I. Particularizing Wall Street

A. Studying capitalism from the margins versus from within
B. Karen Ho, Liquidated (2009): Wall Street investment bankers
C. Shift in American capitalism: "complete divorce of what is perceived as the best interests of the corporation from the interests of most employees" (3).

1. Corporation makes profit, workers lose jobs
2. Dominance of shareholder value
3. Record profits and rampant instability, downsizing, social dislocation, precarity

D. Daily experience: "I ask how exactly Wall Street investment bankers and banks, at the level of the everyday, helped to culturally produce a financially dominant, though highly unstable, capitalism: what kinds of experiences and ideologies shaped investment banker actions, how they were empowered to make these shifts, and how these changes were enacted and understood to be righteous" (5).
E. Booms and busts are cultural effects, but naturalized as part of "the market," rather than being seen as "arising from the particular workplace models, corporate culture, and organizational values of Wall Street financial institutions (investment banks in particular) or the specific and personal experiences of those who work for them" (11).
F. Sleight of hand: "Instead of recognizing constant deal-making and rampant employee liquidity as their own local culture, my Wall Street informants conflated their organizational practices with their cultural roles as interpreters of the market and saw themselves, not as describing their own work and life circumstances, but as explaining 'natural' market cycles and economic laws" (12).
G. Shareholder value

1. Wall Street investment bankers profit from corporate restructuring
2. Financial instruments and liquidation of assets ==> short term, dramatic gains, but produce crisis
3. Capitalists are not homogenous: Corporate execs don't necessarily share this focus on shareholder value.
4. Why is shareholder value dominant?

a. Habitus and institutional culture
b. Naturalization: "When Wall Street's actions in the world are framed and translated as 'people get downsized because of stock prices' or shrugged off because 'markets crash,' investment banking practices are represented and interpreted as abstract, cordoning 'the market' off from social decisions. Socioeconomic dislocations are less cases of abstraction than instances of power being experienced and enacted. When conflicts between unequal values and interests are interpreted mainly in terms of abstraction, which in turn is refracted back as a core characteristic of finance, such assumptions further obfuscate the task of grounding Wall Street actors" (37).

H. Downsizing results from actual decisions by actual actors based on how they've been socialized to see the world, informed by race, gender, and class.

 

II. Investment Bankers' Habitus

A. Investment bankers prize shareholder value and see promoting it as of general benefit according to principles of efficiency and profit
B. Pierre Bourdieu (1930-2002): socialization and internalization of ways of being and thinking

1. Economic capital (money, property)
2. Social capital (personal connections)
3. Cultural capital (tastes, preferences, knowledge, education)
4. Three forms don't need to coincide: starving artist
5. Three forms typically coincide: example of schooling

a. Schools legitimate systems of knowledge possessed by higher classes
b. Education inculcates appreciation of these forms
c. Wealthy families have better access to formal education

6. Habitus

a. "subjective but not individual system of internalized structures, schemes of perception, conception, and action common to all members of the same group or class and constituting the precondition for all objectification and apperception" (Bourdieu 1977:86).
b. Set of cognitive and motivating dispositions or bodily expressions that orient habitual patterns of thought and action
c. Habitus stems from objective economic and social conditions, but it becomes internalized as a set of durable and transposable dispositions that allow you to interpret new ideas and experiences

C. Ho: Bankers' life experiences create habitus that promotes allegiance to shareholder value, even as there are contradictions within their views

 

III. Bankers' Life Stories

A. Culture of smartness

1. Elite universities
2. Best and brightest, meritocracy

B. Recruitment from elite universities, esp. Harvard and Princeton

1. 2006: 40% of Princeton undergrads enter investment banking and financial services (44)
2. Recruiting sessions: alluring vision of future, privileged treatment, egos are stroked

C. Not really a meritocracy

1. Automatic privileging of certain colleges
2. Networks of alumni kinship (social capital)
3. Experiences of woman from Spelman College

D. On the job: culture of instability and competition

1. White collar sweatshop
2. Have to prove how smart you are to get good placement
3. Office isn't an attractive space
4. Work 100-110 hours per week

E. Arduous hours develop a sense of superiority; other workers are lazy or complacent and not adding value
F. Social capital

1. Schmoozing privileges white men
2. Replicating stereotypes provides safe haven but less advancement for women and non-white men

 

IV. Shareholder Value

A. Dominant term, but of relatively recent origin

1. 1990s: stock prices are the primary index of a company's value
2. Problems: "project an ahistorical capitalism across time and space; conflate profit with stock price; flatten the complexity and multiplicity of capitalist institutions, values, and motivations; and reinforce dominant approaches to capitalist histories" (123).

B. History of shareholder value

1. Post-WW II conglomeration: corporation as social institution producing things of economic, social and cultural value and fueling rising standards of living for employees and consumers
2. 1980s takeover movement

a. Corporation is subject to stock market valuation and consolidation at any point, reduces the value of the company solely to its stocks, makes it leaner and meaner
b. Conglomeration in 1960s was encouraged by Wall Street as expanding through diversification without violating anti-monopoly legislation
c. By 1980s and 1990s, conglomeration reinterpreted as inefficient, bloating, aggrandizement, declining productivity
d. Reagan: deregulation, relaxation of anti-monopoly policies, philosophy that private markets worked best
e. 1980s: Hostile takeovers, companies bought to be liquidated, corporate leaders didn't share focus on shareholder value
f. 1990s: Hostile takeovers become mergers and acquisitions, corporate execs also prize shareholder value
g. Leveraged Buy Outs (LBO): borrow money (junk bonds), buy stock, strip assets, issue initial public offering
h. Companies downsize to prevent takeover

C. Results

1. Salary gap

a. 1980s: executives made 44 times that of average worker
b. 1990s: executives made 400 times that of average worker (141)

2. CEOs shielded from responsibility, have incentives to drive up stock prices in the short term to cash out (141)
3. Less focus on long-term growth to maximize shareholder value
4. How to measure value: jobless recovery

D. Shareholder value has become the morally correct concern for a corporation to have
E. Irony: short-term measures taken to achieve shareholder value -- streamlining and downsizing -- often lead to a decline in shareholder value in the long-term because of cycles of instability, boom and bust
F. Bankers ignore contradictions, express hope and faith that in the long term efficiency will increase profits that will trickle down even to those workers who have lost their jobs