More than a century ago, Thorstein Veblen—American economist, sociologist and social critic—warned that the United States had developed a bizarre and debilitating network of social habits and economic institutions. Ascendant financial practices benefited a limited group at the expense of the greater society; yet paradoxically Americans deemed these practices necessary, even commendable. Far from lambasting the financiers plundering the nation’s resources, we lauded them as the finest members of society. Their instincts, wisdom and savoir faire were idealized, their avarice and chicanery promoted under the banners of patriotism and virtue.
Veblen, an inveterate reader of ethnographies, noticed a historical pattern that could illuminate America’s peculiar relationship with its economic institutions. Societies everywhere fall between two extremes. First, there are societies in which every person works, and no one is demeaned by his or her toil. In these societies, individuals pride themselves on their workmanship, and they exhibit a natural concern for the welfare of their entire community. As examples of such “productive” societies, Veblen mentions Native Americans, the Ainus of Japan, the Todas of the Nilgiri hills and the bushmen of Australia. Second, there are “barbarian” societies, in which a single dominant class (usually of warriors) seizes the wealth and produce of others through force or fraud—think ancient Vikings, Japanese shoguns and Polynesian tribesmen. Farmers labor for their livelihood and warriors expropriate the fruits of that labor. Exploitative elites take no part in the actual production of wealth; they live off the toil of others. Yet far from being judged criminal or indolent, they are revered by the rest of the community. In barbarian societies, nothing is as manly, as venerated, as envied, as the lives of warriors. Their every trait—their predatory practices, their dress, their sport, their gait, their speech—is held in high esteem by all.
Our world falls into the latter form. There remains a class that pillages, seizes and exploits in broad daylight—and with our envious approval. Who are the barbarian warriors today? According to Veblen, the modern barbarians live on Wall Street. They are the financiers summarily praised for their versatility, intelligence and courage in the face of an increasingly mysterious economy. Today a growing number of Americans feel at risk of economic despair; in a world of unsatisfying professional options and constant financial insecurity, the image of Wall Street life offers a sort of relief. It symbolizes the success possible in the modern world.
But in order to capitalize mortgage securities, expected future earnings and corporate debts, Wall Street elites must first capitalize on our personal insecurities. They make their exploits appear necessary, natural, even laudable. This is quite a feat, since in those moments when we suspend our faith in the financial sector and candidly examine its performance, we generally judge Wall Street’s behavior to be avaricious and destabilizing, immoral and imprudent. At the best of times, Wall Street provides white noise amidst entrepreneurs’ and workers’ attempts to actualize their ambitions and projects. We are still learning what happens at the worst of times.
The Myth of Finance
The myth of the financial sector goes something like this: only men and women equipped with the highest intelligence, the will to work death-defying hours and the most advanced technology can be entrusted with the sacred and mysterious task of ensuring the growth of the economy. Using complicated financial instruments, these elites (a) spread the risks involved in different ventures and (b) discipline firms to minimize costs—thus guaranteeing the best investments are extended sufficient credit. According to this myth, Wall Street is the economy’s private nutritionist, advising and assisting only the most motivated firms—and these fitter firms will provide jobs and pave the path to national prosperity. If the rest of us do not understand exactly why trading credit derivatives and commodity futures would achieve all this, this is because we are not as smart as the people working on Wall Street. Even Wall Street elites are happy to admit that they do not really know how the system works; such admissions only testify to the immensity of their noble task.
Many economists have tried to disabuse us of this myth. Twenty-five years before the recent financial crisis, Nobel Laureate James Tobin demonstrated that a very limited percent of the capital flow originating on Wall Street goes toward financing “real investments”—that is, investments in improving a firm’s production process. When large American corporations invest in new technology, they rely primarily on internal funds, not outside credit. The torrents of capital we see on Wall Street are devoted to a different purpose—speculation, gambling for capital gains. Finance’s second founding myth, that the stock market in particular is an “efficient” source for funding business ventures, simply doesn’t cohere with the history of American industrial development. When firms have needed to raise outside capital, they have generally issued debt—not stock. The stock market’s chief virtue has always been that it allows business elites to cash out of any enterprise by transferring ownership to other elites. Old owners then enjoy their new wealth, while new owners manage the same old corporation. The reality is that business elites promote the stock market far more than the stock market promotes economic growth.
Rather than foster growth, contemporary financial practices have primarily succeeded in exacerbating income inequality and creating singular forms of economic calamity. In the recent crisis, new instruments for expanding financial activity—justified at the time by reckless promises of universal homeownership—prompted a remarkable spiral of poverty, debt and downward mobility in America. The path from homeownership to homelessness, from apparent wealth and security to lack of basic shelter, is completely novel—as is the now steadily growing social group of “middle-class paupers.” (Ten percent of homeless people assisted by social service agencies last year lost their homes through bank foreclosures, according to the study “Foreclosure to Homelessness 2009.”) The homeless-through-foreclosure, having been persuaded by cheap credit to aspire to homeownership, were punished for unbefitting ambitions; any future pathway out of debt will be accompanied by new insecurities about the appropriateness of their life aspirations. Also novel in recent years is the extent to which economic “booms” no longer benefit average Americans. During the last economic “expansion” (between 2002 and 2007), fully two-thirds of all income gains flowed to the wealthiest one percent of the population. In 2007, the top 50 hedge and private equity managers averaged $588 million in annual compensation. On the other hand, the median income of ordinary Americans has dropped an average of $2,197 per year since 2000.
We habitually excuse Wall Street’s disproportionate earnings out of a sense that it helps American businesses thrive—but even corporations don’t quite benefit from Wall Street’s “services.” Consider the infamous merger between Daimler-Benz and Chrysler. In 1998, Goldman Sachs claimed that this merger would result in a $3 billion revenue gain. Stock prices responded extremely positively to the merger, which won the coveted Institutional Dealers’ Digest “Deal of the Year” Award. Only two years later, because of incongruities between the European and American parties, Chrysler lost $512 million in annual income, $1 billion in shareholder value in a single quarter, and was forced to lay off 26,000 workers. With the merger acknowledged as a failure, Chrysler was sold off from Daimler-Benz in 2007. Goldman Sachs, which had already made millions in windfall fees from the original merger, then walked away with millions more for advising the equity firm which now swooped in to pillage an ailing Chrysler. Bad advice seems to do little to tarnish Goldman’s golden reputation; after all, the firm can always point to its extraordinary profits as proof of talent and success. (Goldman Sachs ought to love the “bad publicity” it attracts nowadays; the headlines that reveal the billions made shorting housing and securities markets only solidify its status as Wall Street’s elite firm—capable of turning a profit even in times of economic crisis.)
The evidence suggests that Wall Street has assumed a negative relation to the economic interests of society at large. Many investment bankers are doubtless nice, hard-working people who give a lot of money to charity; nevertheless, they constitute a distinct class with interests diverging from society’s as a whole. This past year, unemployment skyrocketed from 6.2 to 10 percent. Meanwhile, Wall Street announced stock market gains of $4.6 trillion between March and October.
One might object: surely this “diverging interests” portrait has been complicated since the Clintonian New Economy and the democratization of shareholding? After all, aren’t so many of us investors and portfolio holders today? In the past decade, new financial services promised to extend affluence to more Americans if we partook in finance’s “collective” economic vision. Broker services like E*TRADE enabled non-elite investors to enjoy increasing wealth as the background of their everyday lives. We all bore investment risks together and eventually we would share the resultant wealth. Or so we thought. Remarkably, business elites have managed to corral almost all of the recent winnings for themselves. In 2007, with the mortgage market on the eve of collapse and global economic crisis imminent, Wall Street meted out record bonuses totaling $32.9 billion. Holders of securities lost $74 billion.
The Meaning of Financial Innovation
Early on, capitalism encouraged entrepreneurs to invest in new technology, thus unleashing incredible productive potential. Yet as the hunger for profits outpaced technological innovation, the modern barbarian developed new instruments for increasing the value of his assets—without having to produce anything new. Rather than focus his energies on developing more productive ventures, he started to sell the promise of increased future revenue—which he called an “immaterial asset.” The first immaterial assets were patents and trademarks; what were formerly strategies for being more productive, the barbarian now learned to package and sell by themselves. The next step was to sell claims to these immaterial assets in the form of yet another immaterial asset: capital stock. This stock represented a promise of revenue based on other promises of revenue. Over time, more and more immaterial assets were created and sold, then listed on balance sheets as corporate bonds, credit derivatives and hybrid securities. Eventually, a corporation started to look less like a producing firm and more like a bunch of immaterial assets and liabilities. Today a corporation’s success often depends on how much credit it can raise—that is, on how successfully it can sell the promise of future success.
Salesmanship and future earnings projections have replaced productivity and innovation as the engines of our economy. The barbarian’s pursuit of financial profit now determines how a corporation employs its labor and technology—that is, whether it is valuable to be productive. Capitalism, once propelled by technological investment (classical capital), is now driven by immaterial technology that increases the value of immaterial assets (financial instruments moving modern capital). Today Goldman Sachs and JP Morgan don’t invest in the promise of producing things of use or real value. They invest in the promise of rising asset prices (or in the case of shorting stocks, the promise of falling asset prices). In their world, value is defined by gain. It used to be the other way around.
Because of the dynamic of constant financial innovation, patterns of economic boom and bust no longer follow the traditional business cycle model in which: (1) a low interest rate (meaning cheaper credit) leads to (2) increased investments and economic growth; followed by (3) a period of overheating and excess capacity; which is then balanced by (4) a re-stabilizing period and a cooling of inflationary tendencies. The “new business cycle” is determined by financial innovation, not national productivity and consumer demand. Booms are born when a new financial instrument is dreamed up, and busts occur when the conjurer’s secret is uncovered and collapses.
The most recent boom and bust (i.e. our current financial crisis) was based on this secret: “The market for subprime mortgages is not determined by the number of newly aspiring homeowners, but by the promise of profits from mortgage-based securities.” Irresponsible lending spelled profits for investment banks, so naturally they encouraged irresponsible lending. The story is familiar by now. Banks invented two kinds of risky securities that promised higher yields: collateralized debt obligations (that pay if high-interest mortgages are repaid) and credit-default swaps (that pay if they aren’t). Trading these shadow-financial (i.e. unregulated) securities generated enormous profits—both from constant trading fees and from speculation gains. But selling more subprime mortgage securities required selling more subprime mortgages. So investment banks bought mortgage-lending outfits and themselves offered subprime loans (even to individuals who qualified for better loans). As inevitable loan defaults started to pile up, the value of collateralized debts fell, and heavily invested banks couldn’t cover the swaps they sold. Wall Street’s expert salesmen had sold too many immaterial assets—too many promises of future value. The entire edifice of lending was paralyzed because it had become profitable to lend irresponsibly.
The Barbarian’s Attitude Toward Work
In barbarian societies, the warriors plunder and parade. Their homes adorned with booty from past raids, they brazenly announce their superiority to the rest of their community. Destructive and wasteful, they avoid accusations of spiritual and social infertility by defining what counts as spiritual and social wealth. As Veblen notes, “The obtaining of goods by other methods than seizure comes to be accounted unworthy of man in his best estate.” All throughout history, in fact, virtues of manliness track the least productive—and most esteemed—professions, hobbies and social ambitions. Fight, idle, wear ornate clothing, but suffer not touching the earth or assisting one’s fellow man.
Of course, only a select few were privileged to live the lives of warriors. Yet these elites so relentlessly honored their definitions of vigor and dignity that even the gentler non-elites accepted them. Veblen tells of a Polynesian chief who preferred to starve rather than suffer the indignity of feeding himself, as well as of a French king silently burnt alive because the servant whose duties included shifting his master’s seat away from a fireplace had taken a sick day. This “moral stamina in the observance of good form”—that is, this foolish commitment to predatory decorum—only served to strengthen the elites’ hegemony over the community; non-elites idolize the steadfastness, integrity and apparent dignity of the warrior’s way of life.
According to Veblen, every human being has both an “instinct for workmanship”—a drive to improve in his craft, to work more effectively—and a “propensity for emulation”—a drive to distinguish himself from his peers. But depending on which habits and institutions are dominant in a particular society, these two instincts appear in different forms and hierarchical relations. Today, as in all barbarian societies, the desire for esteem has eclipsed the instinct to produce. This is the legacy of modern finance. The history of Wall Street is usually told through some quasi-Darwinist narrative—bankers worked diligently to invent newer mechanisms for borrowing, lending, hedging and insuring, ones that could better survive in an ever-complicating economic world. But to understand the ways in which Wall Street has reshaped American life, one needn’t know which packaging of immaterial assets came first—corporate debt, junk bond, or mortgage derivative. The proliferation of all these assets is expressive of a more fundamental revolution, one in which America’s production processes acquired new directions, its workforce a different character, and its individual workers a new set of governing instincts.
In White Collar: The American Middle Classes, sociologist C. Wright Mills details how the rise of modern finance transformed the nature of the American workforce. With greater access to capital, large corporations increasingly crowded out small entrepreneurs. These corporations required masses of white-collar administrators, salesmen and managers to keep up with ever-proliferating bureaucratic tasks. Other social developments also contributed to the thinning of the American blue-collar: labor-intensive work was exported to cheaper labor markets, increased American wealth restructured socio-economic ambitions and financial mobility favored capital-intensive production.
The overall effect has been radical: today, fewer Americans than ever are aspiring toward the materially productive professions; meanwhile the habits, talents, language and lifestyle of manual laborers have also been displaced by their white-collar corollaries. Perhaps the most troubling feature of the white-collar mindset is that it conceives of work—not just manual work but any kind of work, and especially its own—as irksome, pointless, an interference with life’s pleasures. (Contemporary economists even model work as a “disutility,” a sacrifice made for the sake of future enjoyments.) Consider the popularity of comedies like The Office or Office Space Why are Americans so charmed by characters like Jim Halpert and Peter Gibbons? It’s because they get that work doesn’t matter anymore, that it cannot offer genuine satisfaction: work is simply something one has to do. Viewers sympathize with Halpert’s detachment from paper sales; his attitude toward work feels appropriate, even noble. On the other hand, Dwight Schrute’s zeal for office tasks seems bizarre, at times pathological. Halpert’s reluctant and instrumental attitude is no less characteristic of the Wall Street analyst slaving at his desk for 80 hours a week. The analyst knows the satisfaction is not in the work itself—what he “gets” from his job is a paycheck and the prestige that comes with it.
A fuller history of modern finance would move beyond merely cataloguing instances of financial innovation and describe the accompanying transformation of our values. It would trace a larger spiritual transformation, in which our definition of what counts as dignified work shifted away from accomplishments and toward status. Veblen attributed to man a basic drive toward productivity—a taste for usefulness and an aversion to futility. But a society’s institutions and values can divert this drive. Why would one bother producing things today, when the jobs producing nothing pay better—not only in cash, but also in prestige? Junk bond or credit-default swap traders produce no real product, all the while securing copious money and esteem. A trader can be celebrated as “masterful” or “naturally gifted,” praises that used to be reserved for artisans. Meanwhile, we ignore or denigrate the laborer that fixes our car.
In “truly productive” (i.e. non-barbarian) societies, the “instinct for workmanship” and the “propensity for emulation” act in concert—individuals emulate the artifice of their compatriots, mimicking their movements and habits in an attempt to duplicate (and eventually improve upon) overlapping projects. They compete in workmanship, which helps goad innovation and creativity. But in our world, we no longer look to workmanship as the source of profound esteem. We rarely find inherent meaning in the struggle to improve our craft; the experience of natural self-heartening once called “a sense of accomplishment” has been displaced from our horizon (or at least from our workplaces). Instead of evaluating ourselves through our projects, self-esteem comes to depend on successfully selling others an image of our value. Promotions come to those who can sell themselves as the future of a company. And in this salesmanship society, Wall Street elites are the salespersons par excellence. Their very job is to sell an image of themselves as deserving of our praise and trust.
There is, however, a cost to all this repackaging and reselling. “Elite” tastes and habits shift so often that they start looking empty. Values seem largely unanchored, purposes transient and superficial. One senses that the goals of the avaricious aren’t really their goals—can they really want those ugly mansions or gaudy cars?—but a way of not confronting their lack of goals, desires, hopes and joys. Who believes that traders are truly happy?
The Banker’s Lifestyle
There remains, of course, much that is enviable about the work of the trader; we might congratulate him for discovering a satisfying professional life—comfortable, secure, challenging but not incommensurate with his ability. Yet the many memoirs and ethnographies of Wall Street depict the job differently—less as a rewarding post for the gifted and proven, more as a petri dish of insecurities and dis-ease. Financial workers appear to be on perpetual trial membership; no individual can be sure which rules he has to follow or which mores he must embrace to remain a member. Indeed, Wall Street’s various cultural practices—its socialization rituals (the recruitment process), life routine (work hours), the structure of aspiration (chronic job-hopping and job insecurity) and self-presentation (as the smartest and savviest)—seem to steadily produce psychically split individuals. The Wall Street worker may look self-assured, comforted by personal displays of status and absorbed in professional projects. But if the memoirs are to be believed, the trader conceals both a secret detachment from his professional persona—a feeling that he either ought to be or actually is quite different from the person his work demands him to be—and a fear of being called out for his faltering commitment to the lifestyle and profession.
Culturally, this means the trader will take on every aspect of the business lifestyle—the clothing, the cars, the eating habits and the attitude toward peers, the market, and the rest of the world. Economically, it compels herd mentality on the trading floor. Without a sure grasp of future market behavior, or even of the basic dynamics that the market will exhibit in the future, speculators seek out any sort of assurance of their expertise, resort to whatever conventions they can grab hold of, and behave in ways that minimize their insecurity, isolation and confusion. One doesn’t want to be marked as lacking the right attributes for “succeeding.” In his memoir Liar’s Poker, Michael Lewis writes:
Investors do not fear losing money as much as they fear solitude, by which I mean taking risks that others avoid. When they are caught losing money alone, they have no excuse for their mistake, and most investors, like most people, need excuses. They are, strangely enough, happy to stand on the edge of a precipice as long as they are joined by a few thousand others.
Stories by former brokers suggest that cultural admission into the community is more important than familiarity with the mechanisms of the economy. (Today, no one involved in the market understands how it works anyway.)
The result is a chronic insecurity which may be at the root of what some economists call the “Cassandra effect” in modern finance. Like the Greek prophetess, those with the clearest insight into the future, or into the present’s deeper truths, can never convince those most in need of being convinced. The few individuals prescient enough (or reasonable enough) to see through the unsustainability of trading practices are ignored by speculators reluctant to stray from the flock. Warnings about the effects of reckless risk-taking are discounted. Cautious or thoughtful traders are traded for their more insecure and faithful counterparts.
Lacking any secure grounding for his inflated status and pay, the speculator compensates with unfaltering public confidence. He feigns knowledge of the manners of the market. He imagines his job calls upon talents precious to society. This self-deception becomes the norm, a requisite for practices otherwise devoid of justification or satisfaction. But Wall Street’s elites are, as we have been told, extremely intelligent individuals; they must be aware of the exaggerated esteem afforded to them. The Wall Street worker understands that he is not yesterday’s noble captain of industry, but merely a deckhand on a ship rowing between the Scylla of unethical trading and Charybdis of financial ruin. To pass these troubled waters, someone needs to be sacrificed. On occasion, Scylla will capture a few of the crew (Madoff, Stanford), but generally, only clientele have to be handed over. Lewis describes his peculiar relief at being able to slough off financial losses:
[The client] was shouting and moaning. And that was it. That was all he could do. Shout and moan. That was the beauty of being a middleman, which I did not appreciate until that moment. The customer suffered. I didn’t. He wasn’t going to kill me. He wasn’t even going to sue me. I wasn’t going to lose my job. On the contrary, I was a minor hero at Salomon for dumping a sixty-thousand-dollar loss into someone else’s pocket.
The culture of Wall Street may have evolved since Lewis’s time but not the paradox that drives it. The networks of acknowledgement and praise run counter to the virtues articulated by its spokesmen (virtues that businessmen sometimes even believe in). Psychic relief and parochial esteem depend on performing poorly in the very activity for which one is publicly praised. Bonuses arrive. Devastated clients disappear.
The institutions and habits that distinguish financial elites as ideal economic agents—and transform recessions into opportunities for billion dollar profits—make anxiety the norm on Wall Street. It is tempting to close one’s eyes to the instability that mars Wall Street life. Who cares that the financial elites work in constant fear of downsizing? (Wall Street cut 116,000 jobs in 2001; 98,000 in 2004; 50,000 in 2006; and 150,000 in 2007.) With Wall Street salaries and bonuses, what does it matter if some traders have to stretch out their severance packages in Buenos Aires for a decade or two? When the economy was hemorrhaging jobs, they extracted record profits and continued to destabilize asset market after asset market. Isn’t it time that they suffer a few days? The irony of seeing former Bank of America CEO Ken Lewis picking up an unemployment check might be too sweet to pass up. (2008 compensation: $20.13 million). Or maybe too ironic to be sweet (another suspicious bailout). But this instinct of ressentiment is dangerous—for when the movers and shakers expect perpetual insecurities in their homes, they welcome those insecurities into everyone else’s homes as well. Wall Street’s anxieties overflow onto Main Street.
Wall Street and Main Street
Amidst nature’s unreasonable scarcity, Wall Street often seems like a refuge of reason. It promises us prosperity, so long as we submit to its values. In Karen Ho’s ethnography of Wall Street, Liquidated, she identifies the three qualities of an ideal investor—smartness, assiduousness and flexibility. Wall Street offered us these ideals in its own image, and we have accepted them as gods. “Make everything in this image; everything more efficient,” we are told. But how have we fared with this injunction? How have the idols passed down from Wall Street affected work and life on Main Street?
Not only does Wall Street’s highly selective recruitment process—restricted primarily to Ivy League graduates and the current students at the top five American business schools—reflect its idolization of ostentatious smartness, it instills this value in future financiers. These young elites are bussed en masse to extravagant recruitment parties, where they are fanned with flimsy adulation of their smartness and precocious accomplishments. Wall Street thus trains its employees in the art of performing eliteness at the same time as it protects its image as the destination of America’s elites. A Princeton alumna and former financial analyst herself, Ho writes:
The conflation of elite universities with investment banking and “the perfect lifestyle” is crucial to the recruitment process, reproducing as it does the ambience of Wall Street cocktail parties, where investment bankers “schmooze clients” in lavish, impeccably catered settings. These norms are enacted for and demonstrated to students, and … they immediately pick up on the importance of performing “smartness,” not to mention how Wall Street business success is premised on pedigree, [and] competitive consumption.
The hiring strategy of financial firms further confirms that they are not selling a product, or even a service requiring skills or experience. What they have to sell is, literally, their salesmen—whose highly publicized “intellect” and “natural talent” secure the trust of clientele despite the poor track record of their expensive advice. Ho quotes one Harvard student’s take on Wall Street recruitment:
The core competency of … an investment bank … the real value these companies bring to the world and to their shareholders is their unmatched skill at recruiting fresh-faced young students from the Ivy League. … Remember that companies that do nothing of value must obscure that fact by hiring the best people to appear dynamic and innovative while doing such meaningless work.
Financial firms aggressively promote the image of Wall Street smarts by hiring, or more precisely, by producing Ivy League analysts. Smartness pays, for Wall Street at least.
But how do Wall Street’s core values affect life on Main Street? The American college, taking its cue from finance, now trains its students primarily in the skill of performing smartness—that is, in appearing able to suavely manage diverse situations and people. This works excellently for the few who can land jobs in finance and consultancy, but it has disastrous consequences for the rest of the college educated, now unequipped with any stable skill set or reliable knowledge. Today, 62 percent of Americans aged 25 and older have college degrees. They compete for the 22 percent of American jobs that require higher education. The losers are left unemployed or consigned to drudge in the bottom echelons of the service sector.
The second virtue of Wall Street employees, according to Ho’s ethnography, is that they are assiduous. Their days are long, fraught with deadlines and taut with anxiety. In The Theory of the Leisure Class, Veblen predicted that conspicuous wastefulness and public idleness would increasingly define American life. Though his arguments about uneconomic consumption habits are borne out on Wall Street, work routines are anything but indolent. Wall Street has managed to persuade its financial footmen to sacrifice almost all of their time to the shrine of the “dynamic worker.” Perks like the 7 p.m. free dinner and the 9 p.m. car service encourage workers already yoked to their trading screens to stay in The Office just a bit longer. But the truth is that they work late for other reasons. The fact that millions of dollars can be won or lost in just a few minutes has reshaped Wall Street’s experience of “time,” investing every moment of the day with an urgency alternately exhilarating and oppressive.
Yet the consistent affirmation that Wall Street works harder and longer than anyone else makes other work environments appear wasteful by comparison—manned by idle and complacent employees. To insecure Wall Streeters repeating mantras of their own hyper-efficiency, the outside world comes to appear horribly inefficient. Disciplining corporate America through downsizing seems increasingly appropriate, even necessary. American jobs thus inherit Wall Street’s instability and compulsiveness, becoming both all-consuming and highly temporary. American workers are no longer card-carrying members of a corporate entity. They are pieces of fat to be trimmed away.
In other words, Wall Street’s cardinal virtue is flexibility—the imperative it preaches to both its workers and clients. Financial footmen are used to losing their jobs. High turnovers and chronic exposure to being downsized are accepted features of the playing field; even before the financial crisis, one’s financial team or even whole division was liable to dismissal depending on the tides of the market. Of course, Wall Street’s inflated salaries compensate for this occupational hazard—but others fare less well. American businesses, seeking to prove their flexibility to Wall Street and sustain their shareholders’ confidence, learn to shed workers when the market turns. For workers themselves, corporate flexibility has brought about lower-skilled jobs and salaries that reflect their easy substitutability. America’s two largest employers—Wal-Mart and the temp agency Manpower—provide model jobs for an economy that idolizes the flexible.
Stability, once a virtue of both the reliable laborer and the well-tested firm, now portends obsolescence, an inability to innovate. Flexibility is the new cultural imperative—and job insecurity the new background to everyday life. In the twentieth century, finance introduced an era of white-collar employment; now it ushers in an era of temporary work—a post-career era. Even full-time jobs no longer provide financial security, and the aspiration of a long-term career (with any company at all, even resigning oneself to “less fulfilling” jobs) appears increasingly whimsical.
Today, the average American will hold more than ten different jobs over the course of his lifetime. Deprived of what Richard Sennett called the “gift of organized time,” he can no longer set goals for long-term personal development. His life feels less like a narrative that he is slowly articulating than a series of discontinuous episodes largely determined by forces beyond his control. At the very least, living a good life would seem to require: (1) the ability to deepen and develop one’s personal relationships and (2) a sense of ownership over one’s existence. In the post-career era, there is little prospect for either. The average American can only play out the temporary roles the world has chosen for him—roles that feel shallow, fleeting and not his own.
Naming the Barbarians
Pick up the New York Times today, and you’re likely to read yet another article about finance’s infidelity with the general public, another violation of the (invisible) norms of propriety. It is only with immense discipline, a well-stocked inventory of financial jargon and a readiness for self-deception that one can actually distinguish these “violations” from business-as-usual. Yet despite ubiquitous references to Wall Street offenses, maybe even because of them, Americans don’t seem deeply troubled, or even all that perplexed, that this abusive sector remains largely undisturbed. Most of us can dutifully recite the scandals and statistics, but few dare to imagine life without Wall Street. For all the talk of a rapidly evolving economic environment, we treat one feature of this environment as permanent: the existence of a class of individuals who make millions by making nothing. We’re no longer surprised to see business elites divine exorbitant bonuses, paid for through record unemployment levels and unprecedented government support. This trick is getting old.
Though Wall Street consistently updates its instruments and practices, one governing rule has remained since Veblen’s time: financial propriety has nothing to do with social and economic growth. Certain rules must be followed, but the construction of those rules is absolutely distinct from considerations of general social welfare. Rather, regulations and rules are defined according to the culture’s metric of success, of value, of esteem—and that metric is money. All financial practices that increase the wealth of the sector are not merely permitted, they are required. No profitable innovation can be ignored. Destabilizing the global economy is fine. Undermining one’s firm, or jeopardizing the system of trading and speculating, is not.
Finance today is not geared toward getting entrepreneurs the credit they need to actualize their good ideas. It is riddled with archaic social forms that perpetuate barbaric status anxieties. The appeal of the Wall Street lifestyle—money, clean working conditions, (paradoxical) status as stewards of prosperity—has blighted the rest of society with its message that the best kind of work is devoid of social utility, knowledge and permanence. Nonetheless, we continue, even in the wake of economic crisis, to accept the barbarians’ rules for social and economic life. The discussion in government today revolves around minor matters of transparency and enforcement. The barbarian does not abide by rules; indeed, it is a point of pride that he knows his way around them. No matter what regulations are passed, the barbarian will figure out a way to make money from them.
Ironically, as anxiety-stricken status seekers, bankers are more vulnerable to social censure than to rules. In the past, barbarians have lost power when new moral voices rejected their predatory habits—as Nordic scholar Gwyn Jones argued, Viking practices were weakened when “under the influence of Christianity, an increasing disquietude was felt about the ownership and sale of men.” Rather than challenge bankers to develop new weaponry, we should debunk the myths that justify their predatory habits. Bankers, those chronic scavengers of affirmation, are among the least equipped to contend with public dishonor. Today, the stock market continues to climb without offering relief to national unemployment. We are assured, as always, that jobs are a “lagging indicator.” But what kind of jobs will they be when they finally come—and will they restore a sense of ownership to our lives? The answer may depend on whether we have the courage to insist that Wall Street’s recovery only impedes our own.