How the City of London came to power By Hywel Williams Financial Times: March 21 2006 The political and cultural con­sequences of the City hegemony over British life are as important as the financial and commercial ones. For here is an elite of the elites whose power has grown to a dimension that is truly imperial in the modern world - stretching across countries and continents, able to ignore the previous constraints of national sovereignty. The fact that money markets can whisper and shout to political power, that they can determine the policies of governments and the strategies of armies, is as old as politics itself. The need for loans to finance Britain's participation in the anti-French war of the League of Augsburg (1688-97) lay behind the establishment of a national Bank of England and the institution of a national debt. In the imperial century that followed, Britain's diplomatic and military vic­tories mirrored the City's prosperity, as successful wars led to the control of the trade routes whose profits meant that City loans were repaid. Successful countries needed a good credit rating - which is why the British political order expanded overseas while the debt-burdened French monarchy stumbled and fell. The expansion was marked by a City-minded indifference to any motive and force other than profit. The Treaty of Utrecht (1713) showed the cleverness of this rapacity as Britain negotiated the exclusive right to sell African slaves to the Spanish colonies. The ability of the British political elites to cut a good financial deal as a result of their power arrangements has been a constant theme. There is a direct line of crooked dealing that connects the church lands grabbed by early 16th-century politicians because of the Protestant reformation with the share options and directorships ­garnered by their late 20th-century successors because of the Thatcherite ­privatisations. The hegemony of today's City elites is, however, very different from the eminence of their predecessors, who had to compete and coexist with other forms of elite power. Britain's once self-regulating professional elites have had the heart ripped out of them by the benchmarking, target-focused state and by a bogus consumerism, with its empty jargoneering about "customer-shaped service delivery". This is as true of doctors and of dons as it is of teachers, soldiers and policemen. In the process, Britain has lost its independent-minded public service elite. City lawyers and accountants now derive their status from the firms they work for rather than from their membership of a professional body. Meanwhile, the political elites have collapsed into introspection as the gap between the parties narrows in reflection of their unanimous view that markets work. The intellectual victory of capitalism - a battle advanced and won by political ideologists - has deprived the political elites of independent power and placed them in the service of financial markets. In the process, the only elites left standing are the financial ones, which also exercise predominance overthe business elites as Britain's manufacturing economy produces less and less. No other country endows its financial centre with quite the degree of mystique that Britain generally, and London-centric power particularly, attaches to the City of London. The French do not venerate the Bourse and Germans do not get dewy-eyed about Frankfurt. This is partly a reflection of market size. It is the prestige of Wall Street in America that comes closest to the British respect for the square mile. But even in New York, the power of finance has to exist within a milieu shaped by leftwing politics and by an intellectual tradition with deep central European roots. The London that surrounds the City offers no such comparison: its universities are locked away within their own worlds and it is music, the most abstract and therefore the least political of all the arts, that is the basis of London's greatness as a cultural ­centre. And the vastness of London, the sheer difficulty of travelling across it and within it, means that it has never been able to sustain the café-society intelligentsia of the great European cities that provided a centre for radical agitation. In the absence both of alternative sources of power and of any independent-minded critique, the City of London has become the central bastion of an elite whose attitudes are more like that of an off-shore centre. A benign tax regime and a prosperous economy means that it makes sense for the financial elites to live and work here for the moment. But the same work could be done anywhere that has a broadband connection. The country through which the financial elites travel at the end of a working day has, to them, many of the qualities of a foreign one. They use, after all, few of that country's public services. This new financial elite is the true heir to the imperial legacy. But its forms of power, being so anonymous, differ from the expatriate supremacy once visibly enjoyed by 19th-century district commissioners who served the British national project of their time. The beautifully suited and well­-spoken agents of City finance embody, by contrast, the 18th-century attitudes of a guiltless lust and a self-serving preparedness to stand aside from the national cause and to go wherever the money leads them. The writer is a historian, journalist and broadcaster, and was a special adviser in John Major's Conservative government . This article is based on a chapter in his latest book, Britain's Power Elites: The Rebirth of a Ruling Class (Constable), published on April 6 **** Williams was in fact an adviser to John Redwood, when the latter was Secretary of State for Wales. As Mark pointed out a few years back, he has made a rather interesting intellectual journey since those days.
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