Recently, I went to my 25th reunion at the Johns Hopkins School of Advanced International Studies. Originally set up as a master’s program for international bureaucrats and diplomats, by the time we graduated in the early 1980s, its administrators had seen the writing on the wall — or on Wall Street — and begun beefing up the curriculum with courses on international economics and finance.
It was the time when financial markets around the globe first took off, and by our 10th reunion most of us were working in the financial services industry. Now, having reached a ruddy middle age, many of my classmates are either catering to the needs of high-net-worth individuals — or have become such individuals themselves.
Indeed, personal wealth has exploded over the past two decades. The Forbes list of 400 richest Americans, when first published in 1982, was headed by a man worth $4 billion in today’s dollars. By 2005, Bill Gates held the top spot with over $50 billion, and you needed at least $900 million to be mentioned — vs. $200 million back then.
As to mere millionaires — people who earn at least $1 million per year — they’ve become a dime a dozen. U.S. households reporting seven-figure incomes totaled 181,282 in 2003, meaning that about half a million Americans live in families earning a million or more. And this is only the tip of the iceberg, since there are probably many more households with net worth in the seven figures.
More recently, the money-making frenzy has spread throughout the world. Russia has the largest number of billionaires after the U.S. and Germany, with 33. China has over 300,000 people with net worth above $1 million. A banker friend recently traveled to India to meet with medium-sized computer and service industry firms. As he talked to his clients, he noticed that they were constantly checking stock prices in exchanges all over the world. Whoever called the ’80s the Decade of Greed obviously jumped the gun.
Dealing with Strangers
What makes so many smart and ambitious individuals around the world pursue wealth so single-mindedly? After all, it wasn’t always the case.
The answer is globalization. It not only creates new opportunities to make money, but it also increases the value of wealth as a measure of success. As traditional societies melt into a global culture, traditional rewards and marks of distinction disappear, and success becomes increasingly monetized — that is, counted in hard cash.
In contrast, feudal societies in medieval Europe were an extension of family relationships. The feudal lord commanded the allegiance of his vassals, rewarding them with honors and valuable gifts. Peasants worked his fields and received protection, lodgings and food. Broadly speaking, all those people were part of the feudal lord’s extended household. Money, which had been widely used in the ancient world, almost completely disappeared in the Middle Ages.
The same is true of traditional societies around the world today, where some 3 billion people live on less than $2 per day. In recent years, millions of Indians have seen their monetary incomes rise sharply. They are just as poor — but they have entered the global money economy.
In his book The Jewish Century, Berkeley historian Yuri Slezkine points out that in traditional societies making a profit off a community member was frowned upon. Commerce and money lending — occupations that have a built-in profit requirement — were often reserved to people “outside” the community. In Europe, such “outsiders” were Jews and Gypsies, in Southeast Asia overseas Chinese, in the Caribbean Indians and in South America Arabs.
Being outside society’s reward system, those groups were forced to seek their success by monetary means. Not surprisingly, all those groups were viewed by the majority population as greedy or money-grabbing.
Americans enjoyed a similar reputation in the Old World — for the same reason. The U.S., which came into being as a melting pot comprised of immigrants from different cultures, never developed a dominant traditional society. Non-monetary rewards have always existed in ethnic communities, especially among recent immigrants. However, a uniform nationwide reward system was relatively weak. From the start, Americans became focused on money as a universal gauge of success. A large fortune was readily recognized everywhere in the country.
The focus on money and commerce, and relative freedom from the prejudices of a traditional society, helped America develop its formidable capitalist system, which proved vastly more efficient in producing goods and services. In turn, America’s military, economic and cultural dominance helped spread the money economy on a global scale, increasingly replacing traditional societies and cultures.
In Europe in the 18th and 19th century, universal fame and enormous professional success were not always associated with financial rewards. Mozart and Beethoven, for example, were both poor — because composers were still supposed to be rewarded by their patron’s largesse. Even in England, where capitalism took root early on, it was still possible to be a famous writer or a distinguished scientist, and be showered with titles and medals while remaining of very modest means.
Today, fame and celebrity are typically translated into financial rewards. You are not going get too many titles or medals if you’re O.J. Simpson, but you can always make the odd million as long as you’re famous.
The monetization of success can be readily traced in sports. A century ago, many top athletes were not even getting paid. They had to stay amateurs because money would have supposedly corrupted their sportsmanship. A few decades ago, even world-famous athletes made no better than a good living. Today, professional baseball, basketball and soccer stars earn well beyond what their economic contribution to their teams’ bottom line would suggest.
Money and its Discontents
Traditional societies have a deeply ingrained prejudice — if not fear — of money. Although more recently greed has been declared good, and even Chinese communists have said that “getting rich is glorious,” these notions remain suspect. We resist measuring human worth by one’s bank account. Yet, when compared to other systems of valuing human worth that have existed in history — such as birth and race — money does not look all that bad.
Nevertheless, in the past reaction against capitalism has sometimes been severe and violent. Karl Marx was the first to identify capitalism with alienation. It is, after all, a world in which the vision of society as a big happy family breaks down and the world becomes a marketplace of strangers. Each of us has to live by his wits and skills, and be judged according to his success in the economic arena, in terms of money earned. It is telling that Marx’s communist society of the future resembled nothing so much as an idealized feudal society of the past, in which people would work because they loved their job and money would disappear once again.
Americans have been remarkably successful in dealing with capitalism. As a counterweight to their dog-eat-dog workplace, they have stressed the family and religion.
Other developed nations have not been so lucky, succumbing to the two reactionary anti-capitalist ideologies of the 20th century, Communism and National Socialism. Communism collapsed only recently, and remains discredited — at least in polite company. But rapid advances of capitalism throughout the world have already given rise to a new reactionary ideology, radical Islam, which has taken root in the Muslim world. And, violent anti-globalism and neo-Nazism remain a serious threat even in industrial democracies.
ALEXEI BAYER runs KAFAN FX Information Services, an economic consulting firm in New York. Reach him at [email protected]