Superstition and mystery are useful to the holders of financial power.
In 1932 Bertrand Russell wrote that the financier needs ‘unintelligent respect on the part of the general public’ if he or she is to remain ‘unfettered by the democracy’. He went on to note the many advantages that the plutocrat enjoys in his efforts to maintain his effective freedom from democratic control:
Being immensely rich, he can endow universities, and secure that the most influential part of academic opinion shall be subservient to him. Being at the head of the plutocracy, he is the natural leader of all those whose political thought is dominated by fear of Communism. Being the possessor of economic power, he can distribute prosperity or ruin to whole nations as he chooses.
But Russell thought that it is superstition above all that explains the supremacy of finance. He pointed out that few learn about economics in school or university despite its universal relevance to people living in an advanced society. Those who do learn about the subject are usually taught in ways that ‘glorify the economic status quo’. There was, Russell argued, a structural problem in the distribution of understanding:
Finance, like war, suffers from the fact that almost all those who have technical competence also have a bias which is contrary to the interest of the community. When Disarmament Conferences take place, the naval and military experts are the chief obstacle to their success. It is not that these men are dishonest, but that their habitual preoccupations prevent them from seeing questions concerning armaments in their proper perspective.
Exactly the same thing applies to finance. Hardly anybody knows about it in detail except those who are engaged in making money out of the present system, who naturally cannot take wholly impartial views.
Recent history appears to lend weight to Russell’s assertions. As Chancellor Gordon Brown appointed investment bankers to the business councils that advised him. They assured him that the light-touch regulation of the City was a wonder of the world. And efforts to learn the lessons of the financial have again relied heavily on the expertise of people who profited from the unreformed system. The Independent Commission on Banking set up by Britain’s Coalition government has five members: its chairman, Sir John Vickers, Claire Spottiswoode, Martin Wolf, Martin Taylor and Bill Winters. Vickers himself has not worked in the private sector as a banker, though he has spent time in a senior position at the Bank of England. Three of his four colleagues have worked in the financial sector, broadly defined – Spottiswoode at the insurance company Aviva, Taylor at Barclays and Winters at J.P. Morgan. Martin Wolf is a journalist at the Financial Times. In the early eighties he was a keen supporter of the government’s attempts to reinvigorate the economy by favouring capital at the expense of labour.
The members of the Commission are doubtless honest and independent-minded people. But they are also human beings. It is silly to imagine that they can be left in technocratic isolation to devise a reformed system of banking. They are being asked to judge a system that has given them wealth and status. Though the financial turn has failed in its publicly stated aims, it has made them private successes.
Russell thought that our reliance on experts who struggle to take wholly impartial views would only end if democratic publics became aware of the importance of finance and were able to understand its workings. He thought that it was a matter of ‘simplifying the principles of finance so that they can be widely understood’. In fact, as I have sought to show here, finance is fairly easy to grasp in its essentials. Indeed, as J.K. Galbraith once observed, its very simplicity repels the mind.
It requires only a little determination to put away the comforting superstition that finance is a complex matter, best left in the hands of financiers. It is not complexity that daunts us, it is the thought of living without superstition and mystery. But the substance of Enlightenment is found in our resolving to do so. Something to bear in mind the next time you hear someone wittering on about the wickedness of religious faith.
It is not God who controls our currency but men – by methods that we currently choose not to understand. And this is the willed immaturity of mind that should most urgently concern us.