Superstition and mystery are useful to the holders of financial power.
Bertrand Russell
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:
But I doubt whether any of these weapons would suffice without the aid of superstition. It is a remarkable fact that, in spite of the importance of economics to every man, woman, and child, the subject is almost never taught in schools and even in universities is learnt by a minority. Moreover, that minority do not learn the subject as it would be learnt if no political interests were at stake. There are a few institutions which teach it without plutocratic bias, but they are very few; as a rule, the subject is so taught as to glorify the economic status quo. All this, I fancy, is connected with the fact that superstition and mystery are useful to the holders of financial power.
And there was, Russell argued, a further 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, but he is a former member of the Monetary Policy Committee of 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 Ann Pettifor shows in her ebook Just Money, 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.
Update: Commonwealth Publishing, my imprint, published Just Money: How Society Can Break The Despotic Power of Finance on January 13th, 2014.
The Return of the Public 
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Good to see Russell back. Always so acute, although rarely quoted.
Perhaps there is something else to add. There seems to be a tendency inherent in the practices of the specialist to make things more complex than they need be; thus the preference for wrapping up quite simple processes in theory and jargon – the Prince2 methodology widely used across government might be a good recent example. This in turn creates an industry to implement and administer them. The upshot is that something relatively simple, like managing a project, now becomes complicated; and you need skilled professionals to educate the staff; who have more bureaucracy to add to the daily round. It also, I am sure, gives clever people, whose work is boring and easy, a psychological justification for doing it; whilst keeping outsiders and the general public away.
At some point it becomes too difficult to disentangle, and you have to work to understand it; but there is a whole internet of other distractions, and the need is not strong enough – work is a bore, the bosses are autocratic, but hey, life is generally ok; and I’m free on the weekends! Moreover, we live in a society that sees education as training, used for merely instrumental purposes (the Browne Review is quite explicit about this – universities must provide a better service to business). This may explain much of our irrationalism: so many things are taken on trust; while we are led to believe that everything is as complicated as the hard sciences. It is not, but it is easy to see why people would believe this – given the vested interests who make a lot of money out of making us think so.
Then there is the economics profession, which seems in large part to have become a clerisy, creating a divinity out of the market. J.K. Galbraith had noticed this already in the 1950s. He attributed it to their seclusion in the university, separated from the practical demands of daily economic life, as well as the needs of economic power, and the easy laziness of conventional thinking. Like all theologians they have an interest in insulating their dogmas from scrutiny, even from themselves, with verbiage and arcane formulas. But how much harder this makes it for the rest of us, especially in a world run by specialists, of which we are often one – many of us believe we are experts in our own fields; with unusual knowledge and experience. You have to be exceptionally honest to see it as mostly tromp l’oeil.
In both cases we have professions that are moving away from an educated public that do not have the desperate urge or the tools to confront their self-interest and mythology. And it is made harder because we quite properly rely on experts to produce the glories that are our modern life. Of course they are fallible. But how much easier to leave it all to them; and moan occasionally when they get it wrong.
This is where your ideas on the media come in: they should be like good select committees interrogating the professions to provide a mediating role for us on the outside to properly evaluate them. Though we need other institutions to help us do that too.
To finish on Russell. In his Portraits from Memory (How I Write is the chapter) there is a wonderfully funny piece on the obfuscations of the typical academic, and an explanation why Russell could get away with plain language – he had previously created a technical terminology that only a few could understand. This is the problem in a nutshell: how can the layman decide between the genuinely complex and the crassly simple dressed up in emperor’s clothes (if you are interested I try to do just this with two stars of the French Left in my Dropout Boogie. Be warned though, it is very very long!). Often it is difficult even to know where to start.
British empiricism and the Enlightenment that followed it came out of an ideology that was collapsing on all sides. This opened a space to look at the world afresh. My fear is that we are not at the end of a new scholasticism, but at its beginning. The one hope – we live in a far more cognitively unstable world than did our counterparts in the 15th century; with faiths tending to rise and fall in much quicker succession. To return to the age of Locke and Hume we need to return to a mindset of both educating and trusting our own judgement; and which also requires hard study, and an interest in knowledge for its own sake. It requires cutting the professions down to size, and reducing the importance of paid work. We need to follow Russell’s advice and work part-time, using the rest of our life to develop ourselves to the best of our abilities; which includes being good citizens; well informed and active. But you know that already – you wrote about it in your marvellous The Threat to Reason!
Thanks for this, Paul – “how can the layman decide between the genuinely complex and the crassly simple dressed up in emperor’s clothes” – you’re right, that is a very important question.
Perhaps a game might provide a useful point of reference. I will never beat a Kasparov at chess. I will never so much as glimpse the complexity that he can see in a game. But I can understand the rules of chess.
Similarly, I will never be a match for a skilled currency markets speculator, but I can grasp the ‘rules’ that bound speculation – central bank operations, say. Indeed I can understand what money is, as I can understand the moves that a knight can make on a chessboard.
If an expert cannot explain the ‘rules’ of what they are doing – if they cannot give a coherent and plausible account of what bounds what they do, then we should regard them with scepticism.
We should demand intelligibility from experts, but the right kind of intelligibility.
I agree absolutely, and it is a good analogy. But I also think this analogy highlights the problem. It is not enough just to know the rules of chess to understand Kasparov’s play; you must have some insight and experience to do so adequately. It is that “adequately” that is the issue. One of the reactions against specialization is to say it is all too complex; let’s ignore it. Another is to reduce everything to the utmost simplicity – knowledge is reduced to mere opinion; a vast country where we are all equal.
None of us can know everything; instead we must work out a balance between having knowledge of a few things, and of which we can be confident to hold our ground, and having an informed opinion of much else. Once this difficulty has been overcome an informed opinion, which in large part is good judgement, can use the knowledge of others to assess the spurious from the genuine; the public good from the merely self-interested.
However, outside of paid employment, and even there it is often questionable, today an awful lot of people do not have even an informed opinion of what is going on in the world. One job is to create the space for us to acquire this; but I think we have to accept that it does mean significant time and effort to get the appropriate knowledge and skills – in part it will be another kind of work; and we have to be honest about it. Although it will be work with a difference: 1. It could help make one’s life and that of the community’s better. 2. Be rewarding for its own sake. Being part of a wider movement or organization obviously makes this easier.
Kasparov is a great example to give. A radical who has fought both the Soviet establishment and the American corporation. His second match against Deep Blue surely a symbol of the problems of our time: whether or not the IBM team cheated, it certainly won by playing politics, exploiting the situation to manipulate him psychologically; to a point where it was almost inevitable he would lose. Nevertheless, although a Russian battling against an American company, he was far more popular amongst the American chess public than their compatriots who ran the machine. They knew what was going on, even if most of them were amateurs.
To go back to the chess analogy, there is a distinction to be made between playing badly or well and playing within the rules or not. I won’t know mid-game whether a Kasparov move is good or bad, but I will know whether it is legitimate.
I don’t need to understand Kasparov’s play to know whether he is breaking the rules. And that is the level of understanding that the citizen needs to acquire – and that the media aren’t currently facilitating. After that, you’re right, we have to exercise our judgment about which experts to trust, to the extent that we need to take a view on the details of any particular game.
And you’re right, this does require that we engage with public matters to a much greater extent. Rather than appeal to civic-mindedness, though, it makes sense to create institutional forms that make the connections between daring-to-know, self-interest and the achievement of the common good much clearer.
At least, that’s how I would gloss the relationship between The Threat to Reason and The Return of the Public.
ps I’ve just read Dropout Boogie. Very interesting. Are you on Twitter, by the way?
Thanks for that. The Deleuze and Guattari phenomenon is especially interesting because it is so odd. Barsky’s treatment of Sokal and Bricmont shows this very clearly. Pulled between the theology and rituals of his own profession and the powerful influence of the Voltaire of the age he ends up defending the doctrine and the church. Reason takes him so far, but not quite far enough. The result is extraordinary, just like D&G: reality is reversed. In this case harsh criticisms of a particular school of thought are used to defend it!
Yes, I agree, I should make a clearer distinction between the rules and the play. And yes, it follows, that if the media, and other bodies, kept the institutions to account, made them follow the rules, they would do a lot of the work for us.
My one reservation would be that whilst in chess the rules are relatively easy to learn, outside criminal behaviour the rules of our institutions might be harder to grasp. Not only for lack of knowledge and institutional obfuscation, but also because some of the rules are part of the play itself. Thus the idea of the self-regulating market was an “über-rule” that both helped facilitate and justify the particular institutional actions that led to the crisis. That is, the institutions are part of a culture that to a significant extent determines what they do. But this reservation is not relevant to the argument. The kinds of reform you are suggesting, and the political strategy needed to implement it, would change the culture, and with them those “über-rules”.
I hadn’t even thought about Twitter. How strange. Looks like I’ll be joining up.