Tuesday, July 7, 2009

Review: Wall Street



With the stock market still in the doldrums and the dust from the housing bubble explosion still settling, the timing of Steve Fraser’s Wall Street: America’s Dream Palace seems perfect.  A concise history of this symbol of American market ingenuity looks like just what we need to understand the mess we are in now. Unfortunately, while entertaining, the book falls short of providing much substantive history, let alone any insight into the current situation.

Fraser’s book is the latest installment in the “Icons of America” series published by the Yale University Press.  The series features “short works by leading scholars, critics, and writers on American history, or more properly the image of America in American history, through the lens of a single iconic individual, event, object, or cultural phenomenon.”

Fraser eschewed a chronological approach to his history of Wall Street.  Instead of discussing the origins, development, and major events of the American stock market, he chose to organize his narrative around the idea of four archetypes he believes exemplify the spirit of Wall Street.  He labels these types the Aristocrat, the Confidence Man, the Hero, and the Immoralist.

According to Fraser, the Aristocrat was an early threat to America’s fledgling democracy in the form of an aristocracy based on speculation – a moneyed class bent on creating a debt-funded plutocracy to replace the republican form of government fought for in the Revolution.  The Aristocrat gained wealth and power through “the inequalities and exploitation that trailed in the wake of capitalistic development” and reached his pinnacle of power during the Gilded Age of the late 19th Century.

The Con Man, on the other hand, is not relegated to a particular stage in Wall Street’s development, but is “endemic to market society.”  “[C]harming, glib, seductive, even charismatic, often sexy[,]” the Con Man is a trickster who takes advantage of the cupidity of hopeful investors.

The Hero thrives on risk with “Faustian panache” and can be “likened to Napoleon.”  In Fraser’s view, the Hero of Wall Street is not someone who accomplishes good or noble feats, but a character living in a “formless infinity of pure money, a universe with no fixed values.”  Such a hero achieves fame by being the biggest gambler on Wall Street.

Finally, the Immoralist embodies all the corrupt and corrupting characteristics of Wall Street, including laziness (making money from others’ labor), greed, hedonism, and general depravity.

Fraser’s caricatures are imaginative and appealing because they put faces on what could be a dry treatise with an unbearably heavy emphasis on economic policy.  It is a lot easier to read about a speculator like Jesse Livermore who drove a yellow Rolls Royce, wore a sapphire pinkie ring, and shot himself in a hotel cloakroom, than an essay on the development and use of corporate debentures.  The problem is that Fraser’s archetypes present a one-sided view of Wall Street.  In Fraser’s world, Wall Street has always been populated solely by bad guys – no one wears a white hat.  By concentrating on the catastrophes and scandals of Wall Street – the events that shaped Fraser’s archetypes – Fraser limits the scope of the book to what is wrong with the stock market system.  Missing is any discussion, necessarily less entertaining, of the national economic growth and personal financial gain enjoyed by millions of Americans because of a centralized stock exchange.

There are other limitations to Fraser’s approach and flaws in his execution.  First, for a short book, it jumps around a lot.  In each section devoted to a separate archetype, Fraser sets out the information chronologically.  This means each chapter starts by going back in time from where the previous chapter left off.  Because the Aristocrat dominated an earlier era and the Immoralist developed only later, the time periods discussed in each section do not overlap entirely; there is a general chronological progression through the book.  But, there is still a lot of going back and forth in time that gets confusing and impedes the flow of the story.

Second, in addition to overlapping in time, Fraser has trouble sorting the characters into his four pre-assigned cubbyholes.  Many of the people he writes about play multiple parts, appearing in one chapter as an example one archetype and in another as a different type.  For example, Cornelius Vanderbilt, shows up as an example of all four types – the Aristocrat, the Con Man, the Hero, and the Immoralist.  There is something about the same people popping up in different roles like amateur actors in a community playhouse production that diminishes the lofty concepts of archetypes and icons.

The biggest problem with Fraser’s book is a lack of substance.  True, it is not meant to be a comprehensive, definitive history of the American stock market, but a short, introductory overview.  Fraser is a gifted writer and the words rush by in a sparkling torrent.  But it would be nice it there were a little more shoe under all that shine.  He includes major historical events almost in passing, without adequately explaining their significance.

Overall, the book reads like an outline for a longer book, stretched out and fluffed up with a lot of exuberant filler words.  As for the timing of the book, it is not as perfect as it seems.  Fraser finished it when the market was still going strong.  From his perspective, the market had recovered from the bursting of the dot.com bubble and 9-11 and things looked good.  Now, sitting in the trough of “the worst recession since the Great Depression,” things look so much different.  In the current light, his closing has an ominous irony:
Whether Americans will continue nonetheless to find in Wall Street a welcoming place to indulge their romance with risk and dreams of universal abundance remains to be seen.

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