The Fits and Failures of Capitalism
The Great Crash of 1929 (1954)
John Kenneth Galbraith
Who Runs Britain: And Who's to Blame for the Economic Mess We are In (2008)
Robert Peston
J. K. Galbraith produced his short book on the
Great Crash of 1929 in late 1954 in an atmosphere that
still recalled recent witch hunts over communism (a fact that will help
an early twenty-first century reader with some of his more obscure
political references). The Penguin edition adds the short
Foreword to the 1975 edition that urged 'memory' as a necessary
corrective to over-enthusiasm within the financial system. One can only
guess what this grand old man of liberal economics would have written in
2008 or, indeed, about the self-inflicted economic mess today (2023). Galbraith's book is not the last word on the subject of
the causes and consequences of 1929 - how could it be: it was written
over 50 years ago within only 25 years of the events in question and
largely from contemporary newspaper reports and available official
documentation. But it is succinct on the facts and very witty (albeit in
that dry professorial way affected by an older generation of
intellectuals) if conservative in its overall message.
Galbraith does not judge capitalism - he could scarcely do so in the middle of the most conservative phase of the Cold War. He is also far more sympathetic to the bankers of the late 1920s than we might feel minded to have been of bankers in 2008/2009. His model is of a crisis in the equity markets built on the greedy and deluded behaviour of a surprisingly small number of Americans, exploited and managed by a yet-smaller group in positions of financial power and influence. A stand-offish government allowed a burst bubble to hit a downturn in the wider business cycle. This triggered something that was much worse than it need have been. Whether he is right or not is not for me to judge. The book is interesting not because of its ability to tell us the 'truth' but because it helps us to understand our own predicament through contrasts as much as similarities. I certainly do not accept the implicit moralism of either Galbraith or today's commentators - people do bad or silly things but it is our responsibility as much as theirs if we have not constructed the political or regulatory framework that will set limits to political or economic collective hysteria. We cannot evade the consequences of our own stupidity and impotence.
His defence of bankers has to be seen in the context of his dislike of William Jennings Bryan's country populism with its roots in creationist Christianity and its ascription of all of the American nation's ills to East Coast elites. He clearly enjoys pointing out that Bryan was complicit in the promotion of inflated land values in Florida that, in retrospect, should have indicated that American popular interest in a 'fast buck' was getting out of hand. The Florida land speculation of the mid-twenties brought us the original Ponzi scheme. Perhaps a million or so Americans out of a population many, many times larger were speculators on the stock market - either with enough money to burn or enough credit to burn other people's money. In some ways, the consequent economic crisis is the story of the loss of an upper middle class surplus available to purchase the goods and services that would have kept the rest of America working.
And this is where we see the similarities and differences in the twenty-first century. The 2008 crisis also started in the US but it did not derive from the upper middle classes getting over-excited by speculation in industrial growth. It started with bankers getting over-excited by what could be done to package or securitise massive debt both for wealthier investors and themselves. The collusion between bankers and investors in 'sure thing' economics is what marks out that crisis as similar to the collusion between trust promoters and investors in the earlier case. Our current crisis (which currently looks as if it will be a case of a relatively mild recession that nevertheless disproportionately damages low and lower middle income households) is, on the other hand, political rather than economic (though it may become the latter). It is almost entirely down to inept decision-making by small groups of excitable politicians living in a world of moral abstractions and theory who confuse editorials and markets with democracy. Only central bankers are now keeping us from being digested by the wolves of inflation and markets don't like it!
The 1929 crisis involved a disconnect from the fundamentals of American industrial strength and the international trading economy. The 2008 crisis derived from a lack of due diligence on the returns that could reasonably be expected from a whole range of instruments. The ultimate recipients and intermediate sponsors understood less about these instruments than Wall Street brokers understood their own investment trusts in 1928/1929. And the recent LDI scandal in London suggests that little has changed today. Similarly, the 1929 crisis was a domestic national crisis which spread around the world because of other instabilities in the trading system. The 2008 crisis was a global one arising to the degree that financial activity is integrated between Wall Street and the City of London. The UK, for example, was hit as hard and probably harder than the US not because of a collapse of trade but because its entire polity is based on the privileging of a financial sector that briefly threatened to go into as sharp a decline as any inter-war steelmaker. Move forward to 2023 and the dreadful state of the British economy can be put down not to markets but to political ineptitude in dealing with markets and commodity inflation caused by almost clinically insane herd-like behaviour in foreign affairs.
There are coincidences in Galbraith's tale - some amusing. Goldman Sachs is the broker behind two of the most egregiously speculative (and ultimately failed) investment trusts - Shenandoah Corporation and Blue Ridge. Its humiliation was to turn it into one of the most conservative broking houses by the time Galbraith was putting pen to paper. The rest is history. Lehmann Corporation, meanwhile, gets rare praise as a rarely well managed investment trust appearing in 1929 - another neat little historical irony. Just as conventional property-based retailing today was the first line of collapse in 2008 (evidenced by the closure of the British Woolworths) so, in a neat mirroring of history, the belief in 1929 that industrial expansion would go on forever was based, in part, on vigorous programmes of retail consolidation and expansion that had created the Montgomery Ward and Woolworths' chains in the US. Investors could see new stores with lots of stock in most major towns by the late 1920s and wanted a slice of the action.
The similarities between 1929 and 2008 (which of course was 'resolved' with loose money measures that merely created the massive debt that is now part of the challenge in the current crisis) do not lie in the causes or incidents of crisis - although investment trusts built on sand perhaps have their parallel in later hedge funds and private equity groups - as in the attitudes of those caught up in it. Galbraith has a great deal of fun at the expense of the 'boosters' of the stock market which seemed to have included just about everyone - including the almost comically wrong Harvard Economic Society. Galbraith was Paul M. Warburg Emeritus Professor of Economics at Harvard but this does not stop him from detailing proof positive that a group of experts engaged in group-think are more than likely to persist in their errors long after the rest of us are staring the facts in the face. The Harvard Economic Society should be remembered whenever any school of public intellectuals and experts purports to tell us what is right and proper in any area of public policy. Those who were seduced by the neo-conservatives before the recent round of incompetent foreign policies, take note.
On the other hand, Galbraith points out that the specialist financial press saw through the house of cards and warned investors of the risks in 1929. Unfortunately, professional investors on Wall Street who would read this material were making serious money out of the speculation, while the people providing cash on margin were not interested in research and analysis - only in profiting from the 'sure thing'. This is in marked contrast to the role of the media in the 2008 crisis. Sadly, the financial press, pace the important reporting of Robert Peston of the BBC and the critiques of a few individuals like Larry Elliott of The Guardian in London, signally failed to advise the public of the trajectory of bank lending and of the 'toxicity' within the financial system. The media in 1929 at least tried to educate the public and policymakers ... twenty-first century media merely parroted the news releases and briefings of the market players.
The differences between the two crises show, paradoxically, what is wrong with the system as a whole. The common denominators are weak laissez-faire governments, the fact that the wealthiest are not necessarily the brightest and the existence of a cadre of insiders within the financial system who are expert at relieving the relatively rich of their funds in mutually profitable (in the short to medium term) adventures. But if the super-rich and their middle class hangers-on are relieved of their funds by cleverer and more devious professionals why should the rest of us worry? The nature of capitalism in the 1920s and at the beginning of the Twenty-First Century means that nothing is so simple or so morally satisfying than simply to blame others and think their greed and narcissism does not affect us. The pleasure of watching a Darwinian struggle amongst the top 5% is mitigated by the fact that the capitalist system operates on the assumption that the wealthiest re-invest their funds in productive capacity. If the wealthy are cutting back because their assets have halved in value and continue to fall or they have lost everything to some over-clever fraudster, then innovative businesses or businesses employing thousands do not get the cash they need. The ordinary Joe's money also, aggregated, fails to go back into the system to sustain the wider economy. The whole bloody thing starts to wind down and even go into reverse. Banks and the wealthy will now have lost a great deal of money and want to make the rest safe and claw what they have lost back. Perfectly rational.
Galbraith will not criticise the total system because he cannot but there are fundamental questions to ask about how it is that innovation and employment are allowed to depend so much on hysterical decision-making by a tiny minority of the population in a collusive herd relationship with an even smaller group of 'technical experts'. More, how can they be allowed to continue to set the agenda after they have almost brought the system to its knees? It may be time for Americans to ask a few questions about whether free markets and the American system of capitalism created by the likes of J P Morgan, centred on Wall Street, actually works for America. They won't, of course. Even Prof. Galbraith seemed unable to ask such questions.
Galbraith does not judge capitalism - he could scarcely do so in the middle of the most conservative phase of the Cold War. He is also far more sympathetic to the bankers of the late 1920s than we might feel minded to have been of bankers in 2008/2009. His model is of a crisis in the equity markets built on the greedy and deluded behaviour of a surprisingly small number of Americans, exploited and managed by a yet-smaller group in positions of financial power and influence. A stand-offish government allowed a burst bubble to hit a downturn in the wider business cycle. This triggered something that was much worse than it need have been. Whether he is right or not is not for me to judge. The book is interesting not because of its ability to tell us the 'truth' but because it helps us to understand our own predicament through contrasts as much as similarities. I certainly do not accept the implicit moralism of either Galbraith or today's commentators - people do bad or silly things but it is our responsibility as much as theirs if we have not constructed the political or regulatory framework that will set limits to political or economic collective hysteria. We cannot evade the consequences of our own stupidity and impotence.
His defence of bankers has to be seen in the context of his dislike of William Jennings Bryan's country populism with its roots in creationist Christianity and its ascription of all of the American nation's ills to East Coast elites. He clearly enjoys pointing out that Bryan was complicit in the promotion of inflated land values in Florida that, in retrospect, should have indicated that American popular interest in a 'fast buck' was getting out of hand. The Florida land speculation of the mid-twenties brought us the original Ponzi scheme. Perhaps a million or so Americans out of a population many, many times larger were speculators on the stock market - either with enough money to burn or enough credit to burn other people's money. In some ways, the consequent economic crisis is the story of the loss of an upper middle class surplus available to purchase the goods and services that would have kept the rest of America working.
And this is where we see the similarities and differences in the twenty-first century. The 2008 crisis also started in the US but it did not derive from the upper middle classes getting over-excited by speculation in industrial growth. It started with bankers getting over-excited by what could be done to package or securitise massive debt both for wealthier investors and themselves. The collusion between bankers and investors in 'sure thing' economics is what marks out that crisis as similar to the collusion between trust promoters and investors in the earlier case. Our current crisis (which currently looks as if it will be a case of a relatively mild recession that nevertheless disproportionately damages low and lower middle income households) is, on the other hand, political rather than economic (though it may become the latter). It is almost entirely down to inept decision-making by small groups of excitable politicians living in a world of moral abstractions and theory who confuse editorials and markets with democracy. Only central bankers are now keeping us from being digested by the wolves of inflation and markets don't like it!
The 1929 crisis involved a disconnect from the fundamentals of American industrial strength and the international trading economy. The 2008 crisis derived from a lack of due diligence on the returns that could reasonably be expected from a whole range of instruments. The ultimate recipients and intermediate sponsors understood less about these instruments than Wall Street brokers understood their own investment trusts in 1928/1929. And the recent LDI scandal in London suggests that little has changed today. Similarly, the 1929 crisis was a domestic national crisis which spread around the world because of other instabilities in the trading system. The 2008 crisis was a global one arising to the degree that financial activity is integrated between Wall Street and the City of London. The UK, for example, was hit as hard and probably harder than the US not because of a collapse of trade but because its entire polity is based on the privileging of a financial sector that briefly threatened to go into as sharp a decline as any inter-war steelmaker. Move forward to 2023 and the dreadful state of the British economy can be put down not to markets but to political ineptitude in dealing with markets and commodity inflation caused by almost clinically insane herd-like behaviour in foreign affairs.
There are coincidences in Galbraith's tale - some amusing. Goldman Sachs is the broker behind two of the most egregiously speculative (and ultimately failed) investment trusts - Shenandoah Corporation and Blue Ridge. Its humiliation was to turn it into one of the most conservative broking houses by the time Galbraith was putting pen to paper. The rest is history. Lehmann Corporation, meanwhile, gets rare praise as a rarely well managed investment trust appearing in 1929 - another neat little historical irony. Just as conventional property-based retailing today was the first line of collapse in 2008 (evidenced by the closure of the British Woolworths) so, in a neat mirroring of history, the belief in 1929 that industrial expansion would go on forever was based, in part, on vigorous programmes of retail consolidation and expansion that had created the Montgomery Ward and Woolworths' chains in the US. Investors could see new stores with lots of stock in most major towns by the late 1920s and wanted a slice of the action.
The similarities between 1929 and 2008 (which of course was 'resolved' with loose money measures that merely created the massive debt that is now part of the challenge in the current crisis) do not lie in the causes or incidents of crisis - although investment trusts built on sand perhaps have their parallel in later hedge funds and private equity groups - as in the attitudes of those caught up in it. Galbraith has a great deal of fun at the expense of the 'boosters' of the stock market which seemed to have included just about everyone - including the almost comically wrong Harvard Economic Society. Galbraith was Paul M. Warburg Emeritus Professor of Economics at Harvard but this does not stop him from detailing proof positive that a group of experts engaged in group-think are more than likely to persist in their errors long after the rest of us are staring the facts in the face. The Harvard Economic Society should be remembered whenever any school of public intellectuals and experts purports to tell us what is right and proper in any area of public policy. Those who were seduced by the neo-conservatives before the recent round of incompetent foreign policies, take note.
On the other hand, Galbraith points out that the specialist financial press saw through the house of cards and warned investors of the risks in 1929. Unfortunately, professional investors on Wall Street who would read this material were making serious money out of the speculation, while the people providing cash on margin were not interested in research and analysis - only in profiting from the 'sure thing'. This is in marked contrast to the role of the media in the 2008 crisis. Sadly, the financial press, pace the important reporting of Robert Peston of the BBC and the critiques of a few individuals like Larry Elliott of The Guardian in London, signally failed to advise the public of the trajectory of bank lending and of the 'toxicity' within the financial system. The media in 1929 at least tried to educate the public and policymakers ... twenty-first century media merely parroted the news releases and briefings of the market players.
The differences between the two crises show, paradoxically, what is wrong with the system as a whole. The common denominators are weak laissez-faire governments, the fact that the wealthiest are not necessarily the brightest and the existence of a cadre of insiders within the financial system who are expert at relieving the relatively rich of their funds in mutually profitable (in the short to medium term) adventures. But if the super-rich and their middle class hangers-on are relieved of their funds by cleverer and more devious professionals why should the rest of us worry? The nature of capitalism in the 1920s and at the beginning of the Twenty-First Century means that nothing is so simple or so morally satisfying than simply to blame others and think their greed and narcissism does not affect us. The pleasure of watching a Darwinian struggle amongst the top 5% is mitigated by the fact that the capitalist system operates on the assumption that the wealthiest re-invest their funds in productive capacity. If the wealthy are cutting back because their assets have halved in value and continue to fall or they have lost everything to some over-clever fraudster, then innovative businesses or businesses employing thousands do not get the cash they need. The ordinary Joe's money also, aggregated, fails to go back into the system to sustain the wider economy. The whole bloody thing starts to wind down and even go into reverse. Banks and the wealthy will now have lost a great deal of money and want to make the rest safe and claw what they have lost back. Perfectly rational.
Galbraith will not criticise the total system because he cannot but there are fundamental questions to ask about how it is that innovation and employment are allowed to depend so much on hysterical decision-making by a tiny minority of the population in a collusive herd relationship with an even smaller group of 'technical experts'. More, how can they be allowed to continue to set the agenda after they have almost brought the system to its knees? It may be time for Americans to ask a few questions about whether free markets and the American system of capitalism created by the likes of J P Morgan, centred on Wall Street, actually works for America. They won't, of course. Even Prof. Galbraith seemed unable to ask such questions.
Peston's Who Runs Britain, centred on the 2008 crisis, is a disappointing book, largely because it
fell into a peculiar genre - that of the journalistic pot-boiler from a
celebrity journalist, who had been given carte blanche by a publisher while the sun of public notice shines upon him, to rehash 'stories what I
wrote'. The disappointment is particularly intense because
Peston was the journalist who broke the Northern Rock story. He was the
boy who cried out 'but the Emperor has no clothes'. He deserves credit for that. The Government and
the City have been trying to cobble together some robes for finance
capital ever since.
I always thought that he was a rather unwitting hero. This book shows just how much. His writing since the Northern Rock imbroglio, on his BBC Blog, remained informative but it increasingly demonstrated the extent to which PR Departments and spinners were determined to tie down this perhaps naive loose cannon whose words almost broke the Bank. The book is merely a demonstration that the author is a man of his time - a believer in an ideal version of the 'middle way' and still sentimental towards the sharks who built empires on debt, a man who suddenly found himself at the centre of the bubble-pricking that wiser heads knew was coming but left him surprised and shocked. The best bit of the book is the first chapter where his confused but fairly typical middle class analysis lies. It is an analysis you will hear as a standard from those in Middle England who liked Thatcher's reforms but who thought they went too far in terms of social cohesion, who rather liked the pseudo-social democrat impulse behind Blairism, who thought debt-fuelled and loud-mouthed near-hysterical one-dimensional services sector bosses represented 'leadership' and who thought growth could be sustained forever. These are people who want a 'nice' capitalism and who will accept a bit of green puffery and corporate social responsibility to ensure that they never have to see how the sausages are made.
If he is shocked that it was not so, there are times when he sees why - only to draw back from the brink because it raises too many questions about a world that he was part of as a commentator for the past decade. There is an excuse for any journalist that he only reports the news and does not make it, but it really is remarkable how few financial and business journalists investigated very deeply what was happening under their noses. Now that the crisis had happened, very few of them wanted to say things that wouldadmit that they had been wrong - they avoided, displaced and obfuscated. It reminds one of the silences from elite policy wonks and establishment journalists after the Vietnam, Iraq and Afghan Wars - best shove it unde the carpet or kick it nto the long grass. As for Peston, there seems to be a decent man here who just cannot see outside his box any more than can the bulk of the London professional classes whose entire wealth resided on a bit of economic legerdemain and a determined refusal to ask too many questions beyond the 'story'. For serious analysis, go to Larry Elliott and others of his ilk.
The nub of his argument should be taken as his own last sentences in that first chapter - "The accumulation of vast wealth by a growing class of super-rich - who owe no allegiance to any state - is a regressive trend for the distribution of power. It will taint governance and distort democracy." He states this and then he moves on ... what should be a considered analysis, about how what he knows leads to his analysis, becomes little more than a series of disconnected case studies - of Sir Phillip Green (and we know how that turned out!) whom he clearly inordinately admires and who was then gambling his retail all on Topshop in New York, a blow-by-blow account of the struggle for Marks & Spencers which seems to fascinate financial journalists but is intensely dull to the rest of us, gossip about the hedge fund superstars (yawn!), the very serious matter of the disarray in national pensions arrangements, the scandal surrounding wealthy donations to the Labour Party and a rather strange and uninformative account of Sir Allan Leighton's Chairmanship of the Post Office which merely indicates that our great national institutions seem to operate in a permanent state of near-policy chaos.
The point about inordinate political influence is to be found in throw-away remarks that should have been the basis for a better book. He writes, for example, of Paul Marshall who set up Marshall Wace, a hedge fund, in 1997, which was one of the biggest ten in Europe in 2008. This man a) gave £30,000 to the LibDems, b) £1m to set up the LibDem-leaning think tank CentreForum and c) was co-Editor of the 2004 Orange Book which was instrumental in building a political clientele for liberal economics within the Liberal Democrats and pushing it back towards the economic centre-right. This is interesting especially when you add the fact that the first Director of Centre Forum was a retired Goldman Sachs banker. In short, there is a nexus here of ideological influence with, on the surface, wealthy finance capital actively engaged in a process of political management directed at the one remaining centre-left party then-resistant to the government/finance capital complex. The arrival of Nick Clegg, a relatively uninspiring but safe political nonentity, at least next to the lively Vince Cable, as Party Leader and the shift of the Party's political centre from the left to the right cannot fail to be seen in this context - Clegg, of course, later turns up as top public affairs honcho for Facebook. Yet Peston does not investigate the matter further - he states the fact like a good reporter and then simply moves on to worry about the decline of Warburg and Cazenove.
In fact, this book is not about 'Who Runs Britain?' at all. It does not have anything like the value of Anthony Sampson's efforts from an earlier generation. It tells us little of the actual as opposed to possible influence by which finance capital effectively ran the UK with the connivance of Government for over a decade. It tells us nothing of why New Labour politicians are so deeply ignorant of the system they serve nor does it tell us about the conditions that have now lead to 'Davos' Starmer being so desperate to curry favour with the usual suspects. There are a few things to be learned from this book - that the then-Government (New Labour) was not a fit custodian of our country (but then neither were the Tories to be fit custodians over the subsequent fifteen years). There was no reason to believe then that any Government from either of the other main parties would do any better and so it proved. There seems to be no mainstream political party of either the Right or the Left which is in a position to challenge large scale globalised finance capital (not the free market, as such, I note) or has an alternative strategy that would allow democratic Government to reassert its authority over surprisingly small numbers of people.
Some of these people (on the evidence of this book) are not a little psychologically disturbed. Many of them unidimensional with an anal obsession with money that must have something to do with inappropriate potty-training or dark moments in childhood history. We may smile but this collusion between the political class and the unaccountable wealthy has become a very serious matter. In the last moments of the book, Peston returns to the theme of stateless, unaccountable plutocrats undermining democracy but it is too late. It is ironic that unaccountable plutocrats like Donald Trump and Elon Musk actually start to look liberatory in this context simply because their narcissism seems to be in rebellion against the systematic incompetence of their peers. Peston has seen the problem but he has not engaged with it. He has given us a bit of gossip and scandal about some over-excitable entrepreneurs. He has shown us the incompetence of our governing classes but we knew of that already. What he certainly did not tell us was who precisely ran Britain, who precisely was to blame for the mess in 2008 (despite the jacket promise) and certainly not what should have happened next. A similar pot-boiling journalistic effort today is unlikely to tell us anything useful about who runs Britain in 2023, who is precisely to blame for the current mess (Liz Truss and Boris Johnson are too easy as answers) and certainly not what should happen next.
I always thought that he was a rather unwitting hero. This book shows just how much. His writing since the Northern Rock imbroglio, on his BBC Blog, remained informative but it increasingly demonstrated the extent to which PR Departments and spinners were determined to tie down this perhaps naive loose cannon whose words almost broke the Bank. The book is merely a demonstration that the author is a man of his time - a believer in an ideal version of the 'middle way' and still sentimental towards the sharks who built empires on debt, a man who suddenly found himself at the centre of the bubble-pricking that wiser heads knew was coming but left him surprised and shocked. The best bit of the book is the first chapter where his confused but fairly typical middle class analysis lies. It is an analysis you will hear as a standard from those in Middle England who liked Thatcher's reforms but who thought they went too far in terms of social cohesion, who rather liked the pseudo-social democrat impulse behind Blairism, who thought debt-fuelled and loud-mouthed near-hysterical one-dimensional services sector bosses represented 'leadership' and who thought growth could be sustained forever. These are people who want a 'nice' capitalism and who will accept a bit of green puffery and corporate social responsibility to ensure that they never have to see how the sausages are made.
If he is shocked that it was not so, there are times when he sees why - only to draw back from the brink because it raises too many questions about a world that he was part of as a commentator for the past decade. There is an excuse for any journalist that he only reports the news and does not make it, but it really is remarkable how few financial and business journalists investigated very deeply what was happening under their noses. Now that the crisis had happened, very few of them wanted to say things that wouldadmit that they had been wrong - they avoided, displaced and obfuscated. It reminds one of the silences from elite policy wonks and establishment journalists after the Vietnam, Iraq and Afghan Wars - best shove it unde the carpet or kick it nto the long grass. As for Peston, there seems to be a decent man here who just cannot see outside his box any more than can the bulk of the London professional classes whose entire wealth resided on a bit of economic legerdemain and a determined refusal to ask too many questions beyond the 'story'. For serious analysis, go to Larry Elliott and others of his ilk.
The nub of his argument should be taken as his own last sentences in that first chapter - "The accumulation of vast wealth by a growing class of super-rich - who owe no allegiance to any state - is a regressive trend for the distribution of power. It will taint governance and distort democracy." He states this and then he moves on ... what should be a considered analysis, about how what he knows leads to his analysis, becomes little more than a series of disconnected case studies - of Sir Phillip Green (and we know how that turned out!) whom he clearly inordinately admires and who was then gambling his retail all on Topshop in New York, a blow-by-blow account of the struggle for Marks & Spencers which seems to fascinate financial journalists but is intensely dull to the rest of us, gossip about the hedge fund superstars (yawn!), the very serious matter of the disarray in national pensions arrangements, the scandal surrounding wealthy donations to the Labour Party and a rather strange and uninformative account of Sir Allan Leighton's Chairmanship of the Post Office which merely indicates that our great national institutions seem to operate in a permanent state of near-policy chaos.
The point about inordinate political influence is to be found in throw-away remarks that should have been the basis for a better book. He writes, for example, of Paul Marshall who set up Marshall Wace, a hedge fund, in 1997, which was one of the biggest ten in Europe in 2008. This man a) gave £30,000 to the LibDems, b) £1m to set up the LibDem-leaning think tank CentreForum and c) was co-Editor of the 2004 Orange Book which was instrumental in building a political clientele for liberal economics within the Liberal Democrats and pushing it back towards the economic centre-right. This is interesting especially when you add the fact that the first Director of Centre Forum was a retired Goldman Sachs banker. In short, there is a nexus here of ideological influence with, on the surface, wealthy finance capital actively engaged in a process of political management directed at the one remaining centre-left party then-resistant to the government/finance capital complex. The arrival of Nick Clegg, a relatively uninspiring but safe political nonentity, at least next to the lively Vince Cable, as Party Leader and the shift of the Party's political centre from the left to the right cannot fail to be seen in this context - Clegg, of course, later turns up as top public affairs honcho for Facebook. Yet Peston does not investigate the matter further - he states the fact like a good reporter and then simply moves on to worry about the decline of Warburg and Cazenove.
In fact, this book is not about 'Who Runs Britain?' at all. It does not have anything like the value of Anthony Sampson's efforts from an earlier generation. It tells us little of the actual as opposed to possible influence by which finance capital effectively ran the UK with the connivance of Government for over a decade. It tells us nothing of why New Labour politicians are so deeply ignorant of the system they serve nor does it tell us about the conditions that have now lead to 'Davos' Starmer being so desperate to curry favour with the usual suspects. There are a few things to be learned from this book - that the then-Government (New Labour) was not a fit custodian of our country (but then neither were the Tories to be fit custodians over the subsequent fifteen years). There was no reason to believe then that any Government from either of the other main parties would do any better and so it proved. There seems to be no mainstream political party of either the Right or the Left which is in a position to challenge large scale globalised finance capital (not the free market, as such, I note) or has an alternative strategy that would allow democratic Government to reassert its authority over surprisingly small numbers of people.
Some of these people (on the evidence of this book) are not a little psychologically disturbed. Many of them unidimensional with an anal obsession with money that must have something to do with inappropriate potty-training or dark moments in childhood history. We may smile but this collusion between the political class and the unaccountable wealthy has become a very serious matter. In the last moments of the book, Peston returns to the theme of stateless, unaccountable plutocrats undermining democracy but it is too late. It is ironic that unaccountable plutocrats like Donald Trump and Elon Musk actually start to look liberatory in this context simply because their narcissism seems to be in rebellion against the systematic incompetence of their peers. Peston has seen the problem but he has not engaged with it. He has given us a bit of gossip and scandal about some over-excitable entrepreneurs. He has shown us the incompetence of our governing classes but we knew of that already. What he certainly did not tell us was who precisely ran Britain, who precisely was to blame for the mess in 2008 (despite the jacket promise) and certainly not what should have happened next. A similar pot-boiling journalistic effort today is unlikely to tell us anything useful about who runs Britain in 2023, who is precisely to blame for the current mess (Liz Truss and Boris Johnson are too easy as answers) and certainly not what should happen next.