This is a book by Sandra Navidi.
One of the enduring conspiracy theories of both the Left and the Right is the idea that a small cabal of the super rich are actually working behind the scenes to "run" the world for their own benefit. The implication of this is this cabal collectively plans the activities they need to do in order to meet their objective. Such figures as George Soros are key players and they use such organizations as the World Economic Forum (the WEF) to accomplish their goals.
I have never bought into this. The financial system is just too complex and there are just too many players, with competing interests, in the system to make planned collective action feasible. However, there is no denying that the financial industry, and many of its key players, do seem to have an inordinate amount of power and influence in the world.
Ms. Navidi does a good job of explaining why. She explains that the financial system is not a collection of institutions but a collection of human beings, who run these institutions, who create, develop and grow vast networks of contacts, associates, colleagues and friends. In other words, it is though relentlessly networking that these individuals derive their power. Individuals in the financial industry work very hard to expand their networks and the power that they give them. For the most part the network influences those in it but some of the most successful networkers become superhubs and they gain the ability to move some of the the network in the direction they want it to go. There are many superhubs and the author introduces many of them to us in the book. She also identifies the WEF and its annual meeting in Davos Switzerland as a supercharged networking opportunity, which is why it is such a popular event for CEOs, politicians and academics.
The networks go beyond the financial system. They spread into the political theatre as well and the author provided several examples of the revolving door between the financial industry and politics. The one that sticks out is the story of Robert Rubin. He is considered a financial genius who started out as a bright light in the financial industry. His success there lead to him being a key financial advisor to Bill Clinton, and the architect of the dismantling of the Glass-Steagall Act. Repealing the act removed the line between commercial and investment banks which was a great contributor to the financial crisis of 2008. He had left government long before the financial crisis hit but he was brought back by President Obama as an advisor on how to resolve that crisis. Yep, one of the (inadvertent) architects to the 2008 crisis was tapped to help resolve it.
On a superficial level this would seem to validate the cabal conspiracy theory but the author clearly demonstrates how this would be impossible. First of all, the sheer complexity of the global financial system makes this impossible. No one person, or group of people, no matter how connected they are, knows all of the ins and outs of the financial system, which would be a basic requirement to actually controlling it. Secondly, the author points out that the most powerful people in the financial industry are pretty much identical to each other. They all went to the same two or three universities, they are mostly middle-aged white men, most of them speak English, most of them are American and most of them rose up the industry ladder the same way. In short, they are familiar with each other and it is human nature to trust and to want to be around people just like yourself. We generally abhor differences. All that being said the author points out that despite this many of the major players in the financial industry can have different interests at any given point in time, which precludes widespread and ongoing collusion. The author identifies and details several examples of this.
Although it was not the intent of the book the author effectively debunks the conspiracy theory, although she still paints a grim picture of a homogenous group of men, who are completely clueless of what their decisions are doing to the broader economy and to society. She mentions that such a situation is probably not sustainable but she also mentions that the nature of networks is they are self correcting.
The biggest issue with the book is the author is an financial industry insider, although not a major player. Her livelihood depends on not offending people in the industry so she does not go very far in criticizing what she is writing about. Indeed, much of the book is her dropping names and telling personal anecdotes about them. The anecdotes are effective in demonstrating the points she is trying to make but she never really takes the gloves off in her criticisms. The closest she comes is the chapter on the almost total lack of female representation at the highest levels of the financial industry.
In the last chapter Ms.Navidi does argue that the dependence of the financial industry on the few superhubs introduces a great deal of fragility into the global financial system. As well, the increasing financial inequality in the world is leading to undesirable outcomes that could lead to greater unrest and increase the danger of another financial crisis that we may not be able to get out from under this time. Note that this book predates the election of Donald Trump and it was published just after the Brexit vote so she could not take those events into account in her analysis.
She acknowledges that the current situation is untenable in the long-term and that something has to change. Unfortunately, she places too much faith in the idea from network theory that networks are self-correcting so it will all work out in the end, probably creating some hardship along the way but nothing fatal to the system. My problem with that argument is the network is made up of people who are getting very rich as a result of the current system and they will resist any kind of correction. As with the rest of her argument Ms. Navidi stops short of suggesting the only real solution to the problem, namely outside intervention. There are too many vested interests for the financial system to correct itself. Therefore the impetus for change will have to come from outside of the system. Ideally, it would be well considered and incremental change proposed and adopted by governments but the change could also come from an explosion of anger and resentment from ordinary people and history has demonstrated that the outcomes from such events are always unpredictable.
Superhubs is a fascinating look into the world of high finance. We get to meet some of the key players in the industry, how they rose to become key players and how they maintain their positions of power. We get a glimpse of how the financial industry operates. It is obvious that the author has some misgivings about the system but she never goes very far in her criticisms of it. Her conclusion that things have to change is spot on but she never really looks past the self-correcting nature of networks to see how that change might come about. Who knows, maybe the movers and shakers in the financial industry will see the need for change and move it that way on their own. However, I would bet a great deal that such an outcome will not happen. Any change is going to come from outside, the only question being whether it will be controlled and incremental or a sudden change brought on by a crisis.
