Do you remember the great economic crash of 2008? You know, the one that has left this nation and many others in catastrophic debt and rendered the future jobless and hopeless for countless millions of young people across Europe? Of course you do because we're all still living through its effects and are likely to for years to come.
Yet in a strange way it's as if it never happened. For while we may be all too familiar with the symptoms of the infamous "credit crunch", a kind of official amnesia appears to operate regarding its causes. In those first few weeks and months after the banking system froze, there was much talk about the urgent need for reform. In the years that have followed, however, scarcely anything has changed in the City.
The greed and venality that ran riot in investment banking remain largely unfettered. The bonus system that rewarded short-term and illusory profit is still in operation. And the corporate governance, based on nonexecutive directorial oversight, continues to be a highly lucrative society of mutual backscratching.
About the only clear-cut and tangible sanction to be imposed was the stripping of former Royal Bank of Scotland chief executive Fred Goodwin's knighthood. A personal humiliation, perhaps, but nothing that his £16m pension pot, courtesy of the taxpayer, can't ameliorate. And hardly a move to stop irresponsible speculators in their tracks.
The wretched Goodwin is among the cast of villains who appear in Ferdinand Mount's spirited new book The New Few: Or a Very British Oligarchy, which surveys the self-serving culture from which the banker and his fellow high-risk high-flyers sprang. With characteristically sharp but unmalicious wit, Mount describes Goodwin as "the roi soleil of Gogarburn [RSB's Edinburgh HQ]" before concluding that he is "the model of a modern oligarch".
Mount's use of oligarchy is to some extent a provocative conceit, designed to make us look again at how unaccountable the business elite have become. He doesn't seriously argue that a tight circle of unelected figures run the country, rather that the chief executives of major companies, particularly in the financial industry, have been allowed free rein to shape corporate policies with profound social and economic implications. Perhaps plutocracy would have been a better term.
What most disturbs Mount is the increasing gap between the super-rich and the mass of society – a separation that he sees reflected at the rioting end of the social ladder. Without excusing looters, he writes that "the unbridled greed of the oligarchs and their indifference to the normal obligations and restraints… engender a sense that society has lost its recognisable moral shape and, with it, its legitimacy".
But if his diagnosis is stark, the prognosis is less gloomy. The solution, says Mount, is to bring both poles of the privileged and underprivileged back within the social contract. "It is because we have got into the habit of regarding the footloose oligarchs as uncontrollable and the underclass as irredeemable that the inequality has been allowed to grow," he writes. "Both classes at the extremes seem somehow to exist beyond our reach." To bring the oligarchs back within reach, Mount recommends improved accountability, reinvigorated democracy, more stringent regulation: all sensible measures, but these are not sensible times.
Mount, who is a gifted and subtle author of many books, both fiction and nonfiction, is perhaps best known for writing the Conservative party's 1983 election manifesto. Like many on the aristocratic wing of the Tory party, he was never a full-blooded Thatcherite, and long ago reverted to classic One Nation Conservatism. What's odd, and is itself worthy of reflection, is how left-field that kind of old-fashioned belief in social cohesion now appears. After all, Mount is no rabid anti-capitalist, but a 72-year-old conservative arguing for a little more equal distribution of wealth. And among a cowed and timid political class that currently qualifies as a radical position.
Mount notes that between 2000 and 2008 the FTSE All-Share Index fell by 30%, yet cash payments to executives increased 80%. Some chief executives are paid hundreds – and even a thousand times – more than the average pay of their workers.
As he cheerfully admits, there are no industrial data or political revelations in the book that have not already been rehearsed elsewhere. Instead The New Few is an invitation to look afresh at the shocking and uncontested facts that we have come to accept as inevitable.
Mount argues that bonuses should be pegged to a maximum 20% of salary and suggests that 40 times average pay ought to be the limit for chief executives, enforced by proper shareholder and worker representation on remuneration panels. As that's likely to be upwards of £1m a year, he's not exactly calling for a revolution. Yet even after the credit crunch, mass unemployment, wage restraint and ongoing economic insecurity, such modest proposals are routinely rejected as an infringement on free competition.
But as this thoughtful book elegantly underlines, any system in which the wealthy are rewarded for fail ure is not a competition. And when the rest of us are left to pick up the bill, it's certainly not free.
