What is London?

Why is London so popular with foreign-born billionaires?

"The attempt to maintain London as the centre of global capitalism requires tremendous dexterity from the country's rulers," writes Hind  [Getty Images]
"The attempt to maintain London as the centre of global capitalism requires tremendous dexterity from the country's rulers," writes Hind [Getty Images]

The Sunday Timesreported recently that more billionaires live in London than in any other city on the planet. According to its guesstimates, the capital’s richest residents were born in India, Russia, Switzerland and Norway. Most of their assets, apart from some prime London real estate and a football club or two, are held outside the country. In other news, the American pharmaceutical giant Pfizer is seeking to merge with its Anglo-Swedish rival Astrazeneca. A “big benefit” of the deal, says Pfizer’s Chief Financial Officer, is the lower tax rate that the merged company will have to pay.

Both the popularity of London as a residence for foreign-born billionaires and the proposed merger are the direct results of government policy. As Richard Brooks and others have detailed, recent administrations have done everything in their power to attract foreign capital by lowering effective tax rates. Meanwhile, Britain has long allowed foreign residents to keep their assets offshore and out of reach of the tax authorities.

London itself hosts a vast financial sector with links to offshore jurisdictions like Jersey and the Cayman Islands that promise all the benefits of the rule of law with none of the costs that democratic governments try to impose on business. It is this combination of policies and understandings that prompted the head of a global banking group to describe the UK as “the biggest, most developed tax haven” in the world. Indeed, the apparent scarcity of British nationals in the Sunday Times list is perhaps a roundabout tribute to the country’s tax avoidance industry. Real wealth can keep itself out of the papers.

London, then, is emerging as the safe and secure centre of a global economy increasingly characterised by rent-seeking, manipulation of the political process and outright theft. Its unreformed institutions offer a respite from the hurly burly of accumulation at gunpoint, its restaurants and clubs a chance to savour the delights of civilisation, while profiting from barbarism elsewhere.

In this there is a troubling continuity with the city’s imperial past. Once one strips away the flags and the wishful thinking, the empire was series of business models that promoted corruption and criminality abroad to generate metropolitan profits. Slavery, opium and the displacement of peoples were not incidental to the empire. They were integral to it. The empire was an empire of crime. And much the same is true now. The HSBC money laundering scandal is only the most lurid example of what happens when a no-questions-asked commitment to the global rich collides with the principle of national sovereignty.

Counting the Cost – Priced out of the city

The attempt to maintain London as the centre of global capitalism requires tremendous dexterity from the country’s rulers. Somehow they have to persuade their counterparts elsewhere that a vast clearing-house for loot and untaxed wealth somehow serves a useful purpose. They must ally themselves with the winners in the global race, no matter how criminal. Success requires full participation in the increasingly flagrant larceny that characterises finance, food, pharmaceuticals and petrochemicals. Only a sustained public relations effort can prevent what is true from becoming obvious; James Bond is more likely to be providing security on a super-villain’s yacht than sneaking on board in the moonlight.

At times the requisite corruption of the intellect achieves a kind of hysteria, as when the former British Prime Minister Tony Blair draws geopolitical cartoons that are, in their way, as disturbing as his friend George W Bush’s paintings. In April Blair claimed that there is “a clear and unambiguous struggle” in the Middle East between those who embrace “the attitudes and patterns of globalisation” and those who want to order their societies on the basis of “one proper religion and one proper view of it”. In order to maintain this clarity and absence of ambiguity Blair contrived to avoid mentioning Saudi Arabia, whose rulers combine lavish support for “one proper religion and one proper view of it” with the passionate embrace of globalisation.

And then there are the natives. While the coalition government and the Labour opposition are committed to London’s paradoxical status as a metropolitan tax haven, the rest of the population seems increasingly unsure. As I have noted before, the referendum campaign in Scotland is already raising questions about the deep structure of the unreformed British state. In England it’s true that disenchantment with the establishment has so far largely expressed itself in support for the UK Independence Party (UKIP) – a project that nimbly harnesses disenchantment with the existing political parties to substantially the same offshore agenda.

But even here, in the last province of the old empire and the exurban periphery of new, cracks are starting to show. Most people support policies that would, if enacted, break the power of the financial sector and strip London of much of its appeal. A financial transactions tax, re-nationalisation of the energy sector and a top rate of tax set at 75 percent are just some of the things that many people in England want and their elected representatives are determined to resist, at home and overseas.

It is tempting to dismiss UKIP as nothing more than a paranoid fantasy about Brussels wrapped around a beer-drinking golf club nonsense artist. It is certainly a tribute to the hallucinatory powers of our media system that the British state can enthusiastically spy on the EU institutions while being accused of craven submission to the same. But, again, there is something troubling about the way UKIP’s mixture of imperial nostalgia and resentment is being pumped through the main circuits of publicity. If fascism does come to England it will come wearing a cravat and quaffing a pint of real ale. And it will come to fend off threats to the offshore empire.

On the other hand, the success of this offshore empire centred in London is by no means assured. The global capitalist order is under more intense ideological pressure than at any time since before the First World War. In London that same order has a location, a point at which to exert pressure. Any organisation serious about poverty reduction, global justice, and the fate of the environment – the possibility of civilisation, in short – will want to pay close attention to the eccentric and sometimes sinister politics of these islands.

If plutocracy can be defeated here, it can be defeated everywhere.

Daniel Hind is the author of The Threat to Reason and The Return of the Public. His third book, The Magic Kingdom, will be published in September. 

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