Third in an ongoing series, Books for Our Times.
What makes Wall Street tick?
To understand the motivation of the financial types who brought down the economy in 2008, where better to go than the novel? Nonfiction gives us facts and their fallout, but novels (and plays) probe motivation: On the Street, what were they thinking as they blew more and more hot air into the balloon that blew us all up? Were there no resisters, no reformed Gordon Gekko? And does Wall Street give any thought at all to Main Street? I suspect not, but details would help, as ammunition.
For this reason, I came to the British writer John Lanchester's novel, Capital, whose focus is London's equivalent to Wall Street, the City of London and whose timeline is 2007-2008, the run-up to and explosion of our financial crisis. In a review, Michael Lewis praised Lanchester as a "moralist," an off-putting term for some but which seems the proper lens to address the vast human suffering and structural damage wreaked by fast-and-loose financiers everywhere. Too, the novel's title, Capital, holds out rich promise: capitalism experienced intimately, a close-in look at banking, and portrayal of the human kind of capital in which the novel can excel.
Lanchester delivers, but in an unexpected way. It's the immigrant characters in the novel who possess a moral compass, and suffer, while the native Britons are all-in on the carnival of money unleashed by the City since the Thatcher era -- a withering indictment by the author of his countrymen's practice of capitalism. The exception is the elderly Petunia Howe, who's the last original stakeholder on the newly chic Pepys Road, where the novel is set, and who misses the quiet way things used to be.
Representing the New Financial Man is Roger Yount, head of foreign exchange trading at the bank Pinker Lloyd, his consumerist wife Arabella, their two bratty boys, and Hungarian nanny. Roger is a cartoon -- this novel is largely a satire -- but cartoons, being graphic, can instruct.
When we meet Roger, he's "doing sums," to calculate the million-pound bonus he needs this year to maintain, among other extravagances, his two houses, the one in town and the one in the country. What Roger is not doing is keeping up on the spiraling complexities of trading -- confirming what many suspect of bankers -- relying instead on his wizard of a deputy, Mark, not realizing his deputy wants him sacked and has the means to do it. Mark, hoping to prove his indispensability by trading off-hours, at first makes the bank millions, but then, caught out by the market's volatility, finds himself millions in the hole -- and is fired for embezzlement, along with his inattentive boss, Roger. The bank itself goes under soon thereafter.
Setting up the historical context of his tale of capital, Lanchester writes:
"It would be hard to put your finger on the exact point when Pepys Road began its climb up the economic ladder. A conventional answer would be to say that it tracked the change in Britain's prosperity emerging from the dowdy chrysalis of the late 1970s and transforming into a vulgar, loud butterfly of the Thatcher decades and the long boom that followed them."
Many new residents, like Roger, work in the City of London. Outsize bonuses, "big multiples of the national average salary," buy them entry to Pepys Road, where they can just sit and "imagine the cash value of their homes rattling upwards so fast that they couldn't see the figures go round."
As for the work producing this wealth, the author situates Roger in time, contrasting the old City with the new (Lanchester's father was a banker of the old City):
"[Roger] would have fitted seamlessly in the old City of London, where people came in late and left early and had a good lunch in between, and where everything depended on who you were and whom you knew and how well you blended in, and the greatest honour was to be one of us and to 'play well with others'; but he fit in very well in the new City too, where everything was supposedly meritocratic, where the ideology was to work hard, play hard, and take no prisoners; to be in the office from seven to seven, minimum, and where nobody cared what your accent was... as long as you showed you were up for it and made money for your employer."
But storm clouds hover. At novel's opening, Black Rock investment bank has just collapsed and people were "twitchy." But, steady on: "That was OK as far as Roger was concerned, because in the foreign exchange business, twitchy meant volatile, and volatile meant profitable." Of course, risk is involved, and risk compounds in volatile markets, but "the risks tended to seem less unacceptable when they were making you spectacular amounts of money." As Roger well understands,
"It was a law of the business that you could not make money without taking some risks, but it was also true, thanks to the wonders of modern financial instruments, that you could manage the risk almost out of existence."
Those "modern financial instruments," however, are no longer in Roger's firm grasp:
"Roger did not love the fact that his footing was no longer entirely secure, and that he could no longer explain, right the way down to the finest grain of detail, exactly what was going on in the trading his department supervised. But then, hardly anyone else could either. That was just the nature of the work that went on in the City these days."
Still, even in this fogged landscape, the getting is good for a long time, creating the
impression of omnipotence in a trader's mind:
"Because every trade involved a winner and a loser, making a great deal of money through trading involved being proved repeatedly right, time after time. That had an effect on people who for the most part had not been shy or unconfident in the first place. They tended to think genuinely and sincerely, that they were the next-best thing to God."
Roger's deputy Mark, who's convinced Roger won't even be a footnote in Mark's own forthcoming biography, is even more hubristic. Engaged in his secret trading, Mark exults: "This is what genius looked like." Lanchester cites traders' capacity to create their own "weather," their own "reality," which a headhunter whom Roger consults after he's sacked says is "a strength, a great strength. Really. In normal times." Which of course is where Main Street would strenuously object: Not!
Lanchester is especially good on the maintenance of this machine. The bank's compliance division is a joke:
"Compliance's job was to make sure that the bank was obeying all the idiotic legislation designed to make the City safe for the timid and the frightened and the conventional and the weak, all the pathetic little bits of string with which governments tried to tie down the giant."
Team-building exercises reinforce the City's feral habits. As Roger sees it:
"Because his people were traders, and because traders were supposed to be competitive, acquisitive, and aggressive... he made them do things which went with the grain. Nothing cooperative or consciousness-raising, no Buddhist meditation retreats. Roger's usual method was to pick a competitive activity and use the whole budget for his exercise as the prize, winner take all. He had done it with go-karting and clay pigeon shooting, with great success. Today's contest was poker."
Do ethics ever intrude? For Roger, only once -- while pheasant hunting with a client: "Roger, in this break away from work, felt relaxed enough to have a thought about ethics." But his ethical "problem" relates to disliking his host while liking his hospitality. For the most part, he subscribes to the ethic reflected in his all-time favorite line in cinema, from Conan the Barbarian: "To crush your enemies, see them driven before you, and to hear the lamentations of their women."
With this mindset, when all goes bust, there's not much by which to repair. At his sacking, Roger's exit line to his staff is, "Well, it's been real" -- irony at its extreme. With time on his hands, he ponders "the sheer unfairness of life": "It was all as if he was being punished for a crime -- and what had he ever done wrong, apart from having a deputy who was a crook and a sociopath?" The one bright spot: When giant Lehman Brothers on Wall Street collapses, rather than causing Roger concern for the stability of the global financial system, or firing him up over the need to reform it, he takes solace knowing he's not the only one having a super-bad day and that his own bank's collapse has been shoved from the headlines. And wife Arabella never does stop pleading the case for "London's struggling well-off."
Oh, and the City's view of Main Street? Apart from the "loser" label that flows from the "winner's" high perch, there is Roger's conviction that, when it comes to flying, one of the perks of having money is not flying "scum class." And deputy Mark dreads Sunday dinners in the suburbs with his parents, those "mediocrities."
Granted, all this is the harsh view from fiction, and satire at that, but absent a real-life George Washington visionary emerging in the City or on Wall Street, it applies.
And yet, and yet, there's some hope for salvation: Roger, Mark, and Arabella each experience the occasional sinking spell -- a "sudden, vertiginous loss of self" -- which however they manage to leave behind, unexamined, and speed on.
It's the immigrant stories that provide this sprawling novel its rich human capital -- the Polish builder who's invested heavily in the stock market, the Senegalese soccer player whose career-ending injury has him battling insurers for maximum payout, the Zimbabwean meter maid about to be deported, and, especially, the Pakistani man who, though innocent, is arrested as a terror suspect. But, given our focus here -- getting a bead on how financial types tick -- we've fixed on the scurrilous Roger Yount.
Altogether, it's not a pretty picture this novel presents, but it's recognizable as our world. How to live in it? The elderly Petunia Howe recognizes that simply "being good" is not enough to make a mark in this new world. Her daughter Mary recognizes "it was now her turn to grow old, to find the world changing, sliding away from the old ways of being and behaving, so that you were gradually a stranger to the place you lived in." Lanchester writes, "A Gresham's Law was at work: the cheap money of overstatement was gradually driving out the good money of true feeling." And the Hungarian nanny notes the children of all her rich clients "were angry all the time."
Clearly, a moral awakening is needed. The predatory ways of Wall Street and the City go largely unreformed since the '08 crash, income inequality grows ever wider and more hurtful to Main Street. Michael Lewis ends his review with the hope "that our elites might experience some kind of moral transformation." Ripe for transformation is the belief voiced in the novel -- "Everything about making shedloads of money was fine."
But, in real life and in art, there exists a fierce allergy to the "moralistic." Until more of us make the moral point, however, we'll keep sliding downward.
Art, especially the powerful form of the novel, can point the way. But let's have done with the satires and send-ups -- it's been done ad nauseam, literally we are sick with it -- and let's get serious. We need a road map and our moral voice back. A good place to start is that sinking spell, the "sudden, vertiginous loss of self" -- in actuality, a call to moral reckoning -- or, even better, the activating rage a morally reckoned character feels at seeing the boat in which we're all passengers being hammered and scuttled. From there, we chart our way upward.
For reviews of "Capital" in the U.K. press, see here, here, and here. For reviews in the U.S. press, see here, here, here, and here. For an interview with John Lanchester about "Capital," see here. For Lanchester's contributions to The New Yorker, see here.
Carla Seaquist is author of a book of commentary, "Manufacturing Hope: Post-9/11
Notes on Politics, Culture, Torture, and the American Character." Also a playwright, she is author of the 2012 volume, "Two Plays of Life and Death," which include "Who Cares?: The Washington-Sarajevo Talks" and "Kate and Kafka," and is at work on a play titled "Prodigal."