The Bank of England and the New Victorians

Mervyn King

Governor of the Bank of England Mervyn King this weekend stopped short of calling the banking class ‘socially useless’; unlike his peer Lord Turner UK over  at the Financial Services Authority, who in 2009, famously questioned the inherent value of the banking class to society.

King, who took over from Eddie George in Threadneedle Street in 2003, warned the Daily Telegraph on Saturday (5 March) that Britain risks another financial crisis unless it undertakes fundamental reform of the banking sector.

Short-termism and a failure to develop relationships sound like a checklist of sociopathic behaviour but apparently, they are also failings of the British banking system. (Who’d have thunk it?) King compares the approach of what he describes as traditional businesses which had a more "moral" way of operating.

Benevolent patriarchy?

Now, I’m prepared to overlook King’s absurdly out of touch comments; when was he last in the marketplace looking for work? A ‘moral’ approach from traditional businesses only ever existed in whatever benevolent patriarchal utopia that the Empire’s historians dreamt up to whitewash the inconvenient truths of the great Victorian age of capital.

Furthermore, the Guvnor fails to take account that there just aren’t any traditional industries left in Britain anymore. The pits have long been closed, the shipyards now only build ghost ships and the steel mills have rusted.

If Mervyn King actually believes that there are legions of New Victorian entrepreneurial philanthropists out there building model communities like Bournville for their short-term contract call-centre workers then I suggest he try living in Deptford or Rotherham.

But for all of that, King is offering an alternative approach. In his new Victorian vision, the captains of industry “care deeply about their workforce, about their customers and, above all, are proud of their products”.

This, as opposed to the current worldview as epitomised by our friends in the City: with the banks “there isn't that sense of longer-term relationships. There's a different attitude towards customers. Small and medium firms really notice this: they miss the people they know.”

And apart the indifference and almost casual exploitation of customers, there is a marked stretching of the caveat emptor principle far beyond the bounds of social acceptability. King sums up the City view : “If it's possible to make money out of gullible or unsuspecting customers, particularly institutional customers, that is perfectly acceptable.”

Busted flush

Project Merlin, the UK government’s attempt to get credit flowing again in the wider economy in return for a light touch regulation of salaries and bonuses has already proved to be a busted flush. This government has proved itself as susceptible to the influence of wealth just as surely as the politicians of Dublin, Rome or Lagos and this was clearly underlined by the News Corp/BSkyB decision earlier this week.

In the end however, the Bank of England’s guvnor can fulminate all he wants. The 21^st century march of capital is every bit as inexorable and socially divisive as its Victorian analogue. King’s comments make about as much difference as a lone kettle steaming in a London fog.