Perhaps the most contentious remark during the campaign before the EU referendum came when Michael Gove said that the British public has had enough of experts. His comments caused outrage and he was so roundly attacked that even some of his own side sought to distance themselves.
But however offensive his words were thought to be at the time, they proved to be prophetic. The experts on whom the Remain campaign were relying to put across what they said was a factual argument about the dangers of leaving proved to be no match for the emotional appeal and romance cultivated by the Brexit camp. The experts were not listened to.
Some have said this is the latest example of the loss of trust in the establishment, the City and business, which has been so much in evidence since the financial crash in 2008. This is obviously true to some extent, but needs to be more nuanced. The distrust of the City shares some common threads with the distrust of experts in general, but there are big differences too.
The loss of trust in experts is in part a result of society being less deferential and having lost its automatic respect for learning and authority. It used to be the norm that the public used experts to cope with complexity – they went to the doctor when they felt ill, the solicitor when they had a legal problem, the accountant for tax advice, the stockbroker for investment, and deferred to the experts’ advice. Today the relationship is much more open to challenge. Few now feel the expert is infallible.
The loss of trust in finance is widely thought to have been brought about by the near collapse of the banking system in 2008, but again this requires qualification. Trust comes in two forms, intellectual and emotional. A customer has intellectual trust in finance if they think their money is safe. They do not expect the organisation to collapse, nor its employees to steal.
It was this that was dented in 2008, when people who had never thought about a bank collapse saw it very nearly happen before their eyes.
Emotional trust is rather different. Emotional trust is the belief that the expert on the other side will treat you, the client, fairly. This is where the City falls down. Not enough of its customers think they get a fair deal: they think City people get paid too much, that charges are too high and returns too low and that they, the clients, are paying for all this. The key point, however, is that this is not new; they thought this long before the financial crisis.
The loss of trust in experts is in part a result of society being less deferential and having lost its automatic respect for learning and authorityBecause they have focused on making the intellectual case that people need to save and their money will be safe, most of the efforts to rebuild trust since 2008 have been misdirected and ineffective. They have got nowhere because they have failed to address the emotional side. Clients will not respond positively if they still think they are going to get fleeced.
But there is an altogether different dimension to the loss of faith in experts, which has been brought to the fore by George Cooper of Equitile, a recently launched fund management group. In a recent paper he talked of the work of Thomas Kuhn, a philosopher who studied what happened when there was a paradigm shift in scientific knowledge – when one worldview of how things worked was replaced by another. One of Kuhn’s key insights was that paradigm shifts are usually led by laymen and resisted by experts who have a vested interest in maintaining the status quo.
When new thinking is needed, experts are usually intransigent, dogmatic and unwilling to look objectively at their cherished beliefs. It therefore falls to outsiders to rock the boat and push new ideas forward.
In the context of the current world, the lay people were ahead of the experts in recognising that the EU was not working as it should, while separately they have recognised the dysfunctional nature of executive pay, the false promises of corporate governance and the way the economic system no longer delivers for them.
The current turmoil could all be noise, but alternatively the abuse of experts and the bad temper exhibited in return in recent months could be the beginnings of a new paradigm – the birth pains of a new way of thinking in economics and finance. It sounds far-fetched, but given the level of dissatisfaction with the current order, it is a possibility worth thinking about.
This article was originally published in the September print edition of The Review. The print edition is available to all members who opt in to receive it, except student members. All eligible members who would like to receive future editions in the post should log in to MyCISI, click on My Account/Communications and set their preference to 'Yes'.