Andrew R. Weiss
I must admit that I find Ivan Boesky and Mike Milken interesting. What interests me is not their adventures in stock manipulation and insider trading per se, or even the fact that they are crooks on a grand scale; there is nothing new about scandal in business. It's the connection to the quantitatively different but qualitatively identical case of Bryan Wrzesinski that intrigues me.
12-year old Bryan conducted a bit of sharp business involving a 1968 Nolan Ryan Rookie Baseball Card, which was priced at $1200. Bryan was able to purchase it for $12.00 because he convinced an inexperienced sales clerk that there was a decimal point on the price tag.
Milken and Boesky were hailed as heroes, saviors of faltering companies, avenging angels of efficiency, paradigms of the spirit of capitalism. Both were featured in Fortune Magazine as among the most important business people in the 1980s, at least before their convictions; Bryan's father defended his son's wheeler-dealer transaction as a reflection of the way the "real world" works, suggesting that Bryan already had learned what he needed to know about the ways of the world to help him succeed.
In his movie "Wall Street," Oliver Stone gives this same view of the world voice in the person of big-time arbitrager and corporate takeover expert Gordon Gekko. Near the climax of the movie, Gekko is involved in a hostile takeover of Teldar Paper. At the company's annual meeting, Gekko addresses the assembled stockholders. He blames the lazy, self indulgent, do-nothing management of the company for its lack of growth, sluggish performance, and low stock prices. He defends himself as a savior of failing companies, and offers a general justification for his life's work:
The point is, ladies and gentlemen, that greed, for want of a better word is good. Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit. Greed in all of its forms--greed for life, for money, for love, for knowledge--has marked the upward surge of mankind . . . and greed, you mark my words, will not only save Teldar, but that other malfunctioning corporation we call the USA.
Gekko sees greed as the great passion that drives the modern world and the capitalist enterprise, and one which will be offset by the traditional family ties that bind his young hero to the sentimental concern of the 'natural superior' for the less fortunate. He echoes, if a bit out of synch, Karl Marx, who wrote in the Communist Manifesto that
"the bourgeoisie, wherever it got the upper hand, put an end to all feudal, patriarchal, idyllic relations, pitilessly tore asunder the motley feudal times that bound man to his 'natural superiors,' and left remaining no other bond between man and man than naked self-interest and callous cash payment."
Stone's view of capitalism is based on a dangerous--and not uncommon--misunderstanding of how the modern world works. It involves the ironic convergence of three distinct critiques of modernity:
1) the critique by the old ruling classes and their fellow travelers of the threat to traditional values posed by the economic practices of the enlightenment,
2) the critique by the 19th century romantics of the dull and uninspiring world of the bourgeoisie,
3) the critique from the Marxist and Marxian left of the inhuman (indeed anti-human) implications of modern modes of economic organization.
The combination of these critiques makes what Donald McCloskey might call a "good story." It makes sense, it has a coherent narrative structure, good characters and lots of action. It provides a reasonable model, a paradigm, for understanding the modern world and for acting in the world. But as McCloskey pointed out in his convocation address at the College this spring, good stories can be evil.
Gekko's story is evil. It informs the actions and choices of the people who embrace it as a paradigm or world view. People who believe that this is the way the world works will act accordingly, creating a self-fulfilling prophecy as their actions generate a world in which theft and cheating seem not only acceptable but heroic. Worse, Oliver Stone seems to agree that this is how the world works, however much he may reject its values.
But Oliver Stone's paradigmatic capitalist is wrong: his story, however compelling and reasonable it seems to Stone, is not true. His view of the world is distorted. He has his facts wrong.
The fact is that greed is not the motive force in modern economic life. It is not great passionate ambition but bland ambition that drives the bundle of economic practices called capitalism--the moderate desire and rational pursuit of private interests within the context of a generally understood (if not well articulated) system of ideas, assumptions, values and expectations which have defined the modern world since it was imagined by the intellectuals of the enlightenment and realized in the polities and economies of modern societies. The emergence of the modern world, including but not limited to its capitalistic economic institutions, reflected the ideology of a new social class: the city people who engaged in commerce and trade.
These city people lived outside the traditions of Medieval Europe, beyond the rights and obligations that were essential to the well ordered world of feudalism and manorialism. They were outlaws in the way that Robin Hood was an outlaw, living outside the law, beyond traditions which no longer had much meaning or value for them. (Not the new Politically Correct Robin Hood of Kevin Costner, but the Robin Hood of the old ballads and, I suppose, of Errol Flynn.) Like Robin Hood, they understood, long before Bob Dylan, that "to live outside the law, you must be honest."
They recognized that the Europe of the 16th and 17th centuries was ruled by great passions--religious fervor, quests for total truth, national and imperial agendas for conquest and colonization--in which princes, poets and prelates passionately defended their understanding of the world and its ways.
Shakespeare--a proto-bourgeois of the first order--knew this well enough to warn his contemporaries about the dangers of great passionate ambitions in Henry VIII,
"Mark but my fall and that that ruined me. Cromwell, I charge thee, fling away ambition. By that sin fell the angels. How can man then the image of his maker hope to win by it,"
and in Macbeth,
"I have no spur to prick the sides of my intent but only vaulting ambition which o'erleaps itself and falls on the other."
Milton seems to have similar motive in warning of the danger of great passion when he attributes to Satan a defense of the worthiness of grand ambition and the preference for ruling in hell rather than serving in heaven.
The world the bourgeoisie made was organized around a new set of ideas, an ideology that expressed the interests of this emerging class and reinforced a vision of a world in which they could achieve the peace and progress that would prevent Europe from shaking itself to pieces.
While any number of intellectuals articulated this ideology--or world view, or paradigm--its real force came from the tacit understanding (as Polanyi calls it) that existed among the bourgeoisie and was embedded in the religious consciousness called, among other things, Puritanism. R.H. Tawney, in Religion and the Rise of Capitalism, points out that in England, for example,
"the growth, triumph and transformation of the Puritan spirit was the most fundamental movement of the seventeenth century. Puritanism . . . was the true English Reformation, and it is from its struggle against the old order that an England which is unmistakably modern emerges. But, immense as were its accomplishments on the higher stage of public affairs, its achievements in that inner world, of which politics are but the squalid scaffolding, were mightier still. . .it determined, not only conceptions of theology and church government, but political aspirations, business relations, family life and the minutiae of personal behavior [1954 Mentor ed., p. 165]."
The bourgeoisie shared radical new assumptions, expectations, values and ideas, and they acted accordingly. They played by the rules and took seriously honesty, moderation, self discipline and reason. Through their actions they built a tacit understanding of how the world should work into the way their world really did work. Their world view became the source for social practices from which the institutions of the modern world arose.
In the economy, bland ambition (Tawny refers to the mundane) is institutionalized in laws governing property and trade. Individual interests in comfort and material success were pursued in the context of an acceptance of self-imposed limits on the passions for great wealth and power.
Commerce was seen as a non-fixed sum game, a matter of mutual benefit in which people who were
free to trade, traded only when both could get what they wanted. Sharp practices, cheating, "winning" were not simply unethical or in "bad taste" but threatened the interests of all. Theft was not merely a crime against property; it was a crime against society and its peace.
In the polity the emerging democratic institutions and competition among political interests served as checks on the grand passions of kings and demagogues. The control of tyrants and the protection of the bourgeoisie was achieved through formal and informal constitutions informed by the world view of the bourgeoisie.
In the emerging Newtonian science the methodical, slow, incremental, rational pursuit of knowledge replaced the great Faustian passion to know everything at once. Increasing certainty--which Langdon Gilkey defined in Creationism on Trial as the knowledge that one has knowledge--replaced the urge to build great speculative systems. Reason replaced passionate belief and method replaced the get-smart-quick schemes promising sudden, all-illuminating insight. Technologies based on experiment and carefully considered observation replaced magic, astrology and witchcraft as ways to control the world and achieve human purposes.
Religious passions cooled and turned inward, giving way to the quiet, even rather dull, forms of worship associated with the Reformed tradition.
Passion was "privatized," to use a contemporary barbarism. Personal passion was driven out of the public arenas. Whatever fires burned within, one kept one's passions to one's self. Nor did one indulge the voyeuristic, even pornographic, urge to dwell on the private passions of others.
Progress and change, innovation and reform were institutionalized in an ongoing and incremental process of what Schumpeter called "the process of creative destruction." Bland ambition drove the routinized revolutions in commerce, science, politics, the arts and religion.
The modern world became a web of relationships among people free to trade, to talk, to create, to know, each according to their private interests and bland ambitions. The interlocking relationships held everyone together.
Now, a world that works this way is undeniably boring. In this sense the romantic and aristocratic critiques are valid: existence can be dull and flattened out without great passions and conflicts. The world has been disenchanted, demystified: the magic has gone out of it. There are no witches (no warlocks, either); there are no fairy god-persons, no glass slippers, no ruby slippers. (Sorry, Dorothy, I guess this is Kansas, after all.)
This was the goal and the triumph of modernity, of the ideas, values, expectations, and interests we associate with the modern world: the bourgeoisie wanted it that way.
But the triumph of modernity is incomplete. The old world with its old traditions was not completely routed. Its champions went underground and keep threatening to break back into the modern world. The nature of modern institutions--their commitment to freedom and the value of the individual--makes the ongoing routinized revolutions of modernity vulnerable to cooptation by individuals and groups driven by traditional passions, the great passions for glory, for tribal and nationalistic identity, for great wealth and power, for revealed truth and transforming ideas of total justice.
There have been major economic scandals in every generation: the crooks who engineered Teapot Dome and Credit Moblier did not differ qualitatively in economic terms from Milken and Boesky: the defense of greed is a golden oldie.
Political demagogues and aspiring tyrants have played out their passions over the past three centuries by seizing and exploiting the passions of others. Saddam Hussein is just the most recent variation on historical themes of right and left: passionate leaders who invoke a sense of victimization and sentimentality and use pseudo-facts to inflame the passions needed to fuel their movements.
Wild claims to new insights and alternative kinds of knowledge have been offered regularly. Rejecting the cool, dull, monotony of facts is a chronic temptation and there have always been people ready to swarm to short-cut revelations about the origins of the universe, the autonomous goals of nature or new, improved historical truth. Attempts to will passionate conviction into natural, social or political fact and call such alchemy "radical" did not cease with Newton's Principia.
But the tacit understandings of modernity, its bland ambitions for incremental improvements in knowledge and its basic commitment to decent behavior have held and reasserted themselves. The ideal of modernity, bland ambition played out in mutually beneficial ways, has persisted--at least until the 1980's.
That difference now seems to be that the middle class has begun to attack itself from within by succumbing to the converging critiques of modernity. Those who share Stone's apparent contempt for the rigors of modernity are remaking self-indulgence into a kind of romantic adventure. If enough people come believe the story of capitalism as told by Gekko and Stone, their actions will undermine the institutions of modernity. We have to remind ourselves that it is members of the educated middle class who are drawn to astrology and mysticism, to the idea that if we had all just cared enough, we could have levitated the Pentagon, that if we believe in fairies, Tinkerbell will come back to life and little boys will never have to grow up.
And when the Bryan Wrzesinskis of the world get their M.B.A.'s and become investment bankers, manufacturers, labor leaders and politicians, Ivan Boesky and Mike Milken will become the real heros of capitalism and we will tell their stories and come to regard them as paradigms.
Just as bad money drives out good money, great passions drive out bland ambitions until the tacit understandings that hold the modern world together unravel. Rule-breaking will become routinized and trivial: rules are made to be broken, it's no big deal; Mike Milken gave millions to charity; let Pete Rose in the Hall of Fame (I will leave the Pete Rose question as an exercise to be worked out on your own time).
The convergence of the genteel aristocratic and romantic critiques that modernity is without real values and the radical-left critique that capitalism is merely rationalized theft, creates a dangerous misunderstanding of how the world works. It opens the door to an ethic which holds that in a world without values everyone is on their own, that theft is an heroic response to theft and that passion is a virtue. It produces a world in which we have to assume that everyone we meet is a greedy crook, a Hobbesian nightmare come true. When that happens, fasten your seat belts: its going to be a bumpy ride.
Andrew R. Weiss is the E.A. Trapp Professor of Political Economy at Monmouth College, Monmouth, IL, 61462