Virtual Reality

The wind threatened to blow people's hats off as they hurried along Pall Mall, and women struggled to control their umbrellas. The rain was being hurled from the sky, the drops bouncing off the pavements, such was the ferocity of the storm. The Diogenes Club was a beacon of light and warmth to those who were privileged enough to be members.

Standing at one of the large windows, I watched the raindrops trace their paths down the outside of the glass. Other than the crackling and spitting of the logs in the fire as they were consumed by the flames, the only sound was the reassuring ticking of the Grandfather clock in the corner.

"I hate days like this" I said, as I moved to stand in front of the fire. "When I drew the curtains this morning, it was so dark I thought my alarm must have gone off early. Even at midday we still have the lights on, and a fire lit."

"Yes, it is rather depressing." said Treworthy as he came across to the fire to warm himself. The only other member present in the library was Abrahams, who was, as usual, engrossed in his crossword. "Listen - I don't suppose you know anything about computer games?"

"Not really - why?"

"Well it's my sister's boy. He seems to spend every waking hour playing the damn things at the moment, and she is a little worried."

"Could it be that spending the long summer evenings playing football with one's schoolfriends doesn't seem to have the same attraction for children as it did in our time, Treworthy?"

"Perhaps not, but spending all one's time in a completely artificial world doesn't strike me as a particularly good substitute - especially as the main activity seems to be blasting one's opponents to pieces with a large selection of guns."

Our conversation was interrupted by Travis, who dumped his wet coat on the table and slumped noisily into his favourite chair, his face almost as grey as the sky outside.

"Good grief," I said, as Henry picked up Travis's coat, "you look dreadful."

"I feel dreadful. Ah, Henry - a double whisky, and make it a generous one. In fact, bring me two."

"Two, sir?" Like a BBC newsreader, Henry was able to convey criticism without any measurable change in either his pronounciation or intonation. Travis, however, was oblivious to such subtleties.

"Yes, Henry. Two. The world is going to hell and I intend forget about it for the rest of the day - or at least until I sober up tomorrow."

"Very good sir."

"Oh, and is lunch ready yet?"

"Luncheon will be served at one o'clock precisely, sir. As usual."

"Well, tell the Chef to get a move on, will you. I'm starving."

"I shall convey your message to him, sir. I have no doubt that he will redouble his efforts."

"Had a bad day old chap?" I enquired gently, as Henry left the room. Travis was usually the most cheerful of the group, albeit with a somewhat acidic edge to his sense of humour.

"Yes, come on. It's usually Manton who is trying to blot out the madness of the world with alcohol." said Treworthy. "Where is he, by the way? He's usually here by now."

"The markets have gone mad. Everywhere you look there are people trying to sell and no one wanting to buy. Confidence has gone through the floor. At least two other banks are on the verge of going bankrupt, but they are trying to keep it quiet until a deal can be done, or the panic will just get worse."

Treworthy, who normally found Travis slightly irritating, struggled manfully to cheer him up. "Oh come on, it can't be as bad as all that. The market always has ups and downs."

"Nothing like this though. I've been talking to some of the chaps who have been in the business since the sixties - they say that it is unlike anything they have ever experienced. Everyone is paranoid. No one trusts anyone any more."

Henry brought over his drinks. Travis gulped down the first whisky almost without taking breath, and immediately had a coughing fit. Henry waited silently at his side until he had recovered, and then, before offering him the second drink, said:

"With all due respect sir, I would recommend a slightly more phlegmatic approach - this is a fine highland single malt which has been matured in oak casks for at least 12 years. Not a..." - the faintest impression of some distant pain moved across Henry's normally imperturbable face, like the shadow of a cloud moving swiftly across a sunlit hillside - "...a Barcardi Breezer. I implore you to give it the respect that it deserves."

The room seemed suddenly quiet.

"Yes, of course. Sorry Henry." Travis was genuinely shocked. It was the closest that Henry had ever come to openly criticising any of us.

Henry withdrew.

"If there is one thing that upsets Henry, it is a man who does not appreciate the finer things in life." said Treworthy. "Still, it seems to have taken your mind off work for a few minutes."

"Yes, that's true."

I walked back to the window. "What about you, Abrahams. Does this weather depress you as well?"

"Hmmm?" Abrahams looked up from his crossword, and pushed his spectacles back onto the bridge of his nose. "Weather? What weather? Is it raining?"

"Abrahams, are you actually aware of anything, other than what is inside your head?" asked Treworthy.

Abrahams stared at Treworthy, as if seeing him for the first time, his brain clearly engaged upon deeply complex thought process.

"You've set him off now", said Travis.

"Oh God. Look Abrahams, it was just a simple question, it wasn't meant to initiate a full-scale philosophical debate."

"Ah...well.....ummmm....well, no, not really. I find the outside world far too....."

"Confusing?"

"..messy. That's why I prefer the realms of pure mathematical logic."

"Yes, well, some of us don't have the luxury of existing in an ivory tower like you, Abrahams. Some of us have to earn our money in the real world." groaned Travis, taking another gulp of whisky.

"Oh my dear fellow, the financial markets of the City are far from being the 'real world'. You and your colleagues are many levels of abstraction separated from anything remotely real."

"And I suppose you do work in the real world?"

"No, far from it. I don't suppose any of us do."

"Hang on a moment. What do you mean by 'levels of abstraction'?" asked Treworthy.

"Oh, it's an idea from computer science - or at least, that's where I've come across it."

"So how does it apply to this?" I asked. "You may as well tell us, while we wait for Manton to show up."

"Oh, well" - he put his newpaper down and cleared his throat. "It's a notion that attempts to describe the relationship between the user and a computer. At the bottom level, you have the hardware of the computer. The processor, the disk drive, the memory, the network card. They communicate with each other at a very low level - electrical signals, binary codes, blocks of data, that sort of thing. But when you use a computer, you don't have to worry about any of those things."

"No, we use an operating system." I said, using up my entire store of computing knowledge in one fell swoop.

"Exactly. A layer of software which provides with a simplified way of, say, using a disk drive."

"Doesn't seem that simple to me." said Travis, somewhat sulkily.

"Well, you don't have to worry about the strength of the current needed to produce a magnetic spot, or where that spot is on the disk. The operating system provides you with the illusion that there are things called folders, inside which you can store things called files. It provides you with a simplified way of using the hardware of the computer. That is what a level of abstraction gives you. A convenient way of thinking about a much messier and more complicated state of affairs."

"Yes. Well I suppose that makes some sort of sense."

"But it doesn't stop there. On top of the operating system, you might have a database package running. That gives you another level of abstraction, because it allows you to store things in lists called tables, and to set up relationships between the tables."

"But if I understand what you are saying, they don't exist either." said Treworthy, "At some point, those tables of data will get stored inside files, which means that the operating system will store them as magnetic spots on a disk. Yes, I think I see."

"But that doesn't mean that a database package isn't real." said Travis, becoming interested despite his mood.

"No, but it is a simplified way of seeing things that are actually much more complex. Of course, there is always a downside to using layers of abstraction, as well as a benefit. On the one hand, it does allow you to concentrate on the matter in hand without getting swamped in too much detail, but on the other, it does mean that it is much easier to start treating the illusion offered by the level of abstraction as reality, and forget about what is underneath."

"But isn't that the whole point?" I asked.

"Yes, but you should be careful about taking it too far. As Bruce Lee said in 'Enter the Dragon': 'It's like a finger pointing away to the moon. Don't concentrate on the finger, or you will miss all the heavenly glory.'"

The room fell silent as we all inwardly digested Abrahams's surprising detour into popular culture. He had a habit of coming up with bizarrely sourced but often appropriate quotations, often belying his outward appearance as a dry academic who rarely ventured outside the walls of his ivory tower.

"Yes, well, that's all very well," said Travis, after taking another quick mouthful of whisky, "but what has that all got to do with the City?"

"It's perfectly obvious, old boy", boomed Manton from the doorway, as he gave his coat to Henry. "You will find that, in the same way, the money markets offer several layers of abstraction, thus enabling you and your colleagues to make - I hesitate to use the word earn - far more money than you would otherwise be able to. Quite apart from the fact that it enables us all to live lives of luxury unsurpassed by even the worst excesses of the Roman empire at it's most decadent."

Manton collapsed into his favourite chair, and grunted apologies for his lateness.

"What on earth are you talking about Manton?" said Travis.

"Well, I don't want to pre-empt our resident academic. Ah, thank you Henry." he said, as club's factotum appeared at his right elbow with a glass of whisky.

Abrahams was untroubled. "Not at all, Manton, I have nothing left to say on the subject. I leave it to others to apply my ideas. I operate in the realm of pure abstraction, a place where the pure thought processes of my intellect can flourish without being caged in by the grey limitations of everyday life."

"More like the realm of pure bollocks, if you ask me." muttered Travis, sotto voce, before taking another gulp from his drink.

"Oh well, if you insist," said Manton. "It's like this. As you know, there was a time when everyone carried round gold or silver coins, where their wealth equated to the inherent value of the metal. It's called commodity money. Which means that the wealth of the country is limited by the amount of gold that everyone has in their pockets, or bank vaults."

"Go on."

"So if the UK wanted to lend a couple of million to America, say, the government would have to get the gold out of their vaults, ship it across the ocean, and the American government would have to lock it up in their vaults. And you obviously couldn't lend more gold than you had."

"Isn't that commonsense?" I said.

"Maybe, but it's very restricting. So what you do is add a layer of abstraction, and invent what is called representative money. In other words, bank notes. You know, a bit of paper which says on it 'promise to pay the bearer on demand...' all that sort of thing. It's a lot easier to ship the stuff around. But it is still tied to the physical amount of gold you've got. In theory, you can take your notes to a bank and get them exchanged for the equivalent in gold. Of course, governments tend to make it illegal for ordinary members of the public to do that."

"Why?"

"Well, a more cynical person than I might say that it is because it might expose the fact that the government has printed more promises than they have gold to fulfill them. Which is a bit naughty of them, but it does mean that they are no longer limited by how much gold they have in the vaults. I think we are meant to call it 'providing enough liquidity to enable the hard pressed British economy to expand'".

"But if you print more notes than you can support with gold, doesn't that mean that each note is worth less gold? I mean, that's what inflation is, isn't it." I asked.

"Yes, but you are forgetting our innate ability, as a civilised society, to completely ignore the underlying causes of something, and be distracted by the superficial appearance."

"Thus spake the little Dragon." said Abrahams.

"Er...quite," said Manton, who, having arrived immediately after the original comment, had no idea what he was talking about. "Everyone becomes so obsessed with the IOUs that they start to think that they have intrinsic value. They see it as 'prices going up' instead of 'money being worth less.'"

"So they start treating representative money as though it were commodity money." said Treworthy.

"Precisely."

"And that is the current state of affairs?"

"Good God no. How is a chap like Travis supposed to earn his substantial salary if the nation is ostensibly limited by the amount of gold it has managed to dig up. No, no. Think about it. Apart from coming across a massive gold deposit under the North Sea or somewhere, how can the government print more money - sorry, 'provide enough liquidity for hard pressed businesses to be able to expand', without causing inflation to devalue it. Anyone except Travis may answer."

"Don't mind me, I have no idea - I'm not an economist. I work on the trading floor." his mood having finally lifted.

"You could link the currency to something other than gold?" I ventured.

"No, no. Come on, show some imagination. You will never be feted as a captain of industry with thinking like that."

"Well go on, Manton. Clearly none of us are able to match your scalpel-like insight into the greater scheme."

"Why have it linked to anything? Float it. It can be worth whatever anyone is willing to give you for it."

"Hang on," I said, "if bank notes are promises to pay the bearer an amount of gold, you can't ..."

"But we're just adding another layer of abstraction. Let them become a commodity in their own right. If that's the way that people tend to treat it anyway, it's only a matter of time before the money men build it into the system itself, and make it official. It's called Fiat Money."

"But it's not linked to anything real." I protested.

"I know, it's brilliant when you think about it. And so much less restrictive. Just think how many more people can earn huge salaries now! Everyone's a winner."

"But it's madness," said Treworthy. "It's not related to anything."

"It doesn't matter - in fact that's the whole point. As long as the Government is willing to accept it as legal payment for taxes, it has a value by default. Baby Ocelots would have a value if you could pay your taxes with them. That's if we all acknowledge the right of the Government to demand payment of taxes, of course."

"Or if they have enough soldiers to render our opinions irrelevant."

"Quite so, Travis, quite so. Of course, that's not the end of the story, there are still quite a few layers of abstraction to go yet. Consider the fact that bank notes are being replaced by electronic impulses inside a computer, which means that there is no real representation at all in the physical world, not even bits of paper."

"And of course there are credit cards," said Travis. "Most people rely on credit cards now."

After a short pause, I turned to Treworthy. "Well, I wouldn't worry about your nephew spending too much time on his computer, inhabiting non-existent virtual worlds. It sounds to me like it might be ideal training for his adult life - especially if he goes into the finance sector."

"I have a horrible feeling that you may be right. What about you Henry? Do you sometimes have trouble working out what is real?"

"The modern preference does seem to be for more change, and not less, sir. A most regrettable development, if I may say so. It would not do for one to become too complacent. After all, the Diogenes Club itself is only a mere 232 years old."

"Yes, the speed of change can be quite terrifying sometimes." observed Travis, somewhat dryly.

The Grandfather clock chimed the hour.

"Luncheon is served, gentlemen."