Death and Resurrection of the Business/Market Model

‘If you want to understand the banking crisis, you should go to the theatre’

– The Independent. October 2009

15 September 2008 was quick to join that short list of cataclysmic dates which, like 9/11 or the Kennedy assassinations, now invoke the question ‘where were you on ….’. That was the date, triggered by the sudden bankruptcy of Lehman Brothers in the US, when a massive domino collapse of prominent banks in the US and Europe led their gobsmacked Governments into costly public rescues and frenetic infusions of capital and liquidity.

Arch-enemies of public enterprise gasped as some of the great household names of private banking became costly burdens on the public purse. The Royal Bank of Scotland was pre-eminent among these, with assets at the time of £1,900 billion – considerably in excess of Britain’s entire annual GDP. Meanwhile, the decent citizens whose munificence had bailed them out were being re-paid with seemingly endless years of austerity, income constraint and shrinkage of their social amenities and standards of living.

Oddly, these unprecedented cataclysms seem to have engulfed us largely unnoticed, creeping under the radar of a massively expensive and sophisticated apparatus of economic commentators, business consultants, Harvard Business School style ‘ leadership’ programmes and blue-chip boards of directors. Together, they had for years battled for the incalculable promised gains of globalised banking and financial services; and the imperatives of super-high bonuses if we were to stay up with the global Joneses. So it should not be surprising that the same concatenation of misplaced assumptions has yet, five years on, failed to produce some more sensible and convincing account of the real causes of their failures. Nor have our collusive Governments.

Which is why the Independent’s advice ( above ) is both sound ( if you were wise enough to follow it ) and unsurprising to those who have seen the often symbiotic relationship between the best of art and the direst of realities. There is a way in which the modest focus of a stage can reveal deeper truths than the most sophisticated of board-room press-releases. And so it was with David Hare’s 2009 ‘The Power of Yes’ at the National Theatre.

Subtitled ‘a dramatist seeks to understand the financial crisis’ Hare’s play allows him to be on stage as one of the actors, questioning and being briefed on what went wrong by a cast of named protagonists in the melt-down . He is our ‘man-on-the-Clapham-omnibus’ getting an unprecedented after-view on what it was that ruined his family expectations.

So the well-known ‘rogues’ are there – the bankers, hedge-fund managers, bond traders, private equity promoters – flanked by the lawyers, academics, journalists and advisers, who for the most part ‘blind-eyed’ them. The stage convention, however, not only releases them to articulate the previously unspoken ‘fantasy’ mind-sets by which they lived, but brings them into unprecedented dialogue with the very people who were supposedly our key defenders and their restraint and ‘regulators’. So the ex-Chairman of the Fed ( Alan Greenspan ) puts in a revelatory appearance; as do the high- profile heads of our own ( now former ) Financial Service Authority – Howard Davies and Adair Turner – mandated to keep any miscreants in order, but mainly choosing to look the other way at crucial times. ‘This isn’t a story about bankers fooling you,’ Adair assures the author at one point; it’s a story about bankers fooling themselves .’

Go to it, or read the book of the play, for it is not our purpose to give a full synopsis of what we believe to be a different and necessary approach to understanding the origins of this greatest catastrophe of our times. By involving theatre in this key social process, David Hare continues a long and necessary tradition of Arts involvement in the social dialogue – an involvement sadly missing, so far, among others on the contemporary arts scene, especially my fellow poets and writers. The wider point, however , is simply about the total inadequacy of the more conventional diagnoses, and the need to follow any more imaginative leads which come our way.

That need is urgent, because as a more penetrating analysis begins to take shape, it becomes clear that the true causes of the meltdown go much deeper than the irresponsible behaviour of bankers, lenders and regulators and into the very heart of a failed, long-standing business model on which Western capitalism has run for nearly a century. That bankrupt ‘business model’ held that ‘the market’ knows best and is therefore the optimum adjudicator of human action and economic performance. The tragedy is that this same failed model is now being wilfully spread, by Government edict, into the key areas of health, social and educational policy.

The true essence of that business model is best expressed in the Credo ascribed, on the ‘The Power of Yes’ stage, to its arch-devotee, the Chairman of the US Federal Reserve, by a key UK disciple ( Adair Turner of the ‘light touch’ FSA). When asked by the Author ( op.cit.) how a Fed Chairman could legitimise ‘securitised credit arrangements’ and other abstruse and risky financing techniques which he confessed neither he , nor ‘ the hundreds of people with PhDs working for him ’ could understand , Turner responds –

“Not if you have Greenspan’s faith … he is a believer in markets, the wisdom of the market.
If professional people make deals in their own self-interest, they’ll come up with products and contracts which by definition are likely to make sense. And he also believes such arrangements work better when he keeps out of the way .. ”

Tragically, but now predictably, they clearly didn’t ‘make sense’, and for a Chairmen of the Fed to have pursued such a business model over the precipice, suggests that both he and it, with others of this ‘church’ , are badly and dangerously out of time. ‘The Market’ has proved to be a deluded sole guide to progressive and sustainable business policy; and a totally disastrous one when paired with equivalent political ideologies which subordinate much wider areas of social, economic, educational and cultural policy to what Rudyard Kipling, long ago, labelled ‘ The Gods of the Market Place ’.

In the central area of business itself, some more sophisticated reappraisal of what ‘market focus ’ could or should mean, is being trailed by a more vigorous re-examination of what corporate and individual values and value systems might better be for the 21st Century. The myopic ‘market’ fixation has, the critics feel, downgraded the essential human element linking the progressive business or institution to its wider publics of employees, customers and other social stakeholders. The bromides which have passed for statements of corporate ‘values’ in many organisations are coming under new scrutiny and fresh constituencies being formed, reflecting the ( too slow but now significant ) changing composition of boards, as more women take on crucial roles. The need for change, and the directions it should take, is now a priority national business issue.

Given the current Government’s embrace, however, this same market-led ideological fixation
has already spread like a virus to other key institutions and sectors of our society, and is insidiously at work reshaping the very language in which we have aspired to discuss such important things. We were once our doctor’s patient but are now his ‘customers’ and under his ‘management’ – as current political dogma and convention would have it. We resist, but need increasingly to shout very loud to be heard above the ludicrous ‘ marketese.’

There is, however, a much deeper and intrusive blight which this introverted and obsolescent
‘business/market’ model has imposed on our attempts to bring a fresher, more creative and innovative language into the business dialogue. It has produced a long-standing stereotype – what I have elsewhere called ‘ the myth of Managerial Man ( and Woman )’ – which has elevated a narrow range of human attributes thought most relevant to executive success – especially financial numeracy and competitive ambition – and groomed many generations, through business schools and other institutions, in the narrowing list of techniques and attitudes thought most appropriate to this need .

With Professor Roy Doughty, of the Center for Ethics and Social Policy at Berkeley, we and others have been arguing for a more ‘grown-up’ language which acknowledges the wider behavioural, creative and relational needs of the progressive managerial life, easpecially in this post-meltdown crisis, as well as the accounting and financial numeracy which fell short. This, and the whole question of language, must now be moved more positively up the 21st Century business agendas. In Doughty’s words … “ business people need this richer language because the world of commerce, no less than the worlds of ecology and spirit, is a nest of inter-relatedness.”

Meanwhile, the corrosive spread of the business model’s ‘market’ virus into ever-wider sectors of our most needed institutions gathers momentum. I have already mentioned the subversion of language, which is accompanying the progressive commercialisation, and creeping privatisation of the NHS. The same redundant business/market model has also invaded the school room, where the rhetoric of markets and competition already focusses on cost reduction through progressive de-skilling of Academy teacher roles and other market devices. This failed model is now a comprehensive threat to the necessary values of business itself and a widening tranche of our social institutions. We need cool heads and more incisive analysis.

The most intrusive subversion to date, however, and the most deeply established threat to our
longer-term values, remains the corrosive influence of the market ideology on our university
institutions and systems. Following the consistent critique mounted by Stefan Collini and others, Nora Croft used a recent review ( of David Ellis’ ‘Memoirs of a Leavisite’ TLS October 2013) to explain how this ‘ politico-market ideology’ .. “ has changed the very definition of our universities … and imposed structures drawn from management theory and practice .”

Virtually overnight in the late 80s, she continues “ a new language was imposed whereby ‘the university’ was defined as its ‘management’, students were to be called ‘customers’ and education became just another commodity to be ‘delivered’ .” Henceforward, universities were to be seen as primarily ‘wealth-creating institutions’. The misnamed ‘Research Excellence Framework’ has completed the degradation of the status of teaching in favour of
Intense and divisive ‘research’ rivalries, impoverishing both, and now threatening to destroy the teaching of the humanities altogether at university level.

This obsolete ‘ business ’ model, with its ‘market’ fetishism, was itself the deeper – so far neglected – cause of the 2008 banking and financial meltdown. And yet we persist in widening the corrosion into other, highly vulnerable, sectors of our great institutions. Across them all, and especially in the our business and corporate structures from which this model ultimately derives, there is a clear and inescapable need to re-examine and upgrade the values, attitudes and behaviours which we now know – or should – brought us here.

The need is urgent, for nature abhors a vacuum; not to act is to connive in the threatened survival and resurrection of the very business/market model which so nearly destroyed us. My associate, and contributor to this post, Christine Elliott ( Chief Executive of the Institute for Turnaround ) is playing a key role in pursuit of this need, especially in one of the main heartlands of failure, the Banking Sector.


© Ralph Windle

November 2013