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Everything You Know About How the City of London Works Is Wrong

We interviewed Tony Norfield, the Marxist ex-City-slicker whose new book explains what's really going on in London's financial centre.

Someone protesting against the bloody banks in the City of London (Photo: Carl Court / PA Archive)

Complicity with evil is a regular feature of our lives. By paying tax we fund weapons that will be used on civilian populations; by buying clothes we participate in a global system of labour exploitation and resource extraction; even by reading this article you're transforming your attention into a commodity to be bought and sold by nefarious advertisers. From this perspective – of the inescapable web of capitalism, entangling our private and public lives – the fact that Tony Norfield, a committed Marxist, spent 20 years working as a banker in the City of London doesn't seem like hypocrisy, just a golden opportunity.


He knew when he joined Bank of America International in the 1970s that he "didn't like capitalism", but the gap between his career and ideology didn't turn into cynicism: it gave him a sensitivity to what his job was actually about. His experience "inside the machine" furnished him with the insights and, eventually, the motivation to leave in 2006 to pursue a PhD in economics, the result of which is his first book, The City: London and the Global Power of Finance, which is released this month.

It's not an autobiographical book. Only a handful of anecdotes are scattered across its 250 pages. It's more an attempt to grasp the City of London and its position within global capitalism – something which "most other writers focusing on finance [are], quite frankly, rubbish at". With heaps of empirical research and a clear style of argumentation, he demonstrates that the City isn't a "satellite of Wall Street" as many think, but its own beast, using Britain's imperialist privilege to extract value from the world economy. Much of the book is directed against bad arguments made by the liberal-left – the distinction between "productive" capitalism and "casino" banking; the populist vitriol against "the banks" – which Norfield believes aren't just analytically false but let capitalism off the hook.

This interview has been edited for clarity.

VICE: Hi Tony. In The City, you write against many liberal-left orthodoxies that you say misrepresent the economy. A basic premise of the book is Britain's economy is "imperialist", which will confuse some.
Tony Norfield: There's an interesting question, which has come up a few times: how do you understand the term "imperialism"? In most people's minds, imperialism means "colonialism" and since it's obvious that there aren't so many colonies around – for Britain anyway – you get no real discussion of imperialism in academic circles. Or at least none that covers Britain today. Instead, most people only focus on the US.


So when you say "imperialism" you don't mean people wearing pith hats while drinking gin and tonics and mispronouncing the names of the places they're claiming for the Queen.
I would say "imperialism" is when you have a clear hierarchy in the world economy – and the understanding that there is a world economy. It's not just a bunch of countries that have a few relationships with each other. It's a hierarchy in the world economy dominated by monopolistic power, one that's a mixture of corporate and state power. And that's what gives it particular features, ones characterised by the domination of a small number of rich countries over the rest.

Another orthodoxy is the narrative of Britain's economy after the Second World War. People like to divide it into two periods: the "Golden Age" in the 1950s and 60s with the welfare state and increasing wages for the working class; and "neoliberalism" when Thatcher and Reagan introduced a set of regressive policies. But you think this is simplistic.
I think it's not just a simplistic narrative, but a very one-sided narrative. The "Golden Age" applied at most to people in richer, western countries, and it was often counterbalanced by all kinds of depredations on poorer countries. Too often, people also miss out how the "boom" period was founded on the destruction of the Second World War and how, with declining profitability, when it had run its course by the 1970s, this was the backdrop for the more aggressive capitalist policies.


You write about the 1945-51 Labour government which wanted to maintain the Empire and continue exploiting the colonies – something missing from the Labour Party's triumphant welfare state narrative.
I really find this funny – even though it's more sad than funny – especially in the talk about "Our NHS". Don't get me wrong, I think having a health service free at the point of use is a great thing, but in what sense is it our NHS? Because the facts show that when Britain set the thing up it was part of a political deal.

When it came to paying for the NHS and the welfare state after the war you need to look at where they got the money from, because Britain was essentially bankrupt at that point. They borrowed 20 percent of GDP: half of it came from the Americans and the other half came from ripping off the colonies.

There were long-term plans that the Labour Party had for continuing this rip-off, like under-paying West African countries for commodities or using the Sterling Area system to get a cheap loan from other countries in the Empire. So the welfare state, looked upon as a touchstone of civilisation and progress by the left, has a chequered past. It was discussed across all parties in the 1930s, with key policies proposed by William Beveridge in the early 1940s, and was implemented in a political deal done by the British establishment and the trade unions and the Labour Party. It was a national patriotic deal, which was why it was not reversed by the succeeding Conservative governments.


And when that deal began to crumble we got the Thatcherite regime of harsh supply-side policies. But you're suspicious of the term "neoliberalism", which people use to describe that – and our current – era.
That's because backdrop to what happened after Reagan and Thatcher was very much set in the 1970s and probably would have happened anyway. Firstly a lot of the deregulation of financial markets was occurring in the 1970s in Germany, Canada and the US. Not so much in Britain because the economy was in such a mess that they couldn't risk it. Then you had the famous statement of Jim Callaghan, the Labour Prime Minister, saying in 1976 that the option of trying to spend your way out of recession no longer existed – they were essentially adopting Thatcherite policies before Thatcher.

So "neoliberalism" was a change that was forced upon different countries because of the economic crisis, not something that was a freely determined policy choice. You find a lot of people who use the term neoliberalism – I think it's a very vague term anyway – use it to counterpose it to a different set of policies that would have been better. And I think that perspective is just foolish because it doesn't understand what led to "neoliberalism" in the first place.

We're used to politicians genuflecting before the City and your book describes why: the City is extremely important – morally objectionable but structurally important. In a way, the Tories or Sadiq Khan are correct when they treat it with so much reverence.
It's not a question of reverence that determines their view, but hard economics. Britain's got a huge trade deficit of more than £100 billion a year. Something like half of that is offset by the dealing earnings and insurance revenues of the City, together with the related legal and accounting services.


In the book, I quote Alistair Darling, former Labour Chancellor, who openly admitted that Labour was banking on revenues from the City to fund a lot of public spending. Then when the crisis hit in 2008, the whole thing fell apart. So the City is very important for British capitalism in that respect. But in the book – although the title is The City – I wanted to pin down more generally how the financial system worked worldwide, not just as it relates to the UK. That's why I give examples of companies who are not banks or financial companies, and of other countries, that use the financial system to promote their wealth and power.

Since you finished the book, we've had the "Panama Papers" revelations. But you write that most writers on offshore accounts miss the mark.
It's true, there's a lot of tax dodging and, of course, governments have done very little about it because that's part of the way the ruling class hides its income! But I think there are two things to point out with the Panama Papers. One is that Panama itself is really, as I call it somewhere else, a "pimple on capitalism's backside". It's not that important even if you're talking about offshore accounts. Little islands off the UK – especially Jersey and Guernsey – are much bigger than Panama is in terms of banking. The Cayman Islands is the biggest.

The second is that these places have "God Save The Queen" as their national anthem. And, as we all know, it's not a very catchy tune. So why are they singing it? As you might suspect, it's got something to do with the linkages to the British state: they're British Overseas Territories.


I also give an example in the book of how Britain borrows a lot of money from its own local tax havens – Jersey, Guernsey etc. – and sends money to the Cayman Islands which then gets invested in the US bond markets and securities markets. This is part of the financial infrastructure that is set up by the major powers. So rather than just being a place for billionaires who don't want to pay their taxes, these centres play a key role in the international flow of funds in the global system.

You write about the geographical advantage of the City – London's in an ideal time zone for managing international finance – but not the City as a physical or political entity, with its arcane laws and customs.
I think that comments about the City's arcane laws are really overdone, and are made to imply that if were there a different legal framework you could stop the depredations of the City. My point is if you look at the form taken by the financial system, you can see how it's very linked in with modern capitalism generally – not simply financial companies in the City or on Wall Street. I think looking more carefully at that would make you put the finger on capitalism and imperialism rather than on the lack of regulation.

The book is framed as a search for value within and without the City. Apart from the Marxist sense – value comes from productive labour – where does it come from in your life now that you've left the City?
I love to see people doing things to help other people; creating new things. There are all kinds of things invented more or less every day of the week that could improve people's lives. There is potential for humanity, I've got no pessimism about that. But the barrier to those capabilities being exercised progressively is the capitalist system that puts a constraint on everything we do. I would love to see the beginning of an end to capitalism – or at least a decent challenge to it in coming years.


The City: London and the Global Power of Finance is out now on Verso.


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