I do a deal right away

The​ top-down story of 1980s finance is familiar enough, but Amy Edwards offers a different account, arguing that our focus on the political history of the 1980s has come at the expense of understanding economic and social change. All kinds of historical development have been attributed to Thatcher’s assertion of state power, but it has become increasingly clear that Thatcherism was the beneficiary as much as the agent of these changes. The decline in manufacturing and the rise of the service sector was accelerated by the Conservatives but not created by them; the obvious political benefit to them was the fragmentation of organised labour. The erosion of social deference that began in the 1960s enabled the Conservatives to present themselves as anti-establishment radicals sticking up for ordinary voters against a paternalistic left-wing elite that wanted to tell people how to spend their money. Aled Davies pointed out in The City of London and Social Democracy: The Political Economy of Finance in Britain 1959-79 that the changing structure of the financial sector had removed some of the foundational blocks of British social democracy. The capacity of the state to regulate credit and investment – and thus to maintain a highly industrialised full-employment economy – was undermined by the Bank of England’s liberalisation of the banking system in 1971, new international capital markets and the growing dominance of pension funds, which became the effective owners of swathes of the economy. The history of Britain’s financial sector in the late 20th century is a case study in a global economic transformation. But Britain’s experience was also distinctive, because its economy, state and culture were particularly susceptible to the allure of financial markets. The City seemed to regain the status it had in the heyday of Victorian capitalism, before the more autarchic economic policies of the mid-20th century narrowed capital’s freedom of movement.

From the 1840s, new sections of the middle class started to use their higher disposable incomes to help them invest in the opportunities offered by the building of British capitalism and the expansion of the empire. Ideas about prudent, responsible ‘investor-citizens’, which associated share ownership with sensible support for business rather than the speculative frenzies familiar from popular culture, began to circulate more widely after 1855, with the introduction of limited liability for investors. A financial press emerged in the late 19th century (the Financial Times was first printed in 1888) to serve this growing market, offering tips, analysis and exposés.

Spinsters and widows were allowed to own shares early on, and from the late 19th century married women were too. As Edwards notes, women could vote at company AGMs before they could vote in parliamentary elections. Share ownership was of course circumscribed by class – it wasn’t until the 1950s that ‘the investing public’ was thought of as including, at least potentially, the working class. In 1923, the Conservative MP Noel Skelton responded to the threat presented by universal suffrage by outlining the notion of a ‘property-owning democracy’: social stability (and Conservative political interests) would be assured by the cultivation of an electorate in which many citizens owned some property and so felt a degree of solidarity with wealthier property-owners. It was an attractive proposition for the Conservatives, if hard to implement. In the 1950s, the Tory prime ministers Anthony Eden and Harold Macmillan championed home ownership, and politicians and financiers became keener on the idea of enabling the working class to own shares. The Wider Share Ownership Council, founded in 1958, promoted schemes such as employee share ownership. In the 1960s newspapers introduced ‘money pages’, which provided jargon-free advice on where to invest.

Although many of the preconditions were in place, share ownership didn’t become widespread until the mid-1980s: only 3 or 4 per cent of the population owned any shares before the privatisations of the Thatcher era. By the late 1980s, that proportion had risen to 21 per cent, though it dropped back to 15 per cent by 2009. The privatisation of nationalised industries was crucial: both directly, through the buying and selling of shares in the newly private businesses, and indirectly, by sparking a wider fascination with financial markets. Edwards recognises this, but argues that the neoliberals’ ideological goals were impeded by certain structural features of modern capitalism. The ideological architects of privatisation – such as Enoch Powell, financial secretary to the Treasury in the late 1950s, and the Tory cabinet minister Keith Joseph, Thatcher’s first secretary of state for industry – envisaged a form of capitalism in which individuals actively traded on the stock market, owned portfolios of shares and took responsibility for their gains and losses. These shrewd, well-informed capitalists were intended to have a direct interest in the companies they invested in.

Not surprisingly, this vision of financial citizenship proved unrealistic. Few people had the time, expertise or money to invest in such a way. Instead, in the second half of the 20th century institutionalised forms of investment, notably pension funds and insurance companies, began their inexorable rise. The proportion of UK shares held by individuals dropped from 54 per cent in 1963 to 38 per cent in 1975 to 20 per cent in 1990, by which time UK pension funds and insurance companies owned half of all UK shares (most of the rest were held by overseas investors). Many individuals who bought shares in privatised industries quickly sold them to institutional investors. The culture of investment in Britain in the 1980s, according to Edwards, focused on shopping around for the best deals from financial institutions. This wasn’t a time of ‘investor-citizens’ but of ‘investor-consumers’; their emergence may have been accelerated by the Thatcher government, but it was essentially the result of changes in the structure of capitalism.

The rise of financial consumerism was shaped by a supply-side logic. Companies struggled to make a profit by catering to small individual share portfolios. In the 1980s ‘share shops’ – essentially stockbrokers who set themselves up on high streets – started to appear, in imitation of the ‘brokerage booths’ pioneered by the Sears chain of department stores in the US. Quilter Goodison was an early entrant to the market, setting up a chain of shops called the Money Centre, with a flagship branch in Debenhams on Oxford Street. The Daily Mail quoted one satisfied customer, an ‘importer/ exporter of fancy goods’, at a rival share shop opened by the Birmingham Stock Exchange at Birmingham International train station: ‘As soon as I get off the train … I drop into the share shop … and if I see something good I get on the phone and do a deal right away. It’s a very simple process. You don’t even need to know a stockbroker or how to buy or sell – the girls behind the counter can do it all for you.’

But share shops and other attempts to engage small investors also turned out to be unprofitable (the Money Centre folded after the stock market crash of 1987). Instead, the large banks and building societies captured the emerging market for financial services by opening what were billed as ‘financial supermarkets’ – a single venue for savings, share-dealing, pensions and mortgages. Banks and building societies, which had huge numbers of existing customers and were able to benefit from economies of scale, took advantage of consumer uncertainty about financial markets by offering the reassurance of a familiar brand name. They directed customers towards products such as unit trusts, which delegated investment decisions to fund managers. The publicity material stressed the ‘democratisation’ of investment, but in essence individuals were subsumed by corporate structures over which they had very little control.

The supply-side transformation of financial services was bolstered by their growing cultural prominence, which provided a demand-side stimulus. Newspapers further expanded the financial news and advice they offered. The Daily Mail led the way, adding a ‘Mail Investment Extra’ to its Saturday edition in 1984 and setting up an investment advice phone line. All the other major newspapers followed suit, and so did broadcasters. In 1986, Channel 4 launched Moneyspinner, a roadshow that ran for eight series, and featured financial experts touring the country and giving advice. The coverage tended to blur the distinction between consumption and investment: investing was presented as an everyday decision about family finances. The growth of financial advice made investment appear socially desirable, even necessary. By 1987 Which?, the magazine of the Consumers’ Association, had founded a new publication, How to Buy, Sell and Own Shares, and in 1995 the magazine itself began to assess investment products.

There is other evidence for the growing cultural prominence of financial services: Edwards has an entertaining section about board games that focused on investing: Shocks and Scares, Strike it Rich!, Insider Dealing, the Stock Exchange Game and Investor (the last two were sponsored by the London Stock Exchange). The chairman of the Wider Share Ownership Council, John Harvey-Jones, provided a blurb for Investor: ‘I am delighted to acknowledge its contribution to the wider understanding, in an enjoyable way, of the opportunities for wider share ownership.’ Bankers and traders were portrayed in films, books, plays and TV series. Jeffrey Archer’s novel Kane and Abel (1979), Oliver Stone’s film Wall Street (1987) and Caryl Churchill’s play Serious Money (1987) all offered images of greed, ruthlessness and excess among the financial elite. Yet these seemingly negative portraits had a peculiar glamour. Serious Money was meant to be a satire, but its West End run drew plenty of City workers. Thames Television’s Capital City (1989-90), which followed the exploits of a group of power-dressing City traders, baffled and intrigued viewers with its use of financial jargon: ‘I’m going to wait till 86 before buying if that means I can cover your swap loss and wipe out my book deficit.’

All of this popularised the ambivalent figure of the yuppie trader. These ‘young upwardly mobile professionals’ – a revealing adaptation of the US term ‘young urban professionals’ – were supposed to be hyper-competitive but products of a meritocratic system. You didn’t have to work in the financial services industries to be a yuppie, but the most famous cultural depictions were from that sector. Even their clothes and accessories acquired a broader audience. The Filofax was an ancestor of the smart phone in its capacity to blur the boundaries between ‘work’ and ‘life’. ‘For the “fax generation”,’ Edwards writes, ‘each minute of the day had to be accounted for and allocated to enhancing some asset or another – whether building friendships, perfecting one’s outward appearance, or curating useful networks of contacts.’

It can be tempting to draw a straight line from neoliberal theories to Thatcherite politics to everyday life and conclude that in the 1980s a novel set of ideas swept through state policymaking, transforming popular opinion. But the trajectory of neoliberalism was far less tidy. Edwards’s point is that the neoliberalism that took hold in the 1980s was consumerist, dominated by the interests of large companies. This was at odds with the aims of those neoliberals who had wanted to create a nation of entrepreneurial small businesspeople and investors. In Edwards’s account, Thatcher didn’t roll out a carefully planned programme. Rather, there was a messy set of political, economic, social and cultural processes that produced some unintended outcomes.

Many neoliberal thinkers, including Friedman and Hayek, argue that the freedom to buy and sell in the market is a more fundamental liberty than the rights attached to democratic citizenship. Although they accept that majority rule is the least bad way to elect governments, they see politics as a realm of coercion, in which citizens are forced to accept decisions they don’t always support. The market, by contrast, allows individuals to make their own choices about how to live, unencumbered by having to reach a collective decision; for that reason, it ought to take precedence over politics. On the one hand, the culture of financial investment that took hold in Britain in the late 20th century was a vindication of this vision, because it enabled more people to benefit from property ownership while delegitimising the regulation of that sector. On the other, it exposed the weaknesses of a theory that was indifferent to concentrations of private power, since the interests of financial institutions ended up dominating the market. One consequence of depicting neoliberalism as the product of a multifaceted process involving many actors and causal factors is that the prospect of undertaking meaningful reform starts to look daunting. But Edwards shows us that the central difficulty is a cultural one: we have been taught for many years to live our lives as consumers rather than citizens.