme. There is a direct line of crooked dealing that connects the church lands grabbed by early 16th-century politicians because of the Protestant reformation with the share options and directorships ­garnered by their late 20th-century successors because of the Thatcherite ­privatisations.

Money and power reinforce one another. "Duh!" might be your reaction, but it's nonetheless interesting to have such an explicit reminder from a conservative writer, and it bears repeating because basic care for balance of power means that money must be kept away from power as much as possible. The inevitable results are excessive power grabs, sleaze and the "culture of corruption". But it is worth saying again: the culture of corruption comes from the unfettered access to politicians that big money, via lobbyists or otherwise, has.


The hegemony of today's City elites is, however, very different from the eminence of their predecessors, who had to compete and coexist with other forms of elite power. Britain's once self-regulating professional elites have had the heart ripped out of them by the benchmarking, target-focused state and by a bogus consumerism, with its empty jargoneering about "customer-shaped service delivery".

This is as true of doctors and of dons as it is of teachers, soldiers and policemen. In the process, Britain has lost its independent-minded public service elite. City lawyers and accountants now derive their status from the firms they work for rather than from their membership of a professional body.

Meanwhile, the political elites have collapsed into introspection as the gap between the parties narrows in reflection of their unanimous view that markets work.

The theme here is that independent counter-powers are necessary, and they need to have their legitimacy come from something else than money or the State - especially if the State has been "neutralised" by the prevailing conventional wisdom that "efficiency" and markets trump everything - and the lack of debate that results.


The intellectual victory of capitalism - a battle advanced and won by political ideologists - has deprived the political elites of independent power and placed them in the service of financial markets.

In the process, the only elites left standing are the financial ones, which also exercise predominance over the business elites as Britain's manufacturing economy produces less and less.

Note again: the "victory of capitalism" is an ideological victory, an intellectual victory, NOT a factual one.

My point yesterday that the debate on the French jobs law was shaped by ideologues intent on denigrating another viewpoint (as hopelessly naive, out of touch and self-defeating) was missed by many of you. Too much focus was put on narrow points of the proposed law and not enough on the context of underlying assumptions (or outright falsehoods) that are made by the commentariat to support their viewpoint.

Pointing out the similarities with the debate on national security in the USA was meant as a way to show how the sheer repetition of "facts" ("Dems are weak on national security" "France cannot create jobs") makes them true in the eyes of most even if they are not actually true.

It's all about ideology, and the lack of audible counter voices.


It is the prestige of Wall Street in America that comes closest to the British respect for the square mile [the finance district]. But even in New York, the power of finance has to exist within a milieu shaped by leftwing politics and by an intellectual tradition with deep central European roots.

The London that surrounds the City offers no such comparison (...) it has never been able to sustain the café-society intelligentsia of the great European cities that provided a centre for radical agitation.

In the absence both of alternative sources of power and of any independent-minded critique, the City of London has become the central bastion of an elite whose attitudes are more like that of an off-shore centre.

A benign tax regime and a prosperous economy means that it makes sense for the financial elites to live and work here for the moment. But the same work could be done anywhere that has a broadband connection. The country through which the financial elites travel at the end of a working day has, to them, many of the qualities of a foreign one. They use, after all, few of that country's public services.

(...)

The beautifully suited and well -spoken agents of City finance embody (...) the 18th-century attitudes of a guiltless lust and a self-serving preparedness to stand aside from the national cause and to go wherever the money leads them.

I don't know how valid the comparisons/differences outlined between London and other financial centers, including New York, are, but the idea of the financial industry as a giant offshore set up, with no loyalty to any country, only to money - and no counter power to speak of anymore - is a strong one.

And thus it is all the more striking to see it written by a leading conservative, and published in the Financial Times, the main paper of that very city.

The solution is simple: the State has to act against the power of money, by regulating finance and industry stiffly, and not letting it (money) dictate the terms of the game.

Display:
last sentence... "letting it dictate the terms" or not letting?
by Metatone (metatone [a|t] gmail (dot) com) on Tue Mar 21st, 2006 at 06:10:34 PM EST
Well, I think "it" would stand for the State and not for money. So it could be "letting itself dictate the terms"?
by Alex in Toulouse on Tue Mar 21st, 2006 at 06:19:35 PM EST
[ Parent ]
I hope it's clearer...

Crossposted on dKos: http://www.dailykos.com/story/2006/3/21/17406/9778

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Mar 21st, 2006 at 06:25:42 PM EST
[ Parent ]
Thanks, maybe I was just tired, but the phrase confused me and being the final sentence of the piece it has a lot of potential impact.
by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 22nd, 2006 at 02:19:59 AM EST
[ Parent ]
Holy molly! Between that and the discussion about Fukuyama, it's penance and rehabilitation special tonight :)

In both cases, those Johnny-come-lately conversions are welcome as they indicate that the narrative is shifting but their authors should not expect free absolution.
by Francois in Paris on Tue Mar 21st, 2006 at 06:48:31 PM EST
The City of London has become the central bastion of an elite whose attitudes are more like that of an off-shore centre.

[snip]
I don't know how valid the comparisons/differences outlined between London and other financial centers, including New York, are, but the idea of the financial industry as a giant offshore set up, with no loyalty to any country, only to money - and no counter power to speak of anymore - is a strong one.

I'm not into finance at all but I believe that London is very heavily involved in managing actual off-shore money, formally domiciliated in places like the Bahamas, Jersey and all those tax-havens where banks are mostly mail boxes. Lot of gray, dubious money and a big part of the activity in the City or so say the rumors that reach my undistinguished ears.

Any expert to confirm / deny / comment?
by Francois in Paris on Tue Mar 21st, 2006 at 06:55:53 PM EST
I'll be entertained to here LondonYank's view on this.
by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 22nd, 2006 at 02:32:17 AM EST
[ Parent ]
She wrote about it extensively in the dailyKos thread (linked to in a comment above). She sees the City as regulating itself pretty well.

And as I had the pleasure to have lunch with her yesterday in London, and we actually discussed regulatory issues, because she is very much involved in these things, I'd certainly encourage you to read what she has to say - she very obviously knows what she's talking about!

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 22nd, 2006 at 03:41:28 AM EST
[ Parent ]
How come you never have lunch with me when you come to London? (Granted, I don't work anywhere near Canary Wharf)

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 22nd, 2006 at 03:56:43 AM EST
[ Parent ]
Are you actually in London? I had put you in a not-so-close county (gloucester?) but maybe my geography is confused.

If you are able to come over somewhere not too far from the City, I'm sure we can set up something next time. I come over once or twice a month.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 22nd, 2006 at 04:15:53 AM EST
[ Parent ]
I live just north of the centre of this map, but I work near the West End. There is an interesting connection with Gloucester, though, I wonder where you got that piece of info from...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 22nd, 2006 at 05:16:20 AM EST
[ Parent ]
Not sure how long this particular link will last, but this is what your profile looks like on the SiteMeter's "Who's On" page: http://www.sitemeter.com/?a=stats&s=s21jerome&v=89&r=9&vlr=15&pg=21&d=322

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Mar 22nd, 2006 at 09:01:39 AM EST
[ Parent ]
Yes, I did engage over there.

However, there's a big gap between "self-regulation works better than govt regulation" and "self-regulation actually works well."

by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 22nd, 2006 at 04:09:52 AM EST
[ Parent ]
A lot of UK financial companies base part of their operations in the Channel Islands, a notorious tax haven.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 22nd, 2006 at 02:59:46 AM EST
[ Parent ]
Yes but where is the actual money management done? In Jersey or in London?
by Francois in Paris on Wed Mar 22nd, 2006 at 05:42:42 AM EST
[ Parent ]
In London, of course.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 22nd, 2006 at 05:54:32 AM EST
[ Parent ]
I'm not an insider, but London has had a lot to do over the years with the development of a number of island havens: the Channel Islands (Jersey/Guernsey), the Isle of Man, the Bahamas, the Cayman Islands...

The image that has often come to my mind is that of an island within an island, networking with other islands. Compared to London financial activity with the Caymans oe the Channel Islands, for example, I'd love to see how much investment there is in the depressed regions of Britain. (see Colman's diary Please remember that government spending is bad.)

The City = The Flying Island of Laputa?

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Mar 22nd, 2006 at 04:59:28 AM EST
[ Parent ]
In the absence both of alternative sources of power and of any independent-minded critique, the City of London has become the central bastion of an elite whose attitudes are more like that of an off-shore centre.
Are we talking about the City financiers, or about the New Labour leadership, or both?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 22nd, 2006 at 02:58:35 AM EST
Both, probably.

It does depend on how you define "the New Labour leadership" though.

For example, Brown, for all his myriad faults is hard to see as an off-shore type, isn't he?

by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 22nd, 2006 at 03:21:11 AM EST
[ Parent ]
He was conned by the Blairites.

What exactly did happen before 1997? Everyone talks about a deal between Blair and Brown, but what was the context (within the party, and without) and what was the deal?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Wed Mar 22nd, 2006 at 03:26:43 AM EST
[ Parent ]
Oh lord. Granita. Now there's a tangled tail.
by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 22nd, 2006 at 04:05:48 AM EST
[ Parent ]
tail or tale?
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Mar 22nd, 2006 at 04:48:38 AM EST
[ Parent ]
Both. The tale is tangled, but so was Tony's devil tail that day...
by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 22nd, 2006 at 05:24:44 AM EST
[ Parent ]
Hywel Williams was a maths teacher at the public school I attended - his nickname (for anyone interested) was 'Whopper'. I don't know why.

He was certainly an active conservative -- he advised loonie-rightie John 'Vulcan' Redwood on his doomed leadership bid. But he turned away from the Tories in the nineties. He is openly gay and he was especially disgusted during the clause 28 controversy when the gay-bashing Tories were refusing to repeal a stupid law preventing teachers from 'promoting' gay lifestyles.

by lemonwilmot (lemonwilmot at gmail.com) on Wed Mar 22nd, 2006 at 09:53:41 AM EST


Display:
Go to: [ European Tribune Homepage : Top of page : Top of comments ]