The Haves and the Have-Some-Mores
The New Few, or A Very British Oligarchy: Power and Inequality in Britain Now
By Ferdinand Mount (Simon & Schuster 305pp £18.99)
If you want to imagine the Prime Minister at seventy, gaze on the features of his cousin at several removes, Sir William Robert Ferdinand 'Ferdie' Mount, 3rd Baronet, of Wasing, and one-time adviser to Margaret Thatcher. As so often, distant relatives look more like each other than close kin. To a disconcerting degree, Cameron and Mount share the same moonish face, the same soft skin and contented look.
Not the smallest of the good lessons The New Few teaches is that appearances deceive. This is not the book of a contented man but of a genuine Tory radical. Modern right-wing 'radicals' are meant to believe in passing public services to private monopolies, cutting corporation tax and the top rate of income tax, increasing inequalities and giving the market its head. In other words, what we have had since Mrs Thatcher's day - only more of it. Their critics normally come from the Left. Mount is a true democratic radical. His book is original and on occasion brilliant because it provides a conservative critique of the status quo.
I imagine his ideal readers to be a couple in their late forties. Politicians from all parties claim that they strain every muscle to help their sort: the 'hard-working people who play by the rules'. But, as Mount shows, playing by the rules has not done them a great deal of good. In theory the shares they own through unit trusts and their pension funds mean that they and investors like them control capitalism. The executives of great companies say that their prime purpose is to serve their interests. Mount revives the economists of the 1930s to show the emptiness of the promises to shareholders - not so much Keynes, but the neglected figures of Gardiner Means and Adolf Berle, who exposed the pretence of shareholder control. Means and Berle's description of their times applies to ours. When managers decide to enrich themselves there is little the legal owners can do to stop them.
Companies, most notably banks, have been run in the interests of their managers rather than the interests of shareholders, customers and workers. In the process, executive reward has slipped its moorings to corporate performance. If you can remember only one statistic from the boom and bust, remember that between 2000 and 2008 the FTSE All-Share Index fell by 30 per cent but cash payments to executives increased by 80 per cent - and carried on increasing, even after the bubble burst. Nothing, not the worst crash since 1929 and the longest stagnation since the nineteenth century, could stop the manageriat lining its pockets.
The public sector mimics the private, in quangos and 'arms-length' agencies. The director-general of the BBC pockets over £800,000 and vice-chancellors of universities £300,000, for no obvious reason. What others see as public service, sharp operators see as private profit. Mount notices what all outsiders notice about the British system: once you are in, you are in. Once you are on the board of one company or quango, you soon join the boards of other companies or quangos.
Our respectable couple may not understand the machinations of corporations - and who can blame them when the world's foremost economists do not understand them either? In any case, they regard themselves as investors in, rather than owners of, companies. And yet in a process that is also beyond their comprehension, their investments have done little for them but much for the middle men. Executives take share options that diminish the values of their holdings. Fund managers and pension administrators take their slice of the pie in the form of management fees. All in all, £7.3 billion is skimmed off savings each year by bankers, brokers and asset managers grabbing their 'croupier's cuts'.
No one can doubt that the system no longer suits the interests of the majority of the British people. The banking crash was a great destroyer of illusions. Mount quotes Walter Bagehot's Lombard Street to show how the world has changed. Banking is a 'watchful, but not a laborious trade,' Bagehot wrote in 1873. A banker, 'even in large business, can feel pretty sure that all his transactions are sound, and yet have much spare mind ... A London banker can also have the most intellectual society in the world if he chooses it.'
Today's know-nothing London bankers prided themselves on their philistinism. They worked fourteen hours a day, made fortunes, and then destroyed their businesses. The country had to bail them out; recession hit, unemployment shot up, and Mount's conservatively minded savers, who had worked hard and put money aside, saw the rates on their investments drop to next to nothing. They then saw something more extraordinary, something that ought to change Britain forever: the bankers carrying on as if nothing had happened.
Suppose our small 'c' conservatives want to be active citizens and play their part in the Big Society by standing for their council. They would find that the centre has stripped local authorities of power. Suppose they think they can influence politics by joining political parties. They will find that party conferences can no longer influence policy. Suppose they want to influence their MP or become MPs themselves. They will find that MPs' power has been usurped by party leaders and the European Union.
In political as in economic life, Britain feels as if it is ruled by oligarchs. Not necessarily malign oligarchs, as Mount emphasises, but men and women who hate the clutter and contradictions of a free society and want to centralise, standardise and cut deals with other oligarchs.
The New Few ends with an assessment of how young David is doing. Mount is too well mannered to wash the family's dirty linen in public, but this book is hardly a hymn of praise to his administration. It has flunked the chance for banking reform, continued to deny local government autonomy and shown no real concern about the widening inequalities of wealth, which Mount, to his credit, worries about constantly. A country crying out for change is run by a cloth-eared coalition.
David Cameron could do worse than read his relative's report on the state of the nation. If he acted on a few of its suggestions, he might yet save his premiership from mediocrity.
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Nick Cohen's You Can't Read This Book: Censorship in an Age of Freedom has just been published by Fourth Estate.