Plane with an empty cockpit

I RECENTLY read a revealing new book by the Dutch journalist Joris Luijendijk. The Dutch title (as far as I know, it hasn’t been translated into English) is “Dit kan niet waar zijn: Onder bankiers” – or “This cannot be true: Among bankers”. The book is a huge success in the Netherlands.

I hope a translation is forthcoming, because this is a must for everyone interested in the inner workings of the banking sector. It is specifically about bankers in the City of London, but I imagine it is also to a lesser or greater extent true for banks worldwide.

From personal experience, I can also say that many things in the book are mirrored in big companies in other sectors as well.

Luijendijk, who made his name as investigative journalist in the Middle East, was approached by the editor of the London newspaper The Guardian, Alan Rusbridge, to submerge himself in the City’s banking culture and write a blog for the newspaper. This book is the end result of a blog which lasted quite a time and is based on dozens of interviews with banking employees.

Luijendijk sets out to answer a very basic question: has the banking sector learnt anything from the near-disaster of 2008, when the world economy came to within a millimetre of total breakdown due to the banking crisis of that year? The short answer is no.

Let me summarise the most important conclusions in the book:

• The banking bosses, even those at the top of the biggest and most prestigious banks in the City, haven’t the faintest idea of what their banks are doing or what their actual task in the broader scheme of things is. In fact, he likens the banks to an aircraft hurtling through the sky at dizzying speed without anyone in the cockpit.

• The banks are characterised by a culture of fear among the workers. Nobody except those at the very top feels secure. The rest may be thrown out on the street within a second. Everybody dreads the telephone call to report to the proverbial 20th floor for an interview which may be over in as little as five minutes.

And then often security guards will be waiting to escort you straight out of the building on to the street outside. On the way out, none of your colleagues will speak to you and they will avoid eye contact, for fear of contamination.

Culture of fear

• This culture of fear is also fed by the fact that speaking out about abuses is a complete taboo. The bank’s reputation may under no circumstances be harmed. Do that, and you are out. Which explains why most of Luijendijk’s informants were paranoid about being identified.

• In contrast to the popular view on the outside, most bankers are not immoral. The banking culture is amoral. Right and wrong, moral and immoral, ethical and unethical simply do not come into it at all.

• Many of the bankers go along with this amoral culture, simply because they are caught up in it and have no alternative. They have become used to high living, have bought expensive homes and cars which have to be paid for, have wives and children to be provided for, et cetera.

• The only thing that counts is profit, more profit and even more profit. Your worth as an employee is measured by how much profit you can earn for the bank, nothing else. The bank couldn't care less how you do it, as long as you do it and stay within the rules.

• Therefore, the question of service to the public is completely irrelevant. It isn’t part of the equation at all.

Too big to be managed

• Some of the banks have been saved by their governments because they are too big to fail. Luyendijk says in addition some are too big to be managed. The leaders have no idea of what is going on in their banks. In fact, very few people have a bird’s eye view – they may know a lot about their immediate vicinity, and very little about anything else.

From personal experience I recognise many of these practices also outside the banking sector. I remember attending a two-day conference a few years back as a reporter, where leaders of a certain company explained expansion plans.

These were, honestly, very impressive. But during a break I asked one of the presenters what the motive was.

“To increase profits,” he answered.

Me: “And what do you do with the profits?”

He: “We plough it back into the company.”

Me: “To what end?”

He: “To expand the company.”

A full circle. No moral content whatsoever. Nothing about providing a service to the public, nothing about doing something to improve people’s lives, nothing about creating job opportunities.

Don’t misunderstand me. I am not one of those do-gooders and tree-huggers who run around with stars in their eyes. I am also not a socialist for whom profit is a dirty word.

But I do believe that enlightened self-interest – profit, if you like – can be sustainable in the long run only when it is reconciled with serving the interest of at least the greater part of society. This is what the father of the free market, Adam Smith (who, as it happens, was also a vicar), taught.

Or else we may experience the end of the free market in our time.

* Leopold Scholtz is an independent political analyst who lives in Europe. Views expressed are his own.