The question of who runs a country is deceptively complex. We could be forgiven if our first response was “the government”. After all, that's why we hold elections isn't it? According to Robert Peston’s brilliant page-turner “Who Runs Britain?” this answer is a bit naive. In the process of explaining why, Peston transforms every cynical thought we ever had about money’s influence over power into a real story. Apparently “the government” doesn’t quite cover all the bases. In fact, Peston makes it clear that the government cedes more and more control over the British economy everyday. So then who runs Britain? Apparently not very many people - and most of them aren’t elected.
Peston's book opens with the story of him in his grade school years enthusiastically extolling the virtues of progressive egalitarianism. In his household fairness and equity were seen as the most important attributes a modern economy could possess. Then Peston turned 19. With the election of Margaret Thatcher, and a bit more schooling under his belt, he began to see rising inequality in income not as something that needed to be fixed, but as a phenomenon necessary to Britain’s growth. Peston’s newfound love for capitalism only strengthened through stints at the BBC, Sunday Telegraph and the Financial Times. The author was transformed into an unflinching “advocate for wealth creators.” And that’s exactly what “Who Runs Britain” is – a championing of human generators of wealth. But it is also a cautionary tale, for it seems Peston has come full circle. As each account of capitalism’s extraordinary accomplishments comes to a close, Peston’s 18-year-old self quietly reminds us that perhaps some of this praise is premature. “Who Runs Britain” soon begs the question of not whether money can actually buy everything, but rather, how is it currently doing so? And is this a good thing?
Explaining how is where this book excels, as Peston is at his best when he is telling a story. The mechanics of modern capitalism are revealed; backroom negotiations worth billions of pounds are brought under a microscope; and superheroes are made out of the upper echelons of hedge funds and private equity firms. Each chapter does an excellent job of explaining how these institutions work and why we should both celebrate their accomplishments and fret their proliferation. The most important contribution of this book is to show how these institutions are channeling money into the hands of fewer and fewer people. The new capitalism is no longer run by companies the size of General Motors or Marks and Spencer; instead, tens of a billions of pounds are manipulated by a handful of companies with staff totaling less than fifty. Sometimes, as one of the many Philip Green stories depicts, these sums can be raised by a single individual almost overnight. The consequences of this consolidation of wealth are extraordinary. Britain, it seems, is no longer run by Parliament.
As Peston illustrates how the financial industry has increased its influence in London, he also reveals the government’s subsequent fall. Ironically, it’s largely of their own doing. While Labour undergoes an internal struggle over how to appear more business-friendly, the issue of "fairly" taxing The City is purposefully swept under the rug. Scared that Britain's financial sector is going to move overseas, Gordon Brown (and previously Tony Blair), defines income in ways that establishes a tax haven for the massively wealthy. While playing to what it thinks the public wants to see, Parliament has shouldered them with a heavy tax burden in the process. After all, if the rich won’t pay taxes someone must. These concessions to the financial sector have fueled rapid wealth generation - ostensibly a good thing. But Peston argues that people are only paying attention to the growth in wealth, not its consolidation. Herein lies the problem: with Labour eager to please The City, the financial sector has acquired massive leverage over the government. By funding Labour’s campaigns, the superheroes of the entrepreneurial world have been awarded advisory roles in Committees and Lordships in Parliament. As these two pillars of power blur their lines the British polity is sidelined. Peston elucidates how this has been both a conscious choice of the government and a costly oversight.
What's interesting about "Who Runs Britain" is how its author treats all of this. Throughout Peston is simultaneously amazed and apprehensive about the effects modern financial engineering is having on the economy. He is quick to espouse the virtues of efficient capital allocation, but uncertain of what that means if only a few benefit. Peston implicitly questions whether the economy is indeed growing if none of the spoils of capitalism are being injected back into it. As the chapters go by he seems less impressed with the clever machinations of the capitalist superheroes and more worried about the long-term effects on the economy.
In the penultimate chapter, the story of Allan Leighton appears to restore his confidence. A fierce entrepreneur on the level of Philip Green, Mr. Leighton comes to the rescue of the British mail service. Employing many of the same methods the executives from the private equity firms and hedge funds use, Royal Mail exhibited a stark turn around. But this again concentrated power into the hands of a few (or in this case, one). It also subjugated the government – underscoring the hard truth that at the end of the day, money wields more influence than the people we elect. But Peston uses this story to show what capitalism can do when focused in the right places. The British polity doesn’t always have to lose with the application of free market principles.
On his way to the conclusion Peston stumbles a bit. For instance: illogical organization of the chapters undermines the composition’s flow. One moment we are privy to backroom dealings of the attempted takeover of Marks and Spencer - one of Britain's most prestigious and powerful firms - while the next Peston is discussing the origins of the financial crisis. Though his explanation is not entirely out of step with the themes of the book, the ubiquity of material currently available on the subject renders his addition unnecessary.
Peston is also at his weakest when he is preaching. Many of the chapters contain mini-conclusions where he warns us of the sometimes-questionable morality of capitalism. These unnecessary and weak diatribes sideline his usually cogent journalistic tendencies. Peston’s own final conclusion is no more than an amalgamation of each of the chapter’s ending remarks. Not only lacking punch, these off-handed sentiments feel obligatory and uncommitted. Perhaps in an effort to identify with popular public opinion on the state of capitalism Peston felt it necessary to say at least something about the economy’s current woes. It appears to be no more than an attempt to renew the book’s relevance with the release of the paperback edition.
However, these missteps do not detract from the importance of this book or its general enjoyment. At worst, they are forgettable inclusions. His exposition on the machinery of modern finance, and the power that private equity firms and hedge funds wield, is riveting and invaluable. We learn much about the inner-workings of the new modern capitalism that would justify many of our more cynical sentiments. The facts are clear throughout: large swathes of the economy are being systematically purchased by a handful of individuals and small firms; money and power have consolidated in the hands of fewer and fewer people; and money really can buy everything.
Peston takes great pains to show us that finance has the ability to exert substantial influence in many sectors of the country. When Labour was in need, a handful of individuals helped nurse it back to health. Subsequently, the tax code has been carefully massaged to keep the extremely wealthy effectively tax-free. Moreover, Lordships and political advisory positions are used as thank you cards for substantial party contributors. This confluence of money and power is remarkable, and Peston makes it downright scary. “Who Runs Britain” is both a celebration of what we can achieve and a cautionary tale on the consequences of those achievements. Peston commands our awe and elicits our fear. It is a dichotomous tome on the superheroes of the business community - one that is a thrilling read and a valuable education. So who in fact runs Britain? A collection of individuals in the government and finance… and they all know each other. Better hope trickle down economics works.
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