This is the third paper from the panel “No Bound For Riches Has Been Fixed For Man: Greed and the Intellectual History of Twentieth-Century American Capitalism,” convened at the recent S-USIH conference in Indianapolis. The panel abstract is here; Andy Seal’s paper is here and Robin Marie Averbeck’s paper is here. Andrew Hartman’s comments will be posted tomorrow.
Introduction: The Slip of the Spirit
In a lecture on the topic of greed and political theology, the Slovenian philosopher Mladen Dolar notes a fascinating detail of Freud’s Psychopathology of Everyday Life (a text famously devoted to the deeper meaning of slips of the tongue, botched language, catachresis). One of Freud’s patients describes her family as full of “gier” (“greed”), and then quickly corrects herself: what she means, of course, is that her family is full of “geist” (“spirit”). Dolar wonders if “greed” itself is not a “slip of the spirit,” with “spirit” here understood as the same term found in the title of Max Weber’s famous study of capitalist rationality: The Protestant Ethic and the Spirit of Capitalism.
In this paper, I seek to think further about “greed” as a “slip” of the “spirit of capitalism.” Since the sixteenth century, anxieties about “greed” have, in fact, consistently haunted capitalist thought (we might think of Thomas More’s Utopia, Shakespeare’s The Merchant of Venice, and Daniel Defoe’s Robinson Crusoe as key exhibits for the prosecution).
With the rise of capitalist thought in the late seventeenth century, we observe the formation of a certain dialectical pattern: defenders of the capitalist order obsessively anticipate the charge (from socialists and communists, primitive or modern; from workers and the poor; from religious agencies, etc.) that capitalism is simply “greed,” universalized. This leads to a dramatized and excessive disavowal of “greed” that seeks to distinguish between a “good capitalism” (the passions of which have been moderated) and a “bad capitalism”––a “slip of the spirit”––that, captured by greed, becomes a sort of barbarism.
“For Mercy’s Sake,” a letter to the Wall Street Journal, published July 2, 1984, from Rev. John Catoir, then director of the Christian outreach organization and television content-provider The Christophers, illustrates this dynamic of anticipation and disavowal of “greed.” Reflecting on recent crises in banking, Catoir asks: was the root cause of these scandals, ultimately, greed?
“No one likes to introduce the word greed,” Catoir muses, “because it has a pejorative connotation; but that’s what many people are saying.” “Greed,” derived from the Anglo-Saxon “groedig,” connotes hunger: “It signifies the state of a person who is hungry for more… The term greedy indicates a wholly reprehensible quality.”
But, immediately, Catoir cautions: “Profit-making is a legitimate incentive and no one has to apologize for trying to build an atmosphere of comfort for his or her family.” He hedges: “If you accept the definition of greed as a state of mind in which one constantly seeks to increase one’s riches, then in a sense all of us are greedy, even little children with their piggy banks.” Then, he makes the crucial distinction:
There is a line, however, which, when crossed, causes the loss of innocence… The greedy become avaricious when they are possessed, or worse, controlled, by an inordinate or unstable desire for gain, without consideration of the element of need. Avarice is blind, and it often leads to overreaching and consequent business failure. When greed becomes avarice, a serious character weakness is revealed. Only those advanced in the vice of greed become addicted to “plunderings, forcible seizures, severe exactions, heartless extortions, and preposterous demands for whatever he desires” (Crabb’s English Synonyms, pg. 392).
“Were the bankers,” Catoir asks, “greedy in this sense? Certainly not.”
As Catoir’s comments indicate, even in a period of capitalist triumphalism (the neoliberal era that we periodize here as beginning with the election of Ronald Reagan), “greed”––and its disavowal––remains a central concern. The 1980s may have been popularly known as the “Greed Decade”: but capitalism itself was extraordinarily conflicted about where the boundary separating a good “greed” from a bad “avarice” might lie.
By reading through the appearances of “greed” in the Wall Street Journal in the years between 1984 and 1987, I attempt to provide a proper intellectual-historical contextualization of this chronic anxiety, including importantly, the ways in which the will to disavow “greed” powers resentment of those in whose absence of whom capitalism might finally be fully enjoyed. Prior to this analysis, however, we should situate the discourse on greed in the broader dynamics of an emergent neobliberalism.
The historiography of neoliberalism has grown at a rapid pace over the past few years. One of the net benefits of this development is the increasing precision with which historians can now locate the crucial turning points and evolutionary leaps that led the way from the end of Keynesianism to the rise of the new market fundamentalism. These analytic gains are sometimes overlooked in scholarly reviews of the literature, in part because the intense battles between various schools of interpretation are so heated.
Even within Marxist historiography, the site of the most vigorous internal arguments about the causes and effects of neoliberalism, there is broad agreement on the character of the developmental timeline. Something decisive turned in the late 1970s. Whether the events of the succeeding decades are painted as reflecting elite concerns about declining profitability, the systematic misallocation of wealth into investment rather than the “real economy,” or a particularly intensified phase of mostly top-down class struggle––most historians of the United States agree that the action truly began with the failure of Jimmy Carter to pass long-promised social democratic legislation, the election of Ronald Reagan, and the shift from a loose to a tight monetary policy at the Federal Reserve (the infamous “Volcker Shock”).
What this story leaves somewhat obscure is the precise character of capitalist ideology in the first years of the Reagan administration. Most studies agree that the “Volcker Shock” took an unexpectedly long time to achieve its intended effect of bringing inflation under control. As Leo Panitch and Sam Gindin write: “The back of inflation was finally broken when unemployment (which initially rose only slowly from its 1979 level of 6 percent) reached double digits in the fall of 1982. It was at this point, exactly three years after it had been launched, that Volcker let it be understood that the ‘shock’ was finally over.”
Most studies also agree that Reagan governed as a sort of perverse Keynesian, cutting taxes for the wealthy, pouring money into the defense sector, and running record deficits. Privatization, deregulation, and, most importantly, the marketization of billions of dollars in pension fund dollars (following the 1974 Pension Reform Act) opened up new stores of public wealth for speculation by the growing armies of investment bankers and money managers.
At the same time, during Reagan’s first term, Americans became familiar with a new and exotic financial operation: the “highly leveraged buyout.” The new world of Mergers & Acquisitions typically involved the debt-financed hostile takeover of less profitable corporations, followed by asset-stripping, mass layoffs, and the quick sale of whatever was left over. There was something allegorically powerful about the new forms of Wall Street aggressivity. Asked in 1984 why old-line firm Morgan Stanley had moved so concertedly into high-yield investment banking, money-management chief Barton Biggs joked: “greed.” Biggs likely would have agreed that the passion for new forms of accumulation also powered the Reagan Era’s pervasive atmosphere of economic unpredictability, felt most immediately in the ever-changing relationship of prices to wages to purchasing power to credit to retirement security.
As Robert Brenner stresses, however, we should not exaggerate the power of these new speculative “masters of the universe.” The domestic manufacturing sector continued to shape economic policy. This was true at a deeper level than was immediately obvious. At the root of the twisted arguments justifying the corporate takeover movement lurked––or so said the court experts and supply-side gurus––the same desire that had animated Andrew Carnegie and Henry Ford: the quest for the greatest efficiency in the production of goods.
This was humbug, of course: the highly leveraged buyouts were effective sources of outsized fees for brokers and dividends for shareholders, but they were extraordinarily crude (and cruel) instruments of scientific management. The transparency of this false consciousness––the shabbiness of the idea that corporate takeovers helped to rationalize the economy––fueled the anxieties about the new face of the market system that began to permeate the corridors of the older capitalist enterprises. These blue-chip corporations still bore a considerable likeness to the portraits drawn by Berle and Means in the 1930s; they were not the testosterone-fueled casinos described by Michael Lewis and Oliver Stone. The older corporate elite grew increasingly worried over the course of the “Greed Decade.” Their concerns peaked with the sublime trauma of the stock market crash of 1987, followed by the slump of and malaise of the first Bush years.
We return, then, to the argument we sketched out in the introduction. What distinguishes one moment of capitalist ideology from another is the relationship established between faith in the ethical perfection of the free market system, on the one hand, and the ever-present specter of destructive forms of greed, on the other.
Greed in the WSJ
Combing through the pages of the Reagan Era Wall Street Journal, seeking references to “greed,” we anticipate that the majority of our reading will involve the infamous editorial page, with its snarling hatred of the working class, the poor, and the Welfare State. As other panelists will go over in more detail, the transformation of the “undeserving poor” into the “greedy” was a major discursive event in the history of the rise of the Right.
We certainly have encountered a good deal of ultramontane propaganda in the course of our research, of which a 1985 editorial on India’s Prime Minister Rajiv Gandhi––“Rajiv Reagan” serves as a useful example: “Prime Minister Rajiv Gandhi’s new government introduced its first budget last weekend, slashing taxes and cutting regulations in a way worthy of another famous tax cutter we know.” This amounted to a “minor revolution” for an India “long enamored of the socialist mirage.” India was not yet a “supply-side nirvana,” the editorialist mused, but for a country that had long believed that “private ‘greed’ must be contained”––“greed” is here in scare quotes––“even a few major liberalizing steps” were deemed praiseworthy.
But we have been surprised to discover that, while the editorial page scoffed at the very idea that “greed” might be a problem, many of the appearances of “greed” in the pages of the Journal involve struggles over the meaning of capitalism, conducted between and among members of the capitalist class.
Even in light of the history of capitalist intra-class tension reviewed above, this is surprising because we often intuitively think of the 1980s as a period of self-confidence and coherence on the part of ruling elites: preppies replaced hippies on college campuses; the bourgeoisie discovered a name for itself––“Yuppie”––about which it was not excessively embarrassed (in contrast to earlier formulations of “Babbitry,” the “grey flannel suit” straphanger, or “Peyton Place”); the economics profession mobilized around a new set of internally coherent (if largely science-fictitious) post-Keynesian projects; and the Manichaeism of the late Cold War allowed for the sloughing-off of lingering shame about corporate complicity in the Vietnam War and American imperialism.
If Howard Brick is correct to insist that much of twentieth century capitalism struck contemporary observers as “post-capitalist”––planned to an extent that market forces were no longer the motor of development––then the Reagan years should have been a moment of triumphalist self-satisfaction, a new Era of Good Feelings: finally, a true, authentic capitalism, restored to the throne in the United States.
What we find, instead, in the pages of the Wall Street Journal is a tremendously anxious and internally conflicted capitalist bloc. The anxieties expressed by management guru Peter Drucker in a 1984 editorial entitled “Taming the Corporate Takeover” set the tone. Drucker writes:
What explains the takeover wave that is engulfing American industry? Should it be stopped? And can it be stopped before it does irreparable harm? I am asked these questions every time I sit down with senior executives, middle managers, or union leaders. The questions are also increasingly being asked by bankers of Wall Street people despite the immediate gains they derive from unfriendly takeovers. It is increasingly hard to defend the unfriendly takeover as benefiting anyone other than the raider (and a few investment bankers and merger lawyers). Anyone working with management people knows that fear of the raider paralyzes our executives. Worse, it forces them into making decisions they know to be stupid and to damage the enterprise in their charge. A good many experienced business leaders I know now hold takeover fear to be a main cause of the decline in America’s competitive strength in the world economy––and a far more potent cause than the high dollar. It contributes to the obsession with the short term, and the slighting of tomorrow in research, product development, market development, and marketing, and in quality and service––all to squeeze out a few more dollars in next quarter’s “bottom line.”
Drucker’s here critiques the greed of the hostile takeover artist, as exemplified by the notorious Ivan Boesky. In 1986, Boesky would deliver his infamous “greed is healthy” commencement speech at Berkeley’s business school; shortly thereafter, he would be indicted for massive securities fraud.
Drucker singled out the “shareholder value revolution’s” legal double bind—the perverse metaphysics of the “fiduciary,” forced to seek out the maximum return on investment, no matter the social costs. For Drucker, it was the replacement of the “owner” by the “fiduciary” that loomed as the most portentous mutation of capitalism, the triumph of a certain destructive brand of greed:
The classical defense of ownership has always been that the “owner’ has an abiding, long-term interest in the welfare of his property and that, therefore, his decision are more likely than those of anyone else to balance and optimize the interests of all who have a stake in the enterprise: those of the owner, to be sure, but also those of employees, suppliers, customers, the economy, and society in general. The owner’s self-interest, argued the Roman lawyers 2,000 years ago when they developed the legal concept we now call “property,” was most nearly compatible with the true interest of the enterprise. But the new legal “owners” of our publicly owned businesses are forbidden as fiduciaries even to consider the interest of the enterprise. Can and will any society tolerate this? Can it even be defended as legitimate power? And how do we reconcile the justified interest of beneficiaries who need to be “investors” rather than “owners,” and whose priorities therefore are quire properly liquidity and the fast buck, with the welfare of society’s wealth- and job-producing asset: the going concern, the enterprise?
Finance titan Martin Lipton (inventor, in the 1970s, of the anti-takeover “poison pill” contract) picked up on Drucker’s critique of merger mania as greed-driven in April of 1985. In an op-ed for the Journal entitled “Takeover Abuses Mortgage the Future,” Lipton bemoaned the triumph of “greenmail,” with shareholders threatening to buy up a company and forcing management to buy out their shares at a premium price. Assailing these practices as essentially parasitic, Lipton pointed out that while these financial transfers benefited “takeover entrepreneurs,” they did not add to national wealth. Rather, they merely rearranged ownership interests by substituting lenders for shareholders and shifted risk from equity owners to creditors.
For Lipton, merger mania was even more insidious than this: it placed the American banking system and credit markets in jeopardy, kept businesses from growing, and depressed productivity. Lipton took issue with the President’s Council of Economic Advisers and the Office of Management and Budget, and the economic establishment, who had all argued that “hostile takeovers (were) economically desirable” because they moved assets into the hands of more efficient management. While this was true in textbook cases, there was no argument for efficiency in the “new bust-up liquidation takeovers.”
The drive to squeeze value out of middling companies by means of leveraged takeovers and buyouts was treason against mature capitalist reason itself: comparable to “a farmer who doesn’t rotate his crops, doesn’t periodically let his land lie fallow, doesn’t fertilize his land and doesn’t protect it by building fences, planting cover and creating windbreaks.” Of course, there would be short-term gains to be achieved by such an approach (a competitive edge gained against more prudent market competitors), but the inevitable consequence was soil exhaustion and economic ruin.
Like Drucker, Litpon laments “a policy favoring bust-up takeovers” as “a policy favoring the present at the expense of the future.” Unable to distinguish between short-term and long-term investments––infected by greed––the stock market was systematically misallocating money:
We have entered the era of the two-tier, front-end-loaded, bootstrap, bust-up, junk-bond takeover. Day after day the takeover entrepreneurs are maximizing their returns at the expense of generations that will not benefit from the research and development and capital investments that takeover entrepreneurs are forcing businesses to forgo. The message to companies is clear. If they want to avoid being taken over or busted up, they must sacrifice long-term growth and future profits. They must use the maximum amount of leverage and operate with the primary objective of short-term profitability. This may in the short run save them from the liquidator but, like the farmer who ravages his land, they will ultimately become victims.
While different in form, what the US economy faced in 1985 was “not different in substance from what happened in 1928 and 1929. Leverage produces great results on the way up, but no economy ever goes up in a straight line, and high leverage inevitably produces a crash when an economy turns down.” Like Drucker, Lipton ends his Jeremiad with a call for new federal legislation to curb the most destructive activities.
The Journal published scores of letters in response to Lipton’s warnings. Jesse Werner, CEO of a chemicals manufacturing corporation, expressed fear that “our country’s industrial growth will be needlessly undermined, all because of the immense greed of a few selfish individuals and the selective laissez-faire policies of the current administration.” Harry I. Grossman of Winnetka, Illinois castigated T. Boone Pickens and “his greenmail ilk”: “grand providers for their personal bank accounts, to nobody else’s ultimate benefit.” Carl Olson, Chairman of Vienna, Virginia’s Fund for Stockowners Rights insisted: “If the free enterprise system is to remain vigorous, it must reinforce ownership control over the businesses. These struggles for such control are a key battleground for the 40 million stockowners versus the incumbent managements.”
Evidently worried about a new regulatory push, the Journal’s editors followed up this back-and-forth with an attempted defense of the governing order. After “listening to the big debate on corporate takeovers this year,” the editors had found their way back to Schumpeter’s chapter on “The Process of Creative Destruction.” And, with Capitalism, Socialism, and Democracy in hand, the editors declared: “the longer we’ve thought about the subject the less we’ve come to fear a ‘takeover mania.’ Instead we fear some heavy-handed congressional regulation… The danger in inhibiting takeovers is cutting off Schumpeter’s creative destruction.”
While critics of takeovers like Lipton had “undoubtedly been able to identify some problems,” they had not singled out any elements unique to takeovers. The Journal was convinced that the highly leveraged buyout was a legitimate new tool, developed to suit the needs of the contemporary marketplace. Drawing on the enthusiasms of McKinsey & Co. consultants, the editors announced that in sectors like energy, the hidebound “vertically integrated corporation” no longer made sense “for either the investor or the consumer” (the concerns of workers, of course, are not mentioned):
The problem is how to shed inefficient refinery capacity, take advantage of the spot market, and return cash flows from oil production to the capital markets so they can be redirected to other opportunities. It is not impossible to do this within the structure of present oil companies; refineries and retail outlets are being closed. Exxon, surely not under any takeover threat, has repurchased some of its shares, a way of returning money to the capital markets. But inertia attaches to any large bureaucratic structure, and even when raiders have not succeeded in ousting managements they have often been the catalysts for necessary restructuring.
“In particular,” the Journal averred, “it’s important to remember that greed is disciplined by the marketplace…” Today, reading such lines, we reflexively recall the road from energy-sector market fundamentalism to the disaster of Enron. But a chastening was due to arrive much earlier, within months of the publication of this editorial: a wave of SEC indictments of the stars of the new economy (most famously, Boesky and Michael Milken) and, soon thereafter, the crash of the stock market.
The Journal’s cognitive dissonance ran deep. A popular history of the excess of the 1980s market culture, published in 1991, reminds us:
Even now it is hard to grasp the magnitude and the scope of the crime that unfolded, beginning in the mid-1970s, in the nation’s markets and financial institutions. It dwarfs any comparable financial crime… The magnitude of the illegal gains was so large as to be incomprehensible to most laymen. Dennis Levine, the small fish, confessed to $12.6 million in insider-trading profits. Ivan Boesky agreed to pay $100 million in forfeitures and penalties; no one pretends now that that is anywhere near the total of his illegal gains over the years. And then there is Michael Milken, whose crimes were far more complex, imaginative, and ambitious than mere insider trading. In 1986, Milken earned $ 550 million in salary and bonus alone from an enterprise that had been tainted with illegal activity for years. When he finally admitted to six felonies, he agreed to pay $ 600 million… Nor were these isolated incidents… Financial crime was commonplace on Wall Street in the eighties. A common refrain among nearly every defendant charged in the scandal was that it was unfair to single out one individual for prosecution when so many others were guilty of the same offenses, yet weren’t charged.
Surely the Wall Street Journal editorialist was aware of this situation as he put pen to paper in order to insist that the invisible hand always puts greed in its place. The dubious legality of the machinations of the Mergers & Acquisitions “pirates” was a public secret.
We see, then, the way that in a moment of class reorganization and the collapse of older certainties, “greed” was neither repressed, nor blocked out, nor angrily denied. Rather, “greed” was disavowed: simultaneously acknowledged and denied. This was a different operation from the Fordist displacement of anxieties about “greed” (usually onto the labor unions, the “robber baron” past, or the social democracies of Europe), and different also from the muscular over-identification with greed that would take hold in the 1990s. If we are to gain a fine-tuned history of recent capitalist thought, it is these various regimes of managing anxiety about greed––that slip of Weber’s capitalist spirit––to which we might to attend.
 Sigmund Freud and James Strachey. The Psychopathology of Everyday Life. New York: Norton, 1966.
 Max Weber, The Protestant Ethic and the Spirit of Capitalism. New York: Scribner, 1958.
 Letters to the Editor: “For Mercy’s Sake,” Wall Street Journal, Eastern edition [New York, N.Y] 02 July 1984: 1
 On the popular meaning of the term “Greed Decade,” see James B. Stewart, Den of Thieves. Simon & Schuster.
Leo Panitch and Sam Gindin write: “What the Volcker shock entailed in policy terms, as he later admitted, was not ‘very fancy or very precise.’ It ostensibly involved a change in procedure from announcing a target interest rate (and then selling or buying the quantities of Treasury bills through its ‘open market operations’ to reach it) to targeting the money supply (and then forcing banks to bid against each other for the funds they needed to maintain their reserves with. The Fed’s embrace of restrictive monetary targets may have been, as Krippner puts it, a ‘political cover’ to avoid direct responsibility for the resulting high interest rates, but the impact on the economy was clear enough: what was really significant about the conduct of monetary policy under Volcker ‘was not the money targeting but the austerity.’ Panitch and Gindin, The Making of Global Capitalism, 168.
 The classic early articulation of Reagan as upside-down Keynesian is Mike Davis, Prisoners of the American Dream: Politics and Economy in the History of the US Working Class. London: Verso, 1986. See also Robert Brenner, The Boom and the Bubble: The U.S. in the World Economy. London: Verso, 2002; Giovanni Arrighi, The Long Twentieth Century: Money, Power, and the Origins of Our Times. London: Verso, 1994.
 “The crisis in profitability of the 1960s and 1970s… showed the extent to which the prerogatives of the owners of capital had been undermined. The period since has seen a strong counter-attack under the slogan ‘shareholder value’, with the financial markets playing a crucial role in transmitting the pressure for improved profitability. An important factor behind the drive for shareholder value in the Anglophone countries was the rise in the proportion of corporate equity owned by financial institutions. Pension funds… swelled; traditionally they were tightly controlled by governments as to what assets they could hold, in order to protect savers from risk. However… the financial sector lobbied successfully to have these restrictions relaxed, allowing these funds to invest in corporate equities and in risky (‘junk’) bonds rather than safe government assets.” Andrew Glyn, Capitalism Unleashed: Finance, Globalization, and Welfare. Oxford: Oxford University Press, 2006. On “pension fund socialism,” see the classic Peter F. Drucker, The Unseen Revolution: How Pension Fund Socialism Came to America. New York: Harper & Row, 1976; and Robin Blackburn, “The New Collectivism: Pension Reform, Grey Capitalism and Complex Socialism,” New Left Review I/233, January-February 1999.
Ken Auletta, Greed and Glory on Wall Street: The Fall of the House of Lehman. New York: Random House, 1986.
 Randall Smith, “Buying In: Money Managers Ride Wave of Pension Cash, But Crest May Be Near — More Enter Field, and Some Adopt Special Strategies In Competition for Funds — Signs of a Possible Shakeout” Wall Street Journal, Eastern edition [New York, N.Y] 27 Feb 1984: 1.
 Robert Brenner, The Economics of Global Turbulence: The Advanced Capitalist Economies from Long Boom to Long Downturn, 1945-2005. London: Verso, 2006. Benjamin Waterhouse, “The Corporate Mobilization against Liberal Reform: Big Business Day, 1980: in Julian E. Zelizer, and Kim Phillips-Fein, eds. What’s Good for Business: Business and American Politics since World War II. Oxford: Oxford University Press, 2012.
Adolf A. Berle and Gardiner C. Means, The Modern Corporation and Private Property. New York: Macmillan Co, 1933.
 REVIEW & OUTLOOK (Editorial): “Rajiv Reagan,” Wall Street Journal, Eastern edition, Mar 21, 1985.
 Howard Brick, Transcending Capitalism: Visions of a New Society in Modern American Thought. Ithaca: Cornell University Press, 2006.
 Peter F. Drucker, Taming the Corporate Takeover, Wall Street Journal, October 30, 1984, 30. On Drucker, see Nils Gilman, “The Prophet of Post-Fordism: Peter Drucker,” in Nelson Lichtenstein, ed. American Capitalism: Social Thought and Political Economy in the Twentieth Century. Philadelphia: University of Pennsylvania Press, 2006.
 Takeover Abuses Mortgage the Future By Martin Lipton. Wall Street Journal, Eastern edition [New York, N.Y] 05 Apr 1985: 1.
 Letters to the Editor: “Pirates Sink Entrepreneurship” Wall Street Journal, Eastern edition [New York, N.Y] 16 Apr 1985: 1.
 REVIEW & OUTLOOK (Editorial) “Creative Destruction — I: Takeovers: The Market Test” Wall Street Journal, Eastern edition [New York, N.Y] 05 June 1985: 1.
 James B. Stewart, Den of Thieves. Simon & Schuster, 20-21.
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