The City of London - Model Startup Society or Nefarious Business Club?

Startup societies as a tool of economic development have existed for as long as civilization itself: Phoenician trading posts were founded on distant shores, as were ancient Greek colonies. Independent autochthonous territories have been a staple of empires, caliphates and republics alike over the ages. The classical-age Romans were no novices in this regard, either; the early empire period of Rome saw a development of trade, productive capability and overall economic well-being on a scale that was unseen in world history until that point. This was in no small amount thanks to the quasi-capitalist attitude that the government took toward the economy, requiring a flat contribution in men, steel and grain from every territorial unit of the empire - requiring no more than a few days' work per capita per year of the unit's inhabitants.

Roman civilization had its faults (slavery, a propensity toward war and inflation being the most recognizable), but an inability to organize was not among them. The extensive web of Viae (Roman roads) provided the empire a rapid-deployment system for its armies as well as a network for trade, which was booming in the early centuries of the new era. Great aqueducts provided the people with potable water and some bridges of Roman make bear traffic to this day. Trading posts (Which would often grow into settlements) were established on these roads, which served as hubs of commerce where information, capital, goods and talent were exchanged.

LONDINIUM

In the year 43AD, Roman settlers to Britannia founded a trading post and settlement on the north bank of the river Thames named Londinium, walling the town off against the Celtic hordes. Shortly after the inception of the town, Boudicca came knocking in 60AD - the town was left burned and sacked. Some 10 years after the tragic event, the provincial government took to rebuilding the town in the image of a planned Roman city. Excavations have found the remains of gubernatorial palaces and similar structures - signifying a rich and vibrant local economy in the 1st and 2nd centuries AD. In 140AD, the city boasted a population of over 60,000 people. It took centuries of fires and war, but the once-bustling settlement was finally deserted by the Roman Empire in the 5th century.

MEDIEVAL DEVELOPMENT

During the coming centuries, London saw repopulation by the Anglo-Saxons, but was under the ever-present threat of the Vikings. Viking attacks dominated most of the 9th century, becoming increasingly common from around 830 onwards. London was sacked in 842 and again in 851. The Danish "Great Heathen Army", which had rampaged across England since 865, wintered in London in 871. The city remained in Danish hands until 886, when it was captured by the forces of King Alfred the Great of Wessex and reincorporated into Mercia, then governed under Alfred's sovereignty by his son-in-law Ealdorman Aethelred. It was around this time that the Anglo-Saxons retreated into the Roman walls for protection.

Skip ahead to William the Conqueror (11th century): The Normans begin conquering Great Britain, but William had issue conquering the thickly-walled city. As the locals had no interest in weathering a siege to which there would be no end, they cleverly decided to acquiesce to William's demands of submission, as long as they are left to police themselves and collect taxes independently. William agreed. Dynasties rose and fell, but the City stood. Through a mix of its thick walls coupled with the medieval practice of guild restrictions in the surrounding area, The City became a beacon for the wealthy and soon it boasted a high concentration of bankers, investors and other assorted financial professionals within the confines of the somewhat self-regulating enclave.

The city of Westminster was founded some distance to the west of the ancient Roman outpost, and grew steadily over the centuries to the point that the City of London was completely surrounded on all sides by Westminster – which we (funnily enough) now call London Proper. In the centuries to come, British colonial rule and maritime prowess grew greatly, leading to the invention of the corporation as a risk-diffusing strategy for trade missions. The City of London (not to be confused with London Proper) adopted the corporation as their organizational structure and the governing body of the "City of London" is to this very day named the "City of London Corporation".

THE CITY OF LONDON TODAY - "THE SQUARE MILE"

Nowadays the City of London is a 1.12 square mile territory within London Proper on the northern bank of the Thames, earning it the colloquial name "The square mile". It is home to an underwhelming 43.000 souls. However, the population surges on workdays as commuters flow in: A whopping 340.000 people work in the City - mostly in the fields of finance and advisory and similar white-collar professions. The City accounts for 2.4% of the UK's GDP, and some 46% of all foreign exchange that takes place on a daily basis passes through the City - $1.85 trillion dollars worth of currency and securities. The City is home to the Bank of England, the London Stock Exchange, Lloyd's and countless other influential institutions. The question of whether the City of London or New York City is the financial capital of the world remains a heated debate to this day.

THE GOVERNANCE OF THE CITY

Calling the governance system in the City of London "strange" would be a severe understatement. It is very probably the oldest still-functioning political unit in the world, as it has existed for so long that the Magna Carta (1215) lists it as already having existed for hundreds of years.

To describe the government of The City requires a flowchart of no small complexity: aldermen, the sheriff, the Remembrancer, the common council, wards, liverymen, freemen of the City, livery companies and committees are only some of the many organizations within the City – the functioning of which is tightly regulated, with many rituals appearing to be straight from medieval times.

To become a freeman, a citizen of the City must be a British, Commonwealth or EU citizen residing in the city – and must then request the privilege from the common council (Manned by the Aldermen). One must also be a member in a livery company (Effectively a guild) to apply. After one has gained freeman status, one may run for the office of Alderman. In these elections, livery companies get around 80% of the votes, which they distribute to their employees. The rest of the votes belong to the citizens of the ward, one of the 21 territorial units of the City.

Once a freeman becomes an alderman, they may run for the office of sheriff. The livery companies exclusively vote for the sheriff, and once the 2-year term of sheriff is completed the sheriff may run for the office of “The right honorable, lord mayor of London”.

The City seems like a quirky vestige of a bygone era, but it still holds major importance: They have their own police force, own city infrastructure outside their “square mile” (Tower Bridge is maintained and owned by the City) and collect their own taxes at their own rates. The UK consists of just over 50.000 square miles of land, one of which produces 2.4% of GDP – over 500 times the GDP of the City’s neighboring square-miles.

THE GUILD SOCIETY

If we can look to the likes of Hong Kong or Singapore as examples of successful startup societies, the City Of London shows more differences than similarities with the two. An overbearingly complicated governance system in which corporations and livery companies get votes, but the general citizenry barely does certainly constitutes a society, but we're not quite sure about calling it a startup society. Though this governance structure may have been innovative in its methods during the Roman times of slavery and pillage, it is less so in today's interconnected, fast-paced world. It is certainly competitive in attracting capital and talent, but it does so through lobbying the UK government (Through the aforementioned Remembrancer – quite literally a lobbyist in parliament) for favorable legislation and people seeking connections in the many large institutions housed therein.

The City of London, though a wealthy and somewhat independent place, is not a model that startup societies should look up to. It has been stuck in its ways for well over 1000 years - something we would never accept from an organization exposed to a free market. The City needs not bother with such qualms. As long as there is no free market in governance or money, the Square Mile shall remain the suzerain of international banking, finance and insurance - all of which are stuck in the past in their own right.

The only reason the City remains in any way competitive is because they wield an iron fist in a velvet glove: Their businesses and organizations claim to simply be the best and most professional, but have achieved such stature purely through preferential legislation going back hundreds of years. It is certainly praiseworthy in Machiavellian terms of attaining power and influence, but the real value created by this system seems to get lost in the numerous bureaucratic titles, gilded town halls and taxpayer-funded parades.

We’ll close with a blunt metaphor: If Hong Kong is a tech startup with a cutting-edge vision for the future, the City of London is a medieval printers' guild keeping its traditions - commendable in its longevity, but ultimately obsolete and surpassed.

 

Don't Argue. Build.

Sign up for our newsletter, get interesting articles and a discount code for our next summit sent straight to your inbox!

Get in Touch

Subscribe to our Newsletter