Stories shape our world, and stock markets are no exception. This episode explores the entanglements of fiction and finance, from Robinson Crusoe to American Psycho. We discover how Tom Wolfe cut a deal with Wall Street, making finance male, rich and white, and see how the concept of ‘smartness’ perpetuates elitism and discrimination in Wall Street recruitment. A better stock exchange is going to need a better story; in this second half of my podcast series we’ll be discovering just that.
Imagine the financier. What does he look like? It’s going to be him, for reasons I’ll come to shortly. He’s white, of course. I wouldn’t be surprised if he has a striped shirt and braces – suspenders if you prefer – a perma-tanned face and slicked back hair. He opens his mouth, and you know what’s coming. Yes, greed is good…
It’s Gordon Gekko, a face and a speech burned into our collective imaginings of finance by Michael Douglas’ spellbinding performance. It’s not even a very good film, but it hit the cinemas just a few weeks after the crash of 1987 – where I wound up the last episode at the beginning of the summer – and captured the popular imagination. Gekko, Master of the Universe. We all know that phrase. It comes from Tom Wolfe and his Bonfire of the Vanities. You remember Wolfe’s description of the trading room at Pierce & Pierce, behind the faux English fireplace and club armchairs:
‘a vast space… an oppressive space with a ferocious glare, writhing silhouettes, and the roar. The glare came from a wall of plate glass that faced south, looking out over New York Harbor, the Statue of Liberty, Staten Island, and the Brooklyn and New Jersey shores. The writhing silhouettes were the arms and torsos of young men, few of them older than forty. They had their suit jackets off. They were moving about in an agitated manner and sweating early in the morning and shouting, which created the roar. It was the sound of well-educated young white men baying for money on the bond market.’
This is where men made money, where real men made real money, a supercharged, 1980s version of the heavy industry that had defined a previous generation of masculinity: blue collars and half-moons of perspiration seeping through the shirt, but the shirts are Brooks Brothers, and the rivers in the background run with money, not molten steel. The trading room Wolfe visited for his research was none other than that of Salomon Brothers, where the biggest of all ‘big swinging dicks’ hung out. That phrase is from Michael Lewis’s celebrated Liar’s Poker, his first person account of the buccaneering heyday of Salomon trading in the decade of greed.
These icons of finance are fixed in our collective narrative imagination.
Ironically, true greed doesn’t seem nearly as glamorous as Douglas, Wolfe and Lewis make out. A more fitting exemplar of contemporary elite finance would be the lovable, Latin-quoting everyman Jacob Rees Mogg (described by my friend, an actual classicist, as a ‘faux aristocratic, xenophobic, hedge fund… well, I’ll let you guess the last word), a walking self-parody seen lounging on the front bench of the House of Commons as if it were his private sofa.
Or Martin Shkreli, the former fund manager, self-styled bad boy ‘Pharma Bro’, and capitalist provocateur, who shot to notoriety for buying the rights to an essential HIV medicine and putting the price up by 5000%. Shkreli disgraced himself further by refusing to answer questions in a Congressional hearing and instead leering like a teenager given detention at school but determined not to lose face.
Here he is, interviewed by Forbes, explaining what he would have done differently next time.
Shkreli voice 
That’s right. He would have put the prices up more. It was his fiduciary duty to go to 100% of the profit curve, because that’s what they taught him in MBA class. It’s worth watching the video (and you can find the link via the transcript on the podcast website) to see Shkreli hunched over in his hoodie, unable to make eye contact with anyone in the room. This is a man who spent $2 million at auction to buy a one-off Wu Tang Clan album only to have it repossessed by the Federal Government. Who wound up with a prison sentence for fraud, having swindled his investors, and was then – allegedly – slung in solitary confinement for running his hedge fund from prison using a contraband mobile phone. Master of the Universe he is not.
Rees Mogg and Shkreli are characters that you couldn’t make up, or at least you wouldn’t bother doing so. The real stories here are something else, the narratives working in the background, a dream of buccaneering Britain in an ocean of free trade, or the fiducary duty to shareholders, right to the end of the profit curve, no matter what cost. These are the fictions that shape our world. Stories matter.
Hello, and welcome to How to Build a Stock Exchange. My name is Philip Roscoe, and I teach and research at the University of St Andrews in Scotland. I am a sociologist interested in the world of finance and I want to build a stock exchange. Why? Because, when it comes to finance, what we have just isn’t good enough.
If you’ve been following this podcast – and if so thank you – you’ll know that I’ve been talking about how financial markets really work, and how they became so important. I’ve been deconstructing markets: the wires, and screens, the buildings, the politics, the relationships, the historical entanglements that make them go, all in the hope of helping you understand how and why finance works as it does. In the second part of this podcast series, I’ll be looking at the stories we tell about the stock market. You might be surprised how much influence stories have had on the shape and influence of financial markets from Daniel Defoe to Ayn Rand. I’m trying to grasp the almost post-modern nature of finance, post-modern long before the term was invented, the fact that finance is, most of all, a story. Start-ups are stories, narratives of future possibility; shares and bonds are promises based on narratives of stability and growth. Even money is a story, circulating relations of trust written into banknotes, credit cards and accounts. Stories set the tone, make the rules, determine what counts and what does not. A good stock market needs a good story, so if we’re serious about rebuilding financial institutions then we need to take control of those stories.
In previous episodes I have suggested that the evolution of finance was driven by erratically developing technologies and political struggles and alliances. This is true, and helps us understand the chaotic history of stock markets and undo neat linear histories of economic and technological progress that lead inexorably to the world of digital high finance, as though there were no other possibility. A sort of Francis Fukuyama does finance, if you will. But it underplays the enormous role played by writing in the development of finance we know today. The literary scholar Mary Poovey has written extensively on the topic, and her 2008 book Genres of the Credit Economy is undoubtedly a masterpiece. Her basic claim is that from the seventeenth century onwards imaginative writing – and there was not, back then, stark demarcation between fact and fiction – helped people to understand the new credit economy and the kinds of value that operated within it. Financial markets are underpinned by styles of writing, and a primary function of writing was to help people get used to the idea of finance. For example, take such mundane financial objects as banknotes and cheques, ledgers and contracts. These are things we use every day. They are written things, but we don’t see that. Money has been so thoroughly naturalised that its identity as writing has disappeared, embedded instead in social processes. Even the written promise to pay is disappearing from banknotes – you can still find it on Bank of England notes but the euro carries only a serial number.
In the seventeenth century, however, these kinds of abstractions were problematic for a population that had always dealt in coinage, in specie. The developing genre of fiction, says Poovey, helps readers to practice trust, tolerate deferral, evaluate character and believe in things that were immaterial, all essential skills for negotiating this market world.
Three hundred years ago, Defoe published Robinson Crusoe. I read this for the first time just a few weeks ago, and cor-blimey, it is not the tame story we learned in primary school: there’s slavery and cannibalism, white supremacism and European-Christian expansionism. Even here we see a pecking order – though Crusoe is not too keen on Catholics, he has no time for them being eaten by heathens. Crusoe gets religion in a big way. And he just shoots everything! No sooner does an endangered beast lumber or roar into view than Crusoe has bagged its hide as a trophy, or as the story progresses, perhaps a hat. He is a model industrious citizen, an archetype of the petty bourgeoisie. He etches a calendar on a post and keeps books of account in a ledger scavenged from his shipwreck. In sum, Crusoe imposes the worldview of any good seventeenth century Englishman on his tiny island dominion, where he eventually becomes king over a growing and hard-working population. No wonder Marx had such fun with him!
Daniel Defoe did not just write Robinson Crusoe. Defoe was a central figure in an era sometimes called the ‘Age of Projects’. A prolific author of fiction and non-fiction, one of the first to earn a living from his pen and shape the world as he did so. Valerie Hamilton and Martin Parker, scholars who work in my own field, have drawn attention to the parallels between Defoe’s fictions and the rash of corporations that emerged in the same period.
‘The figure of Daniel Defoe,’ they write, ‘inventor, businessman, writer, politician and secret agent, characterises the age. His first published work, An Essay upon Projects (1697) bottles this energy. It is a series of proposals for the social and economic improvement of the nation – on banks, lotteries, women’s education and many other topics. Defoe explains that the richness of ideas at this time was generated from ‘the humour of invention’, which produced ‘new contrivances, engines, and projects to get money’’. Defoe defined a project as a vast undertaking, too big to be managed, and therefore likely to come to nothing. Crusoe’s task is a project, the unlikely, implausible but ultimately fruitful endeavour of turning brute nature into a well-disciplined, productive domain.
For Hamilton and Parker the project is epitomised by corporations, and particularly the Bank of England, which grew from the chatter of a few traders in Jonathan’s coffee house, as we saw in episode three, into a building of, as they put it, ‘timeless rusticated stone’, solid and substantial in the heart of the City of London. I should say, by the way, that you will find full references in the transcript on the podcast webpage.
For Poovey, Defoe’s project was nothing less than the attempt to incite belief through print. ‘In the realm of fiction,’ she writes, ‘the negative connotations associated with invalid money were neutralised by the claim that imaginative writing did not have to refer to anything in the actual world; in the realm of economic theory, the fictive elements intrinsic to credit instruments were neutralised by the introduction of abstractions, which would claim simultaneously to be true and not to be referential.’ More plainly, as novelists like Defoe sought to distinguish themselves by refusing to be held to account for the factual content of their stories, so money rode on their tail-coats. A growing cadre of financial journalists aimed ‘to demystify the operations of the city and make even the arcane language of finance familiar to ordinary Britons helped make economic theory seem relevant to everyday life and, not incidentally, make investing in shares in acceptable thing to do with money.’ Walter Bageshot (pronounced badshot) was the exemplar of these men, an early and influential editor of the Economist magazine. Last of all came the experts, the economic theorists, like Stanley Jevons (a distant cousin of mine) whose flights of marginalist fancy and economic scientism, depended both on the existence of dispassionate, factual writing and the availability of abstraction, even the suspension of disbelief, tools assiduously cultivated by the novelists.
We can push the argument further. Marieke de Goede argues that the very existence of the economy, or ‘finance’, as a zone separate from the political and amenable to scientific analysis, is the result of enormous storytelling, narrative work. For her, finance is ‘a discursive domain made possible through performative practices which have to be articulated and re-articulated on a daily basis’. Her examples include the construction of the Dow Jones index, a process that took considerable narrative work. The Dow Jones, or the FTSE, or any other such index, give us a way of talking about stock markets as if they were cut off from the rest of society, distilling them down to a single number, abstracted from all other concerns. As we saw in episode eight, these new narratives – these new numbers – are quickly wrapped up in the wires and screens of the market, forming a sealed, self-contained and self-referential whole.
Or even further: Max Haiven, the Canadian cultural critic, has written about the fictitious nature of money and the role of finance as ‘capital’s imagination’: ‘we are already making a mistake when we take umbrage at the staggering gap between the imaginary world of financial values and what we imagine to be a more real monetary economy. Finance is only a more complicated moment of the capitalist extraction of value. But this abstraction of value is always already at work whenever we speak about resources, social processes, and society in monetary terms.’ 
So we can start to see why this all matters. Stories persuade us that some things are normal, and that others are not; that some things matter and that some things do not. They can even persuade us that certain things are inevitable, when they need not be. The cultural critic Mark Fisher quipped that it is easier to imagine the end of the world than it is the end of capitalism. You only have to watch Spielberg’s Ready Player One to see such a vision in action: society collapsed, but the online retail of high-tech goods amazingly unaffected.
As you might have gathered, much of this cultural criticism has a Marxist bent, but it has been equally perceptive on gender and race. When Michael Lewis talks about the big swinging dicks of the forty-first floor, he does more than make us laugh. Lewis’ book is one of those all too common morality tales that end up eulogising the thing they set out to censure. It is no surprise that scores of undergraduates, keen to make their way into the ritzy world of investment banking, took up Liar’s Poker as a kind of how-to guide; even though, as Lewis makes plainly and comically clear, his own intro into that world comes entirely through personal connection and lucky chance. At the beginning of this episode I suggested that the financier we imagined would almost certainly be a he, and there is a reason for this. In the stories, it’s always he: from those Big Swinging you-know-whats, to the well-educated young men of Pierce & Pierce, baying for money in the bond market.
Tom Wolfe is a particularly bad offender here. Literary scholar Leigh La Berge argues that Bonfire of the Vanities, released days before Black Monday, helped to ‘cement an aesthetic mode that captured the way a new financial class was beginning to identify itself and its economic object.’ The book’s historical realism self-consciously mimics the great realist novels of an earlier era, of Dickens or Balzac: a new city, a new age, with all its vanities and perils, needing a new chronicler.
Wolfe paints finance as complex, a world of leverage buyouts, bond yields, and other such exotic, risky, dangerous creatures; a world accessible only to the ‘masters of the universe’ who inhabited it, and needing the intermediation of a white-suited literary giant to make it legible to the rest of us.
Wolfe makes clear the difficulties involved in representing an exclusive, elite financial world. And yet, says La Berge, ‘Bonfire includes a careful cataloguing of the difference between styles of town cars, codes of cordiality and comportment on the bond trading floor, rules for private school kindergarten admission, and how to hold the Wall Street Journal in public space… What those who had allowed Wolf to observe them received as compensation was a conception of finance as complicated, difficult, hard to define, and reserved for wealthy white men.’ La Berge suggests that Wolfe made a pact with Wall Street. In return for the access he needed, he would take their performances of finance at face value. his prose is littered with exclamation marks, onomatopoeic grunts and groans: ‘Wolfe records sensations of speed, sexual excitement, anxiety and pleasure. In this world of masculine sensation, finance finds its form. Men understand it. As he glares at his wife across the table, alternately planning a bond sale and justifying his affair to himself, Sherman thinks: “Judy understood none of this, did she? No none of it”.’
Wolfe got his ‘masters of the universe’ slogan, from Michael Lewis, and the two wink at each other in their texts: the great interpreters of the excesses of 1980s finance capitalism. Two decades on, and Lewis is still banging the same drum: another crisis, another translation needed, another reproduction of finance as gendered and complicated. The film version of Lewis’ The Big Short, directed by Adam McKay, is even more overt in its presentation of men as cool, rational and in command, and women as distracting and dangerous. Think of the scene where the leading short seller interrogates a topless dancer in a private room as to the viability of her mortgage payments. By the end of the conversation she has stopped dancing, her voice cracked with panic, while our hero calls the office to strike a deal. ‘There’s a bubble’, he says. Gavin Benke, who points this out, notes the very old conceptions of who should and should not participate in the market, concerning not just gender but also class and smartness, all circulating under the surface of the narrative.
The problem is that life imitates art. Literature is too clever, too self-aware to fall into the trap. It tears apart such realist simplicity – think American Psycho’s gruelling banality as non-descript bankers chat about consumer goods and endlessly re-articulate the social mores of which Wolfe is so proud – how to wear a pocket square, for example – interspersed with almost unutterable depictions of depravity and murder. Who could write realist fiction on finance now? But finance self-consciously reproduces these tropes: meetings conducted in strip joints and clients entertained by prostitutes, foul mouthed masculinity and a repertoire of bodily metaphors involving penetration, the steely disposition of the screen trader who pukes in the bin after taking a particularly bad loss and goes on scalping without further pause. All these are examples collected by empirical sociologists, things observed or stories heard in the field. Such narratives police who and who may not enter the market: ‘The stories that they tell and the heroes that they consequently install recreate a world where risk remains unruly and untamed, and stewards’ dreams of stability are there to be exploited,’ write Simon Lilley and Geoff Lightfoot, ‘The steward is seemingly driven to the market by a desire to minimise the potential disruption resulting from the market’s movements. The speculator, however, chooses to go there and to go only there, making their living through better understanding their home than visitors.’ Remember, from episode two, Jadwin, the buccaneering speculator in Norris’ great Chicago novel, locked in combat with the market as monster, all maw and tendrils; such metaphors tell how we place ourselves in relation to the world around us. Perhaps financiers better conceive of themselves as hunters, the aboriginal inhabitants of the stock markets. After all, a common expression for those working on a commission basis is ‘eat what you kill’.
Whichever way, no girls allowed here.
These norms are inculcated in financiers before they even get hired. The anthropologist Karen Ho documents the Wall Street recruitment process on the Princeton university campus, seen from her peculiar insider-outsider perspective of Princetonian, but postgraduate student, female and Asian American. She finds these old ideas of who should and who should not participate in the market very much alive. They fasten around the notion of ‘smartness’. Potential recruits are constantly reminded that they are the smartest of the smart, but Ho sees through any claim to intellectual resources. Instead, it means something quite specific:
‘such characteristics as being impeccable and smartly dressed, dashing appearance, mental and physical quickness, aggressiveness and vigour reference the upper-classness, maleness, whiteness and heteronormativity of ideal investment bankers…the specific elitism that is the key valence of smartness…’
And it helps to have been educated at Harvard or Princeton too. Being British, I don’t recognise the fine distinctions between elite American institutions, but Wall Street recruiters do. If you go to Yale, for example, you need to be studying economics; at Penn State it has to be the Wharton School of Business.
‘It is precisely these differentiations between ‘always already smart’ and ‘smart with qualifications,’ between unquestioned, generic and naturalized smartness and smartness that must be proved, that enact and solidify the hierarchies on which elitism is necessarily based.’
Nothing is without purpose in these stories. Ho suggests that this endless recruitment of the smartest of the smart, even when more established employees are being laid off in shrinking markets, serves to bolster the position of Wall Street relative to its clients in corporate America. For if the smartest of the smart are hired by investment banks – even if they do arrive to a drudgery of all-night shifts in rundown and non-descript offices – by definition those hired by corporate America must be less smart. By an easy logical extension, they must do what they’re told and pay the bankers fees. More than this, the stringent selection process, combined with toxic and insecure working conditions persuades bankers that such macho environments need to be spread elsewhere. This, argues Ho, offers a moral justification for the endless corporate manoeuvres, takeovers, and restructurings that Wall Street imposes on its clients across the nation. Paired with the notion of shareholder value, the ‘origin myth of Wall Street’, these fictions licence investment banks to do what they do best: make money. As we saw from Shkreli’s self-justification, the fiduciary duty to shareholders mandates any course of action, however morally despicable.
Stories shape the way we see the world. They underpin stock markets and everything that flows from them. Many of the problems we face, from populist politics to environmental degradation to the structural inequalities that beset the developed world today, flow from the stories of markets. They flow, for example, from the astonishingly persistent and corrosive narrative of shareholder value that we have just seen at work, taking medicines out of the reach of those who need them and creating insecurity, unhappiness and unemployment worldwide. We desperately need a new narrative of finance and markets: a narrative of building, mending, and making. We need institutions able to support this kind of activity, to pursue new modes of organisation that are not quite so wantonly destructive as the global corporation beholden only to its shareholders. So let me tell you another story, a set of stories in which I am myself caught up. They’re not exemplary, but they might be illuminating and even amusing. It’s a project, as Defoe might have said: a vast, uncertain, unmanageable and even foolhardy endeavour. I’m sure you’ll let me know what you think, but be kind: it’s a risky business, sharing.
I’m going to tell you the story of two stock exchanges, started in 1995, and how they did so much to create the world into which I tumbled as a naïve, cub reporter: the grimy underbelly of one of the greatest financial centres on earth.
I’m Philip Roscoe, and you’ve been listening to How to Build a Stock Exchange. If you’ve enjoyed this episode, please share it. If you’d like to get in touch and join the conversation, you can find me on Twitter @philip_roscoe or email me on email@example.com. Thank you for listening, and see you next time.
 Valerie Hamilton and Martin Parker, Daniel Defoe and the Bank of England: The Dark Arts of Projectors (Zero Books, 2016), 11.
 Mary Poovey, Genres of the Credit Economy (Chicago: University of Chicago Press, 2008), 89.
 Max Haiven, “Finance as Capital’s Imagination? Reimagining Value and Culture in an Age of Fictitious Capital and Crisis,” Social Text 29, no. 3 (108) (2011): 94.
 Traders shouting, under creative commons licence from https://freesound.org/people/touchassembly/sounds/146320/
 Leigh Claire La Berge, Scandals and Abstraction: Financial Fiction of the Long 1980s (Oxford: Oxford University Press, 2015), 88f.
 Gavin Benke, “Humor and Heuristics: Culture, Genre, and Economic Thought in the Big Short,” Journal of Cultural Economy 11, no. 4 (2018).
 S Lilley and G Lightfoot, “Trading Narratives,” Organization 13, no. 3 (2006): 371.
 Karen Ho, Liquidated (Durham: Duke University Press, 2009), 41, 66.