John Lanchester's I.O.U. 02/08/2010
Last night I finished reading I.O.U.: Why Everyone Owes Everyone and No One Can Pay, which is British novelist John Lanchester's wonderfully smart, funny, and lucid popular account of the collapse of the financial markets. I have no head for economics, but even I think I understand things a lot better now than I did before I read the book. I still couldn't tell you exactly what a credit default swap is, but there are a couple of insights about the larger economy that will stick with me. Here's my favorite one, from late in the book—something I had never thought of before, but which seems perfectly self-evident as Lanchester expresses it:
...There is a profound anthropological and cultural difference between an industry and a business. An industry is an entity which as its primary purpose makes or does something and makes money as a by-product. The car industry makes cars, the television industry makes TV programs, the publishing industry makes books, and with a bit of luck they all make money too, but for the most part the people engaged in them don't regard money as the ultimate purpose and justification of what they do. Money is a by-product of the business, rather than its fundamental raison d'etre. Who goes to work in the morning thinking that most important thing he's going to do that day is to maximize shareholder value? Ideologists of capital sometimes seem to think that that's what we should be doing--which only goes to show how out of touch they are. Most human enterprises, especially the most worthwhile and meaningful ones, are in that sense industries, focused primarily on what they do; health care and education are both, from the anthropological perspective, industries.
At least that's what they are from the point of view of the people who work in them. But many of these enterprises are increasingly owned by people who view them not as industries but as businesses: and the purpose of a business is, purely and simply, to make money. The attitudes of a business owner are different from those of people who work in an industry, and from the point of view of business, an industry's ways of doing things are often the unexamined inheritance of the past, willfully inefficient, willfully indifferent to fundamental realities of how the world works. Money doesn't care what industry it is involved in, it just wants to make more money, and the specifics of how it does are, if not exactly a source of unconcern, very much a means to an end: the return on capital is the most important fact, and the human or cultural details involved are just that, no more than details. [pp. 197-198]
Again, this is self-evident and probably no surprise to most people—even to me, if I'd ever bothered to think about it in any serious way. It explains a lot about the culture industry, which includes fiction writing. At any rate, Lanchester puts it beautifully, and the book is full of bracingly clear-sighted insights like this. Here's one more, one of his concluding insights near the end—the, um, money shot, if you will:
So: a huge, unregulated boom in which almost all the upside went directly into private hands, followed by a gigantic bust in which the losses were socialized. This literally nobody's idea of how the world is supposed to work. It is just as much an abomination to the free marketeer as it is to the social democrat or outright leftist. But the models and alternatives don't seem to be forthcoming: there is an ideological and theoretical vacuum where the challenge from the Left used to be. Capitalism no longer has a global antagonist, just at the moment when it has never needed one more. Or rather, capitalism has found a deadly opponent, but the problem is that the opponent is capitalism itself. [p. 230]
Now, of course, my having read, enjoyed, and learned a great deal from Lanchester's book doesn't lessen my credit card debt by a single penny—nor does it make Lanchester himself a single penny, since I took the book out of the library. But even so, it's great, bracing stuff. Go read it for yourself.
In which I mostly write about books, movies, and TV. An all-purpose spoiler alert: Sometimes I will talk about these works on the assumption that the reader's already read or seen them, so if you haven't, be forewarned.
About Last Night