Wall Street: A Cultural History 
by Steve Fraser.
Faber, 656 pp., £12.99, April 2006, 0 571 21829 6
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Among Empires: American Ascendancy and Its Predecessors 
by Charles S. Maier.
Harvard, 373 pp., £18.95, May 2006, 0 674 02189 4
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Many Americans celebrate national holidays by mobbing megastores at dawn, pushing aside the slow-footed and grabbing the $39 computers, while TV crews film the spectacle and warn the indolent that they’d ‘better get down here before it’s all gone’. The image of shoppers sending one another to hospital catches the spirit of these two books. Both address the question of the moment: has the American republic turned into an empire? And if so, should we cheer, lament or simply get on with imperial business?

Both describe an empire of material desire, of consumption, of get rich now. You might call it an empire of greed. Steve Fraser is a fine New Deal historian whose biography of the union leader Sidney Hillman, wistfully entitled Labour Will Rule, chronicled labour’s ascent into the top ranks of the Democratic Party in the 1930s and 1940s. He flatly admires the egalitarian reformers he studies, but doesn’t imagine that labour and its allies will now disinter themselves, return and rule. In Wall Street: A Cultural History, he explores the capitalist seductions that wrecked the progressive order he has spent most of his career analysing.

Fraser tells here a ‘two-hundred-year-old story of how Wall Street has inspired dreams and nightmares deep inside American culture’. He is less interested in hard financial history than in the ‘Wall Streets of the American mind’, the terrain on which Americans have wrestled with ‘ancestral attitudes . . . about work and play, democracy and capitalism, about wealth, freedom and equality, godliness and evil, heroes and villains, luck and sexuality, national purpose and economic wellbeing’. He rummages through America’s speculating past, pulling out sermons, satires, swindles, novels, pratfalls, innovators and fools. He shows us how each generation vacillated between the allure of wealth and the fear for republican virtue. Did Wall Street offer plebeian fantasies or an aristocrat’s monstrosity (as the choice seemed to be in the democratic 1830s)? Reward for innovators or dynastic wealth for rogues and robber barons (in the 1880s)? When Wall Street invented the publicly traded corporation at the start of the 20th century, it created the modern economy, made the US a world economic power and fired up the Populists, who excoriated the fiendish ‘“devil fish” sucking away the lifeblood of the country’s agrarian heartland’.

As his story develops, Fraser’s deeper purpose reveals itself: this is not simply an engaging cultural tour but a quest. Though he never says so directly, he is out to answer the question that haunts the American left: the New Deal reduced inequality and delivered security at home and abroad; why would a society throw that aside for a frantic race to inequality? At the heart of the question lies a mystery. Where are today’s Populists? If the familiar dialectic – documented across 190 years and 500 pages – still operated properly, Americans should be undergoing an angry backlash against money power. After all, new generations of rogues have made themselves fabulously rich and left everyone else to get by with barren prospects and bankrupt pension funds. Once again, the barons offend common decency. My favourite illustration – Fraser offers plenty to choose from – involves the Dallas banker who threw a lavish party, came dressed as Henry VIII and fed lion meat to his guests.

Back in the mutinous 1960s, James Baldwin promised a ‘fire next time’. But the fire this time comes in cool, ironic novels like Tom Wolfe’s Bonfire of the Vanities. When Oliver Stone released his satirical movie Wall Street, the business press embraced the slick financial Mephistopheles at the heart of the indictment. ‘Greed is good,’ purrs the villain, Gordon Gekko. Greed might just save that ‘malfunctioning corporation called the United States of America’. Wall Street brushed aside the irony and enthusiastically cheered the idea.

Fraser has little patience for the untrammelled market thinking that now dominates American culture. He opens and closes the final chapter with an emblem of market lunacy. As the US awoke to the threat of terror in September 2001, it found ‘a remedy so bizarre it seemed like satire was incubating within the Pentagon’: a futures market – el casino macabre – in which players could ‘speculate on the likelihood of death and destruction around the globe’. After all, reasoned the wizards who cooked up the plan, the omniscient market would see a lot further than the experts.

Fraser’s question grows increasingly urgent: how did the US come to worship this strange sacred cow? How did capital come to rule with hardly a dissenting voice? His answer begins to emerge during the Jazz Age of the 1920s, when Wall Street first went public. He pegs the number of investors then at no more than 14 million, or 13 per cent of the population, but at the time it seemed as though everyone was playing: doctors, plumbers and the women in beauty parlours. The Street shed its moral stigma and became fun; Groucho Marx speculated on the strength of hot tips from an elevator boy. ‘A Wall Street persuasion,’ Fraser concludes, ‘seeped deep down into the cultural bedrock.’

A long boom lured the people into the game. Industrial production rose 50 per cent in the 1920s, and the number of companies listed on the exchange grew five-fold. The market, driven by fantastic new technologies such as radio and aviation, rose steadily and then took off into the stratosphere. RCA stock went from $85 in 1928 to $549 in September 1929. Then, of course, it all collapsed. The stock market crash did not cause the Great Depression, but the two became inextricably linked in the popular imagination. Fraser calls the Depression the second great national trauma (the Civil War being the first), not because of the lost fortunes and widespread misery, but because Americans indicted all the beliefs of their economic elite. The old ruling class was not just selfish but ‘foolish, frail and inept’. Even Andrew Mellon, the formidable secretary of the treasury who had dominated three administrations, was now exposed as an ‘ageing nincompoop’. Wall Street winked out of American culture for two generations. Fraser takes an inventory of the great fall. In 1928, 17 per cent of graduates from the Harvard Business School took jobs on Wall Street; by 1941, the number had fallen to just over 1 per cent. In the same period, 10,000 ticker tape machines dwindled to 2000. Trade volume did not match its 1929 peak until 1961.

On this scorched ground, Franklin Roosevelt and the Democrats came to power (in 1933) and built a New Deal around social security and mutual obligation. Government regulated markets and empowered labour unions. Together, government and labour pushed business into providing pensions, sick pay, vacations and healthcare. The state pitched in with aid for poor families, insurance for the unemployed and old age pensions for workers (though most blacks were excluded). The new order produced an egalitarian surge in wealth and property that lasted for forty years. The US began to look like the middle-class nation Americans always claim it to be.

Fraser pictures a ‘mental landscape full of democratic and populist points of reference’. (In the US ‘populist’, with a small ‘p’, is a locution for a revered political reflex and translates, roughly, as the Angry Common Man.) Wall Street played along, turning sober and public spirited. Shareholder value ‘took a back seat to the corporation’s livelier . . . constituents: employees (often unionised), customers, civic groups, the government’. The war boom reinforced these attitudes and then the Cold War sent them abroad, as the US drew on its economic power to rebuild Europe, resist Communism, push free trade and prise open the Third World to private investment. Fraser calls it a ‘deodorised empire of the free world that no longer gave off the aroma of old-fashioned imperialism’.

Then this order was smashed up. Why? The smash had three related causes. First, the system simply broke down. The American economic engine faltered at the end of the 1960s. Rival economies, devastated by the war, had rebuilt and began catching up with the ageing industrial core. Productivity stagnated, oil prices rose, inflation got out of hand. Wall Street mirrored the trouble: between 1968 and 1982, the Dow lost three-quarters of its value. Both books point to the same watershed: the Nixon administration’s decision, announced in 1971, to withdraw from the Bretton Woods agreement that had tied the dollar to gold and other currencies to the dollar. Nixon permitted the dollar to float in the currency markets, which eventually turned swift and treacherous.

If the economy looked weak, the statecraft proved worse. The establishment wise men blundered into Vietnam. They seemed clueless about the long, loud protests that eventually turned into riots and immolated both the cities (during four summers of race riots in the mid-1960s) and the Democratic Party (which saw a bloody clash between police and students at its 1968 national convention). The 1970s brought the ignominious image of frantic South Vietnamese allies leaping desperately for the last helicopters as Americans abandoned Saigon to the Communists – an image that still rankles with many. And, humiliation piled on humiliation, Iranian mobs overthrew a leader the US had installed and, in the process, seized the staff of the American Embassy and held them hostage for more than 400 days. The ABC television network gave the episode its famous tag line with a nightly show entitled America Held Hostage. The New Deal promise of security had imploded.

Second, rising fortunes were piling up in the American South-West. The entrepreneurs overlooked a major source of their wealth – supplying the government through hot and cold wars – and cast themselves in the trusty frontier mould of self-made men and women. Like Westerners throughout American history, they deeply resented the East Coast establishment. Why did social prestige accrue to effete, Ivy League, ‘egg-headed, homosexual, left-leaning financiers’, as the Wisconsin senator Joseph McCarthy described them, unfit for the rough and tumble real world? The new rich despised the rules that bound entrepreneurs in the name of social security. They detested the welfare state, which, as they saw it, only coddled the lazy and the losers. They did not care a jot for foreign aid or the United Nations or old Europe. They chafed for free markets and red-blooded, American dog eat dog.

The new conservatives introduced something new to American politics, a rebellion of the rich. Big money had always played the despised oligarch. Now, the populists attacked a stifling, bureaucratic, regulatory social welfare state (these were all synonyms in the Republican thesaurus). The rebels promised liberation by means of tax cuts, deregulation, an end of social welfare, and – Fraser can’t resist the irony – big subsidies for hard-working corporations.

The third cause was the restoration of the exuberant money culture last seen in 1929. Ronald Reagan’s inaugural ball, held in January 1981, opened a new age of unabashed consumption – with no worries about old money quibbling over good taste. After a crushing recession, the markets took off in the mid-1980s and Wall Street finally returned centre stage, now sporting a swaggering machismo. Fraser documents the vulgarity – ‘swinging dicks’ and ‘rip their fucking throats out.’ Productivity grew. Wealth grew. The state sponsored rounds of tax cuts and deregulation.

Inequality began to rise at a rate unprecedented in American history: the percentage of national wealth owned by the top 1 per cent of Americans jumped from 22 per cent in 1979 to 39 per cent by 1989. Back in 1968, the chief executives of major firms made 25 times the salary of the average hourly factory worker; the contemporary boss commands four to five hundred times the salary of the people at the bottom – and never mind the employee’s vanishing health benefits or vacation pay.

Of course, the market eventually fell. The Dow dropped 23 per cent in a single day in 1987, recovered for a giddy decade, and crashed again. In the ten years after 1991, the Nasdaq high-tech exchange roared up from 414 to 5250, then turned around and wiped out all those easy millions by dropping 70 per cent. Each market crash exposed the same sordid spectacle – misconduct, fraud and greed – though the latest round (for which Enron is the great symbol) left Americans marvelling at the sheer scale of moneyed hubris.

This time, inequality, fraud and the end of the boom have not been enough to provoke a rebellion. Wall Street retains its grip on the national imagination. Why? Fraser finds his answer in ‘history’s little joke’. The New Deal empowered unions and built up a large middle class. What did the workers do with their new wealth? They socked it away in the market. Organised labour accumulated billion-dollar pension funds and invested them on Wall Street. Obscure pension reforms induced employers to contribute to individual retirement accounts invested in stocks and managed by the employees themselves. One way or another, by the time the bubble burst in 2000 half the adult population was invested. Wall Street had discovered Bismarck’s first principle of social control: buy the allegiance of your workers.

This triumph was sealed during the Clinton administration, when the Democratic Party cast aside its economic populism and embraced deregulation, free trade and open markets. The 1990s internet boom even gave the market a blue-jeans, techno-futuristic, anti-establishment buzz. The promise of universal economic progress, Fraser concludes, flickered out from ‘the ambient glow of a computer monitor’. The first gilded age unleashed progressives and socialists, the second inspired day traders on the internet.

Close Fraser’s book and the old question lingers: just why does American populist fervour remain fixed firmly on the right? After all, he vividly demonstrates how inequality continues to grow. Education, once an egalitarian path up, splinters into good schools for good neighbourhoods and poor schools for poor ones. Perhaps universal education falters because the US has shifted its resources to an entirely different mode of social control. One in every 32 Americans (and one in nine blacks) finds himself inside the criminal justice system: in prison, on parole or on probation. Half the population may be in the market but half is out and, if Fraser is correct, worse off than ever.

I recently heard Mudcat Saunders, a hot Democratic consultant who dresses like a cowboy, put the familiar issue of right-wing populism this way: ‘It is just not acceptable for a white male in the South to identify himself as a Democrat.’ (Sure enough, the party’s midterm surge completely bypassed Dixie.) That Southern Republican may be poor, he’ll get very little help from anyone when he becomes old or sick, and he’s never going to cash in on Wall Street; yet he fervently responds to rightist grievances and brooks no government interference in economic markets. Why? If ‘history’s little joke’ offers one important answer for the state of American politics, Charles Maier finds another, in the dynamics of empire.

In Among Empires, Maier asks whether the US is an empire and answers with a yes and a no. It is certainly a great power grappling with the seductions of empire. And it evinces many imperial features. The US acts as the metropole, promoting its own core values way out on the periphery: liberal democracy and open markets. It invests its blood and treasure far and wide. It presses its own principles of class stratification on all comers. Its culture dominates world cinema, television, music, advertising and even social science. And empire’s traditional threat to republican government vibrates with clear and present danger. The American president seizes power from the legislature, consolidates control, and moves toward ruling by plebiscitary democracy, at least over foreign policy.

Having defined empire and laid out the precedents, Maier traces the last sixty years of American action on the world stage. Readers can judge for themselves if and when the US turned imperial. Maier wavers. He starts by sensibly suggesting the difficulty of ‘shoehorning the United States into the received models’, then decides that the term doesn’t quite fit, and then works through the historical material as if it often does. In any case, the struggle over America’s role in the world is still on. The safest generalisation lies in the historian’s inevitable redoubt – time will tell.

Maier describes American postwar power, his ‘empire of production’, with careful attention to the economic muscle that made the international diplomacy possible. He sees its ‘summer solstice’ as having come in 1958 and repeats the familiar story of industrial decline and national malaise through the 1970s. Then his analysis takes a completely unexpected turn.

Yes, Americans began living beyond their means. They ran up enormous budget deficits, bought more than they sold, and borrowed without limits. Foreigners underwrote the extravagance, buying American debt so that Americans could keep on spending. And that, Maier concludes, forms the basis of a fresh empire. Like Britain, which lost a New World empire in the 1770s only to build another that lasted well into the 20th century, the US lost its empire of production only to found another one based on consumption.

Naturally, Maier hears the Jeremiahs warning a profligate nation about the inevitable day of reckoning. They have been proclaiming fiscal doom, he points out, for a quarter of a century – and the foreign money keeps gushing in. Other nations are subsidising the US for a reason. American financial elites promulgate economic rules that privilege investors (no more irksome New Deal pressure to pander to employees, civic groups or government) and push jobs abroad, where goods can be produced more cheaply and sold for less to American consumers, who snap them up with dollars subsidised by the nations which now have the jobs and are eager to peddle the products. Perhaps the advantage naturally flows to an economy that still rings up more than a quarter of the world GDP and roughly as much as the next five nations combined.

Like any imperial power, this empire of consumption spreads its social rules and replicates its inequalities. Elites on the periphery thrive if they boast a good education, technical skills and proficiency in English. In good colonial fashion, they eagerly send their children to Harvard or MIT. Foreign workers with fewer skills take low-paying jobs stitching sneakers or American flags. Maier concludes that the US moves to power, and perhaps empire, on the force of four assets: economic consumption; a seductive, relentless, ubiquitous culture; a military machine marked not only by a nuclear arsenal but by extraordinary high-tech weaponry and an unrivalled ability to project it around the world. The final asset is casually slipped in at the last minute: the technological revolution associated with the microchip. In short: shopping, Star Wars, star wars, and silicon.

Wall Street and Among Empires both end by exploring a new economic order populated by buoyant winners and pliant losers. Both authors speculate about the silent underdogs. Why is there no popular surge against the hegemony of the market? There are two important answers that neither book fully develops.

Maier puts his finger on the first. ‘Many Americans of a certain social status . . . find United States ascendancy exhilarating.’ Fraser adds the telling anecdote. In May 1970, construction workers burst in on an anti-war rally in New York City. Chanting ‘All the way USA,’ they used their tools and work boots to beat up the student protesters and sent more than forty to hospital; the police turned a blind eye. The construction workers then marched up Broadway to City Hall, where they confronted the flag flying at half mast in honour of anti-war protesters who had recently been shot dead. Some of the men scaled the building and raised the flag while the rest warned city officials never to lower the American colours again. Another of history’s little jokes: the workers were employed building the twin towers of the World Trade Center.

Those workers – less educated, lower skilled – would be the first to lose jobs under the looming economic dispensation, yet hard times only deepened their fervour for the imperial project. The populists who once railed against the moneyed now rally around the military. Flags flap from their cars and fly over their homes while politicians salute them with lapel-badge Stars and Stripes. Democrats try to lure the workers back by proffering national health insurance, family leave benefits and a decent minimum wage. But the policy proposals don’t connect. On the contrary, right-wing populists jeer at the Democrats as elitist and brand them anti-American. McCarthy’s jibes – ‘egg-headed, homosexual, left-leaning’ – are alive again in part because conservative patriots correctly read the left as being uneasy about American power. Democrats still trust the UN, solicit European views and pander to the Third World. To translate the hostile reaction back into Maier’s terms, the Democrats are soft on empire.

Most Democrats still don’t grasp the issue’s full dimensions. In 2004, for example, the party ran a decorated Vietnam War hero for president and imagined that his bravery under enemy fire would offset the inevitable Republican attacks on leftist weaklings. Democrats still choke over the slick media campaign that soon transformed John Kerry into a coward and traitor who should have his war medals stripped from him and then – right-wing radio made this their favourite cause – be tried for treason. Democrats admired a war hero who came home and criticised the war; Republicans despised him for it. The memory of Vietnam aggravates deep divisions about the military, about America’s place in the world, and about the imperial project itself. Every time Kerry criticised the Bush administration for ignoring allies or being too quick to dispatch troops he only reinforced the conservative brief against him.

The cosmopolitan, North-Eastern men and women who once shaped American statecraft spoke the polite language of diplomacy, carefully constructed international alliances, and, it must be said, disdained the raw patriotism that emanated from the South and West. After the 2000 election, the South-Western Republicans finally took complete control of Washington. Reading across the three branches of government, the most powerful men came from Texas (George Bush), Texas and Wyoming (Dick Cheney), Texas (Tom DeLay in the House), Mississippi (Senate leader Trent Lott) and Arizona (Chief Justice Rehnquist). Observers immediately began to speculate about a more robust foreign policy, even about empire. When the administration brusquely ignored the old foreign policy establishment and rushed into Iraq, the imperial issue became the major topic it is today.

The Bush administration had skilfully stoked a long simmering resentment into open, angry populism. Fuelled not just by 9/11 but by vague memories of Vietnam, Iranian hostage-taking and other humiliations, a glowering nationalism yearned to throw aside restraint, project national power and force respect – Maier might say tribute – from the bullies on the periphery. Perhaps economic desolation at home raises the patriotic fever. The attitude tipped two elections and appeared to promise fierce support for any politician who wished to push an American imperium. But the US, as Maier reminds us, is only a quasi empire: designed for trade and conquest rather than administering foreign territories. When the Bush team blundered into taking responsibility for actually running Iraq, disaster followed. After a half century of beating the imperial drum (and denouncing ‘soft’ Democrats) Republicans seem – at least for the moment – baffled about what stance to take.

A second source of right-wing populism lies beyond the scope of either book. The US has been always notoriously weak on fraternity because it is a tribal nation divided by race and immigration. The Democrats built their New Deal during one of the rare moments when the familiar tensions had slipped out of politics. The country shut its borders almost completely in the 1920s and did not reopen them until 1965. The left’s ascendancy coincided with the low tide of American immigration. At the same time, segregationists from the South played a central role in the Democratic coalition (Southerners had not yet forgiven the Republicans, the party of Abraham Lincoln), and conspired to keep racial issues off the table. Political leaders preached community and mutual aid, unperturbed by foreigners diluting the culture or black people demanding equality.

The free-market rebels began to develop traction in the 1950s, precisely as the civil rights revolution was spreading. It is too simple to suggest that racism inspired the animosity toward the welfare state. Rather, the market challenge rose while racial tensions eroded social solidarity and many Americans began to link welfare policy to black people who were poor because they refused to work. Racial antipathy, the Puritan ethic, workers rising into the comfortable middle class, and the allure of free markets all reinforced one other.

The second largest period of immigration in American history soon exacerbated the divisions. Today, one in eight US residents was born abroad – most in Central America or Asia. The ethnic charivari subverts social solidarity. Immigrants lost their eligibility for many welfare policies in the 1990s and Republicans repealed the largest New Deal era programme for poor families over the weak protests of an ambivalent President Clinton. What to do with all those foreigners? Embrace them for their votes? Put them to work for low wages? Simply chase them away? Another agony for contemporary Republicans.

Read together, these books explain how and why the US threw off a regime designed to provide security and replaced it with a bare-knuckle market that has led to the greatest gilded age in American history alongside its bloody, quasi-imperial quest to replicate itself around the globe. Fraser is blunter about the consequences. Market thinking, unchecked by common sense, leads to ‘nightmares’. Market rules, not balanced by social solidarity, lead to an inequality that fosters all kinds of pathologies: the most recent tally of infant mortality in industrialised nations, for example, reveals that the US has the second worst rate, just ahead of Latvia. American life expectancy lags far behind that of the other industrialised nations.

Discussions of American social policy turn inevitably back to the same question. Why do decent people acquiesce when markets do such harm? The answer takes us beyond economic policy to that universal human dualism: us versus them. Today, the US features an especially intricate set of divisions: native versus immigrant, black versus white, successful versus lazy, hard imperialists versus soft multilateralists. American populism flows out of that combustible mix, vexes the resurgent Democrats, and defeats every challenge to Gordon Gekko’s dictum.

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Vol. 29 No. 14 · 19 July 2007

James Morone refers to the ‘swaggering machismo’ that allegedly characterised Wall Street in the mid-1980s (LRB, 21 June). The reference that rankles is to ‘swinging dicks’. The full and correct reference is to ‘Big Swinging Dicks’. Michael Lewis in Liar’s Poker unloads a money-losing position of Texaco bonds on an unsuspecting French client. A senior manager at Salomon Brothers lauds his achievement by declaring him a ‘Big Swinging Dick’. Speaking as a portfolio manager and Wall Street habitué of the past twenty years, I can vouch that no self-respecting master of the universe would be content to be a mere ‘swinging dick’. Derisive laughter would result; morale would crumble. Nowadays, the prosaic title ‘managing director’ has replaced the more colourful phrase. Makes one nostalgic for the days when bonds were truly junk.

Bill Tilles

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