Liquidated: An Ethnography of Wall Street (a John Hope Franklin Center Book) [Paperback]

Karen Ho (Author)

Book Description

Publication Date: July 13, 2009 | Series: a John Hope Franklin Center Book

Financial collapses—whether of the junk bond market, the Internet bubble, or the highly leveraged housing market—are often explained as the inevitable result of market cycles: What goes up must come down. In Liquidated, Karen Ho punctures the aura of the abstract, all-powerful market to show how financial markets, and particularly booms and busts, are constructed. Through an in-depth investigation into the everyday experiences and ideologies of Wall Street investment bankers, Ho describes how a financially dominant but highly unstable market system is understood, justified, and produced through the restructuring of corporations and the larger economy.

Ho, who worked at an investment bank herself, argues that bankers’ approaches to financial markets and corporate America are inseparable from the structures and strategies of their workplaces. Her ethnographic analysis of those workplaces is filled with the voices of stressed first-year associates, overworked and alienated analysts, undergraduates eager to be hired, and seasoned managing directors. Recruited from elite universities as “the best and the brightest,” investment bankers are socialized into a world of high risk and high reward. They are paid handsomely, with the understanding that they may be let go at any time. Their workplace culture and networks of privilege create the perception that job insecurity builds character, and employee liquidity results in smart, efficient business. Based on this culture of liquidity and compensation practices tied to profligate deal-making, Wall Street investment bankers reshape corporate America in their own image. Their mission is the creation of shareholder value, but Ho demonstrates that their practices and assumptions often produce crises instead. By connecting the values and actions of investment bankers to the construction of markets and the restructuring of U.S. corporations, Liquidated reveals the particular culture of Wall Street often obscured by triumphalist readings of capitalist globalization.

Editorial Reviews

From Publishers Weekly

The timely question, What caused the current global financial crisis? provokes answers usually aimed at the level of institutions and the more abstract market logic. Ho's refreshing ethnography of the daily lives of Wall Street investment bankers takes another tack and outlines a web of practices, beliefs and structures that may be vital to understanding what keeps the market system in place despite built-in instabilities. Ho, a former business analyst and now an associate professor of anthropology at the University of Minnesota, unpacks constant downsizing, high risk/high reward job liquidity, shortsighted compensation structures, prestige and the ruse of shareholder value. Her keen eye for the significance of space illuminates workplace narratives, e.g., segregating staff by floor, function and prestige; constant and lavish recruiting events at Princeton and Harvard; and anticlimactically tawdry office space for most workers. The author exposes how elite undergraduates are immersed in a culture promoting finance as the only legitimate job, how educational pedigrees reinforce the financial world's self-image—while the actual jobs remain rigidly hierarchical (stratifying women, people of color and non–Ivy League graduates), highly unstable and isolating, encouraging a culture in which making money is the only value. (Aug.)
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Review

“[E]ngaging and hard to put down. . . Karen Ho’s book is a must-read for anyone contemplating joining one of the major global banks. . . . Actually, even faculty of our elite schools are starting to question why so many of their graduates end up in finance. Karen Ho’s book should be required reading for students and faculty at these schools.” - Ben Lorica, Quant Network

“Although written for a mostly academic audience, the book becomes easily digestible because of the summaries Ho adds in each section. She connects well the main theme throughout any areas of the book. Ho’s views should not be considered ‘anti-Wall Street’ but viewed as an analysis of Wall Street’s effect on the American community and the financial markets. This book should be read by Wall Street investment bankers and corporate managers to better understand the social values and responsibilities of corporations and the role that they play in the American community.” - Linda Kee-Koa, International Examiner

“After several decades when anthropologists at last overcame their inhibitions concerning the study of money, Karen Ho’s book . . . seems to mark a coming of age for the contemporary discipline. . . . The intelligence of its author shines through Liquidated. . . . I found it rewarding to read and reflect on, a landmark in the burgeoning anthropology of money.” - Keith Hart, American Ethnologist

“Karen Ho has picked an excellent time to publish her fascinating new study . . . of Wall Street banks. . . . As field-sites go, Wall Street is not classic anthropological territory: ethnographers typically work in remote, third-world societies. . . . Ho nevertheless embarked on her study in classic anthropological manner: by blending into the background, listening intently, in a non-judgmental way – and then trying to join up the dots to get a ‘holistic’ picture of how the culture works. That patient ethnographic analysis has produced a fascinating portrait that will be refreshingly novel to most bankers.” - Gillian Tett, Financial Times

“The book’s great strength lies in Ho’s careful observation of the means by which people succeed or fail on Wall Street, as she punctures many of the assumptions about how markets work.” - Keir Martin, Times Literary Supplement

“Karen Ho is my hero. . . . Her ethnography of investment bankers in the late 1990s, Liquidated, depicts the bravado, callousness, and contradictions that are the hallmarks of investment banking culture.” - Mitchel Y. Abolafia, American Journal of Sociology

“Liquidated is what many of us have been waiting for: a serious ethnographic consideration of finance capital. Using the best kinds of cultural and social analysis, Karen Ho gets inside Wall Street assumptions, turning them around to upend each other.”—Anna Lowenhaupt Tsing, co-editor of Word in Motion and author of Friction: An Ethnography of Global Connection

“We’re pretty familiar with the economic rationale for the regime of cost-cutting and downsizing throughout corporate America in recent decades. But Karen Ho’s research greatly enriches our understanding of how Wall Street’s own peculiar culture of transient relationships and relentless competition has contributed to the shareholder revolution. And, along the way, her interviews and fieldwork offer a very revealing picture of the mind of Wall Street. A fascinating and important book.”—Doug Henwood, editor of the Left Business Observer and author of Wall Street: How It Works and For Whom

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Product Details

• Paperback: 392 pages
• Publisher: Duke University Press Books (July 13, 2009)
• Language: English
• ISBN-10: 0822345994
• ISBN-13: 978-0822345992
• Product Dimensions: 9.1 x 6.1 x 1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.8 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #72,638 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

31 of 33 people found the following review helpful:

5.0 out of 5 stars Timely, incisive and brilliant, July 21, 2009

By 

William O. Beeman "Professor and Chair, Depar... (Minneapolis, Minnesota, USA) - See all my reviews
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This review is from: Liquidated: An Ethnography of Wall Street (a John Hope Franklin Center Book) (Paperback)

Karen Z. Ho is an anthropologist who did ethnography on Wall Street in the time leading up to the current financial crisis. She studied the "culture" of high finance in the largest Wall Street firms, while working in one of the largest. She documents in excruciating detail the fact that Wall Street is not just a neutral market place. It has a definite culture, and that culture led to the financial meltdown in 2008-2009. Among other points she makes is that American high finance placed an extreme priority on liquidity--that everything tangible had to be turned into liquid assets--sliced, diced and homogenized into negotiable commodities. It is thus that mortgages got turned into credit swap defaults and other esoteric commercial paper. Once that had been done, not only could the resulting products be bought and sold, they could be sold two and three times, and shorted. This book is penetrating, fascinating reading from a trained observer who understands both finance and the culture of those promulgating it. For anyone wanting to know the truth about the current financial crisis, this book is absolutely essential reading.

24 of 25 people found the following review helpful:

4.0 out of 5 stars Fascinating topic, impressive research, but not for all readers., November 7, 2009

By 

W. Tuohy (Bay Area, California) - See all my reviews
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This review is from: Liquidated: An Ethnography of Wall Street (a John Hope Franklin Center Book) (Paperback)

Derived from her PhD dissertation, this book seems designed for an academic audience. The Introduction can be painful, as it sets the intellectual context, demonstrates a command of theory, justifies research choices, and makes a case for relevance to the policy world. Subsequent chapters are more accessible and interesting. See the opening paragraph of Chap. 6, pp 249-50, for a clear, succinct statement of her agenda and conclusions.

How could this book - for the public now, no longer a dissertation - have been made more accessible? In the Introduction eliminate jargon and shorten sentences (stop addressing all imagined contingencies in a single sentence); eliminate all but key citations. Shorten the rest of the book by giving less exhaustive detail.

P. 296 summarizes one of her key findings: "Wall Street's rise to dominance - through its smartness, its use of history and shareholder value ideology, its 'own' experiences of downsizing as empowerment - has allowed it to project a local model of employee liquidity and financial instability onto corporate America and the financial markets at large, generating globalizing economic crises." The author develops this "local model" through "analyses of bankers' dispositions and organizational culture," based on research on Wall Street (mostly among low- and some mid-level professionals and managers).

This research is impressive, especially its case examples. Yet projecting that local model "onto corporate America and the financial markets" is harder to assess, and will be challenged: (1) By those who do not accept her purported linkages between (a) micro (employee) behaviors and sub-cultures, and (b) the larger course of economic and financial events. Rephrased, that the recruitment, socialization, and employment practices described cannot be so readily linked as causes to macro outcomes. (2) By critics who do not accept her macro (overview) analysis of the financial industry and its role in historical events.

I described this book's description of recruitment practices (from elite universities) to friends exprienced with CULTS. To them it sounded like the workings of a cult: firms pampering and flattering prospective hires, and assuring recruits that they can sustain the same elite associations and friendships after graduation. "Don't worry about going out into the humdrum, mediocre world. Our firm will help bring Princeton (etc.) with you." Ho seems at least implicitly to appreciate this view, but I would have expected an anthropologist to be more explicit.

12 of 15 people found the following review helpful:

5.0 out of 5 stars Real Insider Tips from Wall Street, January 11, 2010

By 

Donna G. Storey "writer and Japan scholar" (Northern California, USA) - See all my reviews
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This review is from: Liquidated: An Ethnography of Wall Street (a John Hope Franklin Center Book) (Paperback)

Karen Ho's fascinating study is provocative on so many levels, beginning with her courageous project to "study up" and analyze the culture of some of the most powerful men (and a few hardy women) in the world. On some level, I think everyone with a 401K buys the myth that The Market is an abstract force, rather like a moody Judeo-Christian god, rewarding and punishing us at His whim, but hopefully proving merciful in the end. By questioning this "natural" force and exposing the everyday practices of Wall Street, Ho provides convincing evidence that financial markets are in fact created and manipulated by very fallible human beings.

Ho's description of the recruitment and indoctrination of future masters of the universe is perhaps the most poignant part of the book. Targeting young people from elite Ivy League schools (I'm a Princeton grad and witnessed my own classmates' enchantment with the allure of investment banking as an uber-Princeton of the best and smartest), then forcing them to work hellish hours in a cutthroat environment that can only impair judgment, sounds rather chillingly like an initiation into a cult. But even those who survive the hazing face constant job insecurity and pressures to perform for immediate profit. Ho argues persuasively that Wall Street projects these dysfunctional values onto corporate America, to the detriment of millions of workers, shareholders and their families.

An earlier reviewer expressed the wish that this book could be made more accessible, and I agree that the message of this book would benefit a wide audience. However, this non-specialist reader found Ho's explanation of the history of financial markets and cycles to be very clear--I feel I "got" what really happens on Wall Street. I'd also like to humbly suggest that the use of "excruciating" in another review was not directed at the amount of detail, but rather described investment bankers' misguided ambitions and the costs to our society over the decades. Talk about painful! While it's hard to feel sorry for the people who create such havoc for us all, Ho's emphasis on their humanity and personal vulnerability provides a unique and illuminating perspective on our recurring financial crises.

There's no question our financial system as it stands is not serving us well, but is there any way for an ordinary citizen to fight back? While "smartness" alone may not be the key to global domination, knowledge is power, and reading this compelling book may very well be a good place to start.