Cornelius Vanderbilt has been called America’s first tycoon. Yet during his lifetime and afterward, he was often enough depicted (sometimes by himself) as the people’s champion, challenging the prerogatives of an established elite. There was some truth to this. In the decades leading up to the Civil War especially, he and other upstart businessmen demanded open access to state-authorized franchises for ferry services, steamboat routes, railroads, and other vital public conveyances. Up to then, these enterprises had been granted exclusively to the politically well-connected families of older mercantile and landed interests. During the antebellum years, especially during the presidency of Andrew Jackson, these circles were regularly denounced as monopolists and aristocrats. All sorts of aspiring entrepreneurs in town and country called for universal incorporation laws to open up the marketplace. Future tycoons like Vanderbilt associated themselves with this democratic struggle against capitalism on behalf of capitalism.1
Napoleon-like legends have periodically burnished the reputations of American tycoons ever since. One half of that myth—the better-known half—celebrates in the ascendant businessman those qualities of the warrior, commander, and conqueror commonly associated with the French emperor (Vanderbilt’s nickname was the Commodore). The other half, however, is more taken with the contrary plebeian story of Napoleon’s rise from social obscurity; the man from nowhere, the lowly officer in the Grand Army of the Republic who by virtue of his sheer audacity and native shrewdness came to lead that army as it overthrew the monarchies and potentates that had ruled Europe for centuries. Napoleon: the Emperor of Democracy.
America has been particularly infatuated with the version of this story that features the businessman as popular hero, a figure combining imperial mastery with everyman beginnings. The country’s vast terrain, rich resources, egalitarian credo, and common market have made that remarkable rise out of the inconsequential to Olympian heights reality enough for enough people to lend that legend enduring appeal. And as the Vanderbilt version of this Napoleonic tale reminds us, this is more than a simple story of rags to riches. It is also in its own way a stirring account of class warfare. Together they comprise the singular romance of our native bourgeoisie.
Under normal circumstances, the quotidian concerns of the countinghouse, the prudential caution, and the preference for peaceable trucking and bartering do not make the bourgeoisie a likely candidate for heroic exploits and valorous adventure. True, in the Old World, an aura of idealism and heroic bravery accompanied the protracted combat of the rising middle classes against an entrenched feudal order. Blood was spilled on behalf of a new conception of human freedom. Here in the New World, however, once the Revolution accomplished its work, the confrontation with a formal hierarchy of privileged castes (excepting the slave power) was an attenuated one. What remnants hung on from the colonial era, bound together by family ties, breeding, education, and inherited wealth, and deferred to by ordinary folk—Boston’s Brahmins, New York’s Knickerbockers, Philadelphia’s Gentlemen—were more or less quickly overwhelmed by the furious pace of economic transformation, territorial expansion, and the democratization of everyday social life, not to mention the opening up of the political arena to the vox populi.
Yet in what was hypothetically a uniquely classless society, upper classes kept coming into and going out of existence. The most powerful were anchored in various forms of landed, commercial, financial, and, soon enough, industrial property. Their longevity, however, was not assured. This is first of all testimony to the economic fluidity of the expanding marketplace, which kept opening up new commercial opportunities. Nonetheless, to effectively seize the moment often required contesting against those who already had a grip on the levers of economic and political wherewithal.
So began a version of class warfare that pitted striving men from nowhere against those who probably just yesterday had arrived at the heights. At times those challenging the prevailing hierarchs, however much they might have desired to join them, cast their cause in the language of republican individualism, equality, and freedom. Periodically this peculiar crusade renewed that otherwise incongruous experience of a rising nouveau riche mounting the barricades. When this happened, the businessman could emerge as the paladin of emancipation and win an extraordinary degree of public esteem and moral authority.
No stranger interlude in the saga of the businessman as emancipator has cropped up than the one we have lived through during the second Gilded Age. This fable of the financier especially (as well as the techno-entrepreneur) as freedom fighter has made its unique contribution to that mood of acquiescence which so starkly distinguishes our own Gilded Age from the original.
Beginning in the 1980s, a cadre of financial outliers, men lacking the credentials of the Wall Street insider, launched an assault on the white-shoe establishment. America’s leading corporations and banks found themselves in the crosshairs. How odd! A century before, Wall Street and the Fortune 500 stood as the impregnable redoubts of what many identified as the country’s ruling class. Now hot-tempered agitators dressed in neckties and armed with briefcases determined to overthrow the old guard and in the process save the American economy—indeed, not just the economy but the nation.
Save it from what and from whom? By the 1980s, the economy had floundered for a decade, afflicted simultaneously with hyperinflation and levels of unemployment not seen since before the Second World War. Core industries seemed increasingly unable to match the performance of their counterparts in Europe and Japan. Trade deficits, which in the nineteenth century marked America’s status as a developing nation, reappeared as if time was headed in the wrong direction. The postwar global monetary system invented and presided over by the United States collapsed.
Alongside this depressing experience of economic retrogression and aggravating it at every point was a more general sense of national decline. Defeat in Vietnam, OPEC’s defiance of the West, and the humiliation of American captives in Tehran were all mounting evidence that the “American Century” was ending prematurely. Mores and beliefs that had long governed family life, relations between men and women and children and their parents, sexuality, and traditional sources of legitimate authority had lost their grip. Watergate punctuated the disorientation.
Who to blame? Many candidates were naturally offered up. What since the 1950s had been frequently identified as the Establishment was one favorite. Defined and described in various ways, it was pictured by most people who believed in its existence as an interlocking directorate whose components included top management from the Fortune 500, Wall Street, and key regional financial centers; executive branch appointees to leading posts within the national security state and military, often with first careers on Wall Street; intellectuals at think tanks engaged in long-term strategic planning about both foreign and domestic affairs; shapers of public opinion running the nation’s principal metropolitan print media and broadcast television; and those occupying the inner councils of the two major political parties.2
The social profile of this milieu tended to reflect its members’ shared background as upper-class Protestants who had often attended the same or similar private preparatory schools and Ivy League colleges. They had grown up in an archipelago of luxuriant enclaves and secluded mansions running along both coastlines or nestled near their prime holdings in the industrial heartland. After college they socialized in a set of exclusive men’s clubs. That provincialism was counterbalanced by travels and associations around the world, making them self-consciously cosmopolitan. They helped steer nonprofit foundations, moved easily between the private sector and public positions, and usually cut their teeth by running major corporations and banks, if they weren’t lifetime military men.
Ideologically they were at peace with the main institutions and political arrangements of the New Deal administrative and regulatory state, some of which they had helped to create. Bipartisan or nonpartisan by preference (although often genetically Republican), they accepted the postwar concord that allowed a substantial if constricted role for the labor movement in the nation’s political affairs and acknowledged the wisdom of some if limited government oversight of the economy. They were as well the architects and inheritors of the postwar American imperium, including the Marshall Plan, NATO, the World Bank, the International Monetary Fund, and the Bretton Woods system of fixed exchange rates.
Most of all, they were confident that judicious applications of Keynesian fiscal and monetary policy could ensure growth and immunize the economy and society against the cyclical social and political chaos of the past. This was the regnant illusion of the postwar order: that in this way an inherently amoral capitalism could be wedded to some gentlemanly code of conduct. The free market, left to its own devices, might in fact be a moral imbecile. But its longings to be wild and free of all constraints could be domesticated by those wise enough to do the taming.
Common background, breeding, experience, and beliefs prepared the Establishment for one mission above all: to ensure postwar stability. In the words of one historian, they were “American democracy’s only natural aristocracy.” And they were world-class managers.3
Managerial capitalism was born along with the modern, publicly traded, multifunctional, multidivisional corporation around the turn of the twentieth century. It was meant to replace the dynastic version of family capitalism. Those owner-operated enterprises had built up the great industries and fortunes of the nineteenth century. But they had done so at the cost of chronic economic uncertainty and intermittent disaster as well as severe social antagonisms that kept threatening to burn the house down. A handful of corporations establishing oligopolistic positions across a range of industrial and commercial sectors, overseen by an even more select group of investment bankers, were designed to end that era of internecine competition and turmoil.
During the earlier period, the property owner and manager was the same person or family (the great trunk-line railroads, thanks to their enormous capital requirements, expanse, and intricacy, were the first exception to this). Under the new dispensation of the publicly traded corporation, a cadre of professional managers and directors presided over these highly complex organizations. They were to ensure each such corporation’s efficiency, longevity, and of course its profitability.
Severing ownership from management had many consequences. For one, the corporation emerged as an impersonal entity (even though in law it was and still is treated as a “person”). Its leading management team need not reflect any longer the personal interests, prejudices, obligations, or local loyalties of a dominant patriarch. As professionals—expert in finance, sales, technology, or production—managers were compelled to take actions that might not immediately show up in higher stock prices or dividends. Taking root at first in complex business enterprises, the management outlook quickly exfoliated across a wide terrain, defining life beyond the sphere of production. Its emphasis on efficiency and predictability and its intense desire for rationalized means of control to normalize conflict and ensure stability became maxims applicable to all great bureaucracies, public and private.
Little room was left within the interior of these featureless machines for the romance of the adventuring entrepreneur. On the contrary, the manager assumed the role of the invisible functionary. Dynastic capitalism was a relic. Long live the corporation.4
For some this would prove frustrating; not so, however, for the ostensible owners of the corporation. In fact, the widening class of shareholders were not prepared for or interested in taking on the responsibilities of running the enterprise that normally attached to ownership. Rather they focused on the present or future value of its stock. Moreover, the diffusion of stockholders made it hard to check managerial autonomy. While well rewarded, often with equity stakes in the company as well as handsome salaries, the new management class possessed a fungible set of skills and experience that allowed them to move from one corporation to another. Building up a patrimony was no longer organically linked to the capital accumulation of a singular enterprise.
So too, the modern corporation was not as instinctively averse to government meddling as its dynastic predecessor had been. To be sure, it resisted all far-reaching proposals for public ownership, government planning, price fixing, central banking, vigorous antitrust action, oversight of the stock market, and government-sanctioned collective bargaining. But it recognized the tactical usefulness of laws to ensure fair competition, rate setting on the arteries of transportation and power generation, state mediation of labor conflicts, and government help on other matters that would enhance the stability and predictability of corporate affairs (and, not so coincidentally, do away with the nuisance of smaller, upstart competitors who couldn’t afford to live by those rules).
Attitudes about dealing with the workforce also altered along with the phase change from family (or dynastic) capitalism to corporate capitalism. On the one hand, virtually no modern corporation was prepared to accept independent unions on the shop floor until the New Deal era. However, company-initiated and -controlled forms of welfare capitalism allowed for company-created unions, profit sharing, stock ownership, recreational and health facilities, and even pensions. These were pragmatic overtures taken up in order to reduce the enormous expenses of high labor turnover, and incidentally encourage bonds of loyalty where once only estrangement and animosity prevailed. Dynastic capitalism had dealt with this problem more mercilessly.
Other constituencies were also treated with greater forbearance. By the very nature of its size, capital commitments, production cycles, marketing efforts, customer base, and ties to government, educational, and research institutions, the new corporation was compelled to engage in long-term planning and multiple-party negotiations. Maintaining good relations (including public relations, as brand names and corporate logos became strategic marketing devices) with communities, suppliers, customers, and others who inhabited the enterprise’s wider universe became a variable within management’s calculus.
A mystique grew up around the practice of managerial capitalism. Obedient only to the dictates of efficiency, the corporation was allegedly cleansed of the unseemly greed and cruelty that typified robber baron days. In this idealization managerial capitalism presented itself and often enough was accepted by the outside world as a mechanism of public service: a minicommonwealth of workers, consumers, shareholders, and local communities. Those who ran these enterprises deployed power benignly, having expropriated the primary functions of the old expropriators. They held the public interest in trust, as such firms would not hesitate to claim.
Halfway between truth and a tall tale, this account eluded some discomfiting realities. There was little effective check on how these managers used their power; nor was their social conscience strengthened by regular exercise. Politically they were first among equals when it came to getting their way. Their loyalty above all was to their own self-advancement, tracking through the treacherous terrain of the corporate hierarchy. In its pursuit, these dispassionate professionals could become downright nasty and unscrupulous. So too, this milieu’s sense of noblesse oblige is easy to exaggerate, committed as they were to moneymaking, guided by principles no loftier than “work and win/strive and succeed.” While they were well educated, their approach to knowledge was strictly instrumental: shrewd rather than wise. Profitability was always the leading priority.
Nonetheless, measuring profit, when and how often to take that measure, and what to do with accumulated surpluses, did not always or necessarily coincide with the interests of shareholders. Today that would be considered heretical.5
“Shareholder value” as the only value that ought to govern decision making in the boardroom is the orthodoxy of our time. To lend ballast to that claim, its advocates intimate its pedigree goes all the way back to the beginning of capitalist time. But that was not so in Adam Smith’s day or during the long nineteenth century that followed. Stock exchanges, once they became significant, were infrequently used to raise capital for long-term investment; rather they were a vehicle for cashing in and cashing out by individuals or were used in more or less ingenious ways by financial institutions trading for the short term. Reinvested earnings, commercial loans, and bond issues instead constituted the lion’s share of capital resources for the modern corporation. This practice continued well into the twentieth century. Between 1950 and 1973 nonfinancial corporations funded 93 percent of capital expenditures out of internal resources. During this period, 70 percent of corporate profits on average were reinvested in the company as opposed to 30 percent in 1929.6
Shareholder value as an ideology and faith, no matter its claim to axiomatic truth and longevity, was actually invented a mere generation ago to overthrow the ancien régime, itself increasingly dysfunctional. The faith’s underlying premise that shareholder value would be protected and enhanced by a studied ruthlessness again and again proved faulty. In so many leveraged buyouts, takeovers, mergers, and acquisitions, shareholder value declined over the long term, corporate performance fell, and the “discipline” of debt, which was supposed to make these firms pit-dog fit, ended up sinking otherwise entirely viable concerns. Nonetheless, we now pay obeisance to the belief that those who have essentially nothing to do with the running of these businesses—and in most instances have little or no intrinsic interest in what they make or do, and whose collective identity as a mass of individual owners changes almost daily—by right and tradition ought to control them.7
Managerial capitalism together with the New Deal political order defined the contours of stability for two generations. The Establishment took the credit and then suffered the consequences of its excessive self-confidence. When everything began unraveling in the 1970s, the liberal elite that had run the country since the Great Depression apparently ran out of answers. David Rockefeller complained that “people are blaming business and the enterprise system for all the problems of our society.”8
More than economic ineptitude and corporate obesity were at stake. The political and cultural landscape became harder to navigate. The Establishment seemed to have allied itself with the ghetto. Its commitment to civil rights and affirmative action (to which it assented only under pressure) suggested it was jettisoning its political marriage of convenience with the white working and middle classes. And its will to defend the empire had fissured and grown too timid, its credibility and legitimacy eroding on the left and right. What one writer has called “the end of victory culture,” culminating in the horrific calamity of Vietnam, fatally undermined the puissance and credibility of the Establishment. Plus it seemed far too sympathetic to the counterculture’s mockery of the conventional moral and social order.9
So profound was its loss of authority that the Establishment began failing to reproduce itself. Its offspring no longer felt attached to its traditions, manners, and religious rituals, stopped going to law school or disdained joining the family business, married outside its exclusive social circle if they married at all. Children sometimes ended up on the other side of the barricades, assaulting the family compounds and corporate boardroom. (Indeed some members of the SDS’s Weather Underground faction hailed from Social Register families.)10
The Establishment was losing its footing everywhere. In its heyday, it seemed to share core values with its subjects, at least with regard to work, patriotism, piety, modesty, moral discipline, reserve, and racial privilege. Now this liberal elite seemed to have repudiated all that, which ate away at the sentimental ties binding it to ordinary working people. The stigmata of race, drugs, unorthodox sex, irreligion, and suspect patriotism seemed to mark an ancien régime gone to seed. They became the telltale markers of a potent new fable: that of the limousine liberal, a group soon to become the bête noire of right-wing populism.
Economic calamity and elite paralysis nourished another oddly related fable: the Wall Streeter as heroic revolutionary. In this tale, the corporate old guard had become ossified and sclerotic, complacent, bureaucratic, and risk averse. On their watch the economy was withering away, losing its combative muscle, its indigenous American taste for the audacious. What native entrepreneurial urges still lived on were disabled by a bewildering labyrinth of government regulations, restrictions, and inhibitions. Together business and public bureaucracies were responsible for the arteriosclerosis afflicting the national economy. They needed dismantling. Fortunately, there were men ready to face the Goliath.
A capitalist version of liberationist theology, at one time the eccentric faith of outlying circles of revanchist businessmen and marginalized conservative intellectuals, gathered momentum all through the dolorous 1970s. An aged ideological alloy combined reverence for the free market with a seething resentment of state interference and the servile demoralization it allegedly encouraged.
Such ancient ideas were now defended by the latest applications of differential calculus and probability theory. But what gave this old-time religion added force, first of all among a rising generation on Wall Street and soon among a milieu of nerdy techno-entrepreneurs, were the unprepossessing social origins of these young men.
Precisely because many of them, like Ivan Boesky and Carl Icahn (or for that matter Bill Gates or Steve Jobs), were not to the manor born, but were instead strivers from the middling classes, they genuinely believed and were able to convince legions of followers and admirers that they had come to storm the fortresses of the ancien régime. Richard Fuld, who eventually ran Lehman Brothers and ran it into the ground, attended the University of Colorado and hawked bonds for a living. AIG was founded by the son of a woman who ran a boardinghouse; he later turned it over to Maurice “Hank” Greenberg, whose father owned a candy store on the Lower East Side. Greenberg in turn appointed Joseph Cassano, the son of a Brooklyn cop, to manage the London-based credit default swap operation. Stan O’Neal, who mismanaged Merrill Lynch into near bankruptcy, was the son of a farmer turned GM worker. Carl Icahn, the son of a cantor, was a lower-middle-class kid from Queens whose smarts got him to Princeton and then to Wall Street. Once there, he exercised a raging temper and a petulant contempt for the old-boy network from whom he regularly extracted tribute in the form of “greenmail” that temporarily at least allowed top management to hold on to its executive suites.11
Self-proclaimed champions of the disenfranchised shareholder and saviors of a business underclass denied access to life-sustaining bank credit, men like Icahn turned Wall Street into a combat zone where the forces of market freedom faced off against the overlords of yesteryear. The inventors of this ideological drama were capable of the most cynical and self-interested deceptions while remaining true believers in its underlying moral allegory and economic axioms: the shareholder as the oppressed victim, management as the great usurper.
It was this sense of mission that transformed these corporate raiders, merciless practitioners of the lean-and-mean approach to corporate reorganization, into cultural heroes during the Reagan era and beyond. They promised to open up the marketplace for capital to that discriminated-against mass of American businessmen who lacked the size and connections to command the attention of the big banks. They fearlessly attacked the entrenched managements of the very largest corporations whose timidity, addiction to routine, and limited vision kept stock prices artificially depressed, depriving their shareholders of their rightful gains. In this brave new world, the formal legalities of property rights trumped all other social claims. This was the “right” ne plus ultra that the New Deal had momentarily abridged.
Ironically, as time passed, each new hosanna to the shareholder invoked a more and more migratory, shadowy presence, a kind of massless mass, whose purpose in life seemed less and less to do with ownership and management and more and more to do with speculation. The idea of being tied down to a particular piece of property in the age of financialization seemed like a fool’s game—until everything went smash.
Every act of this Wall Street insurgency had its disinterested or even nonmaterial justification. If their outsized mergers and acquisitions made them stunningly rich, they produced handsome returns for holders of mutual funds, college endowments, savings and loan institutions, and pension funds that bought the high-risk/high-return junk bonds which financed these transactions. If men like Saul Steinberg, Carl Icahn, and Ron Perelman and the immaculately coiffed circle of anonymous suits serving them seemed almost indecently awash in money, at least they worked liked demons to get it, putting in inhuman hours, beginning their days at four in the morning, ending them at midnight. For them, hard work, an American sacrament, was an aphrodisiac; they were a living reproach to the stereotypical Wall Street banker whose day began at ten and ended at three, with an intermission for a three-martini lunch.
Taking on the stuffed shirts like Felix Rohatyn of Lazard Freres or the urbane, French-accented Michel Bergerac, head of Revlon (as Ron Perelman, an uncouth upstart out of Philadelphia, did in his hostile takeover of the company in 1985), was depicted as class warfare, American-style. The have-not-enoughs were confronting the have-too-muches (even though Perelman himself craved nothing more than to climb to the summit of social notoriety). Somehow, the fate of the American dream seemed to be at stake. And if in the immediate aftermath of root-and-branch corporate reconfigurations, landmark industrial plants shut their doors; if whole communities became ghost towns; if middle management lived in terror of its own extinction—in the long term, this was a kind of tough-love patriotism; it would strengthen America against its rivals in a global economic jungle where only the fittest survived.
When they lobbied ferociously for a defanging of the government’s regulatory apparatus or for the repeal of keystone pieces of New Deal legislation like the Glass-Steagall Act, these young lions did so to extend the realm of freedom, to remove the dead hand of the government bureaucrat, and to unleash the creative energies of the enterprising individual. The willingness to be savage, and to wear that savagery like a medal of honor, was the whole point; this was a revenge fantasy against America’s white-shoe crowd, who had forfeited their right to rule.
A choir of youthful publicists provided intellectual cover for the new knighthood. In his best-selling Wealth and Poverty (its title an ironic and perverse echo of the Henry George classic), George Gilder explained that “to help the poor and middle classes one must cut the taxes of the rich.” Fatuities like this soon became commonplaces of our political life and remain so to this day.12
No mere public policy scrap, this was a crusade with a metaphysical bottom line. Richard Dorman, Reagan’s deputy secretary of the treasury, lambasted the business establishment as “bloated, risk averse, inefficient, and unimaginative.” Freedom morphed into a synonym for free enterprise. An anti-elitist revolution from above, it exuded a messianic aura. Corporate America was to be saved from itself, from its fat cat complacency. Stripped of poorly earning assets, malingering workers and their featherbedding unions, and doddering and absentee managers, American business would rise again. Only men who had risen from social obscurity could appreciate and meet the challenge. They came armed with the necessary irreverence, fearlessness, and appetite for the new. They could reinvent the world in their garages or sweep away those cobwebbed gray flannel suits. Only they had the foresight to spot, and the derring-do confidence to resurrect, companies languishing in commercial oblivion, financially distressed but latent with untapped potential. They could be freed, but it would take the valor of a new financial knighthood.13
Michael Milken’s Aladdin-like junk bond leveraged buyouts, megamergers and acquisitions made him the chief knight of the realm. Raised in California, nerdy, married to his high school sweetheart, residing in the same suburb he grew up in, supremely arrogant, yet notably modest in what he drove, dressed in, and lived in, he was perhaps an unlikely candidate for the role. He nonetheless exerted a mesmerizing influence, a charisma that had limos lining up on Rodeo Drive in Beverly Hills at four in the morning to do deals, convinced, as one of his more perfervid admirers gushed, that “Michael is the most important individual who has lived in this century.” Why not? Contemporary observers thought they spied a social revolution in the making. Milken was its Lenin.
Household names in American business—TWA, U.S. Steel, Gulf Oil, Walt Disney—were all of a sudden in play and threatened with absorption into some alien acronym of financial abstraction. One-third of the companies on the Fortune 500 list in 1980 no longer existed as independent entities a decade later. Employment rosters at the Fortune 500 fell from 16 million in 1979 to just over 11 million in 1993. Three thousand mergers worth $200 billion took place in 1985 alone. By the end of the century, Fortune, anointing America “a Trader Nation,” announced that there was “a revolution underway, and it’s changing the way we invest and work and live.”
Milken’s social revolution overturned Wall Street’s historic hierarchy. The firm he worked for, Drexel Burnham Lambert, had been distinctly minor league; now it and a handful of other new arrivals, like Kohlberg, Kravis, Roberts & Company, were cock of the walk. “Relationship banking”—that genteel world lined with mahogany walls hung with Old Masters, resting on time-tested traditional dealings between particular banks and their corporate mates, a relationship premised as much on family and social ties as it was on mere moneymaking—gave way to (indeed, was run over by) “transactional banking.” Here every new deal was open to negotiation, each a new test for some Wall Street financial house to prove its commercial bona fides all over again, and all deals were subject to the singular criterion of the highest return produced in the shortest time.
Nasty microbattles for control took place inside venerable firms like Lehman Brothers, where languorous Ivy League patricians turned out in rimless spectacles and the omnipresent breast-pocket hankie were challenged by shirtsleeved, uncouth, cigar-chomping geeks from the trading floor staring out at the world through stylishly obtuse, thick-framed black glasses. As one magazine profile noted, Mesa Petroleum’s T. Boone Pickens, a corporate raider of the first rank, although a WASP, “never loses a chance to dramatize his persona as a plain-talking country boy engaged in a populist battle against an effete elite.” Frank Lorenzo, who wrestled to the ground the old-line management of Eastern Airlines, was the son of a Spanish immigrant who went out of his way to emphasize his ethnic origins by listing his given name in Who’s Who as “Francesco.” It was all symbolic of fresh blood getting pumped through the aerated arteries of an aging financial organism.14
No arena of cultural endeavor remained immune to the charisma of these young Turks. Preachers and newspaper editors, magazine entrepreneurs and board game creators, novelists, playwrights, moviemakers, and television soap opera producers, historians, book publishers, gossip columnists, and even choreographers were all infected with a kind of bug-eyed fascination. Treating the financier as a messiah was already afoot when the economy first turned down in the seventies. In The Financier, Michael Jensen invoked the “I” banker as a kind of holy magician: “His art is arcane. But just as the rainmaker promised to draw from the sky that drop that nourished the farmer’s crops, so these latter day rainmakers draw from the people and institutions around them the dollars that one needed to build the nation’s factories.” In an atmosphere like this, those who covered the news or searched it for sources of entertainment couldn’t take their eyes off what Michael Thomas, a columnist for Manhattan Inc. (perhaps the magazine most single-mindedly zeroed in on doings on the Street), waspishly dubbed the “new tycoonery.”15
Catholic theologians like Michael Novak joined televangelists in scouring the Bible for injunctive commandments to multiply and accumulate. Televangelist Jerry Falwell found “the free enterprise system… clearly outlined in the Book of Proverbs.” Great wealth, Falwell professed, was “God’s way of blessing people who put him first.” He and his fellow evangelicals certainly practiced what they preached, transforming their ministries into multipurposed businesses that included theme parks, cable TV stations, colleges, and hotels. Nor were they shy about flaunting their personal opulence. Jim and Tammy Faye Bakker had six houses, one of which came equipped with an air-conditioned doghouse.
New magazines like Success, Manhattan Inc., Venture, and Millionaire, and the relaunched Vanity Fair (as well as established ones like Esquire and The New Yorker) sprang to life as awestruck documentarians of the era’s power-suit costuming, its manly horseplay, its philanthropic social climbing, its O.K. Corral financial stare-’em-downs and shoot-’em-ups. Power portraits of the biggest deal makers marveled at their all-around fitness, their regimen of physical workouts that prepared them for all-nighters. A high-end athletic club offered the “Fitness Program Fast Enough for Wall Street.” These were financial athletes at the peak of their game, in it not for the money alone but for the je ne sais quoi that always seems present at the mystic heart of all true sportsmen, men like the financier Asher Edelman, known as “the Liquidator,” who confided his “Nietzschean desire for control.” Bond traders made out like professional hit men and boasted of “ripping the faces off” opponents (who sometimes turned out to be their clients). More cerebral samurai of the financial wars carried around copies of The Art of War by Sun-tzu, the Chinese Clausewitz. Forbes rhapsodized about Michael Milken’s “one-man revolution”; Business Week’s cover story compared the junk-bond master with Morgan; Institutional Investor anointed him “Michael the Magnificent.”
A whole subgenre relived familiar tales of transfiguration. For instance, there was the story of Bruce Wasserstein (playwright Wendy’s brother), who grew up in the middle-class neighborhood of Midwood in Brooklyn, spent time as a poverty worker and Nader raider, only then, like some character out of The Big Chill, to go on to negotiate the four largest corporate mergers in American history. He was compared with a bloodied general perpetually embattled. Wasserstein enjoyed homelier comparisons: “I’m a craftsman, no different than a carpenter or a painter.”
Moreover, Wasserstein’s incongruous beginnings turned out to be not so odd after all, as a small cohort of young men living on the fringes of the counterculture and the “new left” brought its feistiness and irreverence, if not its politics, to this bizarre version of the class struggle on Wall Street and to the information superhighway. A face-off at an unsexy institution like Lehman Brothers between two otherwise colorless figures—one, Lewis Glucksman, a jowly merchant; the other, a onetime political functionary, Pete Peterson—got dramatized in the media as a facsimile of mortal combat, a tale of “greed and glory.” Arbitrageur Ivan Boesky’s book Merger Mania modestly attributed his triumphs to hard work and common sense. But this was mere rhetorical gesture since everyone knew his real allure was that of the riverboat gambler. Nicknamed “Piggy,” he was a charmer with a long history of skirting the law.16
Slang from the Street insinuated itself into the language of everyday life. And whole thesauruses migrated in the opposite direction—from civilian life back to the front lines—to capture the atmosphere of bloodthirsty romance. Metaphors for corporate mergers leaned heavily on the language of sex and violence, ranging all the way from chivalrous marriage to rape. There was talk of “white knights,” of “shotgun” corporate marriages, of “financial angels” and “sweethearts,” not to mention “sleeping beauties” targeted by a rogue’s gallery of “black knights,” “killer bees,” and “hired guns.” This was a refreshed vocabulary stripped of the politesse of the Establishment, earthier and closer to the Volk. Here was the metaphoric vocabulary of a Wall Street state of mind spoken from coast to coast.
However improbable it might have seemed to our ancestors, this fable of Wall Street heroism on behalf of democracy managed to enchant. By the turn of the millennium, a cultural democratization of the Street was widely visible. It had grass roots. First of all, by then roughly half the population participated in the stock market, if only passively through their pension funds and other forms of institutional investment. Moreover, the Street’s reputation had undergone a miraculous makeover. Those hoary suspicions of old had faded away. More than that, the Street had become for many a zone of liberation, visionary exultation, national pride, and entertainment. A great many people had come to think of the stock market as a place that welcomed outsiders; not merely welcomed them, but empowered them; and not only empowered them but put them in touch with the zeitgeist of the new millennium. Ordinary folk could become homesteaders on Wall Street’s virtual landscape, where they might stake out their claim to freedom: freedom from workday tedium, from the press of material want, from the demeaning deference to employers and haughty elitists in business and government. A chemical engineer in New York credited his involvement in the stock market with a miraculous change in his thinking: “It gave me the feeling of control over my life I never had before.” Susie Vasillov, owner of a housewares store and a stock market player, spoke for many: “And whether you’re a mommy or the owner of a tony housewares shop, we’re all businesspeople. I think it’s a great thing that’s happened to the country.” Shareholder Nation had arrived.17
Toy manufacturers simulated the excitement about piratical cutthroatery with aptly titled board and video games like Greed, The Bottom Line, and Arbitrage. Book publishers discovered an insatiable demand for titles purporting to illuminate the mysteries of business gamesmanship: The Money Game, The Takeover Game, and dozens of others featured the stories of financial “geniuses” and takeover Michelangelos.
Newspapers and magazines were full of glad tidings about Wall Street as the latest form of the vox populi. CNBC, CNN-FN, Bloomberg, and others responded and encouraged the insatiable appetite for investment news and advice. Financial news plus sports accounted for half the editorial content of many newspapers. By the 1990s, the sheer overwhelming presence of stock market news on TV and radio, the proliferation of talk shows and whole new cable channels where market analysts became video celebrities, the inundation of the airwaves by commercials for brokerages, online trading websites, and other avenues of mass enthrallment were all evidence that someone was listening.18
They were doing more than listening. Average folk were predicating their spending plans on the leverage their assets in the stock market presumably provided. Home building and buying, car purchases, vacation getaways, big-ticket consumer electronics, air travel, and consumer durables in general stayed afloat, in part, atop the bubble. People wore wristwatches that beeped when IBM stock hit its owner’s price threshold. A Florida dentist confessed to tracking his investments in between patients, sometimes between X-rays and fillings.
Day-trading, which became wildly popular by the mid-1990s, particularly invited hoi polloi, all sorts of people who might not otherwise have ventured anywhere near the Street, to indulge and overindulge. They seemed consumed by normal consumer anxieties about being left out and left behind, but also by the sort of thrills, titillation, and lightninglike action that popular culture in general thrived on. Newsweek called it a “blood sport.” A Connecticut billboard touting offtrack betting captured the sneaky thrill: “Like the Stock Market. Only Faster.”
Investment clubs for schoolkids and octogenarian ladies and everyone in between sprouted up everywhere. They were as much pastimes as they were financial undertakings. By 1990 there were about seven thousand officially registered clubs, with probably three times that number organized on a more informal basis. More than a third were all female. The most famous was organized by a group of women in Beardstown, Illinois. They published The Beardstown Ladies’ Common Sense Investment Guide, which flew off bookshelves since the ladies had done quite nicely, thank you, on the stock market. (Later it turned out the club’s books had been cooked, although innocently.)
High schools introduced investment into the curriculum; by the late 1980s, 350,000 students were playing the Stock Market Game in class and competing in tournaments that went on for weeks. In Arlington, Massachusetts, seventh graders formed teams called the Wizards of Wall Street, the Money Machine, and Stocks R Us. Summer camps added playing the market to their menu of daily activities. Mothers who thought teaching their children about Wall Street would be empowering could buy Wow the Dow, a kiddie’s guide published by Simon and Schuster. When the Four Seasons Hotel in Boston set up a “dollar and sense investment camp,” a local magazine editorialized: “If kids get hooked on saving and investing, America’s future could be free of dependence on foreign capital… and the nation closer to a balanced budget.”19
Fever dreams like this were in one sense nothing new when it came to depicting the Street as the pathway to riches. Yet what was different was the way visions of El Dorado were interwoven with the merry informality of consumer culture and the expectations of social emancipation. Wall Street, once a popular symbol of aristocracy, inequity, and oppression, now promised to overthrow itself and have a lot of fun doing it. The Bull is dead. Long live the Bull.
Back-shelving the Protestant catechism about hard work and frugal living, the staple wisdom of an earlier era, the element of risk now got top billing in an economy increasingly dominated by financial high-wire acts. It was a more precarious world, but a fairer one, or so declared scholars like Milton Friedman or Peter Berger. The latter’s Capitalist Revolution likened the system to a great wheel of fortune that spun in a way that best assured material progress and social mobility.20
This kind of liberatingly brutal frankness reached its comic-opera apotheosis when Ivan Boesky addressed the graduating class at Berkeley’s business school in 1986. There he proudly recalled his working-class, Jewish immigrant origins and famously assured the graduates that “greed is healthy,” a revelation they greeted with a healthy round of applause. Boesky’s bon mot had become an axiom of the new age. Immortalized by Oliver Stone’s Gordon Gekko in the film Wall Street—although Gekko managed to lend it an added moral wallop through a critical emendation of the original: “Greed is good”—it hung on even when the party seemed over.
And why not? By the time Boesky made his remark, whole flotillas of students from the nation’s top colleges were disembarking at Wall Street. Recruits in unprecedented numbers streamed into an army of investment bankers, money managers, venture capitalists, and corporate lawyers, financial re-engineers armed with higher mathematics and determined to make over America. They constituted a new praetorian guard of “the best and the brightest,” a group who wore their SAT scores and Ivy League diplomas like escutcheons of their right to rule. Meritocracy, narrowly defined as “smartness,” served as social camouflage, an egalitarian façade concealing a single-minded fealty to the inexorable laws of the market. Conveniently, it buried out of sight the less flattering reality of socially privileged backgrounds that accounted for what was otherwise depicted as an act of self-creation. It was a parody of democracy. An insidious ideal, it degraded the egalitarian credo of earlier times, replacing it with devil-take-the-hindmost apologia for gross and growing inequality.
Such remarkable self-assurance amid the wreckage is breathtaking. Speaking at St. Paul’s Cathedral in London in 2009, Brian Griffith of Goldman Sachs invoked the Son of God: “The injunction of Jesus to love others as ourselves is recognition of self-interest.… We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all.” His boss, Lloyd Blankfein, was pithier, claiming, amid the ruins, that he was “doing God’s work” supplying money for companies to hire people to make things. For his part, just when the economy hit rock bottom at the end of 2009, President Obama praised Blankfein and Jamie Dimon (the head of JPMorgan Chase) as “very savvy businessmen,” noting that he did not “begrudge people success or wealth.”
The transfiguration of moneymaking into a fearless quest for self-discovery and self-invention was married to a grander and older idealism about America as a “redeemer nation,” holding a perpetual tutorial for the rest of the planet. It was a chiliastic creed that combined eschatology and chauvinism enlisted on behalf of imperial bullying abroad, balm after years of decline and defeat.
Even the shattering of the world financial system couldn’t shake this article of faith. An executive at an international hedge fund put it this way in 2011: “We demand a higher paycheck than the rest of the world. So if you are going to demand ten times the paycheck, you need to deliver ten times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.”
All of this fueled a contagious triumphalism not confined to the Street or corporate boardroom. The aroma of renewal and power smelled all the sweeter as the Japanese and Germans, onetime pretenders to economic supremacy, were compelled to swallow enormous mouthfuls of U.S. debt, to suffer the loss of their trade advantages with the up-valuation of the yen and the deutschmark, and to bring their “economic miracles” to a screeching halt, from which the Japanese struggled to recover for decades to come. In his 1985 State of the Union address, President Reagan boasted that the United States would become “the investment capital of the world.”21
To the victor belong the spoils. It took no time at all for these rebels against the old order to morph into plutocrats, revolutionary plutocrats perhaps, but decidedly gilded ones. Reagan’s first inaugural ball started it all. A New York Times article headlined “A New Opulence Triumphs in the Capital” captured the moment and went on to describe “an upwardly mobile suburban sensibility founded on buying power and unabashed appreciation for luxury.” One grande dame feeling her oats huffed, “It’s getting a little tiresome to always have to apologize for ourselves.” She needn’t have worried. The ball was called “a bacchanalia of the haves,” a marriage of the “New Right and the New Rich.” Diana Vreeland, style guru and confidante of the Reagans, sized up the future: “Everything is power and money and how to use them both.… We musn’t [sic] be afraid of snobbism and luxury.”22
The afterhours social life of these young moguls had a narcotic effect on journalists. They filled page upon page with who wore what and who sat next to whom and what edible artwork was served at the latest fete for the Metropolitan Museum of Art. Saul Steinberg, the period’s most notorious greenmailer and an original corporate raider from the late 1950s, was ushered into society at a gala affair covered like a coronation. The Brooklyn-born son of a plastic manufacturer, Steinberg, his former corpulence trimmed away, was welcomed aboard thanks to a newly mastered social poise and his generous disbursement of funds to the favorite cultural institutions of the city’s elect. These nouveau robber barons competed with rock stars for off-the-business-page coverage in style-conscious publications like New York magazine, which meticulously traced their footsteps across the art market, the city’s nightlife, and the white sands of the Hamptons. Journalists mapped the social geography of their residential splendor, often enough teardowns in newly fashionable faubourgs replaced by kitsch palaces equipped with tanning parlors, motorized chandeliers, petting zoos, and heliports. Still, even Robin Leach, the voyeuristic host of Lifestyles of the Rich and Famous, who made a career of televising the geography of excess, found an all-gold house—walls, floors, ceilings, crockery, a gold-dusted Rolls-Royce—“obscene.”23
Male sartorial display became an item of editorial comment as well as commercial advertisement. Wall Street in particular modeled a return to a kind of rococo extravagance: red suspenders, assertive midriffs encased in vests that simulated the look of nineteenth-century clubmen, custom-tailored suits from the Old World that gave off a lambent shimmer. Manhattan Inc. invented a column called “Power Tools,” offering advice on power fashions, including a $135 silk scarf embellished with a Napoleonic bee design and a late-nineteenth-century ebony, ivory, and gold walking stick available at $485. Aston Martin slyly promised prospective customers that the car would “demoralize thy neighbor.” Yachts were selling at such a clip that by the mid-1980s the Atlantic and Pacific Oceans were assigned their own area codes—871 and 872. There was a run on fur coats for Cabbage Patch dolls, prompted by ads informing customers “it comes in 23 colors, including envy green.” Tiffany and Company mounted a window display for a $50,000 diamond necklace that included a bag lady sitting in a cardboard box reading House and Garden.
Yearnings of this sort echo the quest for “pecuniary decency” identified a century earlier by Thorstein Veblen as proof you belonged to the elect. That urge to be sure, plus a pernicious version of an indigenous American egalitarianism: “The more equal people become the more relentless their desire for inequality.”24
Enthusiasts of their own celebrity, the new tycoons loved to posture and pose as philosophes, gurus, and style setters. The media ate this up, “the luxe, calme, and volupte that business success or inherited wealth can bring.” Gossip columnist Suzy Knickerbocker summed it up: “Perhaps it’s dreadful that money is God, but that’s the story.” More gimlet-eyed reporters, however, noticed that these business Olympians could pull all-nighters only because they employed a bevy of servants to clean up after them: personal shoppers, hairdressers, gift buyers, manicurists, and half a dozen other “experts” to keep the rest of their mundane existence on track. Even magazines like Manhattan Inc. ran features in which the reader got to learn about the uglier personal as well as professional attributes of the newly risen, including their peculations, frauds, and gargantuan overreachings. Newspapers occasionally found some spare ink to measure the gulf opening up between the nation’s have-nots and the Mount Everest of wealth piling up on Wall Street.25
All but the most zealous and unabashed registered a certain queasiness about the sudden appearance of a new plutocracy. But this unease failed to seriously disturb the surface of public life. Michael Thomas and Lewis Lapham performed exquisitely comical dissections of the mores of the new moneyed elite, but these left little imprint behind. Instead, the cultural climate sustained an air of ironic knowingness, arch, yet at the end of the day fascinated and awestruck. Even books like The Bonfire of the Vanities and Liar’s Poker, meant to puncture the infatuation, failed to undercut the mythos of the plutocrat as rebel. Nor did they intend to: the comic cynicism of Bonfire was, after all is said and done, the standpoint of a world-weary acknowledgment of the way things are and have always been.
Nothing, no jokes and no moralizing, could disrupt the new normal. Staying power like that was all the more remarkable since it survived in one form or another the bubbles and busts of the next twenty years—the 1987 stock market crash, the savings and loan debacle and bailout, the collapse of the “Asian tiger” economies, the Russian implosion, the mathematical fiasco of the hedge fund Long-Term Capital Management, Latin American meltdowns, and the dot-com implosion at the turn of the millennium. The Bull kept charging, though even before this cascade of crises, mounting evidence suggested that this tale of the financier as revolutionary and national savior was indeed a fable.
Once the crises did hit with alarming frequency, the fable’s credibility should have been further undermined. Shareholder value, always an evanescent phenomenon attaching to a floating population of transient traders, proved vulnerable to precisely those measures taken to buoy it up. Often enough, the allegedly senile managements that had run these acquired properties turned out to be much more adept and knowledgeable about how to manage them than the financial outliers who leveraged their purchase on a sea of debt. Nor was this supposedly lifesaving debt used to fund reinvestment in new plant and equipment or in longer-range research and development. Several years after they were issued, most junk bonds turned out to be precisely that: “junk” securities whose rate of return declined if they didn’t default.
Beginning with the S&L bailout, the notion that new paladins of capitalism relied on themselves and their mastery of the free market, taking their punishment like men when they faltered, seemed like so much disposable cant. Preaching about getting the government off the businessmen’s back couldn’t stand up against the desperate pleas for that same government to save them. As one observer noted, the bailout state proved beyond any doubt “the non-ideological character of the American faith in money. No economic theory, no political coronation, no wall of rhetoric or line of thought can survive a loss of 500 points on the Dow.”
Moreover, the conspicuous consumption of the nouveau plutocracy inevitably earned the era a reputation as the country’s second Gilded Age. The parallels were obvious. There was the same insatiable lust for excess, the vulgarity of what one wag described as “robber baron aesthetics.” Inequality in the distribution of wealth and income increased at a speed never before seen in American history, even in the Gay Nineties.26
While ten million lost their jobs to plant closings and layoffs during the Reagan “recovery,” compensation packages for the ten leading corporate CEOs ballooned 500 to 700 percent since 1980, and average CEO pay, twenty-five times that of the average hourly production worker in 1968, was nearly one hundred times that amount by the 1990s. Nor was there any consistent correlation between the increase in CEO compensation and corporate performance or shareholder gains.27
Shades of Jay Cooke’s Ogonzt castle and Jacob Riis’s rag-pickers alley now and then caught public attention. Amid industrial ghost towns, soaring rates of child poverty, central city rot, shuttered mines and factories, and small-town atrophy, Business Week observed, “The great divide between rich and poor in America had widened in perhaps the most troubling legacy of the 1980s.” Social commentator Kevin Phillips, invoking a relevant historical parallel, described this national drama as a “tale of two cities.” And like the original Gilded Age, the new one was quickly sunk in a miasma of corruption. Suspect dealings honeycombed the federal bureaucracy—HUD, EPA, FAA, the Agriculture Department, the VA, FEMA, the Federal Home Loan Bank Board, the Health and Human Services Department, the Transportation Department, the Consumer Product Safety Commission, the Bureau of Land Management, OSHA, and the Pentagon all had scandals during the Reagan years. Favors for lobbyists, polluter violations buried, corporate functionaries consulting for government agencies, bribes, kickbacks, fraud—a whole shadow economy carried on incestuous relations with the public treasury. The Charles Keating–Lincoln Savings and Loan debacle implicating five senators as the eighties ended, or the Jack Abramoff–style crony capitalism at the turn of the twenty-first century, matched anything on offer from a century earlier, including the Credit Mobilier, Whiskey Ring, and other notorious scandals that had provided Mark Twain with raw material for his first best seller, The Gilded Age.
By the turn of the millennium, K Street (ground zero of crony capitalism, named after the Washington street where lobbyists gathered) had become so powerful that it didn’t so much lobby for particular legislation as it wrote the laws itself or chose who would regulate its constituents. Enron got to vet the new head of the Federal Energy Regulatory Commission, for example. This was a form of merger and acquisition of business and government on the grandest scale. Government, it turned out, was neither the problem nor the solution; it was merely expedient or it wasn’t.28
Meanwhile the hippest pioneers of entrepreneurial self-reliance trailblazing on the Silicon Valley techno-frontier seemed to be champions of an irresistible future, seers, fabricators of Progress like those path breakers in the days of the iron horse and electric light. People like Bill Gates, Steve Jobs, Andy Grove, and Mark Cuban were as much a part of the plebeian business mystique as their Wall Street counterparts—men from nowhere, self-confident, impatient with business as usual, and audacious when it came to challenging the old corporate and technological order. Moreover, unlike their Wall Street analogs, because they worked on the frontiers of science, they added something special to the fable of the businessman as revolutionary. Here was entrepreneur as the bearer of the inevitable, in touch with underlying mechanisms of the cosmos, a traveler to a place no man had been before. Defy that if you dared!
Yet so much of what these men achieved relied on decades of government-sponsored research and technological development, encouraged by the Defense Department and the rest of the national security state. So much for the reigning faith that government needed to go extinct—though acknowledging that debt was predictably rare.29
Finally, as ideology, shareholder value as the only value bore a striking resemblance to the social Darwinism of that earlier time, both functioning as rationales for the callousness—one might call it the self-conscious social unconsciousness—of the 1%. Yet few felt ashamed. Only when the system went belly-up did the whole mythos of the businessman as the people’s hero temporarily deflate, as onetime “masters of the universe” became wards of the state.30
Mimicking each other in so many ways, these two gilded elites separated by a century nonetheless elicited quite different reactions: fear and loathing back then, enduring populist romance in our time. Why?
When the captains of industry and finance lorded it over the country in the late nineteenth century, no one would have dreamed of calling them rebels against either some overweening government bureaucracy or some entrenched set of “interests.” There was virtually no government bureaucracy to rebel against, and these men were themselves “the interests,” Wall Street chief among them. People like J. P. Morgan, E. H. Harriman, and Jay Gould worried about being overthrown, not about overthrowing someone else. How different this is from the faux-radical rhetoric of the more recent past, with its pointed barbs directed at busybody, obstructionist regulators, sclerotic corporate managements, and timorous financiers. A Gilded Age peopled by irreverent, leonine youngsters out to shake up the old order has a distinctly different feel from one run by lugubrious, bearded patriarchs whose very physical heft cried out their sense of overlordship and reverence for good order.
And then there is the Gordon Gekko factor, a parodic invention worth remembering. His icy bloodthirstiness and candor, on the one hand, make him loathsome in ways that would have been familiar to generations of Americans who’d never run across a corporate raider and wouldn’t have known the difference between an LBO and a PhD. He’s pure parasite. He leeches off the hardworking, productive enterprise of others, embodying a moral antinomy going as far back as one cares to look. “I create nothing, I own,” he boasts to his young protégé. Merciless when it comes to dealing with his opponents, he orders his chief aide, “the Terminator,” to “rip their fucking throats out. Stuff them in your garbage compactor.” He’s a moral sleaze as repugnant as Jay Gould, the original “Mephistopheles of Wall Street.”
Yet Gekko is also a new creature. There is something irresistible about him. It is not merely the devastating combination of single-minded decisiveness, animalism, and sexual allure. Even more tempting is his breathtaking self-confidence and showmanship. And even more than that is his astonishing power to persuade. Gekko is unscrupulous beyond compare, but he succeeds first of all not through skulduggery. He triumphs in the same way that the Wall Street upstarts of this new gilded era first did, by a mesmerizing invocation of shareholder value as a form of liberationist theology. He’s not a destroyer but a savior, not only of companies, but of “that other malfunctioning corporation called the United States of America.” There is a purgative cleanliness to his rhapsodic exaltation of greed. It offers a metaphysical thrill: “Greed is good. Greed is right. Greed works. Greed clarifies and cuts through and captures the essence of the evolutionary spirit. Greed… has marked the upward surge of mankind.” Gekko is a charismatic grotesque who has mastered the art of mass communication, appealing to the darker side of the popular imagination. He doesn’t talk down, he doesn’t patronize. Instead, he fraternizes with the people, abandoning the socially irritating presumptions of the Establishment and those earlier incarnations of what in the nineteenth century was sometimes referred to as “the shoddy aristocracy.”
That whole ragtag assortment of warrior metaphors drawn helter-skelter from disparate civilizations—from antiquity to medieval Europe, from the Wild West to futuristic, high-tech, sci-fi heroes: a Grand Guignol of titans, black knights and white knights, gunslingers, conquistadores, predators, and barbarians at the gates—lay anchored in an amoral savagery, an unbridled individualism nesting deep within the vengeful psyche of a disarmed and demobilized society. The power to resist its call diminished inversely with each new addition to the Forbes rich list. But this surrender did not entail any bending of the knee. After all, the aristocracy of the first Gilded Age had gone away.
Minus the oddball exception or two, the new tycoonery of the Age of Acquiescence, as Gordon Gekko reminds us, did not fancy itself an aristocracy. It did not dress up like one or marry off its daughters to fortune-hunting European dukes and earls. On the contrary, many of its leading figures regularly dress down in blue jeans, construction worker regalia, and cowboy hats, affecting a kind of down-home populism or nerdy dishevelment. However addicted to the paraphernalia of flashy display they may be, the new capitalist elite does not pretend these are the insignia of ruling-class entitlement.
Feigning simplicity and the art of the ordinary, they are apt to enter into informal friendships with the help that would have scandalized the paternal habits of yesterday’s elect. Once upon a time, the lower orders aped the fashions and manners of their putative betters; now it’s the other way around. The new breed of plutocrat shed the quasi-aristocratic demeanor that for generations had defined the haute bourgeoisie: studied indolence, complacency, cool ennui, ironic distancing.31
Even the fears of our newly risen are categorically different, living in dread not of class conflict but of the IRS, criminals, con men, terrorists, and, as Tom Wolfe memorialized in The Bonfire of the Vanities, the urban underclass. A plutocracy that embraced the populace nonetheless retreated behind locked gates, spiked hedges, floodlights, electronic surveillance gadgetry, and personal bodyguards.
Like any nouveau climbers, they also lived in dread of falling back into the obscurity they came from. But they didn’t stage tableaux vivant, hold masked balls, and cook up fake genealogical credentials to prove blue-blooded lineage. They did hunker down, however, in walled-off worlds, nurserylike Edens that encouraged not only a sense of entitlement but a delusional social ignorance and escapism, one lacking in discipline. In this universe far, far away you could travel in a limo with a hot tub; patronize a Madison Avenue butcher who stocked antelope, elk, bear, mountain sheep, eland, lion, cape buffalo, hippopotamus, llama, yak, and opossum, in case you had grown bored with ordinary red meat; and send your children to a “mini couture” run by Giorgio Armani.32
All of this stood as a kind of libidinal counterweight to the hyper-rationalism inspired by the rigors of the market, its protocols of risk management, and the celibacy of numbers. Tangible evidence of triumph like this enhanced the illusions of omnipotence. The faux-revolutionary plutocrat was perhaps convinced, and certainly convinced others, that he needed to be left alone so that he could fulfill his mission. Only he and his kind could create jobs, as if that were his principal purpose, as if there were still—as there once was in traditional societies—real sanctions, obligations, and customs that commanded the social use of privately held means of production. In real life, however, there are today little or no such obligations, only the comical fancy of the businessman as missionary job creator.
Neither sybarite nor statesman, the plutocratic rebel is an odd duck and an elusive target. Indeed, it is no longer even apt to talk of a leisure class (at least in the way Thorstein Veblen conceived of a milieu in hasty flight from anything tainted by work). After all, our moguls of the moment are workaholics. When it comes to doing deals, they convey a commanding presence. Yet in the larger arenas of public life, they don’t seem to come naturally armed with the “habit of command,” having been raised on the narcissism of popular culture and its cult of self-absorption. This withering away and erasure of the very notion of ruling classes carries profound political consequences. Having an aristocracy to kick around, even an ersatz one like the American version, was politically empowering; lacking one is disorienting. It may generate anxieties. Confronting the realities of power and wealth threatens the understructure of private property in a way that challenging the undemocratic, elitist practices and pretensions of an alien nobility did not. To question the inherent rationality and rightness of the prevailing way wealth is made, distributed, and controlled is a taboo not easily violated. To acquiesce may be less disquieting and at the same time cater to the evergreen hope that the road to self-enrichment remains open.33
Our populist plutocrats are more adept than their Gilded Age predecessors were at mastering democratic politics. The old leisure class was distinctly allergic to the seamier aspects of courting the populace. Some tycoons like Mark Hanna put in long hours running party affairs from the top. Others got involved if they needed a tax break or tariff by calling upon their kept senator. By and large, however, this world relied on the federal judiciary, business-friendly presidents, constitutional lawyers, and public and private militias to protect their interests.
Savvy corporations became more engaged at the dawn of the twentieth century, lobbying, helping conceive and write legislation, and fending off invasions (not always successfully) of party fiefdoms by irate farmers, angry ethnics, urban machines, and middle-class reformers. They even sought avenues into proletarian precincts, encouraging the more compliant elements of the trade union movement to work out the terms of a social peace they could live with. Beginning in the 1970s, however, business elites became acutely more political-minded, penetrating deeply all the pores of party and electoral democracy. This meant going so far as to craft alliances with elements of what their predecessors—who might have blanched at the prospect—would have termed the dangerous classes.
Conservative elites first turned to populism as a political strategy thanks to Richard Nixon. His festering resentment of the Establishment’s clubby exclusivity prepared him emotionally to reach out to the “silent majority,” with whom he shared that hostility. Nixon excoriated “our leadership class, the ministers, the college professors, and other teachers… the business leadership class… they have all really let down and become soft.” He looked forward to a new party of independent conservatism resting on a defense of traditional cultural and social norms governing race and religion and the family. It would include elements of blue-collar America estranged from their customary home in the Democratic Party.34
Proceeding in fits and starts, this strategic experiment proved its viability during the Reagan era, just when the businessman as populist hero was first flexing his spiritual muscles. Claiming common ground with the folkways of the “good ole boy” working class fell within the comfort zone of a rising milieu of movers and shakers and their political enablers. It was a “politics of recognition”—a rediscovery of the “forgotten man”—or what might be termed identity politics from above.35
Soon enough, Bill Clinton perfected the art of the faux Bubba. By that time we were living in the age of the Bubba wannabe—Ross Perot as the “simple country billionaire.” The most improbable members of the “new tycoonery” by then had mastered the art of pandering to populist sentiment. Citibank’s chairman Walter Wriston, who did yeoman work to eviscerate public oversight of the financial sector, proclaimed, “Markets are voting machines; they function by taking referenda” and gave “power to the people.” His bank plastered New York City with clever broadsides linking finance to every material craving, while simultaneously implying that such seductions were unworthy of the people and that the bank knew it. Its $1 billion “Live Richly” ad campaign included folksy homilies: what was then the world’s largest bank invited us to “open a craving account” and pointed out that “money can’t buy you happiness. But it can buy you marshmallows, which are kinda the same thing.” Cuter still and brimming with down-home family values, Citibank’s ads also reminded everybody, “He who dies with the most toys is still dead,” and that “the best table in the city is still the one with your family around it.” Yale preppie George W. Bush, in real life a man with distinctly subpar instincts for the life of the daredevil businessman, was “eating pork rinds and playing horseshoes.” His friends, maverick capitalists all, drove Range Rovers and pickup trucks, donning bib overalls as a kind of political camouflage.
“Live free or die” might have been their adopted motto. Calls to dismantle the federal bureaucracy carried a certain populist panache. Huffing and puffing about family values proved a cheap date for the new gilded elite that otherwise couldn’t care less. A graphic novelist drove the point home by depicting them as “sunshine rednecks” and “weekend good ol’ boys.”36
A generation’s worth of this kind of political theater has made it second nature. When, for example, rival candidates for the governorship of Connecticut faced off in 2010, they were in fact both men of stupendous wealth, possessed of all the educational, residential, and other material insignia of privilege—prep and Ivy League schooling, private planes, oceangoing yachts, hotel-sized homes. But the Republican made sure to be seen eating egg salad at a diner wearing blue jeans. His Democratic rival dressed up in a “barn jacket” and rolled-up sleeves, garb suited to telling tall tales in aw-shucks lingo about his early struggles to start his own business. Jeff Greene, otherwise known in Florida as “the Meltdown Mogul,” had the chutzpah (hardly alone in that, however) to campaign in the Democratic primary for a Florida Senate seat in a Miami neighborhood ravaged by the subprime debacle—precisely the arena in which Greene had grown fabulously rich. There he rallied the people against Washington insiders and regaled them with stories about his life as busboy at the Breakers hotel in Palm Beach. Protected from the Florida sun by his Prada sunglasses, he alluded to his wealth as evidence that he, a maestro of collateralized-debt-obligation speculations, knew best how to run the economy he had helped pulverize, punctuating that point by flying away in his private jet securely strapped in by his gold-plated seat buckles.37
Mitt Romney provided the near apotheosis of this fable. Denounced even by his Republican rivals as a “vulture capitalist,” he nonetheless put himself forward as a credible candidate for president based mainly on his record as a salvationist hero of business in distress. The ex-governor of Massachusetts kept shooting himself in the foot by reminding voters of his gilded life and gilded friends. But he rested his quest for the presidency on his experience running Bain Capital, a private equity firm he claimed was the workingman’s best friend.
Business lobbyists quickly mastered the art of masquerade. Journalist Jonathan Chait notes one striking case. A rally was convened to support George W. Bush’s tax cuts for the wealthy. It was planned, according to a campaign memo, so that “visually this will involve a sea of hard hats. The Speaker’s office was very clear to say they do not need people in suits.… AND WE DO NEED BODIES—they must be DRESSED DOWN, appear to be REAL WORKER types, etc.” Lobbyists who attended the rally were indeed provided hard hats. In another instance, the political director of the National Association of Manufacturers dressed in a rugby shirt and a faded blue “Farm Credit” hat. When The Wall Street Journal attacked renegade rich people who actually favored the estate tax as “the fat cat cavalry,” it confirmed that virtually anyone could play this game.38
True enough, there is a long history of political patronizing of this kind, going at least all the way back to Andrew Jackson’s time. Arguably, the essential genius of the American political tradition consists of this complex choreography: accommodating the passions and interests opened up by the protocols of democracy without disturbing the underlying equanimity of capital accumulation and rule by propertied elites. It is a balancing act made even more complicated by the heightened fluidity of the American experience of class hierarchy, perhaps best captured by that old but still cogent observation about “shirtsleeves to shirtsleeves in three generations.”
Nonetheless, rarely if ever in the past has the plutocrat so rooted himself in plebeian culture, erasing all that remained of the habits of deference once expected to inform relations between rulers and the ruled. Nor did he before now build bridges to the lower orders by pointing out precisely what separates them—namely, his unapproachable wealth—using it as a credential of his all-Americanism. Nor have such alliances, when they existed, lasted nearly as long. Nor have so many businessmen assumed second careers as elected officials without any prior experience; on the contrary, many have pointed to their lack of personal political experience as their chief virtue. That, plus offering their long years spent running companies as proving their unique aptitude to govern. Michael Bloomberg, whose billions plus managerial genius won him three terms as mayor of New York City, is perhaps the most illustrious example. There are many others, including: Meg Whitman, the onetime CEO of eBay who lost a race for governor in California; Carly Fiorina, who ran Hewlett-Packard and then tried, unsuccessfully, to become a senator from California; the victorious governor of Michigan, Rick Snyder, once chairman of Gateway; Rick Scott, another winner as governor of Florida after a career as a health care entrepreneur; the serial loser Linda McMahon, whose decades running, along with her husband, World Wrestling Entertainment wasn’t enough to launch her into a new career as senator from Connecticut; and then of course, for comic relief, there is always “the Donald.” In pointing out their business savvy and experience as their singular qualification for holding office, it is as if these people, and numerous others running for less visible local and state offices around the country, were trying to get elected to the board of directors of America, Inc.
Populist plutocracy reconfigured the age-old problem of legitimacy, of the underlying sources of consent on the part of subordinate classes to the rule of tiny, wealthy elites. The new plutocrat makes a convincing case that he is of the people, expresses their deepest desires and aspirations, and governs in their name. So, for example, the Herrenvolk democracy over which the George W. Bush administration presided epitomized this marriage of corporate elitism to blue-collar, white-skinned cowboy populism. Without an establishment to overthrow, resisting the rule of the déclassé feels like pushing on a string.
Moreover, this new plutocratic milieu is far less defined by a shared ethnic genome; cultural beliefs, social clubs, school ties, even geography are far more diverse, as is its basic demographic profile. These traits, or rather the lack of a common set of shared traits, comes with the territory; it’s a world in constant motion, rootless, as mobile as the capital flows streaming here and there that define it. Consequently, the profile of the plutocracy becomes ever more indistinct. Its disappearance becomes part of the general leveling down of cultural distinctions that constitute the age.39
What a wondrous transformation—a vanishing act really—so disarming, so essential to the Age of Acquiescence. The rise of a populist plutocracy that comes to power with counterfeit credentials of its own manufacture, thereby contributing to its self-erasure as a ruling class: the final nonconfrontation.