I saw this customer comment about "Wall Street" on Amazon.com. I couldn't resist posting it. See, Doug, you do have a social function, after all: you show the ruling class what it's not supposed to believe.
Bill from Washington, D.C., 07/30/98
Valiant, though muddled, effort; Facile conclusions This book should be required reading for all MBA students and undergrad econ majors, so that they can test their understanding of economics and finance by rebutting the majority of Henwood's assertions in this book that are egregiously false.
This was a delightful book to read, if only because it tests the mind. Henwood makes some extremely important points and asks some fine questions. For example, he is absolutely correct to note that the stock market provides little new capital formation. He is also, I believe, correct in his portrayal of investment bankers as unctuous and predatory. The qualifiers "some" or "many" would be useful in the text but restraint is hardly a quality that Henwood possesses. One comes away with the overwhelming conclusion that beyond the Herculean effort it must have took for a layman to partially digest the arcana of modern financial academic research, Henwood just has a Manhattan-size axe to grind with New York financiers. This book is his whetstone.
Henwood has little to no understanding of basic economic concepts. He fails to distinguish between a financial decision (yes, online day-trading for the average Joe is a losing proposition because of transaction costs and the relative efficiency of markets) and an economic decision (I may decide to day-trade online anyway because I enjoy the adrenaline rush; I attach a high marginal utility to this activity). He fails to understand that the value of the stock market is in its marginal re-allocation of investor capital as an information signal about the performance of corporate management and growth. In fact, he fails to understand the concept that only that which is marginal is relevant to any kind of economic decision making.
At least Henwood is honest in the introduction when he muses that his angry obsession with Wall Street is probably a sign that he is in need of psychotherapy. But then he finishes the book with raving about how anyone involved in finance must be anal-retentive, sado-masochistic, and just downright evil. And, by the way, psychotherapy is in the same league as these illnesses, "the disease of which it is the cure". ???? What is one to make of this horrendous substantial inconsistency?
For those who think solely in political terms and who are economically illiterate, Henwood's tome will leave them looking for still more "capitalist" ogres under the bed. This is a shame, since he touches on the need (a vital one, in my opinion) to recouple economics and political philosophy into political economy and then fails to examine this rigorously. Likewise, Henwood delves into the merits of Keynesian economics but his conclusions are often ill-informed.
For those of us who know better, this book is like a New York Times crossword puzzle. Immensely entertaining and testing but substantially deviod of meaning. Henwood has half-learned most everything he writes about here. Unfortunately many laymen won't be able to distinguish the few piercing insights in this book from the river of drivel from which they must be plucked. A little knowledge is a dangerous thing, indeed.
Jim Baird
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