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

See all Editorial Reviews

Product Details

• Paperback: 392 pages
• Publisher: Duke University Press Books (July 13, 2009)
• Language: English
• ISBN-10: 9780822345992
• ISBN-13: 978-0822345992
• ASIN: 0822345994
• Product Dimensions: 6.1 x 1 x 9.1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.6 out of 5 stars  See all reviews (23 customer reviews)
• Amazon Best Sellers Rank: #76,059 in Books (See Top 100 in Books)

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39 of 40 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

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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. Read more ›

38 of 41 people found the following review helpful

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

By William O. Beeman

Format: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.

22 of 25 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 VINE™ VOICE

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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. Read more ›

12 of 15 people found the following review helpful

5.0 out of 5 stars The "Smartest...Bulimic Culture of Expediency"...in the World January 12, 2010

By William R. Neil

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Anthropology has done many things over the years for citizens of the "first world" trying to understand allegedly "exotic" cultures. It has shown us the humanity beneath the too easy stereotypes about foreign lands and cultures, and often revealed their surprisingly complex systems of practices and values. It has also held up a mirror to "modern" world values - one which has not always been flattering to our own self-images and definitions of how we think things "have to be" organized. Would it be unfair to say, then, that anthropology has had just a bit of the "deflator" about it, having a partly unintended message, implicit at least, and sometimes more than that, a message of a shared humanity despite the differences, especially for the high-perched civilization that would be receiving the field reports? The exercise of observing and reporting has also raised those exquisite modern methodological problems of "the Western white upper-middle class male anthropologist studying the less-powerful `native' in the context of the colonial and postcolonial encounter." That's author and anthropologist Karen Ho's voice inside the quotation marks, and she's set out to take contemporary readers on a journey to what she calls "the new exotic:" not to some newly discovered culture in the South Pacific, but instead to the seat of the most powerful symbol of the economic forces of modern day, "free-market" capitalism and "globalization" - Wall Street itself - via her fascinating book, Liquidated: An Ethnography of Wall Street.

And to this effort I say: why not?... Economists, historians, reporters, and even Rolling Stone writers have thrown everything they've got at trying to explain Wall Street behavior, especially in the wake of the great financial crisis - and to what effect, we have to ask, if by effect is meant an easing of The Street's hold over our elected officials in Washington? When I use the term "Wall Street," I mean to cast it additionally in the role of chief augur of that difficult deity, part secular and part religious, "The Market," which casts such a pervasive, chilly shadow over so much of modern life. Although Ms. Ho's main focus is upon investment banks, when she uses the term "Wall Street," she inclusively means "the concentration of financial institutions and actor-networks (investment banks, pension and mutual funds, stock exchanges, hedge funds and private equity firms) that embody a particular financial ethos and set of practices, and act as primary spokespeople for the globalization of U.S. capitalism." (Page 4).

One of the main impediments to greater citizen understanding of what has happened to all of us under the ominous shadow of both The Street and The Market is the shield of abstraction, of impenetrability, which surrounds them. That is nowhere more apparent than in the daunting nature of their derivative "products," such as mortgage-backed- securities, credit default swaps, and interest rate swaps, which have been the focus of so much analysis, if not understanding, during the crisis. Yet what was it that enabled The Street to have such a hold over us all, to market these incomprehensible investment instruments so easily? Karen Ho acknowledges the power of those abstractions over us, noting that "many academic critics of market fundamentalism inadvertently take as foundational the notion that the economy has become `disembedded' from society, that financial market logics - as utopian ideals - are being used to abstractly shape social relations, leading to social violence and inequality on a global scale..."(Page 33.) She also takes note of the trend towards "dematerialization," away from making physical things and towards more ephemeral financial inventions. Yet she offers us, in Liquidated, a very different approach, and asks: what if we stopped accepting all the abstractions about The Market, and the aura of The Street, and actually looked at "the local, cultural habitus of investment bankers, the mission-driven narratives of shareholder value, and the institutional culture of Wall Street?" In blunter terms, she says "allowing finance to be simply abstract lets it off the hook."(Page 34.)

There are really two main strands to Ho's work: Wall Street practices, and the values behind them. Of course, there is a close connection between the two, and they often shade into one another. We're going to look first at some of the startling practices of The Street, of the investment banks, in particular, and then at the values presented in a long series of interviews Ho conducted - the heart of her field work - which allows the practitioners to tell us in their own words what they believe they are doing in their job, how they see themselves in relation to corporate America, and what it means for the broader economy.

But before that, some facts, and thoughts, about Ho herself. She doesn't waste any time in putting her own values on the line. In the Acknowledgements, she tells us that "an intellectual commitment to social and economic justice first galvanized this book's journey" and that her "search to understand the massive sea changes occurring in American business practices during the past three decades took me to the doorstep of Wall Street investment banks..." And on the first page of the Introduction, we learn further that it was the massive lay-offs at ATT in 1995 and that decade's compulsive downsizings, often resulting from "merger and acquisition" syndrome - and the celebratory mood on Wall Street towards these job loss tsunamis - that really got her started. So one wonders, right away, how did someone with values like these ever make it inside The Street? Well, Ms. Ho had some credentials that we come to understand The Street looks upon very favorably, primarily, her Stanford and Princeton degrees, and also the sense that Wall Street seems favorably disposed to the Asian association with smarts and hard work. So she was hired at Bankers Trust in 1996 as a "`internal management consultant,'" but lasted just a brief time before getting "liquidated" herself. Nonetheless, she was able to network well enough to conduct 17 months of field work from February of 1998 to June, 1999, across a range of institutions.

I suppose these facts, as well as her descriptions of what she had to do in her last months actually working on The Street, might lead some observers to render the judgement that Ms. Ho has some "axes to grind." Yet she presents her field work findings with a remarkably light touch, allowing generous room for Wall Street's finest to tell us what they are up to and how they justify it. In her interviews, in her own questions and gentle coaxings, she reminded me very much of the verbal style of Public Radio's Terry Gross, the voice behind the "Fresh Air" interviews. So there is no ax-wielding by Professor Ho here, just some finely turned dissection with very sharp mental instruments. And, interestingly enough, there are no charges of Wall Street hypocrisy made, or to be made, from the findings. In fact, we learn that Wall Street, in matters of hard work, its own self-inflicted job insecurities, the focus on the short term performance of the stock market, and its own corresponding lack of planning, is consistent with the values and pressures it applies to the rest of corporate America. I don't know whether that finding comes as a relief to readers or not. As for me, the code of Wall Street is scary enough in its implications for our economic and civic life not to need any hypocrisy to embellish the damage that has been done.

Wall St. at Harvard and Princeton: "A Communal Obsession"
As we continue to ask ourselves, "how could it all have happened," that is, the financial crisis that nearly plunged the world into a second Great Depression, we should not forget the nature of the salespeople who peddled the faulty investments which almost brought it on. That's conveyed to us in a startling way in Chapter One, which Ho has entitled "Biographies of Hegemony." In an interview (individual names are changed, the institutions' kept) with a "Robert Hopkins, a vice president of mergers and acquisitions at Lehman Brothers," the pitch is: "`We are talking about the smartest people in the world. We are! They are the smartest people in the world. If you (the average investor or the average corporation) don't know anything, why wouldn't you invest with the smartest people in the world? They must know what they are doing.'"(Page 40.) Now where do you find the smartest people in the world? Arguably, but conventionally, the answer would be mostly at Harvard, Princeton and the Wharton School at the University of Pennsylvania. Why not MIT, and Stanford, and what's the matter with Yale? Well, maybe it isn't quite all about smartness. In fact, it's about cultural projection too: clothes, confidence, aggressiveness contained within good manners, body image...in brief, it's smartness well-packaged, because salesmanship for financial products, deals and mergers, scanning the horizon for new customers, depends on wide business networking and social interaction with corporate America, and beyond...as we will see shortly. So sorry MIT, Ho tells us ("too nerdy"), Yale ("too liberal") and Stanford ("too far" - from Wall Street, that is)...

Two things jolted me about this smartness motif and the recruiting process at Princeton and Harvard. One is the astounding numbers of undergraduates that want to ascend into this celestial orbit; at Princeton, from 37% of the class of 2001 up to 40% of the class of 2005 & 2006 "entered financial services," with similar numbers for Harvard. How could that be done? The answer is not pretty: Wall Street's presence "dominates campus life: recruiters visit the university virtually every week, even on weekends...the recruiting process saturates almost every aspect of campus life from the very first day of the academic year."(Page 45.) Ho presents us with a two page spread of "Goldman Sachs Recruitment Schedule at Harvard University, 2000-2001," and I count 30 or so events, multiples in every month from September through February. It's so Wall Street saturated at these schools that Ho says "a glance at the campus publications...demonstrates what amounts to a communal obsession..." (Page 53.)

It was in the light of Ho's illumination that I read with great interest Harvard President Drew Gilpin Faust's September 6, 2009 NY Times Op-Ed, "The University's Crisis of Purpose." It's a retrospective and lamentation at the same time, in the wake of the Great Financial Crisis, and what universities had become, unable to "expose the patterns of risk and denial" contained in that "bubble of false prosperity and excessive materialism..." She asks if "universities (became) too captive to the immediate and worldly purposes they serve" and, "has the market model become the fundamental and defining identity of higher education?" Noting the trend, since the 1970's, for business degrees to outnumber by a 2:1 ratio the next most popular major, she reaffirms a mission for higher education to "offer individuals and societies a depth and breadth of vision absent from the inevitably myopic present." This sounds hopeful, but the trends of 30 years of Market Utopianism, and the vast shadow cast by The Market, will not be lifted in an instant, barring a further economic catastrophe on the scale of the Great Depression.

Readers who would to see more commentary on Liquidated, and other works, are invited to visit a longer essay: Sinners in the Hands of an Angry Market at [...]

William Neil
Rockville, MD Read more ›