Wall Street: a cultural history, by Steve Fraser

How greed turned good

FABER & FABER £25 (632pp) / £22.50 (free p&p) from 0870 079 8897

Americans pray a lot and go to church quite regularly. To Europeans, that may make them strange. But a more important statistic than church attendance, likely to be of greater consequence in the long run, is that for the first time in US history roughly half the population participates in the stock market.

Whether as passive investors through pensions or mutual funds, or as aggressive day traders, Americans see their most important concerns, from retirement and medical care to education, directly linked to Wall Street. Stock tipsters and gurus have become media celebrities. Television is awash with reports on market trends. There are thousands of investment clubs, and books on investment race up the bestseller lists. Few doubt that Americans are deeply religious, but the mother church of daily life is located at the intersection of Broad and Wall Streets in lower Manhattan: the New York Stock Exchange.

In this long and vivid narrative, Steve Fraser shows that the history of Wall Street has alternated between periods of sharp public hostility and euphoric times. Then, the public fell in love with the stock market, fascinated by its colourful titans, and seemed prepared to throw money down the sinkhole of speculation. The collapse of an older hostility in the 1980s, during the Reagan presidency, and the open acceptance of the market consensus on the part of Bill Clinton, suggests to Fraser that the sharp criticism of free markets so widespread between 1930 and 1970 has no likely role in the future.

Yet it is the Progressives, launching salvo after salvo against the "Money Trust" or denouncing the banker JP Morgan, who capture Fraser's imagination. Novelists from Dreiser to Doctorow, wrestling with American greed and rootlessness, alone appear as remaining true to an older critique of money-worship. Other than in literary fiction, with its small readership, serious resistance to Wall Street can scarcely be heard any longer in America.

As the stock market enters its third century, it has achieved an unprecedented place of dominance. The most striking argument Fraser makes, through a discussion of popular board games, television shows, magazines, advertising, plays and novels, is that Wall Street has seized hold of the collective imagination, and shaped the nation in accord with its new theology, the "American consensus".

Doctrines which lurked on the fringes of the conservative movement have now moved into the mainstream. Fraser notes that the last American president to adopt an adversarial position towards Wall Street was Harry Truman. Figures like Rudy Giuliani, who as District Attorney in New York insisted that Kidder Peabody brokers under arrest be walked in handcuffs across the floor, are not critics of Wall Street. They just want it to be run honestly.

There are no more than sardonic and marginal voices in America objecting to free markets and lower taxes. The small-town pieties of Calvin Coolidge ("the business of America is business") were cited with seriousness and respect in the 1980s as wisdom to guide American public life.

The decisive turn in attitudes came in the aftermath of the war in Vietnam. Fraser reminds us that hard-hat construction workers from the rising World Trade Center beat up anti-war protesters on nearby Wall Street, and that a small number of brokers sought to help the anti-war protesters escape the attack. These deep divisions, and the sustained period of industrial decline and international humiliation which followed the war, left a vacuum. After Vietnam there was a bitter public, a discredited government and disgraced politicians.

Where were the alternative visions of social solidarity and community to be found? The Harvard sociologist Robert Putnam suggested that Americans were now less engaged in public life than at any time in the 20th century. They were "bowling alone" - a phrase vivid enough to win him an invitation to 10 Downing Street.

In the absence of alternatives, a theology of greed and individualism triumphed in American life. The voices praising greed found a ready audience. In 1986 Ivan Boesky, a noted practitioner of insider trading, was invited to give the commencement address at the business school of the University of California, Berkeley. Boesky had risen from a humble working-class Jewish family to become a leading figure in the world of high finance. His message was that "greed is healthy".

Later, Boesky cut a deal with the government, testified against his co-conspirators, and plea-bargained for a shorter term in prison. He also paid a $100m. fine. But Boesky's sentiments had an important afterlife. Gordon Gekko in Oliver Stone's Wall Street (1987) re-states Boesky's sentiments ("Greed is good") but in a far more seductive way. That is the point. We have all been seduced by a handsome, charismatic snake-oil salesman.

The waning of the old Protestant suspicion of speculation, the decline of the unions, the collapse of opposition, has perhaps brought America to an end of this chapter of its history. Fraser sees something in American life which the re-election of George Bush has confirmed. We are not going back to an older world of conscience, rectitude and social concern. Do brokers wearing Armani, and the public wearing Ralph Lauren tweeds, need an ethical code demanding that they care about the poor? Or is that, like spats, only for costume parties, not for real life? It is hard to image a more thoughtful, and urgent, book than Fraser's picture of a nation willingly seduced by greed.

Eric Homberger's cultural companion to New York City is published by Signal