2007 - 2022

Poisoned Chalice, anyone?

As a nation reels from what can only be described as ‘a kick in the polls’ by the London Meeja and their cross-party paymasters, Christopher Harvie writes on bankers, historians, industrialites and elites:

Argument with Michael Fry, the grand fauve of Scottish history, is exhilarating, and as usual the solid citizen has to talk the man down from the ceiling. The man might have converted to nationalism but is still rabid profit-seeking personified, at least in theory. Given that he has twice the talent and narrative skill of say Simon Schama, Linda Colley or Niall Ferguson, even such a generalisation-merchant ought to have cottoned on to the reality that talent (no matter how effervescent) and theory (no matter how libertarian) is no match for a good old elite or cartel.

Extend this to the matter in hand: banking.

What has happened to Britain hasn’t been ‘creative chaos’ or ordinary citizens going large a bit, but a banking system out of legal control. Personal greed and unchecked speculation fostered by grand banks ‘made markets’ which firstly penalised industrial modernisation (boring old ‘Rhenish capitalism’) and then favoured their owners/partners’ compulsion to flog dodgy financial stuff, cash in and piss off.

I tried to impress on Michael that this scenario had been forecast by sociologists and criminologists as long ago as 1975, the year of Gordon Brown’s Red Paper, and five years before Thatcher. In a project The Crime Industry, commissioned by the Scottish Office, John Mack and Hans-Juergen Kerner argued that tax havens, computers and globalisation would blur the borderline between ‘robust business practice’ and outright crime. They impressed the great Eric Ambler sufficiently for him to base his last thriller Send No More Roses (1977) with its ‘able criminal’ Paul Firman at its Genevan centre, on their model. It turned out the prototype of the genre of ‘financial thrillers’ out of which, I would argue, stemmed the many and various growths of ‘moral hazard’ that went on to all but wreck international finance. Throw in the hand-held computer, the derivative, and dealer-nerds oblivious of real society, and what was worrying in a state without a written constitution, became lethal under ‘light-touch’ regulation.

Crashes happen, said Michael, look at Overend and Gurney in the 1860s. But relate the Victorians’ finance to their massive manufacturing and transport sectors, their vast political confidence. Today, where real manufacturing and services survive, they’re largely foreign-owned; even unsavoury BAe (running Scotland’s last big shipyards) is effectively an American puppet. Our crisis is that the damage wreaked by a bloated finance sector has to be paid for by the public, with no remoralisation of Big Finance remotely visible.

In the investigations of the Economy Committee of the Scottish parliament it became quite evident that United Kingdom Financial Investments (UKFI) the state-paid legatees of ‘universal banking’ thought that ‘narrow banks’, concentrating on building affordable and thermally-efficient housing, or raising investment for eco-hi-tech manufacturing were a joke. This bunch inspired the same feelings as the Telegraph’s appalling cityboy Alex, whose magic fingers could never be got out of your pocket.

In fact the society we live in, thanks to some genuine progress towards Adam Smith’s ‘sympathy’ reinforced by the communications possibilities of the internet, has potentially strengthened ‘market mutuality’: from the German mittelstand, funded by local government banks, to the good old principles of the Co-op. This needs the back-up of far-sighted and honest finance, something unforthcoming from universal banking, as the victims of RBS and HBoS can easily testify.

The perpetrators of the Crash have snarled ‘Sorreee!’ like a naughty child and been let off with, at most, nominal penalties. Far from being found selling the Big Issue outside Waverley Station, after wrecking RBS, Sir Fred Goodwin has added a nice little part-time earner to his pension pot: rumoured to be £ 100,000 a year (twice my salary as an MSP) for some work for the Edinburgh architects RMJM. RamJam, it may be remembered, were in charge of the Holyrood Parliament going about ten times over budget in 1999-2004: a disaster which elicited a collective ‘non mi ricordo’ from the Edinburgh finance, administrative and building establishments. Did this give some fly guys from universal banking the feeling that in semi-detached Scotland they’d found the perfect place to do business in?

Wicked benefit frauds (usually accompanied by shock horror headlines in the Sun) cost according to the Guardian (10 January 2007) £ 1 billion, tax dodges by and for the wealthy at least £ 97 billion. The Sun’s proprietor, Rupert Murdoch, once Gordon’s pal, now Dave’s, has never been heard to complain, let alone to pay UK tax. The old system is being patched up, but the bonus boys are back, inventing new games from their Caribbean hideouts, ‘doing God’s work.’ The next crash, Prof John Kay assures me, will be even worse.

The proven dimensions of financial wrongdoing make judicial inquiry necessary, followed by criminal trials and exemplary prison sentences. The Americans know this. Even Mrs Thatcher, in 1986, clapped the guilty Guinnessmen in the slammer. She never acknowledged that she lived off the North Sea oil harvested by the ‘rust-belt industries’ which Michael Fry sneers at. But these provide (when steered by computers and run by and for communities) the way to the ‘geotechnic’ future which is the only future we’ve got.

The malefactors of great wealth have to be brought to realise this, and a mailed fist is more persuasive than a light touch. They can probably relax this Thursday, but not for long. During a Committee visit to London I found myself at the Future of Banking Inquiry, in a group talking to David Davis, whom David Cameron beat for the Tory leadership. ‘Everyone here is in favour of socially-useful finance.’ he said, ‘but look at the people who are bankrolling our party…’

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  1. Michael Fry is one of those great characters that any right minded broadcasting organisation would make the most of. Of course he’s an intellectual and pro-independence so no danger of that.


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