The row over the usefulness of bankers rumbles on, with many of our leaders rushing to the defence of the indefensible. The original remark by Lord Turner, the chairman of the Financial Services Authority, that some banking was socially useless, is on the face of it incontestable. Never mind useless, some banking has proved to be spectacularly harmful. Surely, with £1.3 trillion of public money committed to the bank bailout and business failures and unemployment soaring, we can at least agree on that?

Apparently not. Alistair Darling, despite plenty of encouragement from John Humphreys on the Today programme yesterday, refused to concede even this much, giving no support to the FSA head and absolutely opposing his suggestion that the City needs to shrink back.

The normally sure-footed Richard Lambert, head of the CBI, the employers’ body, attacked Lord Turner for even raising the issue. “In a free society, it’s not the job of a politician — or, for that matter, of a regulator — to argue that a particular form of activity is or is not of social value,” he opined.

There is so much to challenge in this assertion, it’s hard to know where to start. Perhaps with the suggestion that, in a free society, everyone — even regulators — should be free to express an opinion, even if Mr Lambert doesn’t like it.

Even the most rampant of free-market fundamentalists would hesitate to ignore social value. Consciously or not, policymakers weigh it up in all their calculations. That is why petrol is taxed and food is not. It is why defence and media companies are given special privileges.

Lord Turner’s assessment that the wholesale finance industry has swollen to excessive proportions deserves better than this kneejerk dismissal. If ever there was a time when we should scrutinise its real contribution, it is now.

There is strong evidence, as suggested by George Soros, that the sector has grown out of all proportion to the wider economy. Why are the orders of magnitude for banks’ balance sheets bigger than a decade ago? Why have takeovers and mergers grown in 20 years from 2 per cent of GDP to 20 per cent? Why in 40 years has turnover in UK equities soared from 10 per cent of GDP to 200 per cent. Why has the volume of derivatives trading grown from near zero to $1,000 trillion?

Above all, why, during this unprecedented explosion in activity and supposed financial innovation, have long-term real investment returns fallen to levels not seen for almost a century? It’s hard to see how this whirlpool of extra activity benefits anybody except the bankers, brokers, traders, consultants and fund managers who keep the maelstrom turning.

To use the vivid phrase of Charlie Munger, No 2 to Warren Buffett, too many of the benefits of capitalism are swallowed up in “the croupier’s take” — the portion taken by those running the game. And, for them, the more frequently the wheel spins, the better.

The City, says Mr Lambert, is “not some bloated excrescence throwing the whole UK economy out of balance”. Even that claim may be challenged: Bill McKelvey, of UCLA, argues that the rise of London as a key financial centre has driven up the value of sterling to the detriment of other UK industries trying to compete internationally.

Rolling Stone magazine’s recent description of Goldman Sachs as “a giant vampire squid wrapped round the face of humanity, relentlessly jamming its blood funnel into anything that smells like money” is unforgettable, and many would see the entire wholesale finance industry in much the same way.

That may be too much of a caricature. Perhaps a more accurate analogy would be a vast shearing shed. A shearing shed that savers, businesses and even governments have no choice but to enter; one through which they are herded with ever increasing rapidity, each time emerging with less wool on their backs.

Something to slow the traffic must surely be a good thing.

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