I. Shareholder Value

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

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

C. 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).

D. 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

E. 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

F. Shareholder value has become the morally correct concern for a corporation to have
G. 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
H. 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

 

II. Capitalist Culture

A. Ho's contribution: capitalism is a cultural institution, driven by perspective of individuals, not abstract market
B. Patterns of behavior come to look as if they are responding to abstract, impersonal market forces
C. Impact of job insecurity: "It is investment bankers' experience as employees (which in turn reshapes the market models they learn and proclaim) that instills a specific disciplinary model of employee liquidity, insecurity, and workplace relations; motivates them to export this model to the rest of U.S. business; as well as renders their own model superior" (214).
D. Corporate culture = material practices, social relations, ways of thinking that shape and are shaped by individuals
E. Downsizing comes to be seen as ultimately good

 

III. Being Downsized

A. Ho's downsizing experience

1. Group is suddenly disbanded
2. Colleagues take it in stride b/c young, bright, cheap
3. Flexibility as ultimate virtue, builds character

B. Bull market has lots of downsizing: yo-yo approach to maximize profits
C. Rapid rate of downsizing

1. Blamed on "the market"
2. "What is missing is an analysis of how the values and practices of investment banks helped to construct both 'the market' in emerging markets and in the United States and their approach to employment and the workplace" (235).
3. Hiring and firing are ultimately decisions made by individuals; odd denial of agency

D. Mystification? Why don't bankers see their own role?

1. Their businesses represent market ideal: ruthless, harsh, but flexible, responsive
2. Fighter jet vs. aircraft carrier
3. Being downsized is sign of superior market fitness
4. Liquidity = moral good

E. Americans with two years or more of college are expected to change jobs 11 times during careers (246)
F. Loyalty is dysfunctional
G. Particular culture of Wall Street seen as ideal response to market conditions, not culture that has shaped those conditions

 

IV. Globally Exporting Liquidity

A. Habitus of Wall Street created subprime mortgage crisis and global ripple effects
B. Subprime mortgages

1. Higher risk loan to those with low credit scores
2. Adjustable rate mortgages
3. 2006: rates rise sharply, defaults increase
4. Plummeting housing prices ==> difficult to sell or refinance ==> defaults
5. Bankers say they're making home ownership available to more people
6. Crash, but "creativity" of investment bankers is celebrated (301)

C. "Spectacular marketing"

1. Global presence
2. Not a physical presence, but an image of reach (Henry Paulson, CEO of Goldman Sachs)
3. Merrill Lynch: Japan in 1990s

a. Expand investment to regular people
b. Closed 31 out of 33 offices in Japan
c. New CEO redefines Merrill as nimble

D. Why did subprime mortgages crash?

1. Wall Street sold and consumed boutique investment devices
2. Acquired mortgage lenders
3. Rush to get in on the market: taking immediacy too far
4. Credit-default swaps

a. Unregulated "insurance"
b. Insufficient reserve capital
c. 60 Minutes report

E. Ho's conclusion: "It is the very privileged subjectivities of investment bankers -- their elite biographies, experiences, and hierarchical representations -- that empower and legitimate their authority over inefficient corporate American and outdated financial techniques. When enmeshed within the organizational culture of Wall Street, particular dispositions are constructed and investment bankers are motivated to engage in intense deal-making and market responsiveness as signs of their superiority. These structuring practices, which occur without a strategy for the future and are rationalized by a shareholder value ideology, in turn depend on continual global boasting, marketing, and leveraging in order to grow and become dominant. Wall Street-led financial booms are made possible by the very financial ideologies and transactions which eventually implode under the accumulated weight of broken promises, failed shareholder value, and the mining of capital without replenishing it" (324).