Rather late in the day, this article by Aditya Chakraborrty runs a serious chance of being my favourite of 2009.

It scratches a major itch of mine, one that I utterly failed to deal with when criticizing the BBC’s attempt on Lehmans*: how artists attempt – and fail – to portray finance and explain the crisis, which they do while managing to be utterly sanctimonious and moralistic at the same time.

Aditya writes:

Faced with a catastrophe that has ruined everyone from sub-prime homeowners in San Diego to venerable Swiss bankers, nearly all the crisis literature falls back on portraits of cosy elites. Marking the first anniversary of the banking crisis this September, the BBC drama The Last Days of Lehman Brothers should have been titled Men on the Verge of a Systemic Breakdown. It can be summarised thus: alpha males squabble around a table; alpha males fail to strike a deal; Christendom goes bust. Meanwhile, Dick Fuld, boss of the soon to be ex-bank, broods in his office, less King Lear than Blofeld in a business suit. . .  This is banking as a boys’ club: decisions made in boardrooms that somehow affect the rest of the world. It takes no account of the expansion of wholesale finance since the late 80s, nor of the fact that Fuld and other executives had little idea of the balance sheet explosives traded by their underlings.

The ‘heroic’ interpretation of history – that you can blame mighty events on particular people, like the stale old Kings’nQueens stories – is dreadful for explaining large systemic events.  Aditya, despite being no cosy chum of capitalism,  gets this:

The challenge for writers, then, is to show markets as things of monstrous scale and volatility, with workers bombarded by information and demands from the boss, clients and colleagues; more The Wire with its minor characters trapped in failing systems than the charismatic evil of Gordon Gekko.

This topic matters.  The political fallout from the Crisis will be influenced by the occasional half-baked thoughts of the artists who try to represent it to the wider public – who then put pressure upon the politicians, who then try to craft laws to Fix It So It Can’t Happen.   If they are told it is about a few villains being Auguste Melmotte all over again, then the wrong solutions will come forth.

Read the article, particularly you, Rowan Williams.

UPDATE:  Edmund Conway of the Telegraph covered this ground in October, in a post that is fairly unforgiving of the Hare play, and calling for Economics to get its equivalent of “The Wire”. ** He writes:

The play isn’t really a play, but sits somewhere between a “story” (as one character describes it at the start) and a lecture. It is rather like having someone stand up in front of you and read you a selection of features from the financial press over the past year.

Ouch.

*While  it is likely to take PWC half a million man hours to get through the bank’s books, the BBC are confident that the whole thing can be explained as a sort of morality tale.

**Note: not its own equivalent of Doctor Who . . .

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13 thoughts on “Brilliant Guardian article

  1. I thought that The Power of Yes play did a fairly good job of portraying the systemic, complicated and no-easy-moralising truth of the banking crisis. Probably because it had a lot if help from Gillian Tett, and cos it was pitched at £35 a ticket chattering classes, wheras the BBC is scared of its license fee shadow and appears to be in a terminal spiral of dumbing ever downer.

  2. I liked the article – particularly since it reminded me very much of one I wrote on my blog some months ago (http://blogs.telegraph.co.uk/finance/edmundconway/100001387/what-this-crisis-needs-is-a-the-wire/). Excuse the shameless plug, but the thrust is similar.
    Giles – your point about the simple “heroic” style narrative being incapable of explaining the crisis is precisely right. And the implications go beyond mere post-mortems and documentation of the crisis – they go to the heart of why it all happened in the first place.
    One of our very human frailties is our incapability of conceptualising chaotic and complex systems – we tend to rely on computers to do the hard work, and then fashion a simpler, linear narrative in our heads as a means of understanding them. One of the things that contributed to the crisis was that we eventually forgot about the existence of the chaos (the long tail, you might say) because we had become so absorbed in the narrative we fashioned.
    Understanding how we conceptualise the world through literature helps us understand not just why episodes like this are so difficult to dramatise, but why we are inexorably doomed to booms, busts and cycles.
    But then given I studied Literature at uni, I probably would say this wouldn’t I?

  3. That blog – which I think I remember reading at the time, but failed to recall in time for this post – deserves to be resurrected. I’m going to take advantage of it to update the post with a link.

    You should take a year out to write the script – having both literature and Econ puts you in very select company this side of the Atlantic, I bet.

    I had similar though lesser experiences of trying to dramatise finance for the Beeb – this rather indifferent drama “Suicide Trader” was the heroic myth writ large, with everyone believing that a single actor could bring the whole edifice down with just a few trades. Explaining “zero sum game” to BBC directors was never going to work. From the few Crash books I’ve read so far, I would put Lords of Finance as the closest to actually describing the complexities, and how individuals are tied into their own actions.

  4. “I would put Lords of Finance as the closest to actually describing the complexities, and how individuals are tied into their own actions.”

    Dispatched on January the 8th, the internet tells me.

    Although I do have 8 books in between me and that. Plus course reading. And an essay. But that’s on Weber, so it’s fun.

    And I did just read 4 books in 9 days. That’s over a thousand pages. (Yes, this is a call-back to previous posts poking your reading inferiority complex. Not having kids makes life easy, i’ll tell you).

  5. Sorry, just to make my first comment clearer, I disagree with Chakrabortty. I decidedly think he’s shoving The Power of Yes into his paradigm for the convenience of his article. TPOY is certainly not super-in-depth (I knew most of it already) and it’s only an hour and a half (which made me feel a tad ripped-off), but it does quite honestly dismiss the notion that the meltdown was caused by greedy individuals, and explains fairly how systemic situations make individual behaviour immediately rational (and justified) even if from hindsight we think it all looks terrible greeds or irrational. It also points out that ordinary people massively benefited from the bubble when the boom was on and certainly weren’t complaining. And for my money, it didn’t stick the knife in anywhere far enough regarding money-worship and greed.

    So I think it’s a tad unfair to lay into TPOY. Perhaps because, as established above, the financial crisis needs a “Wire” treatment. But that’s 60 hours, not 90 mintues…

  6. On the books: it depends which. Christmas gift books, or Marx? From what I know of you it could be either . .. anyone who calls Weber Fun . . . .

    I try to cast my mind back to pre-kids and what I could get through on a beach holiday – but that far back is fuzzy.

    I hope you like Lords of Finance. On the crunch, I have Gillian Tett’s Fool’s Gold, The Creation and Destruction of value, The Road ahead for the Fed, Alan Beattie’s False Economy, and i really WANT Sorkin’s one. But, apropos of blogging etc, I think I may know 50% from what I read on Reader, so wonder if my time is better spent on Sen, or Galbraith, or something else to boost my actual politics, rather than add layers of economics. And someone has recommended Michael Sandel too.

    Help. Advice.

  7. I liked the article too, and you do well to draw attention to it. Funny to spend the end of 2009 in agreement that systemic problems in the way the world economy is run are often overlooked at the expense of ‘Blofeld-style’ complicity theory, even if we disagree on the fundamentals of how such problems might be resolved (and how fundamentally).

    On books, while I’m hardly in a position to offer advice, I will do anyway. My general sense is that you need to move beyond your (and maybe even your organisation’s) current paradigm of thinking and writing, which is along the lines of ‘This is how the economy should be run, you silly buggers’……..’if only the silly buggers would listen to us – we know what we’re talking about.’. While technical/technocratic knowledge is a great base to wrk from, you need to engage (much as you say artists do in the OP) with the murky reality of decision making feedback loops, systemic imbalances of power, and all the discourse-reality interface thingummies which make up the complexities of the world of finance and politics (not to mention micro-finance decision making).

    I’s start with Colin Hay’s ‘Why We Hate Politics’ and work back from there through some of his stuff on the way tax regimes in particular are products of self -fulfilling prophecy. Then Bob Jessop. It’ll all tie into your Galbraith somewhere alnog the line, and inform it. Don’t get too post-modern.

    1. Paul, I find all that stuff interesting, and hope that when you read my next report on Quantitative Easing you will find that it is not just technocratic best-case arguments. Who wins and who loses matters, because of the political calculus that follows.

      I hope to be sympathetic to the actual decision makers – I think I have been so to Al Darling in what they did in the depths of the crisis a year ago. The biggest risk with think tanks is idealism – this is what is best, who cares how we get there . .. a bit like socialism, in fact . . .

      I’ll check out Colin Hay. About to start on Sen, too many recommendations to ignore

  8. Giles,

    Given the subject of this posting I think we should all read/re-read Death of a Salesman.

    A great deal of our thinking is mediated by metaphor. At any one time a particular metaphor can dominate, often based on new technology, which then through feedback loops both influences future trends in that technology and our thinking about the world – e.g. the workings of a clock/God as the clock maker.

    In DOS, Miller looks at how life, pans out for a salesman who invests everything in the American Dream.

    So, when Arthur Miller looked at the realities of The American Dream and he did not chose to portray a VP at IBM, (your point about theapproach of eg BBC Lehman Brothers play) but looked at 24 hours in the life of Loman – the low man and his low family – and portrayed The American Nightmare.

    I am writing a play about today’s Loman and his family.

    Here’s the plot: In 1999 Lorise saw his nextdoor neighbour Mr Highrise remortgage his terraced home in Manchester, put a £500 deposit on an off-plan canal-side apartment, sell this effective ‘right to buy the apartment’ for a 1000% profit when the ‘value’ of the apartment (still a shell of a building) went up 5%, take Chancellor Brown’s advice to form himself into a Limited Company (no corp tax on first £20k for an incentive), use £50k as collateral to borrow £1 million for deposits on a whole block of apartments in Leeds, move out from the old terraced house to a house with a ‘One Mile Long Drive’ in Cheshire (becoming a member of the OMLD Club) … then use his friends to form a syndicate of buyers of off-plan apartments from Urban Splash with 20% discounts, 10% of which they passes on to their syndicate members (Lowrise of course refuses the invitation to be part of this syndicate; “I don’t need his bloody help, that’s an insult”). Eventually in November 2007 sells all his properties/deposits; you guessed it, at exactly the moment that Lorise decides to sell his life insurance, remortgage his nearly paid off home, borrow £1 million more from RBS and buy his first 100 off-plan properties.

    The action takes place in 2009 … as he is about to be evicted from his terraced property (value £100k) outstanding debt on property £120k, outstanding debt on loans £1m plus interest. The Property Dream having turned into the Nightmare. He doesn’t even have any life insurance.

    Happy New Year.

    B

    1. Rather gloomy plot! Bill, what I would be interested in knowing is: where do you put the Blame? Do you blame Brown for setting up the incentives, or Mr Lowrise for following them? Where is free will? I learned the ropes in the City during the dotcom madness, and while I could see the systemic aspects, I had little sympathy for the individual punters, who often struck me as greedy, deluded and arrogant at the peak of the bubble.

      Speculation in a sense involves trying to make more money than ordinary work can manage. To presume that one can is arrogant and in a weird way lazy – trying to bypass the ordinary processes. So,. for Mr LowRise, how much does he deserve?

      on another angle, are you aware of the fact that UK-based housing loans etc are only a small part of the overall UK financial distress we have had? If it were just UK-mortgage loans going sour, we would not have had the banking crash. In a way, the UK-based losses are an epiphenomenon to the overall crisis – a consequence but not on their own a sufficient cause.

      Happy New Year!

  9. Giles,

    I think Fools’ Gold will be really basic and boring for you. (I knew a lot of it already, for example). I guess if you want to know more about JPMorgan Chase’s internal history, it will be fun. Then again, Tett does a descent job of presenting the whole thing as extremely complicated and gives a balanced assessment of the use of financial derrivatives and other tools.

    The books I read:
    Simon Blackburn – Truth
    Gillian Tett – FG
    Cormack McCarthy – The Road (this is really, really amazing. And you can read it in a day)
    Quentin Skinner – Hobbes and Republican Liberty

    So reasonably light-weight (the Skinner book is an extended essay really)

    Most of the books on my “to read” list are indeed Christmas novels though. I’ve got a nasty feeling I won’t get time to read most of them. Which is a shame cos Wolf Hall looks awesome…

  10. Giles,

    Mr Lowrise is to blame for his own misfortune.

    (As incidentally are all the MPs and Peers who were told by the whips to pump up their income using the expenses/allowance systems, but who should have been steered by higher personal values).

    Everyone can say ‘No’.

    I use the epiphenomenon of the property market as an example (as I have some experience and just as you could write a very good piece on Dostoevsky – Thrill and Shame or the relationship between the croupier and the player. Smiley here please)

    But the same mentality/process/model works for many other areas. Highrise was working for Enron, for Goldmans, for Globespan, for Leeds United, for the Army and for Loamshire County Council, among many other institutions.

    When I used mentality/process/model above, I really wanted to use ‘metaphor’. There is always a dominant metaphor – humours and the body, clockwork and God as the Master Clockworker. It is how evolution operates in animals with minds – social selection working on the principle of the survival of the most effective metaphor.

    Over the last 35 years the ‘rising’ and now dominant metaphor has been the ‘company’ or business concern’ model (itself built on the body or corporate metaphor) and profit maximization.

    Either your piece or one of those linked by it mentioned that ‘even’ civil servants now see themselves as running PLCs. Here is the metaphor at work.

    As Lancashire Paul will know very well, until the Baines report in ’74 the senior ‘officer’ (a word that survived from an earlier dominant metaphor along with elaborately uniformed station masters) was the Town Clerk. In the late seventies more and more authorities began changing the title to Chief Executive. In the Nineties that the Borough Treasurer became the Director of Resources, and the Noughties saw ‘Boards’ replace Committees.

    These were the surface traces that indicated the rise of the ‘company’ and profit maximizing all-conquering metaphor. It explains the often inappropriate (for a public service) replica behaviour such as the use of outsourcing, escalating public sector pay at the top and JVs.

    The Council that goes into a joint venture with a PLC is Lowrise JV-ing with Highrise.

    The latest amusing example of the dominance of the ‘company’ metaphor comes from Jeremy Snape, former Leicestershire off-spinner, and now South Africa’s ‘Mental Conditioning Coach’ [nice work if you can get it] who is suggesting his cricketers think of themselves as Managing Directors of the small company that is themselves. The symbiosis of body and corporation?

    The crisis has come from adopting the wrong metaphor. The cure comes from finding and campaigning for a better one.

    B

  11. Giles,

    This is the first time I’ve been on the web since Christmas eve and so I’ve just seen this and am really chuffed. Thank you very much.

    Paul, I agree that power of yes is intelligent and an elegant explanation. My quibble with it — and what links it with some of the lesser works i mention elsewhere in the piece — is that it treats the crisis as a creation of an elite. In Hare’s case, it’s the Davos set of finance ministers and bigwig bankers. One of the points i wanted to make in my piece is finance is too important and influential now to be treated as a discrete area.

    Two works of fiction that i think get closer to rendering finance realistically are Don DeLillo’s Cosmopolis and James Buchan’s High Latitudes. Both are a few years old now but they capture what it is like to be work in a job that is partly about information bombardment.

    All best,

    Aditya

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