A large 'hop-off' sign aimed at hedge funds and private-equity firms was erected in Germany in 2005. Why? Because the establishment had become horrified by the way the board of the stock exchange, Deutsche Borse, was being knocked around by a couple of aggressive hedge funds - TCI and Atticus - which wanted to frustrate plans by the Borse to buy the London Stock Exchange. They corralled other shareholders and killed the takeover, after which Deutsche Borse's share price soared - a good enough reason for investors to be thankful.
But the boss class hated this manifestation of how its power was being undermined by global financial capitalism, in the guise of PE houses. Next came the great verbal assault by Franz Munterfering, then deputy chancellor. 'Some financial investors spare no thought for the people whose jobs they destroy,' he harrumphed to Bild. 'They remain anonymous, have no face, fall like a plague of locusts over our companies, devour everything, then fly on to the next.'
Hedge funds and private-equity firms as 'locusts'? To the horror of the global finance gang - looking to Germany for a deal bonanza - the analogy resonated.
At the time, our own grandees tut-tutted about antediluvian Germans and their fear of the future (to murder one of the great lines in Phoenix Nights: 'Collective loan obligations, Max? I've tasted them; they're the future'). German anxieties were a manifestation, surely, of the sunset of Teutonic industrial might, and global financial capitalism was the unstoppable reality. Economic winners in the new globalised world would be countries that embraced it, rather than tried to check it. 'You can't beat them, so join them' is the credo of G Brown - and JP Morgan's T Blair.
On the first anniversary of the crunch in our credit markets, it's apposite to ask whether Munterfering's wariness of the new financial masters was quite so Neanderthal after all. The remuneration system and financing techniques of investment bankers, PE partners and hedge-fund managers have all contributed to the financial crisis, a theme explored in my own book, Who Runs Britain?.
But back in 2005, too much was at stake for the members of what David Rothkopf calls the 'Superclass' to allow Germany to opt out of the global financial economy. And his book contains a hilariously unguarded account by Stephen Schwarzman - founder and chairman of PE juggernaut Blackstone - of how he allegedly turned Angela Merkel. 'Every once in a while ... something goes off the rails and you need help from people you don't know personally,' Schwarzman is quoted as saying. 'That is one of the wonderful things about finance. You can get to anybody in the world with one phone call.'
Schwarzman asked an acquaintance to fix up a meeting with the German chancellor. He spent an hour with her explaining the good that private equity could do for her country. Apparently, because she is 'by training a physicist' and 'very datacentric and very logical', Merkel got it in no time. Schwarzman adds that 'eight weeks later we bought a big stake in Deutsche Telekom from the government'.
It's a resonant anecdote about the nitty-gritty of power politics. But most of Rothkopf's ambitious book is an attempt to adapt for our globalised era an analytical framework devised in 1956 by C Wright Mills to show who ran the US. Mills' The Power Elite was a map and Who's Who of what was then called the military-industrial complex. Today's show is the world, not the US - and Rothkopf contends there is a superclass of 6,000 powerful individuals (mostly men) who have disproportionate control over the pulleys and the levers.
The best proxy for the members is Davos Man, or those businesspeople, politicians, media folk and celebs who try to set the world to rights every January in the Swiss Alps. Rothkopf's superclass members are to a large extent the stewards of our great multinational businesses and financial firms.
Rothkopf claims he can name every member of the 6,000, but rather feebly says he won't because membership fluctuates too much. But his point that globalisation has seriously exacerbated the democratic deficit is well made. As the credit crunch shows so starkly, many businesses and individuals are now able to make decisions that affect billions of people, in many different countries - and our governments, central banks and regulators are unable to keep them in check, acting alone. We lack effective institutional structures for governments to pool sovereignty as and when needed to stand up to globalised commercial power.
Superclass: The global power elite and the world they are making, David Rothkopf. Little, Brown £20.00
- Robert Peston is the BBC's business editor. His book, Who Runs Britain?, is published by Hodder & Stoughton (2008).