December 9, 2005
Excerpts: The Battle For The Soul of Capitalism - Part II
Chapter 1 - What Went Wrong in Corporate America?
"A Pathological Mutation"
The great stock market bubble of 1997–2000, and the great crash that inevitably followed, are poignant reminders of the periodic but random aberrations described in Charles MacKay’s 1885 epic history of speculation, Extraordinary Popular Delusions and the Madness of Crowds. Each burst of madness, of course, is different, but each yields similar adverse consequences. The most recent episode witnessed the culmination of an era in which our business corporations and our financial institutions, working in tacit harmony, corrupted the traditional nature of capitalism, shattering both confidence in the markets and the accumulated wealth of countless American families. Something went profoundly wrong, fundamentally and pervasively, in corporate America.
At the root of the problem, in the broadest sense, was a societal change aptly described by these words from the teacher Joseph Campbell: “In medieval times, as you approached the city, your eye was taken by the Cathedral. Today, it’s the towers of commerce. It’s business, business, business.” We had become what Campbell called a “bottom-line society.” But our society came to measure the wrong bottom line: form over substance, prestige over virtue, money over achievement, charisma over character, the ephemeral over the enduring, even mammon over God.
Joseph Campbell’s analogy proved to be ominous. On September 11, 2001, we witnessed the total destruction of the proudest towers of American commerce, the twin towers ofNew York’s World Trade Center. While that tragic event reawakened the nation to many ofour social values, it was too late to deter our financial system from its ruinous course. In the aftermath, the stock market continued its downward trajectory. When the plunge ended, the aggregate market value ofAmerica’s corporations had dropped by a stunning 50 percent, the worst stock market crash since 1929–33. The value of U.S. stocks collapsed from $17 trillion to $9 trillion, before some $4 trillion of this paper wealth was recovered in the ensuing market rebound. New symbols of commerce arose from the ashes: no longer the proud towers ofcommerce, but beleaguered captains of industry. Too many of our business leaders were transmogrified from mighty lions of corporate success to self-serving and untrustworthy operators, with several doing “perp walks” for the television cameras.
Our bottom-line society has a good bit to answer for. As the United Kingdom’s chief rabbi Jonathan Sacks put it: “When everything that matters can be bought and sold, when commitments can be broken because they are no longer to our advantage, when shopping becomes salvation and advertising slogans become our litany, when our worth is measured by how much we earn and spend, then the market is destroying the very virtues on which in the long run it depends.”
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