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Lehman Brothers: Five Years On – A Seismic Loss of Purpose

A George Pitcher Foreword Polemic for Simon Heffer’s “My Word Was My Bond”

This lecture is being delivered almost exactly five years to the day since investment bank Lehman Brothers spectacularly collapsed, threatening to take the global economic system with it into a black hole of unsustainable debt. Those were apocalyptic days – for the more excitable among us, it was almost as if free-market capitalism had entered its End Times.

The false gods seemed to be running scared. Senior bankers who had spent careers telling meddlesome politicians and regulators to butt out of the serious business of wealth creation were now calling the Treasury like spendthrift children on a gap year calling their parents for a bail-out. They had privatised the boom years, but apparently felt no shame in nationalising the crisis.

There was, however, to be no Judgment Day for them. Indeed, even repentance – just as Gordon Gekko said of lunch – was for wimps. That iconic figure of runaway banking, Bob Diamond, whom I believe has a walk-off part in Dr Heffer’s paper, was by the New Year of 2011 famously telling MPs that the time for contrition was over. Clearly, behaving properly has its limits.

He was not alone. A depressing cycle of rate-fixing and money-laundering revelations continued to emerge as if financial services were entirely staffed by recidivist old lags. And throughout it all, even now, financiers and their PRs still talk of a return to “growth”, by which they all too often mean the default position of triple-digit domestic property inflation in the south-east. I’m fond of saying that they are like heroines in a Chekhov play talking wistfully of a return to Old Moscow, even as their samovars turn cold.

The popular capitalism spawned by Thatcherism’s privatisation programme enjoyed very different climatic conditions from the current sale of Royal Mail. There is now a sense that retail investors won’t get fooled again. The Occupy protesters of 2011 weren’t anarchists and class warriors; they struck a chord with much of Middle England. St Paul’s Cathedral, which had traded pastoral care for its ceremonial role, didn’t get that. Nor did the Corporation of the City of London that evicted them. Nor did a Mayor of London who shouted at them “In the name of God and Mammon, go!”

It would be wrong to underestimate the level of real fear out there. This is not a ruling social and financial elite facing a peasants’ revolt. Rather it is disparate and dysfunctional commercial interests floundering in the wake of a seismic loss of purpose. The world has changed since 2008, but its asset managers have widely hoped that normal service will be resumed. That is a triumph of optimism over expectation. Strikingly different corporate behaviours are called for and, like soldiers after a war has ended still defending tiny and remote islands, our red-braced former masters of the universe need to be taken gently by the elbow and told it’s all over.

That, of course, is not bad news for them and nor is it for us. There is a hunger for change in corporate life. And opportunities abound. Not least, as Dr Heffer elucidates, for those who ply their trade in public relations. There’s a clue in their profession’s name: They may need to consider how their City clients actually relate to their public, rather than leasing them a megaphone to “get their message across”.

The City of London can no longer communicate and be judged by what it says, nor even by what it says it does, but by what it actually does. Like any other industry, financial services needs to know what it is for and whether it is celebrated by those who use it. It could start by asking itself who its wealth enriches. If the answer to that is anything that it would seek to manipulate in its communication with any audience, then something is deeply wrong.

Because compliance with regulations is no longer sufficient for corporate leadership. Today’s leader needs to know what values his or her corporation is led by and how these values may differ from those espoused on the trading floor or in the sales conference and how differently they may be perceived from the outside, by customers and stakeholders.

That process of self-discovery for companies is both disruptive and transformative, but more than worth undertaking. For it’s not about being better people so much as being better professionals – and there is competitive commercial edge to be found in better practice. Ultimately, none of this is about law and regulators and corporate governance. It is individual people and their actions which caused the crisis of 2008 and it is individuals who will lead us away from the idolatrous worship of market forces and show us that there’s a better way of operating.

I used to sit with Dr Heffer – or Simon as he is sometimes known – at the editorial table of a great national newspaper during the dark days that followed the collapse of some of our world banks and the rescue of others. His analysis was always austere and sparse. He identified the third-rate spivs and recognised the remedial behaviours required. He brings the perspective of the historian to bear with the clarity of the top columnist. I’m also a big fan of Simon’s atheism. I love the idea that human nature alone is capable of the most noble achievement – and I look forward to his book on some of the Victorian lives that were so fulfilled – as well as our most base errors.

Of course, we would differ on the source of the highest in human nature. But the point here is surely that a grasp of ethics and their application in the public sphere isn’t the preserve of the religious or the secular, nor of regulators or politicians, nor of sustainability gurus or social grandees. It is an imperative for all of us in deciding what kind of society we want to live in. As Simon demonstrates, the solutions to the economic circumstances in which we find ourselves are both complex in their causes and delightfully simple in their remedy. Again, it is individuals who got us into this mess, but it will be enlightened individuals also who lead us out of it.

All it needs is people like Simon to tell it as it is. My colleagues and I at Jericho Chambers are delighted to provide him with a platform to do so.

George Pitcher

George Pitcher

George Pitcher is a writer and talker, an academic specialising in the purposes of journalism and an Anglican priest. You can read his LSE blog here.

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