I recently went to an event titled 'Heart of the City: What is Really Wrong with our Financial System?' where John Kay and Joris Luyendijk were speaking. John Kay is an economist and columnist for the Financial Times. Joris Luyendijk is an anthropologist by training who has done some financial journalism for The Guardian.
It was interesting learning about the workings and culture in the City, and I also found myself wondering about parallels in other walks of life.
John Kay emphasised that traditionally financial services have provided useful services by enabling capital accumulated by one individual or corporation to be borrowed and used for investment by another individual or corporation. In recent years this idea of banking as a service has been lost as banks have sought to maximise short-term profits by trading worthless bits of paper for a lot of money and taking a cut each time (this is somewhat simplistic - John Kay explained it better!)
While it is useful to establish what is going on the financial sector, it is also important to understand why this is happening. What are the causes for the unhealthy changes seen in finance? Joris Luyendijk's answer to this was that liquidity has replaced of loyalty. By loyalty he was referring to the loyalty that the employees of city banks have for the companies they work for. And by liquidity he was referring to the volume of transitions between banks made by city workers. His view was based on a fascinating collection of evidence obtained from interviewing over 200 city workers, which he wrote up as a book, "Swimming with Sharks."
For example, it is apparently very easy to lose your job in the city if you do not conform to what your manager asks of you, or if you miss the ambitious profit targets that banks set. People are terrified of losing their jobs and this means that they are willing to compromise on almost anything, whether that is working extremely long hours, or not blowing the whistle on other's malpractice. This leaves very little time for thinking about whether the bank's end-product has genuinely been of service to the bank's customers.
For me, all this raises some interesting questions for academic research. Should academic research be thought of as a service? If so, who is it a service for? I have met several academics who see their work primarily as finding out about interesting things for their own sake. This view is sometimes justified by saying that historically many important advances have come about by exactly those type of people being free to pursue their interests. Personally I think it is useful to think of academic research as serving some purpose, as this helps to direct where effort should be applied. However I do acknowledge that it is not always possible to identify in advance which discoveries will lead to the greatest impact.
In terms of liquidity, there are some shortcomings to the current academic research system. Academics can often be under a lot of pressure to produce short-term results in the form of publications in high-profile journals, so that they can win research funding and permanent positions. This can sometimes get in the way of longer-term research goals.
However I think on the whole I think there should be loyalty and liquidity in academia. It is a good thing for academic researchers to move between research groups, picking up different tools and perspectives in different places. And it is also good for academics to have long-term affiliations to a group or a particular academic sub-community to allow for relationships to develop and for paths to be fully explored.
It was interesting learning about the workings and culture in the City, and I also found myself wondering about parallels in other walks of life.
John Kay emphasised that traditionally financial services have provided useful services by enabling capital accumulated by one individual or corporation to be borrowed and used for investment by another individual or corporation. In recent years this idea of banking as a service has been lost as banks have sought to maximise short-term profits by trading worthless bits of paper for a lot of money and taking a cut each time (this is somewhat simplistic - John Kay explained it better!)
While it is useful to establish what is going on the financial sector, it is also important to understand why this is happening. What are the causes for the unhealthy changes seen in finance? Joris Luyendijk's answer to this was that liquidity has replaced of loyalty. By loyalty he was referring to the loyalty that the employees of city banks have for the companies they work for. And by liquidity he was referring to the volume of transitions between banks made by city workers. His view was based on a fascinating collection of evidence obtained from interviewing over 200 city workers, which he wrote up as a book, "Swimming with Sharks."
For example, it is apparently very easy to lose your job in the city if you do not conform to what your manager asks of you, or if you miss the ambitious profit targets that banks set. People are terrified of losing their jobs and this means that they are willing to compromise on almost anything, whether that is working extremely long hours, or not blowing the whistle on other's malpractice. This leaves very little time for thinking about whether the bank's end-product has genuinely been of service to the bank's customers.
For me, all this raises some interesting questions for academic research. Should academic research be thought of as a service? If so, who is it a service for? I have met several academics who see their work primarily as finding out about interesting things for their own sake. This view is sometimes justified by saying that historically many important advances have come about by exactly those type of people being free to pursue their interests. Personally I think it is useful to think of academic research as serving some purpose, as this helps to direct where effort should be applied. However I do acknowledge that it is not always possible to identify in advance which discoveries will lead to the greatest impact.
In terms of liquidity, there are some shortcomings to the current academic research system. Academics can often be under a lot of pressure to produce short-term results in the form of publications in high-profile journals, so that they can win research funding and permanent positions. This can sometimes get in the way of longer-term research goals.
However I think on the whole I think there should be loyalty and liquidity in academia. It is a good thing for academic researchers to move between research groups, picking up different tools and perspectives in different places. And it is also good for academics to have long-term affiliations to a group or a particular academic sub-community to allow for relationships to develop and for paths to be fully explored.
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