Capitalism Betrayed
The rise of the White Collar Big Money Psychopath.
By PEGGY NOONAN
Friday, June 28, 2002 12:01 a.m. EDT
Three scenes.
It is a spring day in the early 1990s and I am talking with the head of a mighty American corporation. We're in his window-lined office, high in midtown Manhattan, the view--silver skyscrapers stacked one against another, dense, fine-lined, sparkling in the sun--so perfect, so theatrical it's like a scrim, like a fake backdrop for a 1930s movie about people in tuxes and tails. Edward Everett Horton could shake his cocktail shaker here; Fred and Ginger could banter on the phone.
The CEO tells me it is "annual report" time, and he is looking forward to reading the reports of his competitors.
Why? I asked him. I wondered what specifically he looks for when he reads the reports of the competition.
He said he always flipped to the back to see what the other CEOs got as part of their deal--corporate jets, private helicopters, whatever. "We all do that," he said. "We all want to see who has what."
Second scene: It is the mid-'90s, a soft summer day, and I am crossing a broad Manhattan avenue, I think it was Third or Lexington. I am doing errands. I cross the avenue with the light but halfway across I see the switch to yellow. I pick up my pace. From the corner of my eye I see, then hear, the car. Bright black Mercedes, high gloss, brand new. The man at the wheel, dark haired, in his 30s, is gunning the motor. Vroom vroom! He drums his fingers on the steering wheel impatiently. The light turns. He vrooms forward. I sprint the last few steps toward the sidewalk. He speeds by so close the wind makes my cotton skirt move. I realize: If I hadn't sprinted that guy would have hit me. I think: Young Wall Street Titan. Bonus bum.
Third scene, just the other night. I am talking to a shrewd and celebrated veteran of Wall Street and Big Business. The WorldCom story has just broken; he tells me of it. He has a look I see more and more, a kind of facelift look only it doesn't involve a facelift. It's like this: The face goes blanched and blank and the eyes go up slightly as if the hairline had been yanked back. He looked scalped by history.
For years, he said, he had given speeches in Europe on why they should invest in America. We have the great unrigged game, he'd tell them, we have oversight and regulation, we're the stable democracy with reliable responsible capitalism. "I can't give that speech anymore," he said.
Something is wrong with--what shall we call it? Wall Street, Big Business. We'll call it Big Money. Something has been wrong with it for a long time, at least a decade, maybe more. Probably more. I don't fully understand it. I can't imagine that it's this simple: A new generation of moral and ethical zeroes rose to run Big Money over the past decade, and nobody quite noticed but they were genuinely bad people who were running the system into the ground. I am not sure it's this simple, either: A friend tells me it all stems from the easy money of the '90s, piles and piles of funny money that Wall Street learned to play with. That would be a description of the scandal, perhaps, but not the reason for it.
At any rate it no longer seems like a scandal. "Scandal" seems quaint. It is starting to feel like a tragedy. Not for Wall Street and for corporations--it's a setback for them--but for our country. For a way of living and being.
Those who invested in and placed faith in Global Crossing, Enron, Tyco or WorldCom have been cheated and fooled by individuals whose selfishness seems so outsized, so huge, that it seems less human and flawed than weird and puzzling. Did they think they would get away with accounting scams forever? Did they think they'd never get caught? Do they think they're operating in the end times and they better grab what they can now and go hide? What were they thinking?
We should study who these men are--they are still all men, and still being turned in by women--and try to learn how they rationalized their actions, how they excused their decisions or ignored the consequences, how they thought about the people they were cheating. I mention this because I've been wondering if we are witnessing the emergence of a new pathology: White Collar Big Money Psychopath.
I have been reading Michael Novak, the philosopher and social thinker and, to my mind, great man. Twenty years ago this summer he published what may be his masterpiece, "The Spirit of Democratic Capitalism." It was a stunning book marked by great clarity of expression and originality of thought. He spoke movingly of the meaning and morality of capitalism. He asked why capitalism is good, and answered that there is one great reason: Of all the systems devised by man it is the one most likely to lift the poor out of poverty.
But, he asserted unassailably, capitalism cannot exist in a void. Capitalism requires an underlying moral edifice. Without it nothing works; with it all is possible. That edifice includes people who have an appreciation for and understanding of the human person; it requires a knowledge that business can contribute to community and family; it requires "a sense of sin," a sense of right and wrong, and an appreciation that the unexpected happens, that things take surprising turns in life.
Mr. Novak was speaking, he knew, to an international intellectual community that felt toward capitalism a generalized contempt. Capitalism was selfish, exploitative, unequal, imperialistic, warlike. He himself had been a socialist and knew the critiques. But he had come to see capitalism in a new way.
Capitalism, like nature, wants to increase itself, wants to grow and create, and as it does it produces more: more goods, more services, more "liberation," more creativity, more opportunity, more possibilities, more unanticipated ferment, movement, action.
So capitalism was to Mr. Novak a public good, and he addressed its subtler critics. What of "the corruption of affluence," the idea that while it is moral discipline that builds and creates success, success itself tends to corrupt and corrode moral discipline? Dad made money with his guts, you spend it at your leisure. The result, an ethos of self indulgence, greed and narcissism. The system works, goes this argument, but too well, and in the end it corrodes.
Mr. Novak answered by quoting the philosopher Jacques Maritain, who once observed that affluence in fact inspires us to look beyond the material for meaning in our lives. "It's exactly because people have bread that they realize you can't live by bread alone." In a paradoxical way, said Mr. Novak, the more materially comfortable a society becomes, the more spiritual it is likely to become, "its hungers more markedly transcendent."
Right now Mr. Novak certainly seems right about American society. We have not become worse people with the affluence of the past 20 years, and have arguably in some interesting ways become better. (Forty years ago men in the New York City borough of Queens ignored the screams of a waitress named Kitty Genovese as she was stabbed to death in an apartment building parking lot. Today men of Queens are famous for strapping 60 pounds of gear on their back and charging into the towers.)
But it appears that the leaders of business, of Wall Street, of big accounting have, many of them, become worse with affluence. Or maybe it's just worse with time. I think of a man of celebrated rectitude who, if he returned to the Wall Street of his youth, would no doubt be welcomed back with cheers and derided behind his back as a sissy. He wouldn't dream of cooking the books. He wouldn't dream of calling costs profits. He would never fit in.
Mr. Novak famously sees business as a vocation, and a deeply serious one. Business to him is a stage, a platform on which men and women can each day take actions that are either moral or immoral, helpful or not. When their actions are marked by high moral principle, they heighten their calling--they are suddenly not just "in business" but part of a noble endeavor that adds to the sum total of human joy and progress. The work they do builds things--makes connections between people, forges community, spreads wealth, sets example, creates a template, offers inspiration. The work they do changes the world. And in doing this work they strengthen the ground on which democracy and economic freedom stand.
They are, that is, patriots.
"The calling of business is to support the reality and reputation of capitalism," says Mr. Novak, "and not undermine [it]."
But undermining it is precisely what the men of WorldCom et al. have done. It is their single most destructive act.
Edward Younkins of the Acton Institute distills Mr. Novak's philosophy into "Seven Great Responsibilities for Corporations": satisfy customers with good services of real value; make a reasonable return to investors; create new wealth; create new jobs; defeat cynicism and envy by demonstrating internally that talent and hard work will and can be rewarded; promote inventiveness, ingenuity and creativity; diversify the interests of the republic.
As for business leaders, their responsibility is to shape a corporate culture that fosters virtue; to exemplify respect for the rule of law; to act in practical ways to improve society; to communicate often and openly with investors, pensioners, customers and employees; to contribute toward improved civil society; and to protect--lovely phrase coming--"the moral ecology of freedom."
To look at the current Big Money crisis armed with Mr. Novak's views on and love of capitalism is to understand the crisis more deeply.
Businessmen are not just businessmen. They are not just moneymakers. Businessmen and -women are representatives of, leaders of, exemplars of an ethos and a way of life. They are the face and daily reality of free-market capitalism.
And when they undermine it with their actions they damage more than their reputations, more than the portfolios of investors. They damage and deal a great blow to our country. They make a great and decent edifice look dishonest and low because they are dishonest and low.
When we call them "thieves" or "con men" we are not, with these tough words, quite capturing the essence of the damage they do and have done.
It would be good if some great man or woman of business in America would rise and speak of that damage, and its meaning, and how to heal it. It would be good if the Securities and Exchange Commission held open hearings in New York on what has been done and why and by whom, and how they got away with it until they didn't anymore. It would be good if the business leaders of our country shunned those businessmen who did such damage to the very freedoms they used to make themselves wealthy. And it just might be good if some companies, on the next casual Friday, gave everyone in their employ the day off, with just one assignment: Go read a book in the park. They could start with "The Spirit of Democratic Capitalism," and go from there.
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Ms. Noonan is a contributing editor of The Wall Street Journal. Her most recent book, "When Character Was King: A Story of Ronald Reagan," sis published by Viking Penguin. You can buy it from the OpinionJournal bookstore. Her column appears Fridays.
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