The Opening of the American Mind: Ten Years of The Point

By The Point

In a cultural landscape dominated by hot takes and petty polemics, The Point stands for something different. Informed by the conviction that humanistic thinking has relevance for everyday life, the magazine has long maintained a rare space for thoughtful dialogue between a wide range of political views, philosophical perspectives, and personal experiences: its contributors include liberals and conservatives, philosophers and activists, Marxists and Catholics, New Yorkers and Midwesterners. A little more than a decade since its founding on the campus of the University of Chicago, it offers a unique and revelatory look at the changing face of America, one that speaks not only to way American minds have been forced to “open” by a decade of trauma and transformation, but also to the challenge of remaining open to our fellow citizens during our deeply divided present.

Featuring award-winning and highly acclaimed essays from The Point’s first ten years, The Opening of the American Mind traces the path of American intellect from the magazine’s inception in 2009, when Barack Obama was ascending the steps of the White House, to the brink of the 2020 election. The essays, chosen both for the way they capture their time and transcend it, are assembled into five sections that address cycles of cultural frustrations, social movements, and the aftermath of the 2016 election, and provide lively, forward-looking considerations of how we might expand our imaginations into the future. Spanning the era of Obama and Trump, Occupy Wall Street and Black Lives Matter, #MeToo and renewed attention to reparations, this anthology offers critical reflections on some of the decade’s most influential events and stands as a testament to the significance of open exchange. The intellectual dialogue provided by The Point has never been more urgently needed, and this collection will bring the magazine’s vital work to an even broader readership.

• Language: English
• Publisher: Open Road Integrated Media
• Release date: Nov 6, 2020
• ISBN: 9780226738857

Book preview

THE OPENING OF THE AMERICAN MIND

THE OPENING OF THE AMERICAN MIND

TEN YEARS OF

THE UNIVERSITY OF CHICAGO PRESS

CHICAGO AND LONDON

The University of Chicago Press, Chicago 60637

The University of Chicago Press, Ltd., London

© 2020 by The University of Chicago

All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission, except in the case of brief quotations in critical articles and reviews. For more information, contact the University of Chicago Press, 1427 E. 60th St., Chicago, IL 60637.

Published 2020

Printed in the United States of America

29 28 27 26 25 24 23 22 21 20    1 2 3 4 5

ISBN-13: 978-0-226-73580-1 (cloth)

ISBN-13: 978-0-226-73871-0 (paper)

ISBN-13: 978-0-226-73885-7 (e-book)

DOI: https://doi.org/10.7208/chicago/9780226738857.001.0001

Library of Congress Cataloging-in-Publication Data

Title: The opening of the American mind : ten years of the Point.

Other titles: Point (Chicago, Ill.)

Description: Chicago : The University of Chicago Press, 2020.

Identifiers: LCCN 2020026852 | ISBN 9780226735801 (cloth) | ISBN 9780226738710 (paperback) | ISBN 9780226738857 (ebook)

Subjects: LCSH: Philosophy, American—21st century. | Philosophy, Modern—21st century.

Classification: LCC B946 .O64 2020 | DDC 191—dc23

LC record available at https://lccn.loc.gov/2020026852

This paper meets the requirements of ANSI/NISO Z39.48-1992 (Permanence of Paper).

Contents

Introduction   Jon Baskin & Anastasia Berg

•

THE END OF THE END OF HISTORY

•

Predatory Habits   Etay Zwick

Hard Feelings   Ben Jeffery

No Such Thing?   Jonny Thakkar

Forward with Fukuyama   Daniel Luban

•

AFTER FERGUSON

•

Who Will Pay Reparations on My Soul?   Jesse McCarthy

Linked Fate   Melina Abdullah

After Ferguson   Brandon M. Terry

•

FINAL FANTASY

•

Understanding Is Dangerous   Kathryn Lofton

Midwestworld   Meghan O’Gieblyn

Letter on Our President   The Editors

Pleasure Won   Lauren Berlant & Bea Malsky

Final Fantasy   James Duesterberg

•

TIRED OF WINNING

•

Tired of Winning   Jon Baskin

I Am Madame Bovary   Anastasia Berg

The Closing of the American Mind   Jacob Hamburger

Switching Off   Rachel Wiseman

•

Thinking Ahead

•

Innocence Abroad   Ursula Lindsey

This, Too, Was History   Peter C. Baker

The Dictatorship of the Present   John Michael Colón

Leaving Herland   Nora Caplan-Bricker

It’s All Just Beginning   Justin E. H. Smith

LIST OF CONTRIBUTORS

ACKNOWLEDGMENTS

Introduction

by Jon Baskin & Anastasia Berg

Written more than thirty years ago on the same University of Chicago campus where we would launch The Point in 2009, Allan Bloom’s The Closing of the American Mind: How Higher Education Has Failed Democracy and Impoverished the Souls of Today’s Students set off a raucous and often rancorous debate about the state of higher education. At its heart was the allegation that a new nihilism was gaining ground on America’s elite campuses. The culprit was an egalitarian relativism—the new education of openness—that persuaded the nation’s best college students it was immoral and probably impossible to make meaningful judgments about different cultures, life choices or ideas of the good. As they mouthed the slogans of diversity and tolerance, Bloom believed, his university colleagues were undermining the traditional basis of humanistic education—the search for a good life. True openness, as Bloom saw it, was inextricably linked to the possibility of knowing good and bad. Thus what was advertised as a great opening was in fact a great closing.

Reading Closing today, at a time when the crisis of the humanities consists less in high-minded debates about the viability of moral philosophy than in a daily drumbeat of apprehension about falling enrollments, the digitization of academic life and the corporate restructuring of the university—all likely to be exacerbated by the public health crisis that swept the country as we were completing this introduction—it can be tempting to dismiss Bloom’s concerns as anachronistic. To be sure, there have been threats to higher education in the ensuing years that Bloom did not fully anticipate or even envision—threats that have little to do with relativism or egalitarianism. Yet it would be foolish for us to deny that these threats have been aided and abetted by many of the trends that Bloom was among the earliest and most articulate to discern. Bloom foresaw, more vividly than many of his contemporaries—or ours—the fate awaiting humanities departments that neglected to address the fundamental questions: Is there a God? Is there freedom? Is there punishment for evil deeds? Is there certain knowledge? What is a good society? How should I live? These were the questions that had always attracted the brightest students to the humanities, Bloom observed. What did professors expect to happen when they informed those students that the texts humanists had consulted for answers for millennia were nothing more than vectors of ideology and oppression? Who could blame them for transferring into economics or computer science—as so many now have?

At a time when scholars are habitually asked to account for the value of the humanities—whether to our economy, our political life or our attempts at therapeutic self-improvement—there is much to be learned from Bloom’s insight that what some pejoratively label the elitism of the traditional humanities was in fact their greatest strength. Bloom recognized that if the humanities relinquished their role as the steward of the great conversation, they risked relinquishing much more than that. Like many of the thinkers he asked his students to grapple with, he was highly sensitive to the vulnerability of intellectual life to technocracy, greed, materialism and an immoderate individualism. If the university did not continue to be valued above all for its capacity to introduce America’s most privileged students to a robust dialogue—in its full grandeur and even occasionally in its arrogance—about the virtuous life and the just society, he had little doubt about what other masters it might serve.

Bloom’s pessimism about the humanities has been vindicated not only by shrinking enrollments but also by the almost complete disappearance of the assumption that the humanities can offer guidance on how to live. Paradoxically, it is this very development that reveals the true folly of Bloom’s argument in Closing: not his contention that humanities departments should address the fundamental human questions but his conviction that such questions could be addressed only within the confines of academia. The founders of The Point came to the University of Chicago, to the very same graduate program Bloom once led, in part because we shared his confidence that the humanities could speak to our most urgent personal, philosophical and political concerns. But the impetus behind The Point ran counter to Bloom’s restrictive account of who was qualified to participate in the conversation of culture. Indeed, our decision to start a magazine—a resolutely nonacademic forum for the exchange of ideas, interpretations and interests—followed from our rejection of any notion that the souls of today were dependent for their salvation on higher education.

Bloom, who spent his career teaching at the University of Chicago and Cornell, despaired of any general reform in society. He wrote for a few, the true friends of philosophy, who also happened to be students at the twenty or thirty best universities. When he was promoting Closing, he spoke repeatedly about the four years of freedom enjoyed by these students, a charmed period that fell between the intellectual wasteland of the student’s family life and the inevitable dreary professional training that awaits him after the baccalaureate. In such statements, rather than in his defense of the great books or his concern about relativism, Bloom reveals the dark side of his elitism. In theory, Bloom stood for the dignity of the different ways of life that were investigated in the great tradition; in practice, he was repulsed by the ways of life that differed markedly from his own. Beyond the university walls, he believed, lay a brown fog within which crowds flowed somnolently from birth to the office to death. At best, his elite students, having been exposed for four years to something higher, could get their listless compatriots to shuffle in the right direction. That the opening of the American mind might involve opening oneself to America—the actual as opposed to some ideal America—in addition to instructing it does not seem ever to have occurred to him.

The Point was not conceived with Bloom’s project in mind. But his one-way approach to intellectual dialogue, if perhaps predictable coming from a cultural conservative, is worth recounting here in part because we believe it describes a broader tendency to which the magazine has always been opposed. Skepticism about the ability of the public to think, whether based in a belief in natural inequality, or in the ideological mystifications of religious faith or consumer capitalism, is a perennial theme across our political spectrum. Among today’s leftist and liberal intellectuals, many who reject elitism toward the public in the strongest possible terms in theory seem unable to help recapitulating it in practice. In their insistence on monitoring what counts as acceptable public discourse, on correcting their fellow citizens’ faulty ideas and on reducing intellectual life to a war of position in which they play the role of enlightened vanguard, they betray their own contempt for actually existing democracy. Those who endorse Hillary Clinton’s judgment of the irredeemable prejudices of large portions of the American public—no matter how politely or privately—can hardly claim to distinguish themselves from Bloom’s conviction of that public’s irredeemable thoughtlessness. In fact, both attitudes are a manifestation of thoughtlessness—the thoughtlessness regarding one’s own inevitable ignorance that is always most tempting to the intellectual. The progressive commentator is unlikely to speak in such reverent terms as Bloom about the university’s responsibility to tutor the public, yet they are no less likely to conceive of the office of public intellectual as one of permanent lecturer.

The goal of The Point, in contrast to all those who show contempt, purposefully or not, for the nonacademic public, has never been to reform, protect or otherwise project the virtues of the university. For us, true openness dictates a converse movement, one that does not culminate with the minds of college students, no matter how closed or coddled. It means leaving the library stacks—and every other enclave of settled opinion—and confronting the pandemonium of the American mind in its multiple manifestations: in contemplation and reading but also at work and at home, in love, in protest and at play. You think your pain and your heartbreak are unprecedented in the history of the world, but then you read, said James Baldwin, describing the first half of a movement that we turn to Thoreau to complete: A truly good book . . . is so true that it teaches me better than to read it. I must soon lay it down and commence living on its hint. The American mind we admire and have encouraged to express itself in our pages is not a mind bred in isolation to rule or instruct its fellow citizens but one driven out into the world by its curiosity. It is a mind that wants to understand, not only the contest of ideas as they have been explicated in great books, but also the drama of social and personal life in which we try to test those ideas against our own experience.

When we ask ourselves what to eat, where to work, how to vote, whom to love or what to worship, we are immediately cast into philosophy. Whether or not we have had our four years of freedom at a great university, we will be compelled to make arguments to ourselves in response to these questions, and the answers we arrive at will take the shape of our lives. But these lives take place in a shared world, alongside family, friends and fellow citizens who will arrive at their own answers, often sharply at odds with our own. To acknowledge this is to recognize the fact not of relativism but of pluralism. Pluralism does not release the individual from the responsibility to choose or to judge, because it does not assert that all choices are equal, or that judgments of good and bad are futile. It does demand that we make our choices and judgments with humility, in recognition of the fact that other choices and judgments are both possible and defensible.

Just as there is no escaping the burden of making our own choices, so is there no escaping living with the choices these others make. We do have a choice about how to live with them. We can do so grudgingly, tolerating the differences of our fellow citizens out of prudence or fear, or simply because we see no alternative. In such cases, we harbor the secret hope that one day we will bring them all over to our way of thinking. This was Bloom’s hope—at least for the portion of the population that he considered up to it—just as it is the hope of all those today who see the job of the public intellectual as one primarily of correction and condemnation. Such a hope is plainly incompatible with the imperatives of true openness, not to mention with the character—insofar as one can be discerned—of the American mind. For it denies precisely what American intellect has always stood for at its best: the faith that there is no canon capacious enough to encompass the full breadth of our experiences, no principles so authoritative that they can trump our collective testimony.

There is another choice as to how to confront the fact of pluralism—that is, of living with people who hold views that are alien and sometimes repellent to us. In her lectures on the life of the mind, Hannah Arendt, another former professor at the University of Chicago, points out that Socrates, in speaking to Athenians who were shopping in the marketplace, on their way to war or tending to their gardens, intended in the first place not to instruct his fellow citizens but to learn together with them how best to live. For those who looked on—often the future leaders of Athens, the kind of elite youths who would be students at top universities today—what he modeled in these dialogues was not any special knowledge or vocabulary; still less did he sanction the appeal to tradition or convention. What he modeled, rather, was the soundless solitary dialogue we call ‘thinking,’ an activity that is not a prerogative of the few but an ever-present faculty in everybody. Indeed, according to Arendt, Socrates demonstrated that thinking was only apparently solitary. Thinking would be impossible if it did not involve voices other than one’s own, including the voices of those who were not in the academy and had no desire to wall themselves off in it. True openness followed from truly democratic pluralism. Only through dialogue with our fellow citizens—only by continuously opening ourselves to their criticism, instruction and difference—can we credibly claim to maintain an open mind.

---

•

Whereas The Closing of the American Mind was a polemic on behalf of Bloom’s idea of true openness, The Opening of the American Mind seeks to offer a demonstration of ours. The Point was launched on the South Side of Chicago in January 2009, the same month that a brilliant and charismatic former law professor was sworn in as the forty-fourth president of the United States. As graduate students at the time, the founders of the magazine had benefited from being protected, to some extent, from the realities of daily life in America at the tail end of the Bush presidency and the beginning of the financial crisis. But with Obama’s election we could sense, in the city and the country, the beginning of a renewed conversation about who we were and what we wanted. However much we valued our reading and our seminar discussions, this was a conversation to which we believed we could contribute, and from which we did not want to be protected.

This book tells the story, through the essays in the magazine that best capture the spirit of their time in thought, of the decade that followed. It is also an argument about how to tell that story. To create a public space that could do justice to the adventure of the American mind—in its full diversity and vitality—meant allowing our writers to go wherever their experience would take them. It meant publishing liberals and conservatives, philosophers and activists, Marxists and Catholics, New Yorkers and Midwesterners. And it meant continuously asking our writers not to relinquish their convictions but to trust that they were strong enough to withstand intelligent questioning and criticism. What emerges is, perhaps surprisingly, not a series of incongruous portraits. Still less is this collection an ode to centrism, compromise or consensus. What emerges, rather, is a prehistory of our present moment, wherein the distinctive individual perspectives combine to bring the disparate and at times disorienting events of the past ten years into focus.

Given the role that Obama’s ascendancy played in the genesis of the magazine, it is ironic that the first part of this book, drawn from the early years of The Point, is one of the grimmest. Although there are glimmers of Obama-fueled optimism in these early essays, they are predominantly a record of a country lurching into an existential cul-de-sac. In Predatory Habits, published in 2010 in our second issue, Etay Zwick looks at the financial crisis through the lens of sociologist Thorstein Veblen’s distinction between productive and barbarian societies. In pointing out how the mores of the barbarian financier had come to define an entire way of life—and not only for bankers—Zwick sets the template for the next two essays, which trace analogous developments in American social and political life. In Ben Jeffery’s Hard Feelings, an essay about the French author Michel Houellebecq’s brutalist portrayal of the late-capitalist sexual marketplace, the term depressive realism is coined to characterize the only form of literature capable of capturing a social reality where the news might simply be bad. In No Such Thing?, inspired by the death of Margaret Thatcher, Jonny Thakkar grapples with the paradox that in raging against Thatcher, our generation is, among other things, raging against the forces that shaped us—but rage as we might, they did still shape us, and they continue to do so.

Only in the final essay of this part do we begin to glimpse the promise of a politics that might respond to, rather than merely reflect, the ambient atmosphere of foreboding. In 1989, the political philosopher Francis Fukuyama delivered his famous end of history speech, predicting that with the fall of Soviet socialism there were destined to be no more viable challengers to economic and political liberalism. In the ensuing years, critics on the left and right ridiculed Fukuyama’s thesis, but, as Daniel Luban argues in Forward with Fukuyama, it was still not clear, in 2015, that a serious ideological alternative to liberal democracy had emerged, either in America or internationally. Yet Luban, writing four years after Occupy Wall Street in the midst of an unprecedented effort, in his adopted city of Chicago, to privatize what had previously been seen as core functions of the liberal state, sees reason to doubt that Fukuyama’s framework will prove as durable going forward. We still lack the vocabulary to describe what is happening around us, Luban concludes, but perhaps this very lack is a sign that the end of history will not last forever.

It has become fashionable to speak of the post-Occupy period as representing a new beginning for history, but the abstraction can obscure as much as it illuminates. What did it feel and sound like, in that historical moment, for people to begin to chart a new way forward? For the second part of the book, After Ferguson, we have chosen essays that address that question from the perspective of emergent activist movements around issues of class, gender and especially race. These pieces both reflect and interrogate the claim made by Cornel West that Ferguson signified the end of the Age of Obama. In Linked Fate, Melina Abdullah recounts the groundswell of rage and pain that overtook her community in the wake of the acquittal of George Zimmerman in the Trayvon Martin shooting, alerting her as a black woman to the brutality of state systems meant to disrupt our families and criminalize our very existence. As she traces the opening days of the Black Lives Matter movement in Los Angeles, Abdullah anticipates both the visceral personal engagement and the wider communitarian impulse that would characterize the upsurge in left-wing activism during Obama’s second term. In Who Will Pay Reparations on My Soul? and After Ferguson, Jesse McCarthy and Brandon Terry combine their personal experiences with historical and philosophical perspectives on the burgeoning movement, asking questions that remain relevant today about its relationship to the civil rights movement and the German experiment with reparations—as well as what it will take to leverage early gestures of recognition, as Terry puts it, into concrete victories and the enduring exercise of responsible political power.

Of course, not all the radical movements that had their origins in the second Obama term were progressive, and even as progressives pushed for a more complete equality, a countervailing set of forces began to appear on the political stage, one that wished not to advance the values of liberalism but to break free from them. Final Fantasy, the third part of Opening, includes writing from the immediate aftermath of the Trump election. Following the election, there was a surge of concern in mainstream media for the strangers in their own land—to quote the title of the sociologist Arlie Hochschild’s popular book on Tea Party conservatives in Louisiana—who had cast their votes for Trump. But much of this writing seemed to regard the developments as occurring at a safe distance from, or even confirming, the pieties of right-thinking liberals. In Letter on Our President, written by the Point editors, we caution against the temptation of dissociation, recommending that we recognize Trump as a product of forces and feelings with deep roots in both our history and ourselves. In James Duesterberg’s Final Fantasy and Kathryn Lofton’s Understanding Is Dangerous, the authors likewise challenge liberal common sense, asking us to consider the full reality and promise of alternative political, cultural and spiritual ideals. What would it mean if the people who were most forcefully committed to restarting history were the ones generally considered to be on the wrong side of it?

In the fourth part of the book we ask what help intellectuals can offer—if any!—during a period of such dramatic national discord. Drawing largely from the magazine’s issue 16 symposium, What Are Intellectuals For?, the essays in this part speak to the questions faced by public intellectuals in the Trump era. How do we balance the call to resist with our responsibility as thinkers? How can we create a space for genuine dialogue in a media landscape polarized by the dynamics of us versus them? How, in an increasingly politicized culture, do we do justice to the ongoing importance of aesthetic, spiritual and personal values? From Jon Baskin’s Tired of Winning to Anastasia Berg’s I Am Madame Bovary to Rachel Wiseman’s Switching Off, the essays in this part strive to articulate some of the deepest commitments we have always tried to uphold at The Point: that intellectuals have a responsibility to consider the truth embodied in perspectives other than their own; that we are part of the public we write for, and therefore do not lecture to it; and that our social and political commitments are strengthened, rather than compromised, by the adventure of genuine dialogue.

In our final part, entitled Thinking Ahead, we’ve collected the essays from the past two years that most successfully think beyond the calamities of the present. How might we build on the revelations around #MeToo, the renewed attention to reparations that has followed from the Black Lives Matter movement and the increasingly explicit disenchantment with neoliberal economics—aggravated into desperation by the pandemic and the ensuing economic turmoil? How can we conceive of America’s role abroad while avoiding the twin pitfalls of cynicism and naivete? And how can we continue to think beyond the present moment when so much of our current experience is framed in the rubric of crisis? These essays are not programmatic; they do not tell us which policies or ideologies to embrace or express any certainty about how the world will look in the aftermath of the 2020 election or of COVID-19. But they do ask us to expand our imaginations in ways we might not have dared back in 2009. They encourage us to liberate ourselves, to quote John Michael Colón’s provocative title, from the dictatorship of the present—and to ask ourselves, as Nora Caplan-Bricker does, What comes next? These are not the end times, Justin E. H. Smith observes in his dispatch from New York, in the opening days of the quarantine, but we might welcome the possibility of their bringing an end to some things. Any fashion, sensibility, ideology, set of priorities, worldview or hobby that you acquired prior to March 2020, Smith writes, you are no longer beholden to it. You can cast it off entirely and no one will care; likely, no one will notice.

Famously, at the end of his end of history speech in 1989, Fukuyama indicated that life in the forthcoming age would be very boring. His prediction of the cessation of ideological struggle shares a family resemblance with Bloom’s concern about democratic relativism, which he worried was causing his students to lose interest in the struggle to live virtuously as opposed to comfortably. Whatever the value of such insights for understanding their own period, the essays in these pages suggest that they are ultimately unsuitable for coming to terms with the events of our own. They offer undeniable evidence not only of the dissatisfaction bred by the perversely unequal distribution of resources and recognition under end-of-history liberal capitalism but also of the obstinacy of our desire to find greater meaning and purpose in our social lives. At the same time, and increasingly as they move closer to the present, they take note of a new set of challenges, characteristic of any age in which passivity gives way to passion. The danger to today’s American mind, it seems, is not that it will close itself to judgments of good and bad but that it will close itself to the possibility of meaningful disagreement about those judgments.

In allowing their impressions, experiences and ideas to be set beside one another, the writers in this collection signal their opposition to the prevailing assumption that political commitment is incompatible with a desire for dialogue, self-reflection or self-criticism. They remind us that, just as there are no alternative facts, so are there no alternative worlds. There are only the fantasy worlds in which we isolate ourselves, and the real one we all share, whose story we can only tell together.

I

THE END OF THE END OF HISTORY

Predatory Habits

HOW WALL STREET TRANSFORMED WORK IN AMERICA

by Etay Zwick

ISSUE 2 | WINTER 2010

More than a century ago, Thorstein Veblen—American economist, sociologist and social critic—warned that the United States had developed a bizarre and debilitating network of social habits and economic institutions. Ascendant financial practices benefited a limited group at the expense of the greater society; yet paradoxically Americans deemed these practices necessary, even commendable. Far from lambasting the financiers plundering the nation’s resources, we lauded them as the finest members of society. Their instincts, wisdom and savoir faire were idealized, their avarice and chicanery promoted under the banners of patriotism and virtue.

Veblen, an inveterate reader of ethnographies, noticed a historical pattern that could illuminate America’s peculiar relationship with its economic institutions. Societies everywhere fall between two extremes. First, there are societies in which every person works, and no one is demeaned by his or her toil. In these societies, individuals pride themselves on their workmanship, and they exhibit a natural concern for the welfare of their entire community. As examples of such productive societies, Veblen mentions Native Americans, the Ainus of Japan, the Todas of the Nilgiri hills and the bushmen of Australia. Second, there are barbarian societies, in which a single dominant class (usually of warriors) seizes the wealth and produce of others through force or fraud—think ancient Vikings, Japanese shoguns and Polynesian tribesmen. Farmers labor for their livelihood and warriors expropriate the fruits of that labor. Exploitative elites take no part in the actual production of wealth; they live off the toil of others. Yet far from being judged criminal or indolent, they are revered by the rest of the community. In barbarian societies, nothing is as manly, as venerated, as envied, as the lives of warriors. Their every trait—their predatory practices, their dress, their sport, their gait, their speech—is held in high esteem by all.

Our world falls into the latter form. There remains a class that pillages, seizes and exploits in broad daylight—and with our envious approval. Who are the barbarian warriors today? According to Veblen, the modern barbarians live on Wall Street. They are the financiers summarily praised for their versatility, intelligence and courage in the face of an increasingly mysterious economy. Today a growing number of Americans feel at risk of economic despair; in a world of unsatisfying professional options and constant financial insecurity, the image of Wall Street life offers a sort of relief. It symbolizes the success possible in the modern world.

But in order to capitalize mortgage securities, expected future earnings and corporate debts, Wall Street elites must first capitalize on our personal insecurities. They make their exploits appear necessary, natural, even laudable. This is quite a feat, since in those moments when we suspend our faith in the financial sector and candidly examine its performance, we generally judge Wall Street’s behavior to be avaricious and destabilizing, immoral and imprudent. At the best of times, Wall Street provides white noise amidst entrepreneurs’ and workers’ attempts to actualize their ambitions and projects. We are still learning what happens at the worst of times.

THE MYTH OF FINANCE

The myth of the financial sector goes something like this: only men and women equipped with the highest intelligence, the will to work death-defying hours and the most advanced technology can be entrusted with the sacred and mysterious task of ensuring the growth of the economy. Using complicated financial instruments, these elites (a) spread the risks involved in different ventures and (b) discipline firms to minimize costs—thus guaranteeing the best investments are extended sufficient credit. According to this myth, Wall Street is the economy’s private nutritionist, advising and assisting only the most motivated firms—and these fitter firms will provide jobs and pave the path to national prosperity. If the rest of us do not understand exactly why trading credit derivatives and commodity futures would achieve all this, this is because we are not as smart as the people working on Wall Street. Even Wall Street elites are happy to admit that they do not really know how the system works; such admissions only testify to the immensity of their noble task.

Many economists have tried to disabuse us of this myth. Twenty-five years before the recent financial crisis, Nobel laureate James Tobin demonstrated that a very limited percentage of the capital flow originating on Wall Street goes toward financing real investments—that is, investments in improving a firm’s production process. When large American corporations invest in new technology, they rely primarily on internal funds, not outside credit. The torrents of capital we see on Wall Street are devoted to a different purpose—speculation, gambling for capital gains. Finance’s second founding myth, that the stock market in particular is an efficient source for funding business ventures, simply doesn’t cohere with the history of American industrial development. When firms have needed to raise outside capital, they have generally issued debt—not stock. The stock market’s chief virtue has always been that it allows business elites to cash out of any enterprise by transferring ownership to other elites. Old owners then enjoy their new wealth, while new owners manage the same old corporation. The reality is that business elites promote the stock market far more than the stock market promotes economic growth.

Rather than foster growth, contemporary financial practices have primarily succeeded in exacerbating income inequality and creating singular forms of economic calamity. In the recent crisis, new instruments for expanding financial activity—justified at the time by reckless promises of universal homeownership—prompted a remarkable spiral of poverty, debt and downward mobility in America. The path from homeownership to homelessness, from apparent wealth and security to lack of basic shelter, is completely novel—as is the now steadily growing social group of middle-class paupers. (An estimated 10 percent of homeless people assisted by social service agencies last year lost their homes through bank foreclosures, according to the study Foreclosure to Homelessness 2009.) The homeless-through-foreclosure, having been persuaded by cheap credit to aspire to homeownership, were punished for unbefitting ambitions; any future pathway out of debt will be accompanied by new insecurities about the appropriateness of their life aspirations. Also novel in recent years is the extent to which economic booms no longer benefit average Americans. During the last economic expansion (between 2002 and 2007), fully two-thirds of all income gains flowed to the wealthiest one percent of the population. In 2007, the top fifty hedge and private equity managers averaged $588 million in annual compensation. On the other hand, the median income of ordinary Americans has dropped an average of $2,197 per year since 2000.

We habitually excuse Wall Street’s disproportionate earnings out of a sense that it helps American businesses thrive—but even corporations don’t quite benefit from Wall Street’s services. Consider the infamous merger between Daimler-Benz and Chrysler. In 1998, Goldman Sachs claimed that this merger would result in a $3 billion revenue gain. Stock prices responded extremely positively to the merger, which won the coveted Institutional Dealers’ Digest Deal of the Year Award. Only two years later, because of incongruities between the European and American parties, Chrysler lost $512 million in annual income, $1 billion in shareholder value in a single quarter, and was forced to lay off 26,000 workers. With the merger acknowledged as a failure, Chrysler was sold off from Daimler-Benz in 2007. Goldman Sachs, which had already made millions in windfall fees from the original merger, then walked away with millions more for advising the equity firm which now swooped in to pillage an ailing Chrysler. Bad advice seems to do little to tarnish Goldman’s golden reputation; after all, the firm can always point to its extraordinary profits as proof of talent and success. (Goldman Sachs ought to love the bad publicity it attracts nowadays; the headlines that reveal the billions made shorting housing and securities markets only solidify its status as Wall Street’s elite firm—capable of turning a profit even in times of economic crisis.)

The evidence suggests that Wall Street has assumed a negative relation to the economic interests of society at large. Many investment bankers are doubtless nice, hardworking people who give a lot of money to charity; nevertheless, they constitute a distinct class with interests diverging from society’s as a whole. This past year, unemployment skyrocketed from 6.2 to 10 percent. Meanwhile, Wall Street announced stock market gains of $4.6 trillion between March and October.

One might object: Surely this diverging interests portrait has been complicated since the Clintonian New Economy and the democratization of shareholding? After all, aren’t so many of us investors and portfolio holders today? In the past decade, new financial services promised to extend affluence to more Americans if we partook in finance’s collective economic vision. Broker services like E*TRADE enabled non-elite investors to enjoy increasing wealth as the background of their everyday lives. We all bore investment risks together and eventually we would share the resultant wealth. Or so we thought. Remarkably, business elites have managed to corral almost all of the recent winnings for themselves. In 2007, with the mortgage market on the eve of collapse and global economic crisis imminent, Wall Street meted out record bonuses totaling $32.9 billion. Holders of securities lost $74 billion.

THE MEANING OF FINANCIAL INNOVATION

Early on, capitalism encouraged entrepreneurs to invest in new technology, thus unleashing incredible productive potential. Yet as the hunger for profits outpaced technological innovation, the modern barbarian developed new instruments for increasing the value of his assets—without having to produce anything new. Rather than focus his energies on developing more