When asked where he got his ideas, the late Terry Pratchett would confidentially tell his audience, “Well, there’s this warehouse called Ideas R Us.” That was a good answer, because it did two useful things: get a laugh and deflect the question. The truth is, it is hard to know where ideas come from.
A novel usually begins, in my experience, with a thought or image that won’t leave me alone. In the case of my novel Capital, I became obsessed with a thought I had one day, looking out of the window at the permanent chaos of building work near where I live. In addition to the skips and builders’ vans, the scaffolding and concrete mixers and basement diggers, there was a constant scrum of deliveries and services going to people’s front doors. The thought that struck me was this: that the houses were like living beings, with needs and demands of their own. Instead of being the backdrop to people’s lives, houses had assumed such economic and psychological importance that they had now become principal characters in their own right.
The thought came accompanied by another: that it couldn’t go on like this. It was around late 2005-early 2006, and it seemed as if our economy was a bubble that was about to pop. Unsolicited offers of credit came in the post more or less every day. When you rang the bank, you were greeted, even before being given a choice of numbers to press for other services, with the question, “Do you need a loan?”. (Corporations increasingly try to make their interactions with customers feel real and human. So imagine that in human terms: as if somebody was walking up to total strangers and saying not “hello”, but “Do you want to borrow money?”). It was obviously out of control. The feeling was familiar: the late 80s were a bubble too, which popped to what seemed at the time like spectacular effect. And yet, here we were no more than 15-odd years later, and it was as if that had never happened. That was part of what interested me, the sense of willed amnesia about the fact that manic good times never go on indefinitely.
I started working on Capital with the feeling that I was creating a dramatic irony: something that the audience knows but the actors don’t. Readers would know that when I described the frenzied scenes in an imaginary street, a crash was coming, even though the characters had no idea. It follows that I was betting a good few years of work on the fact that a crash was coming. When it came, though, it turned out to be a lot bigger and more systematic and more frightening and more global than I had imagined. So I was right that a crash was coming. But I was also wrong. I thought that the epicentre of the bubble would be the London property market. I thought that I was writing what would in effect be a historical novel about the recent past; about a moment just before everything changed. I thought that we had reached Peak London.
Ten years after I began working on it, and nearly four years after it was published, Capital is about to be broadcast as a three-part BBC television series, and the single biggest change that has been made in the adaptation didn’t need to be done: the writer Peter Bowker didn’t need to set the story in the same time as the book, 2007-08, the runup to the great implosion. Instead, it is set today. The moment I thought of as one of supreme obliviousness, an obliviousness that would never return, is right back with us.
At least, it is in London. Across large parts of the country, the opposite is true. The impact of the “great recession”, in particular the impact of the longest sustained fall in real income ever recorded, has changed lives; the effects of cuts, imposed under the political cover of the recession, has in many cases ruined them. The intergenerational impact has been particularly severe. We now have a generation growing up with the sense that the social contract has been rewritten, and a future they once had good cause to believe was in front of them – one offering a life as good or better than that of their parents’ generation – has been taken away.
London is more different from the rest of the country than it used to be. I have noticed it even in talking to people about the TV adaptation of Capital. I’ve been asked a couple of times, “What do you think this has to say to people who aren’t from London?” My answer to that is that the themes of inequality, of immigration, of the social impact of finance and of the way we live in our communities – indeed, what we mean by “community” – are present all over the UK, not just in the capital city. The feeling of being carried along on currents of economic force that are incomprehensibly strong is something we have all come to experience, wherever we live and whatever we do. But the real sting of the question is that people feel the need to ask it. I did plenty of interviews when the book came out, and talked to lots of audiences, and that issue never came up. The British, looking at their capital city, increasingly struggle to see a resemblance with themselves.
The problem is not new, and it is rooted in some facts that are difficult to gloss over or ignore. The simplest is that London is too big, as a proportion of the population. If you add New York to Los Angeles to Chicago to Houston to Philadelphia to Phoenix – the six biggest American cities – you are still nowhere near being as big as London. More: you can add the 30 biggest American cities, down to Louisville, Kentucky, and their total population is smaller, relative to the size of the US, than London is to the UK. It is the most diverse place in the UK, with the majority of its population now no longer white British. London is also the centre of the nation’s cultural, entrepreneurial, artistic, financial, gastronomic and touristic activity. It is even the biggest university town. And it is the political capital too.
This would be a difficulty for the UK, even if all other things were equal and stable. The trouble is that London is becoming more unlike the rest of the country as it grows richer, and as property prices grow out of the reach of the indigenous populations. To locals, house prices dipped and wobbled in the aftermath of the credit crunch, and then started going up again. It looked different to people who were watching how much sterling had fallen relative to other currencies. To overseas capital London house prices went down by 50%: a 20% drop in the asking price and a 30% drop in the pound. The money started pouring in, and hasn’t stopped. One reason is because the investors/speculators who took a punt are thrilled at how well they have done, and are not shy about boasting, which attracts more investment/speculation. Also, London benefits from global instability, and London property is an excellent place to store cash made in jurisdictions that are less safe, less stable and have less legal reverence for ownership rights.
The net effect can be seen in the numbers: the average London property is now at a multiple of 13 times average income. (The historical average in the UK is around three times income.) This means an ordinary Briton can no longer afford to buy a home in London. A phenomenon that first became apparent when it affected ancillary workers, and then key workers such as nurses and teachers, now affects higher-income groups too. The city has become, in the words of the Swiss bank UBS, “decoupled” from the rest of the UK. That is a hell of a thing to happen to a capital city.
This is the biggest difference between the world I was trying to evoke in my novel and the world depicted in the TV adaptation. A moment of general obliviousness has been replaced by an increased sense of difference, of divergent fates between the winners and the losers. The fact that the world of finance is roaring away unchecked is part of this. I didn’t think that a few years after the scenes I was depicting there would be a fundamental revolution, and the world of finance would simply no longer be a central part of London life. I did think it would be checked, inflected, quietened down, “rebalanced” – to use the once-favourite word of George Osborne. I thought it would be like the excesses of the late 80s, which fairly rapidly acquired a historical perspective. Ha!
One irony: I gave my banker character, Roger Yount, a job in forex (foreign exchange) trading, as a way of putting him at some distance from the immediate causes of the financial crash. I didn’t want to make him someone directly linked to the unfolding disaster. Unfortunately, the latest and arguably biggest of the recent banking scandals exactly involves the rigging of forex markets. Libor was a huge scandal partly because the activities kept on happening after the credit crunch. Forex, though, didn’t just happen after the credit crunch, it kept on going after Libor too. In other words, it was the scandal after the scandal that was supposed to end all scandals, after the previous scandal that was supposed to end all scandals.
I suppose I should be pleased, on the basis that it makes the book more relevant, for so little to have changed. But I am a citizen as well as a writer, and it is from that point of view that the return of the bubble, and the continuation of financial excess, and the growth in the separateness of our capital city, makes me gloomy. I started out, a decade ago, thinking that things couldn’t go on like this. I still think that. It is just that it is all taking longer than I would have thought possible. Still, if something can’t go on, sooner or later, it won’t. In the words of the German economist Rudi Dornbusch: “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”