The meek aren’t quite inheriting the earth, but for the moment the rich are getting a bit of a kicking. On one level, the HSBC story does not break new ground. The takeover of the global economy by a cabal of super-rich is a 20-year-old phenomenon, the combination of a single financial ideology, technology and a political class that has acted as courtiers. What is so shocking about the revelations is the detail: an entire elite wasn’t just playing fast and loose. Much of the time it was acting criminally but for some of these people, the word crime comes down to semantics.
What is so curious is that after the financial crash of 2007-08, those responsible were able so easily to change the narrative. The perpetrators (the bankers and regulators) wallowed in a sense of injustice and self-pity, while politicians blamed the feckless poor and spendthrift middle for the mess. It has taken nearly a decade since then for a semblance of a political reckoning. For all these years, why did the mainstream centre-left fail to score when facing an open goal?
Will Hutton, in his latest magisterial tour of the dislocation of Britain, does not restrict himself, as other authors have done, to banker bashing. His lament incorporates not just a failed financial system, but also constitutional break-up, diplomatic isolation and the hollowing out of the political establishment. His analysis is strengthened by a refusal to wallow in pessimism. For all the problems, he sees a nation that is entrepreneurial, innovative and, if belatedly, questioning.
At the root of the malaise is corporate governance. The removal of any motivation beyond shareholder value has, he argues, turned the stock market into a casino. Is it any wonder that so many British companies have been sold to “tourist shareholders” or gone bust? Over the past decade, he points out, a fifth of quoted companies have evaporated from the London Stock Exchange, the largest cull in our history. Seventy two per cent of stock market trading is done by hedge funds, high-frequency traders or investment banks trading on their own account. Perhaps the most shocking statistic is that the UK languishes 159th out of 174 countries in the international league table for investment.
It is through this prism of cashing in and maxing out, that the financial crisis should be seen. “The banks too are ownerless corporations with their own footloose shareholders: part of the reason they expanded their balance sheets so aggressively and recklessly was that over the 15 years before 2008 they had succeeded in trebling the rate of return on equity – for which directors were handsomely rewarded with bonus packages dependent upon the consequent rising share prices.”
While the spotlight may currently be cast on David Cameron’s fawning billionaires’ fundraiser and his previous decision to appoint HSBC’s Lord Green as a trade minister, it was during 14 years of Labour governments that the rot set in. Indeed the Conservatives say, with a modicum of justification, that they have done more than their predecessors in tightening up regulation. I always enjoy quoting Gordon Brown’s 2004 “greatness” eulogy to Lehman Brothers; but Hutton suggests that the worse sin committed by New labour was the vetoing (twice) of a Companies Act that would have shaken up corporate governance. For six years a committee tried to sort out bad practice in the boardroom, only for Tony Blair and his civil servants to obstruct them at every turn.
If only Blair and Brown had listened to him, Hutton suggests more than once, we wouldn’t be in the state we’re in – to coin a certain phrase. As long as the economy was buoyant and the money was coming in, Labour saw no reason to take on vested economic interests. “Looking back, if I had been told in 1994 that 20 years later 5m council houses would have been sold and not replaced, that in the last 10 years British companies worth £440bn would be sold overseas, that privatisation would lead to such extensive profiteering… I would not have been surprised… but I would have been shocked by the sheer scale and indifference to fairness with which it has all been done.”
Labour may yet get the chance to challenge this unfairness, reinforced perhaps by an alliance of sorts with the SNP which, Hutton believes, has embraced with more alacrity his recipe of public-benefit capitalism. He also expresses the hope that the Conservatives will recover their one-nation mojo, instead of descending ever further into Europhobia. And as if to prove his non-tribal credentials, Hutton gives a passing nod to academy schools and calls on trade unions to reform further.
Hutton’s policy prescriptions seem cautious given the portentousness of his language. He cites four areas of economic growth – micro-production, what he calls “human wellbeing”, dealing with “wicked issues” (such as environmental damage), and digital and data management. Fiscal reform, particularly corporation tax and inheritance tax, would rebalance incentive towards wealth creation and against assets, while a new elected upper chamber should better represent the nations and regions of the UK. Having failed to take heed last time, Hutton may well be wondering, will the next generation of political leaders pay attention to him now?
Peter Hain is a politician who might also complain about not being listened to enough. Indeed I recall back in the early New Labour years, when he had the temerity to question whether the top rate of tax might be increased, he was monstered by Gordon Brown’s Sopranos-style team for demonstrating independence of thought. Indefatigably upbeat, for his latest book Hain casts Anthony Crosland’s seminal Future of Socialism in a modern context.
His analysis is uncannily similar to Hutton’s. That is perhaps no surprise given that they belong to a 1990s generation of centre-left politicians and thinkers defined by a post-Thatcher hunger for change and a subsequent disappointment with New Labour, or as he calls it, Nervous Labour.
With Labour having little prospect of a majority mandate in the forthcoming general election, Hain urges Ed Miliband and the next generation to plan more coherently for a broader-based settlement. He emphasises the need for Labour to change the way it campaigns to reflect an era of looser political allegiances. One of the most attractive aspects of Hain’s politics is his international hinterland, the huge part the anti-apartheid struggle played in his life (which he has addressed poignantly in other books). With so many MPs of all parties rising through the hideously narrow world of Westminster, his decision to stand down will deprive Labour of a powerful voice in parliament. But, as Tony Benn said, perhaps he’ll have more time to devote to politics.
Since the death nearly a decade ago of Robin Cook, Labour’s most consistently enquiring voice has belonged to Jon Cruddas. The MP for Dagenham, who has been in charge of the party’s policy review (a fraught process), has been at the forefront of the Blue Labour movement. Founded just before the last election by Cruddas and the academic Maurice Glasman, the group is back with a fresh compendium ready for the forthcoming battle. The authors of other essays in this book take forward their notions of community engagement and decentralisation (a centre-left take on Cameron’s stillborn Big Society). Cruddas writes that inequality and identity are at the heart of political social malaise, daring to use religious terms in describing ethical economics and moral markets.
Will any of these protagonists have the opportunity to practise what they preach after May, to start addressing the arrogance of the HSBC clan and their political cheerleaders? And even if they do, will they end up disappointed by the broken promises and machine politics of another Nervous Labour administration? Deja vu once again, as someone once said.
John Kampfner is author of The Rich: From Slaves to Super Yachts – A 2000-Year History.
How Good We Can Be is published by Little, Brown (£16.99). Click here to order it for £13.59.
Back to the Future of Socialism is published by Policy Press (£19.99). Click here to order it for £15.99.
Blue Labour is published by IB Tauris (£14.99). Buy it here
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