on December 18, 2001
I have worked on Wall Street and I have to say this gives a pretty decent macroeconomic view of Wall Street. He explains stocks, bonds, derivatives, currencies, the Federal Reserve, Bretton Woods, the (in)efficiency of markets and many other topics. He then interprets what these things mean from a leftist perspective. The financial world is heavily right wing and accuses the left wing of not understanding how economics work and thus why the right wing is right about economics. This book will demystify acronyms like LIBOR, GDP and CAPM, and explain to you in Wall Street terminology how the rich are robbing the working class in this country (and the world) blind. Henwood's book, like Marx's Capital, is at heart an economic treatise with political ideas sandwiched in between the economic data and analysis. I said at the beginning I have worked on Wall Street and that is the truth - once you see the machine up close, or even become a cog in the machine, you realize how right people like Mr. Henwood really are.
on September 5, 1997
Wall Street is that most rare thing, a critique of capitalism that knows what it is talking about. Doug Henwood has been writing about Wall Street for some time. He produces the Left Business Observer, subtitled 'accumulation and its discontents', which looks like a cross between a bulletin for investors and a revolutionary manifesto. Henwood's insider knowledge of Wall Street means that he can be as radical as he likes, without being shrugged off as inconsequential.
Henwood is scathing about the idea that the stock market and its financial off-shoots exist to mobilise resources for production. As he points out, that is not what they have been doing. If anything the mergers and shake-outs are about taking resources out of production where profits are low. Over and over again Henwood emphasies the divergence between making money on the markets and real production. As he points out, growth in the stock exchange can as easily reflect faltering production as a boom.
Henwood reports the growth of investor-power in the USA, the increasing clamour for a greater return on their stock. Astutely, he traces its origins to the first stirrings of ethical investment, when small investors first started to make their voices heard at shareholders meeting by demanding disinvestment from apartheid South Africa. But as Henwood notes, what started with the highest of intentions quickly turned into furious demands for bigger dividends, to be paid for by more lay-offs.
Henwood's sources are eclectic: the most up-to-date neo-Keynesians jostle Sandor Ferenczi's psychoanalytic theories of money, Karl Marx's Capital and even the lyrics of a song by eighties punk band the Slits. But what keeps Henwood sharp is his basic intuition that it is the whole system that is at fault, not any singular feature of it. Introducing a chapter on the key players, he says that he could go on about Ivan Boesky and other disgraced traders, but that would only make the rest look artificially good. And, by way of a conclusion ('What is (not) to be done'), Henwood explains the weakness of every piecemeal scheme of reforming the markets, from ethical capitalism, to democratising the federal bank.
In that spirit he knows, too that the current trend for knocking the financial markets only to praise capitalist industry must be wrong. The reason is that the perverse growth of the financial markets is a symptom of the slow-down of capitalist investment, but not its cause.
on February 24, 2008
Ten years have passed since the publication of Henwood's paperback edition. In economic terms, that's an eon, so why bother in 2008 with a 10-year old book, given all that's happened financially in the meantime. Mainly, I wanted insight into how Wall St. really works. For a layperson such as myself, the lexicon and mechanics of the stock market are as untranslateable and arcane as the Runic alphabet. However, I didn't want one of those texts that uncritically repeats the official version every time a probing question appears-- you know, about how the market sends investment signals while directing funds into the most promising sectors of production. Sounds good, but I've been around long enough to separate theory from reality and recognize a self-serving statement when I see one.
So I picked up Henwood's tome for two reasons: the first three chapters define the basic lexicon and mechanics of the market, while the remainder presents contrasting points of view on how the markets really function. Sure, in the latter context, Henwood has positive things to say about capital's arch-enemy Marx, but considering how wealth is actually distributed-- or more accurately, not distributed-- Marx deserves a hearing, along with other critics, notably Keynes. How ironic that we as a culture are so quick to blame Marxist theory for its practical failings, but refuse to blame official capitalist theory for its 300 years of gross inequality and trickle-down. But then, I guess that's the function of apologetics, which among other benefits does offer the "exogenous" ready employment.
The first three chapters worked pretty well for me. I'm somewhat more conversant about "derivatives", "calls", "puts" and the rest. But I would advise other interested neophytes to pay attention in those boring highschool or college classes that really teach at the elementary level because Henwood does assume a certain level of sophistication in those explanatory opening chapters. Then too, the text is interlarded with refinements of one sort or another, e.g. "q-ratio", that may illuminate at a more advanced level, but nonetheless, cloud the explanatory level. But what there is of a disparity probably lies more with my hopes rather than with Henwood's exposition.
The discussion section, particularly the chapter on "renegades", is itself worth the purchase price. Both there and in the succeeding chapter, Henwood presents data and theory showing why and how Wall St. diverges from the official version of the securities markets. There's plenty here to mull over, and I agree with the reviewer who said the book should be required reading at business schools (fat chance!). The value of these heterodox perspectives remains as important now as 10 years ago, given the current crisis in the derivitives markets and its capacity to bleed through the entire financial system. In that key sense-- i.e. as deeper background to recent developments-- the book, I'm happy to say, hasn't dated at all.
on August 25, 2003
First a word about the publishing house: Verso Publishing is probably the finest publishing house in the world. When in a bind simply pick up any one of their titles and one cannot go wrong. It's imperative to read at least a few of their books at least once.
Henwood's Wall Street blows the lid off high finance like few other works. It's the definitive critical analysis (along with some of William Greider's books) of the high circles of wealthy investors.
Throughout Wall Street it rips apart the Federal Reserve Board and exposes its gritty innards. Henwood demonstrates that the Fed is an undemocratic institution that's obsessed with any hints of labor militancy, its biggest fear being wage inflation.
The Monetary School is also dissected by Henwood, being exposed as the fraudulent theory it truly is (or clever ruling class ideology). He points out that the Monetarists' ostensibly blamed the federal government for the Great Depression. Of course this has the fascinating effect of letting capitalism completely off the hook. The concepts of over productivity and income polarization, which were the defining characteristics of the 1920s, are rarely to be found in their school of thought.
Constant pressure by Wall Street for ever higher stock prices is what spurred most of the downsizing during the last decade according to Henwood. He smartly points out that this pressure for quick profit growth can often squelch research and development and investment projects which would benefit society. Because shareholders may very well deem these projects irrelevant to short-term profit growth.
Underlying Wall Street throughout Henwood continually pays homage to Karl Marx and some of his incredibly accurate predictions. He also demolishes old shibboleths such as the well worn canard that higher wages automatically translate into reduced employment opportunities, or that rising stock prices always mean a rosy economic picture for the general population. Wall Street proves that rising stock prices can often coincide with a poor economy for the masses.
Henwood documents the fraudulent work done by professional money managers who'd be better off throwing darts at a dart board than using their investment "skills" when making investment decisions for clients.
Some of the most important and informative sections deal with the rising consumer debt of the average American citizen. Being leveraged to the hilt, the family unit has basically been turned into a player in a giant Ponzi scheme. Capitalism in the United States desperately relies on credit-financed consumption to stay afloat.
Most books dealing with such an overarching topic give a paltry and dissatisfying "What is to be Done" final chapter. This isn't the case for Wall Street. Henwood offers up many concrete and plausible solutions. Finally at one point asserting that an authentic financial transformation must be made along with an attack on capitalist social power in general.
on November 25, 1997
This is an impressive book; well researched, written in a detached and scholarly way, yet full of humour, it convincingly shatters most of the myths that have shaped economic policy in the world since the mid-seventies. Henwood claims, supported by a lot of evidence, that stockmarkets fulfill no useful purpose as far as production of real goods and services is concerned; we could abolish them with no loss for the economic well-being of society. More: he demonstrates that the enhanced power of stockmarket investors over corporations - a phenomenon that goes back to the mid-seventies, for until then American capitalism was content, for all practical purposes, to leave control to managers - had disastrous consequences for the standard of living of employees (i.e. most of the population): reduced growth and investment rates, massive layoffs, shrinking wages, etc. This, of course, had already been stated in dozens of other books on the subjects of Wall Street, Corporate America, Reaganism,etc; but Mr. Henwood goes far beyond the mere "corporate trashing" shool of litterature. He introduces the hipothesis that the abandonement of keynesianism - and the consequent adoption of monetarism - as the main doctrine in the academic and economic policy centers of the western word since the seventies was a direct consequence of a new political and ideological strategy of American and European elites: faced with the growing confidence of an increasingly restless and uncontrollable working class "pampered" by decades of growth, full employment and a welfare net that gave "them" a sense of security and empowerment, the ruling classes of the West slowly but effectively began to implement a cure of austerity. Clamping down on demand because of supposedly "high" prices, increasing interest rates, reducing deficits, striving to reach a "natural" rate of unemployment that meant throwing thousands on the dole queues - all in the name of the new economic ortodoxy of monetarism - slowly eroded the economic and consequently also the political power of non-elites. No wonder then if the nineties have been a decade of undisputed rule by corporate and financial elites on both sides of the Atlantic. Mr. Henwood concludes his book with a few Keynesian prescriptions (do's and dont's) to overcome the present situation: don't privatise social security, tax wealth (like Switzerland presently does, as he reminds us), tax currency transactions and stockmarket investments, above all go for a policy of growth and full employment. There are, he says, no sound economic reasons not to follow this line of action, but of course elites will do everything in their (enormous) power to prevent a return to any form of Keynesianism, however mild. Henwood's analysis and conclusions are thus really an Appeal to Reason: a world where the ideas of Keynes are seen by the establisment as a dangerous form of radicalism must no doubt be out of its mind.
on November 24, 2002
Critics of America's financial system (capitalism) have pointed to economic deficiencies such as recessions, depressions, unemployment (and underemployment) and so forth as cracks in the system, and with a lot of these cracks popping up recently I've become more interested in the financial system and what's wrong with it. Doug Henwood's book "Wall Street" is very helpful in that respect. We also see a picture of economic history that for some reason we don't see in the news much: over the past thirty years, hours worked have increased, productivity has increased enormously, wealth for the rich has increased enormously but household debt has exploded as hourly wages (inflation-adjusted) have fallen. This is a very interesting trend which I didn't even know about until I read Henwood's book. I guess I'd heard people mention it in passing, but until he lays out the data, where it came from (BLS, Federal Reserve, NBER etc.), puts it on charts etc. it doesn't really hit you as being real as opposed to rhetoric.
Economic books can be dry reading, thus Henwood's wit helps make the reading more enjoyable. Henwood's sympathies also seem to lay with working class people over the rich who the financial markets usually serve, which makes reading easier as well as I don't have to read every passage critically wondering if he is trying to BS me into believing something that's against my interest to believe. This book got me interested in Henwood's other ventures - his newsletter, magazine, radio show, web site, mailing list etc. and they are all interesting as well. I hope every American reads this so they can understand better how this economic system works - after all, the fact that you spend most of your time in life working in order to get money means that *understanding* how money works is one of the more important things in life, right?
on June 18, 1997
Wall Street is a well conceived and much needed critical, and accessible, primer on international finance and economics that is worth buying just for the fascinating charts, graphs, and statistics within. While floating between the roles of journalist, scholar, and critical critic Henwood has a real skill at clearing away the mud surrounding institutions that often leave outsiders dumbfounded to understand "how they work and for whom."
Though the title of the book is "Wall Street," its focus is really the much broader world of finance, wealth, and power. Stocks, bonds, options, currency, swaps, The Fed, FX exchanges, S&L and derivative scandals, institutional investors, consumer credit, debtors and creditors, gold, leverage, financial theory, monetarism, Keynes, Marx, the relation between shareholders and managers, stock markets and workers, financial markets and governments, the distribution of wealth, and what is to be done are all incorporated into this thorough, but unintimidating, book.
Understanding how financial institutions work is the preoccupation of much sophisticated economic analysis, and Henwood does an admirable job at laying out the major lay and academic theories, their implications and faults. But what sets this book apart is the attempt to move outside the narrowness of how and, sometimes, why traders trade and buyers sell to the effects their actions, and the institutions in which they take place, have upon others and the power relations which are responsible for their profits and losses.
Henwood combines witticism and lucidity to make for a highly informative book, and a delightful read. It is certain that any reader of "Wall Street" will leave with a multitude of general information, new ideas, and insights about finance, political economy, and the individual's relation with them
on September 14, 1998
The frantic shudders of the global stock markets over the past few weeks have no doubt sparked some anxious moments for millions of Americans who have been seduced by the lupine legions of brokers and a giddy media into offering up a hefty share of their earnings into 401-K plans and mutual funds. If only these investors had read Doug Henwood's Wall Street they might have realized from the outset that a perpetual sense of hopeless anxiety is an axiomatic part of the Faustian bargain they struck when put their cash into the hands of their "investment counsellors".
In Wall Street, Henwood takes readers inside the one place on Earth where the population most resembles that in the inner circles of Dante's Inferno. Along the way Henwood explodes three of the major myths of the market:
1. That the stock market is a primary way corporations raise capital; 2. That stocks prices have a direct relation to the value of a corporation (look at Amazon.com, for an example close at hand) 3. That the Dow Jones average provides any real indication as to the health of the American economy.
Henwood has written a cautionary tale, an instructive counter to the go-go treacle we are fed daily by the financial press. His prose style is a pleasure to read: clear, biting with irony, and neatly balancing outrage with humor.
Doug Henwood's Wall Street also stands as a vital political work, a perfect hedge fund against the last great project of neoliberalism: the privatization of social security.
on May 26, 2013
This book is a classic. Some of the numbers are a few years old, but the institutional factors described by Doug Henwood, who runs an excellent website www.leftbusinessobserver.com which features a weekly radio show and podcast that has some of the most knowledgeable and interesting guests, are as important to understand and as true as ever. I highly recommend his podcast/radio show, and enjoy his presentation, writing style, and contributions.
on March 3, 2004
Journalist Doug Henwood has produced an interesting book on U.S. financial markets. Written from a left-wing point of view, Henwood contends that these markets do not raise capital for new investments or improve corporate governance. Instead, he argues that their primary function is to enable manic corporate restructurings that accomplish little besides shifting additional wealth to rentiers who already have plenty of it. Henwood relies mainly on the research of others.
The good news about "Wall Street" is that Henwood is witty and iconoclastic. The bad news is that having these traits doesn't mean that he can put together a good book. His bloated and repetitive text mixes statistics, polemics, anecdotes, biz school research, and potted discussions of Keynes, Marx and Minsky (and Freud!). The mish-mash of data definitely informs and entertains the reader (hence my rating of 4 stars) but never systematically establishes Henwood's core thesis about the parasitism of Wall Street. The book is worth reading but mainly for readers with a background in finance or economics who can separate the wheat from the chaff.