John Kay

When the next crisis hits, and it will, the frustrated public is likely to turn, not just on politicians who have been negligently lavish with public funds, or on bankers, but on the market system. What is at stake now may not just be the future of finance, but the future of capitalism.

Maintain a clear sense of long-term objectives but acknowledge the limits on your day-to-day actions.

Economics is not so much the queen of the social sciences but the servant, and needs to base itself on anthropology, psychology – and the sociology of ideologies.

Businesses are complex systems. We tend to infer design where there was only adaptation and improvisation, and to attribute successful business outcomes to the realisation of some deliberate plan.

The Reform of Banking Regulation
We should spend less time trying to ensure that our regulators can regulate financial behemoths with turnovers bigger than the GDP of many countries and more on trying to redesign the financial services industry so that regulation focuses on the interests of the public as consumers of financial services.
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In the unlikely event that the G20 leaders can spare a few moments between photo opportunities and ritual denunciation of greedy bankers, they might give urgent attention to the question of how to extricate themselves from the underwriting of failed banks.

One lesson of recent events is that there seem to be no limits to the greed of the greedy. But perhaps the explanation is simply the one Madoff gave to the judge who sentenced him: “I made a mistake.”

Do not waste any time on sermons and the prohibition. Even if the Good Lord himself were to deliver the Sermon on the Mount, He would be ignored. Hardened gamblers only give up when they have made the resolution to quit themselves.

The benefit of road improvements is principally the reduced time and strain on private motorists, not the economic advantages to road transport operators: that lesson should influence the way we plan our road networks. Fast roads for light traffic are much cheaper to build than superhighways.

If you want to understand how the City came to play such a central role in British economic and political life, why a crash was inevitable, and why the crisis is being resolved on terms which give so much and ask so little of the financial sector, this is the most important thing you need to understand: the influence of investment banks on modern politics and policy.