John Lanchester: Of money, time and the City

The author discusses his state-of-the-nation novel with Amanda Craig

Author John Lanchester sees one street as a microcosm of life in the capital (Abbie Trayler-Smith)

Few novels can have been given as much advance praise and publicity as John Lanchester's Capital.

Half a decade in the writing, it uses the banking crisis of 2008 as a climax to the kind of densely plotted multi-layered view of contemporary life that was once popular with readers of Dickens, Trollope and Balzac. As the author of Whoops!, a much-praised 2010 non-fiction book on the cause of the crash, and a cult journalist, Lanchester seems poised to become Britain's answer to Tom Wolfe. But as he sits shivering in the café of the Covent Garden Hotel, having come out without an overcoat, he is not wearing anything as glamorously impractical as Wolfe's famous white suit. Indeed, in his spectacles and dark separates, he seems closer to T S Eliot – the last literary figure who understood anything about banking.

"I didn't look at anything recent," he says, when asked how aware he is of all the other recent realist novels - notably Ian McEwan's Saturday and Sebastian Faulks's A Week in December – with themes uncannily close to those of Capital. "I'm an omniviorous reader, but I don't read what could overlap with my own work. It's like tuning a radio frequency – it's much harder to pick up if there's something else there."

Capital's conceit is to show a year (from December 2007 to December 2008) in the life of the fictional Pepys Road, which was originally for lower middle-class families but is now ludicrously gentrified. New arrivals include the City banker Roger, who is counting on his next £1m bonus to cover the debts incurred by his appalling wife Arabella; the Senegalese teenage football star in the making, Freddy, and his culture-shocked father Patrick; the Polish builder Zbigniew; and the Zimbabwean political refugee and traffic warden Quentina. Long-term residents include the elderly and dying Petunia, whose grandson Graham is the anonymous Banksy-esque artist Smitty; and the Muslim Kamal family, who run the corner shop.

One of them has begun a disturbing campaign of posting cards to everyone in the street that say, simply, "WE WANT WHAT YOU HAVE". The residents are disturbed, alarmed and infuriated, and the police are called. It's the kind of mystery with which both Victorian and contemporary London novelists are familiar, and to prepare for his own novel Lanchester looked at Balzac, Tolstoy and Stendhal, reread Dickens and tackled The Way We Live Now, the only Trollope he's read. ("The writing is so deliberately flat," he says, by way of explanation.)

Once he has thawed out, Lanchester is a charming, albeit very cautious, interviewee. But he has already told readers a good deal about his background and personal history in his 2007 biography of his parents, Family Romance. Born in Hamburg in 1962, the only child of an expatriate banker in Hong Kong ("not a grandee banker," he adds hastily), he was urged by his father not to waste the "unencumbered freedom" of youth – advice that was given particular force by his father then dying a few months later, in his early fifties.

Lanchester has also described a kind of nervous breakdown he had at Oxford after gaining a first in English, and how he drifted into unhappiness while attempting to complete a PhD on Renaissance poetry. His escape was to start writing journalism, and after a stressful period of writing up football matches for the short-lived Sunday Correspondent, "the clouds parted" and he got a job as deputy editor of the London Review of Books. A well-received first novel about a murderous gourmand, The Debt to Pleasure (1996), established him as a novelist, and two more, Mr Phillips and Fragrant Harbour, followed.

It was probably Whoops! Why Everyone Owes Everyone and No One Can Pay which really put him on the map, however. He became interested in the coming crisis in 2005 while researching Capital; a couple of incisive, almost prescient pieces for the LRB expanded into Whoops! and delayed his finishing the new novel until 2009. Explaining "the profound break between the language of finance and that of common sense", Whoops! is a layman's guide to the meltdown. If the climax to Capital may now appear slightly dated as a result, its main character, the weak and incompetent – but not malign – Roger Yount gives a human face to many of the debates that have raged ever since the Lehman Brothers collapse.

In Capital, Lanchester has chosen to fictionalise his own particular patch of the city – Clapham, where he has lived for 25 years with his wife, the biographer Miranda Carter, and their two sons. "There are a lot of financial services people where we live," he says. "Bonuses radiate through property values, and people who would once have found it unthinkable not to live in Chelsea now live in Clapham. Bankerisation definitely changes the texture of a place, and makes it decreasingly true that people do a variety of interesting work."

He is less exercised by bankers' bonuses than by their overall level of remuneration, which he says "bears no relation to reality. In sport, the money goes to the talent, it goes directly to the worker – unlike a bank, which sits in the middle of transactions and whose income bears no relation to any of the services it provides."

As for the disconnect between the self-pity of the rich and the rage of the rest, Lanchester points out that the slogans in the three works of art which best satirised banking in the 1980s – The Bonfire of the Vanities' "masters of the universe", Wall Street's "greed is good" and Liar's Poker's "big, swinging dicks" – have all become "iconic phrases of self-celebration, adopted as a slogan by those they satirised".

It is his skill at rendering his protagonists' preoccupation with money which makes the splash of Capital's publication part of a general sea-change in contemporary literature, as it moves away from historical fiction towards novels that address our own times and problems. As the novelist and journalist Alex Preston recently pointed out, it is not Dickens who is proving the model for novelists so much as his contemporary Trollope; it's The Way We Live Now, with its depiction of financial fraud and greed, that most resonates with us. Like Trollope's characters, none of Lanchester's protagonists perceive themselves as unpleasant or reprehensible in their pursuit of the London dream. "People aren't vile on their own terms," he says. "The novel stays close to their perception of themselves, which the readers are free to disagree with."

Lanchester is bullish about the future of the novel – "because readers are still there and writers are still there". Having been so prescient about the financial crash, it's cheering to hear him say this, though he adds, "Novels should try to be as good as the best long-form TV series – a properly new form which demands higher levels of attention in a medium that in general is dumbing down."

In the case of Capital, it looks as if British television series, at least, will have a run for their money.

Capital, By John Lanchester

Faber £17.99

"He wanted to do well and to be seen as doing well; and he did very much want his million-pound bonus. He wanted a million pounds because he had never earned it before and he felt it was his due and it was a proof of masculine worth. But he also wanted it because he needed the money ..."