merely cultural?

alec ramsdell a_ramsdell at
Wed Dec 9 10:30:21 PST 1998

I know this is in a somewhat different context than the Sokal et al culture/science head butting--well, ok, it's more than that--but I thought it interesting. Is it simply a matter of changing relations of production? Bankers are bonkers. (I know Doug writes about this stuff in Wall Street,--I've been reading JKG more recently).


from _Created Unequal_, James K. Galbraith, p. 222

Banks are classic aspirants to the top of the capitalist pile. A poor or even a middle-class banker would be unheard of, even unworthy of trust. In a society with rising inequality, therefore, target rates of return for banks rise as rapidly as necessary to preserve their relative positions. And this has dramatic implications for the behavior of the banking system, for it does not follow that every financial institution can do equally well in an economic environment that is producing a smaller number of big winners and a larger number of small losers.

Partly for this reason, as long as twenty years ago, bank profit expectations came to be driven not by the average of what the economy could deliver over the medium or long term, but by examples of selectively high performance within the banking industry itself. Flying high became the standard against which the average itself was judged. A culture of speculation began to develop within the financial sector, driving up required returns for successful bankers. As the average expected returns rose to levels that could in the nature of things be earned only by a few, there followed an increasingly wild pursuit of speculative investments, herd movements into and out of assets. The particular types of assets changed from one cycle to the next, from the real estate investment trusts of the 1970s, to Third World debt, to real estate development again in the 1980s.

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