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Transaction Man: The Rise of the Deal and the Decline of the American Dream
Over the last generation, the United States has undergone seismic changes. Stable institutions have given way to frictionless transactions, which are celebrated no matter what collateral damage they generate. The concentration of great wealth has coincided with the fraying of social ties and the rise of inequality. How did all this come about?
In Transaction Man, Nicholas Lemann explains the United States’—and the world’s—great transformation by examining three remarkable individuals who epitomized and helped create their eras. Adolf Berle, Franklin Delano Roosevelt’s chief theorist of the economy, imagined a society dominated by large corporations, which a newly powerful federal government had forced to become benign and stable institutions, contributing to the public good by offering stable employment and generous pensions. By the 1970s, the corporations’ large stockholders grew restive under this regime, and their chief theoretician, Harvard Business School’s Michael Jensen, insisted that firms should maximize shareholder value, whatever the consequences. Today, Silicon Valley titans such as the LinkedIn cofounder and venture capitalist Reid Hoffman hope “networks” can reknit our social fabric.
Lemann interweaves these fresh and vivid profiles with a history of the Morgan Stanley investment bank from the 1930s through the financial crisis of 2008, while also tracking the rise and fall of a working-class Chicago neighborhood and the family-run car dealerships at its heart. Incisive and sweeping, Transaction Man is the definitive account of the reengineering of America and the enormous impact it has had on us all.
In Transaction Man, Nicholas Lemann explains the United States’—and the world’s—great transformation by examining three remarkable individuals who epitomized and helped create their eras. Adolf Berle, Franklin Delano Roosevelt’s chief theorist of the economy, imagined a society dominated by large corporations, which a newly powerful federal government had forced to become benign and stable institutions, contributing to the public good by offering stable employment and generous pensions. By the 1970s, the corporations’ large stockholders grew restive under this regime, and their chief theoretician, Harvard Business School’s Michael Jensen, insisted that firms should maximize shareholder value, whatever the consequences. Today, Silicon Valley titans such as the LinkedIn cofounder and venture capitalist Reid Hoffman hope “networks” can reknit our social fabric.
Lemann interweaves these fresh and vivid profiles with a history of the Morgan Stanley investment bank from the 1930s through the financial crisis of 2008, while also tracking the rise and fall of a working-class Chicago neighborhood and the family-run car dealerships at its heart. Incisive and sweeping, Transaction Man is the definitive account of the reengineering of America and the enormous impact it has had on us all.
320 pages, Hardcover
Published September 10, 2019
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October 4, 2019
This is a recent addition to the growing literature of political economy for the post financial crash age - to take stock of US economic developments in the past several decades and try to make sense out of it. Among recent books, it can be compared to “The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society” by Binyamin Appelbaum, although they are very different books.
Lemann’s book is generally organized around three different types of economic actors - sort of like Weber’s ideal types. He starts with “organization man” riffing off of the book by William H. White about the move towards a society defined by life within big corporations after WW2. This type is situated in an economic setting dominated by a set of industries that are dominated by small numbers of large oligopolistic competitors - a state of affairs leading to a near corporate welfare state regime, such as Whyte warned of in his book. The view of society and economy still leaves its traces on popular media in shows like Mad Men and was a thing in the social science and commentary of the time. Lemann focuses on the work of Adolph Berle and his great work “The Corporation and Private Property” - written in the early 1930s - as setting the intellectual standard for politics and economics, although there were certainly other key works.
Then came Vietnam and the oil shocks of the 1970s and the stagflation that followed and the Volker recession into the early 1980s. This is when the US economy wavered in producing on the American dream and the hollowing out of the middle class picked up speed. Ah, remember the first encounters with Bruce Springsteen’s music.
In the book, Lemann organizes his story in terms of a second type - transaction man (hence the book’s title). The idea here is the rise of the Chicago School of economics and the decline of traditional Keynesian Macro policies, that seemed to run out of gas (bad pun) in the 1970s. The focus of economic thinking changed towards the individual transaction and by implication the view that government should not be as involved in managing economic life and that everything should be left to the market (privatized) to the extent possible. People in finance and real estate got richer and economic inequality soared to levels not seen since the 1920s.
The focal thinker/ideologist for this period is Michael Jensen, a leading financial scholar who pioneered ideas on agency theory and the corporate control transactions that reshaped the economy through M&A in the 1980s and 1990s. The other characters associated with these ideas, such as Henry Manne and Michael Milken are also featured. The pioneers of Chicago financial economics, going to the 1950s, are also presented. The world of transaction man is much more complicated and difficult to understand, even though economics became much more mathematical during this time.
We know how this works out after 2008, but Lemann is right to point out multiple harbingers of financial collapse that occurred internationally in the 1990s, for example LTCM. The punchline of the section is that a strident and ideological focus on transactions and the markets did not end up producing its promised vision but instead led to enormous inequality and a major extended economic downturn. Prior to the crash, some were claiming that macro economic problems had been solved, but that did not turn out as planned. Just like the organization man, the transaction man model was insufficient for guiding the economy and instead produced political unrest - as the troubles of organization man had similarly produced unrest in the 1970s and early 1980s.
So far so good. The interplay of intellectual work and real life counterparts makes sense, although it is hardly new. What came after the crash? Network Man. The third type of based on the Silicon Valley model of networked but libertarian competition with most new venture failing but a few succeeding wildly. The thinker associated with Network Man is Reed Hastings, who was strongly associated with PayPal, LinkedIn, and other ventures. Network Man lives in winner take all markets freed from government controls but very well paid. This section was less compelling than the first two but Lemann does a good jobs at raising most of the political economy issues associated with the post-crash tech boom. He even notes the consolidation of the industry to five very large and powerful firms, although more would have been helpful on recent issues of monopsony complaints. But all this is still fairly well known.
The idea of structuring the book as a multidimensional joint biography, where each individual was associated with a particular intellectual position and a record of implementing that position, is an intriguing way to organize a story like this. The problem is that it puts a huge burden on the author to get all of the parts aligned and working. I am not entirely sure If it all came together as well as it could and worked as Mr. Lemann intended.
...and then he tied the book together! The structure of the book interspersed discussions of the economic positions and their incarnations in business life with shorter discussions of the political dynamics that ensued during economic crises as the individuals affected by the crisis mobilized and petitioned their government for some redress. At the end, Lemann argues that this political activity is not or should not be an exception but instead should be the norm. He presents some forgot arguments for pluralism that suggest political economy as messy and lacking the intellectually simple and clean answers to economic questions. His point is that broad universal theories pretending to provide a clear answer to economic problems are inherently flawed. It is instead the messy and often conflictual processes by which individuals organized into myriad groups assemble and interact to pursue their interests.
This is a fairly satisfying punchline, although I would have appreciated being clued in a bit earlier. Markets are never perfect and reality is always messy. Lemann is arguing that while different grand theories and policy perspectives may be helpful for clarification on complex issues, The real work of societal functioning is political and economic and efforts to push politics out for the sake of intellectual abstractions will come to grief when they are actually put into practice.
That is a very reasonable place for a good book like this to end up.
Lemann’s book is generally organized around three different types of economic actors - sort of like Weber’s ideal types. He starts with “organization man” riffing off of the book by William H. White about the move towards a society defined by life within big corporations after WW2. This type is situated in an economic setting dominated by a set of industries that are dominated by small numbers of large oligopolistic competitors - a state of affairs leading to a near corporate welfare state regime, such as Whyte warned of in his book. The view of society and economy still leaves its traces on popular media in shows like Mad Men and was a thing in the social science and commentary of the time. Lemann focuses on the work of Adolph Berle and his great work “The Corporation and Private Property” - written in the early 1930s - as setting the intellectual standard for politics and economics, although there were certainly other key works.
Then came Vietnam and the oil shocks of the 1970s and the stagflation that followed and the Volker recession into the early 1980s. This is when the US economy wavered in producing on the American dream and the hollowing out of the middle class picked up speed. Ah, remember the first encounters with Bruce Springsteen’s music.
In the book, Lemann organizes his story in terms of a second type - transaction man (hence the book’s title). The idea here is the rise of the Chicago School of economics and the decline of traditional Keynesian Macro policies, that seemed to run out of gas (bad pun) in the 1970s. The focus of economic thinking changed towards the individual transaction and by implication the view that government should not be as involved in managing economic life and that everything should be left to the market (privatized) to the extent possible. People in finance and real estate got richer and economic inequality soared to levels not seen since the 1920s.
The focal thinker/ideologist for this period is Michael Jensen, a leading financial scholar who pioneered ideas on agency theory and the corporate control transactions that reshaped the economy through M&A in the 1980s and 1990s. The other characters associated with these ideas, such as Henry Manne and Michael Milken are also featured. The pioneers of Chicago financial economics, going to the 1950s, are also presented. The world of transaction man is much more complicated and difficult to understand, even though economics became much more mathematical during this time.
We know how this works out after 2008, but Lemann is right to point out multiple harbingers of financial collapse that occurred internationally in the 1990s, for example LTCM. The punchline of the section is that a strident and ideological focus on transactions and the markets did not end up producing its promised vision but instead led to enormous inequality and a major extended economic downturn. Prior to the crash, some were claiming that macro economic problems had been solved, but that did not turn out as planned. Just like the organization man, the transaction man model was insufficient for guiding the economy and instead produced political unrest - as the troubles of organization man had similarly produced unrest in the 1970s and early 1980s.
So far so good. The interplay of intellectual work and real life counterparts makes sense, although it is hardly new. What came after the crash? Network Man. The third type of based on the Silicon Valley model of networked but libertarian competition with most new venture failing but a few succeeding wildly. The thinker associated with Network Man is Reed Hastings, who was strongly associated with PayPal, LinkedIn, and other ventures. Network Man lives in winner take all markets freed from government controls but very well paid. This section was less compelling than the first two but Lemann does a good jobs at raising most of the political economy issues associated with the post-crash tech boom. He even notes the consolidation of the industry to five very large and powerful firms, although more would have been helpful on recent issues of monopsony complaints. But all this is still fairly well known.
The idea of structuring the book as a multidimensional joint biography, where each individual was associated with a particular intellectual position and a record of implementing that position, is an intriguing way to organize a story like this. The problem is that it puts a huge burden on the author to get all of the parts aligned and working. I am not entirely sure If it all came together as well as it could and worked as Mr. Lemann intended.
...and then he tied the book together! The structure of the book interspersed discussions of the economic positions and their incarnations in business life with shorter discussions of the political dynamics that ensued during economic crises as the individuals affected by the crisis mobilized and petitioned their government for some redress. At the end, Lemann argues that this political activity is not or should not be an exception but instead should be the norm. He presents some forgot arguments for pluralism that suggest political economy as messy and lacking the intellectually simple and clean answers to economic questions. His point is that broad universal theories pretending to provide a clear answer to economic problems are inherently flawed. It is instead the messy and often conflictual processes by which individuals organized into myriad groups assemble and interact to pursue their interests.
This is a fairly satisfying punchline, although I would have appreciated being clued in a bit earlier. Markets are never perfect and reality is always messy. Lemann is arguing that while different grand theories and policy perspectives may be helpful for clarification on complex issues, The real work of societal functioning is political and economic and efforts to push politics out for the sake of intellectual abstractions will come to grief when they are actually put into practice.
That is a very reasonable place for a good book like this to end up.
October 19, 2019
I was really excited by the promise of the book, which was to track the organization man to the transaction man, but that is not exactly what the book delivered. What the book is about is a history of American business regulation told through the lens of 5 or 6 pivotal men--either policymakers or businessmen. The book is fascinating in the Progressive to the New Deal era, but it sort of loses the thread into the modern era. And it doesn't really explain the move to the transaction man--it just sort of talks about the financialization of the business world.
October 13, 2025
Good, not great.
113,000 words, including footnotes, which appear at the back of the book (sigh) instead of at the bottom of the page.
Nick once said (though I can’t recall where) that he viewed Redemption (2006) as the prequel to his earlier book The Promised Land (1991), and taken together he viewed them as Parts 1 & 2, respectively, of an eventual trilogy.
If Transaction Man (TM) is meant to be the sequel to The Promised Land (TPL), I'm disappointed because (1) TPL ranks as one of my all-time favorite books, and (2) TM bears only a slight connection to issues raised in The Promised Land—a book that dearly needs a full-length follow-up.
1. The NYT published a good, short positive review of Transaction Man (1300 words).
2. The WSJ published a good, smart negative review (1000 words).
3. Sebastian Mallaby wrote a long, dull review here (3200 words).
4. The Economist’s review is good, but critical (900 words).
The hero of Transaction Man is an idea—value pluralism—as set out by Arthur F. Bentley and exemplified in TM by a plucky group of car dealers who band together in 2009 to win concessions from Obama's tight-fisted, overly moralistic "car czar" Steven Rattner.
(Nick praised value pluralism & Bentley, while criticizing Thomas Frank, in this 2008 New Yorker essay.)
In 2012 Nick wrote a 10,000-word New Yorker profile of Mitt Romney entitled “Transaction Man,” available here, in the middle of which he digresses to muse upon the changes in business/economic culture that separate George Romney's era from Mitt's.
In 2014 Nick gave a two-part Tanner Lecture at Stanford that would later become the rough draft for Transaction Man. I highly recommend reading those two lectures:
https://tannerlectures.org/wp-content...
Or, second best, watch them on YouTube. In these two lectures, and the follow-up discussions, Nick surveys the intellectual landscape that dominated the post-war era by providing long character analyses of people like Adolf Berle, David Riesman, Wm. Whyte, Michael Jensen, Reid Hoffmann and others.
Nick's hero is value pluralism, the contestation of the good by different groups lobbying on behalf of their interests. His villains are people who, like Plato or Hume, believe justice, or a just outcome, awaits human discovery, preexists contingent circumstance in a timeless, ahistorical realm.
In Transaction Man, Platonic/Humean thinking animates both the statists (Adolf Berle, J.K. Galbraith) and the anti-statist libertarians (Hayek, Mies, Milton Friedman, Michael Jensen, Reid Hoffman), so it's hard to pick a side to root for when you might wish a pox on both of their houses.
I think TM, to borrow from Nick's terminology, is mis-framed. Nick's goal is to combine narrative and analysis, to "start with a theme and turn it into a narrative without sounding too schematic"—which he said in this 2011 interview, when he said:
Nick's method or goal, quoting him again, is to "use the narrative form in ways that let [the author] be analytical.”
Like Proust, Nick arrives at his conclusions by working-up his impressions, developing them in long 10,000-word essay-profiles, usually published in The New Yorker—like a pointillist working up a portrait of his subject with oils on canvas.
I liked Nick’s New Yorker profile of Romney, thought he was on the right track, had the right frame, but Alan Wolfe’s profile of Romney (3900 words) is much better, more illuminative because Wolfe framed his analysis around Romney's Mormonism: he connects, via Max Weber’s ideas, how religious beliefs shape Romney's ethics. I think Wolfe's analysis was more penetrative than Nick's.
In TM, Nick expends too many words on Michael Jensen and Reid Hoffman with too little to show for it. Imho those two guys are trivial figures, dullards on the page, unable to perform their role, which (as he said in his 2011 interview) is to "use the narrative form in ways that let you be analytical."
Instead of Michael Jensen, I'd have cast someone like Keynes, Hayek, Schumpeter, Ayn Rand, Milton Friedman, Theodore Lowi, Mike Milken, or Alan Greenspan. As for Silicon Valley, I'd love to read Nick's take on someone like Arthur Rock or John Doerr. But instead Nick gives us Reid Hoffman, sigh.
In the prologue to Transaction Man Nick writes that "events generated ideas, ideas generated actions, and actions changed the structure of society." But the problem with this book is that Nick doesn't tell us enough about the particular events that generated the ideas.
I disbelieve that a super-structure of (Jensen’s) ideas descended from heaven to Wall Street and thereby changed the mode of production. If Nick had framed his story from the ground up he'd instead have highlighted how declining bank profits created the need for new revenue sources—like, LBO takeover lending—which in turn necessitated a new rationality, ideas promulgated by credentialed persons authorizing a new financial ethos.
In contrast to Nick's story, James Grant framed his book Money of the Mind (1992) as a story of how the history of finance from the Civil War to Mike Milken (his book's subtitle) revealed two facets: 1. increasing democratization of credit access, and 2. the socialization of default risk.
In the 1980s people like Jerome Kohlberg and Mike Milken did indeed preach the gospel of Mike Jensen’s ideas—for the sake of spurring transactions. But Milken himself was prolly more deeply influenced by Braddock Hickman's ideas in "Corporate Bond Quality & Investor Experience" (1958) than by anything written by Friedman or Jensen. And Kohlberg (like Romney?) was prolly more influenced by his religious upbringing, in particular, the Quakerism he imbibed at Swarthmore—at least according to Sarah Bartlett's bio of KKR (Money Machine, 1991).
Which came first: the transaction society or the superstructure of ideas that blessed it? Marx famously said
Nick doesn't mention Saul Steinberg's attempted takeover of Chemical Bank in 1968, nor does he mention Jerome Kohlberg, who was doing LBOs at Bear Stearns in the early 1970s, more than a decade before anyone on Wall Street knew or would even care about the musings of obscure academics like Michael Jensen. Afaik, none of Kohlberg's motives for founding KKR in 1976 owed anything to Jensen.
My point is: the "transaction society" mentalité existed long before Michael Jensen published anything of note. In fact, one can warrantably suppose that the arrow of causation (that Nick often highlights) runs in a direction opposite to Nick's supposition: It's warrantably possibly that Steinberg & Kohlberg did more to influence the thinking of Michael Jensen & Milton Friedman than vice versa. Nick's account of "the facts on the ground" strikes me as so full of holes that it undermines the readers' faith that his account of "the ideas in the air" can be considered creditable (pun intended).
Sidenote: I think KKR’s LBO of Beatrice in 1986 was epochal, the success of which ignited Wall Street to immediately join the "takeover" game searching for other candidates to be levered-up, like RJR. The change signaled by the Beatrice LBO recurred a decade later when Yahoo & Netscape went public, signaling another major shift: the rise of Silicon Valley.
The Garn-St. Germain Act of 1982 enabled Savings & Loans to buy junk bonds, which in turn became an important source of funds for Mike Milken's junk bond debt-issuance business, which fueled LBO-takeover financing, which fueled the increase in corporate leverage ratios, which increased the disparity of wealth, etc.
Greenspan's intervention in the credit markets in the aftermath of the 1987 stockmarket crash gave birth to the Greenspan Put.
Nick doesn't mention the Garn-St. Germain Act in TM, but he did riff upon it in his Stanford Tanner Lecture. The Fed gets little attention in TM, but he wrote a long, mostly flattering, profile of Janet Yellen (New Yorker, July 21, 2014), so he knows the subject.
(At the end of Liar’s Poker (1989) even Michael Lewis looked longingly upon Drexel Burnham.)
Milken and Drexel Burnham's clients, especially KKR, were the 1980-era's “cool kids.” They were also playground bullies. My recollection is that Trump wanted to join their gang but was shunned, relegated to second-tier firms like Bear Stearns.
Milken was king then. News of his $550 million payday in 1986 astounded everybody, engendering much envy & enemy fire.
But Milken lived in LA. The king of Manhattan (before Schwarzman) was Henry Kravis. Trump, who was never a member of Milken’s claque when they ruled Manhattan, got some revenge when the tables turned and he could offer the Treasury Secretary’s job to Kravis, his former schoolyard idol & tormentor, who was baffled by the offer & rejected it. (Kravis was a lifelong friend of the Bush family.)
Nick argues that the ideas of Berle, Jensen, & Reid have played a significant role in heralding the contemporary era he calls the transaction society. But his evidence on behalf of that claim is rather weak.
I think that if Nick had read more business histories he'd be less inclined to draw an arrow of causation from the Captains of Erudition to the Captains of Industry. The arrow would point in the other direction.
Years ago, in his wonderful, gentle takedown of Taylor & Cohen’s biography of Mayor Richard J. Daley (American Pharoah, New Republic, July 31, 2000), Nick extolled Daley as the exemplar of Wm. Whyte’s “Organization Man,” the instantiation of Arthur Bentley’s value pluralism. Nick coined a type of politicking that he branded "Daleyism":
Nick endorses "interest-group politics," Daleyism—the kind of politics that his plucky band of car dealers deploy to win bailout money from Steven Rattner.
Nick dislikes the "true believers" typified by Dick Cheney and the bombastic tv-celebrity of Donald Trump; those brands he defines separately as Cheneyism and Trumpism—far worse in his view than Daleyism.
=========================
miscellany:
The Tribune printed several stories in 2005 on mortgage-loan fraud on Chicago’s south side, like this one (2800 words).
===========
Que es mas macho: Mike Jensen or Mike Milken?
The LA Times reported in 1987 that Milken
https://www.latimes.com/archives/la-x...
113,000 words, including footnotes, which appear at the back of the book (sigh) instead of at the bottom of the page.
Nick once said (though I can’t recall where) that he viewed Redemption (2006) as the prequel to his earlier book The Promised Land (1991), and taken together he viewed them as Parts 1 & 2, respectively, of an eventual trilogy.
If Transaction Man (TM) is meant to be the sequel to The Promised Land (TPL), I'm disappointed because (1) TPL ranks as one of my all-time favorite books, and (2) TM bears only a slight connection to issues raised in The Promised Land—a book that dearly needs a full-length follow-up.
1. The NYT published a good, short positive review of Transaction Man (1300 words).
2. The WSJ published a good, smart negative review (1000 words).
3. Sebastian Mallaby wrote a long, dull review here (3200 words).
4. The Economist’s review is good, but critical (900 words).
The hero of Transaction Man is an idea—value pluralism—as set out by Arthur F. Bentley and exemplified in TM by a plucky group of car dealers who band together in 2009 to win concessions from Obama's tight-fisted, overly moralistic "car czar" Steven Rattner.
(Nick praised value pluralism & Bentley, while criticizing Thomas Frank, in this 2008 New Yorker essay.)
In 2012 Nick wrote a 10,000-word New Yorker profile of Mitt Romney entitled “Transaction Man,” available here, in the middle of which he digresses to muse upon the changes in business/economic culture that separate George Romney's era from Mitt's.
In 2014 Nick gave a two-part Tanner Lecture at Stanford that would later become the rough draft for Transaction Man. I highly recommend reading those two lectures:
https://tannerlectures.org/wp-content...
Or, second best, watch them on YouTube. In these two lectures, and the follow-up discussions, Nick surveys the intellectual landscape that dominated the post-war era by providing long character analyses of people like Adolf Berle, David Riesman, Wm. Whyte, Michael Jensen, Reid Hoffmann and others.
Nick's hero is value pluralism, the contestation of the good by different groups lobbying on behalf of their interests. His villains are people who, like Plato or Hume, believe justice, or a just outcome, awaits human discovery, preexists contingent circumstance in a timeless, ahistorical realm.
In Transaction Man, Platonic/Humean thinking animates both the statists (Adolf Berle, J.K. Galbraith) and the anti-statist libertarians (Hayek, Mies, Milton Friedman, Michael Jensen, Reid Hoffman), so it's hard to pick a side to root for when you might wish a pox on both of their houses.
I think TM, to borrow from Nick's terminology, is mis-framed. Nick's goal is to combine narrative and analysis, to "start with a theme and turn it into a narrative without sounding too schematic"—which he said in this 2011 interview, when he said:
“I’ve been interested in developing curriculum here [at Columbia’s Journalism school] about framing.”(A random essay I read earlier today asserted:
“The frames people choose reflect who has power and who doesn’t—or who thinks they have it....”)I believe Transaction Man is framed inadvisably. If it were framed differently, his story would highlight different facts & valences; it'd have a different narrative arc, different villains & heroes.
Nick's method or goal, quoting him again, is to "use the narrative form in ways that let [the author] be analytical.”
Like Proust, Nick arrives at his conclusions by working-up his impressions, developing them in long 10,000-word essay-profiles, usually published in The New Yorker—like a pointillist working up a portrait of his subject with oils on canvas.
I liked Nick’s New Yorker profile of Romney, thought he was on the right track, had the right frame, but Alan Wolfe’s profile of Romney (3900 words) is much better, more illuminative because Wolfe framed his analysis around Romney's Mormonism: he connects, via Max Weber’s ideas, how religious beliefs shape Romney's ethics. I think Wolfe's analysis was more penetrative than Nick's.
In TM, Nick expends too many words on Michael Jensen and Reid Hoffman with too little to show for it. Imho those two guys are trivial figures, dullards on the page, unable to perform their role, which (as he said in his 2011 interview) is to "use the narrative form in ways that let you be analytical."
Instead of Michael Jensen, I'd have cast someone like Keynes, Hayek, Schumpeter, Ayn Rand, Milton Friedman, Theodore Lowi, Mike Milken, or Alan Greenspan. As for Silicon Valley, I'd love to read Nick's take on someone like Arthur Rock or John Doerr. But instead Nick gives us Reid Hoffman, sigh.
In the prologue to Transaction Man Nick writes that "events generated ideas, ideas generated actions, and actions changed the structure of society." But the problem with this book is that Nick doesn't tell us enough about the particular events that generated the ideas.
I disbelieve that a super-structure of (Jensen’s) ideas descended from heaven to Wall Street and thereby changed the mode of production. If Nick had framed his story from the ground up he'd instead have highlighted how declining bank profits created the need for new revenue sources—like, LBO takeover lending—which in turn necessitated a new rationality, ideas promulgated by credentialed persons authorizing a new financial ethos.
In contrast to Nick's story, James Grant framed his book Money of the Mind (1992) as a story of how the history of finance from the Civil War to Mike Milken (his book's subtitle) revealed two facets: 1. increasing democratization of credit access, and 2. the socialization of default risk.
In the 1980s people like Jerome Kohlberg and Mike Milken did indeed preach the gospel of Mike Jensen’s ideas—for the sake of spurring transactions. But Milken himself was prolly more deeply influenced by Braddock Hickman's ideas in "Corporate Bond Quality & Investor Experience" (1958) than by anything written by Friedman or Jensen. And Kohlberg (like Romney?) was prolly more influenced by his religious upbringing, in particular, the Quakerism he imbibed at Swarthmore—at least according to Sarah Bartlett's bio of KKR (Money Machine, 1991).
Which came first: the transaction society or the superstructure of ideas that blessed it? Marx famously said
It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness.In The Promised Land Nick deploys that Marxian notion (at least) three times. Here’s one such instance:
Americans are imbued with the notion that social systems proceed from ideas, because that is what happened at the founding of our country. [But] The relationship of society and ideas can work the other way around . . . people can create social systems first and then invent ideas that will fulfill their need to feel that the world as it exists makes sense.Nick should have reiterated that same trope in Transaction Man; he should have argued that declining bank revenues created the need for the work of academic shills like Jensen and others.
Nick doesn't mention Saul Steinberg's attempted takeover of Chemical Bank in 1968, nor does he mention Jerome Kohlberg, who was doing LBOs at Bear Stearns in the early 1970s, more than a decade before anyone on Wall Street knew or would even care about the musings of obscure academics like Michael Jensen. Afaik, none of Kohlberg's motives for founding KKR in 1976 owed anything to Jensen.
My point is: the "transaction society" mentalité existed long before Michael Jensen published anything of note. In fact, one can warrantably suppose that the arrow of causation (that Nick often highlights) runs in a direction opposite to Nick's supposition: It's warrantably possibly that Steinberg & Kohlberg did more to influence the thinking of Michael Jensen & Milton Friedman than vice versa. Nick's account of "the facts on the ground" strikes me as so full of holes that it undermines the readers' faith that his account of "the ideas in the air" can be considered creditable (pun intended).
Sidenote: I think KKR’s LBO of Beatrice in 1986 was epochal, the success of which ignited Wall Street to immediately join the "takeover" game searching for other candidates to be levered-up, like RJR. The change signaled by the Beatrice LBO recurred a decade later when Yahoo & Netscape went public, signaling another major shift: the rise of Silicon Valley.
The Garn-St. Germain Act of 1982 enabled Savings & Loans to buy junk bonds, which in turn became an important source of funds for Mike Milken's junk bond debt-issuance business, which fueled LBO-takeover financing, which fueled the increase in corporate leverage ratios, which increased the disparity of wealth, etc.
Greenspan's intervention in the credit markets in the aftermath of the 1987 stockmarket crash gave birth to the Greenspan Put.
Nick doesn't mention the Garn-St. Germain Act in TM, but he did riff upon it in his Stanford Tanner Lecture. The Fed gets little attention in TM, but he wrote a long, mostly flattering, profile of Janet Yellen (New Yorker, July 21, 2014), so he knows the subject.
(At the end of Liar’s Poker (1989) even Michael Lewis looked longingly upon Drexel Burnham.)
Milken and Drexel Burnham's clients, especially KKR, were the 1980-era's “cool kids.” They were also playground bullies. My recollection is that Trump wanted to join their gang but was shunned, relegated to second-tier firms like Bear Stearns.
Milken was king then. News of his $550 million payday in 1986 astounded everybody, engendering much envy & enemy fire.
But Milken lived in LA. The king of Manhattan (before Schwarzman) was Henry Kravis. Trump, who was never a member of Milken’s claque when they ruled Manhattan, got some revenge when the tables turned and he could offer the Treasury Secretary’s job to Kravis, his former schoolyard idol & tormentor, who was baffled by the offer & rejected it. (Kravis was a lifelong friend of the Bush family.)
Nick argues that the ideas of Berle, Jensen, & Reid have played a significant role in heralding the contemporary era he calls the transaction society. But his evidence on behalf of that claim is rather weak.
I think that if Nick had read more business histories he'd be less inclined to draw an arrow of causation from the Captains of Erudition to the Captains of Industry. The arrow would point in the other direction.
Years ago, in his wonderful, gentle takedown of Taylor & Cohen’s biography of Mayor Richard J. Daley (American Pharoah, New Republic, July 31, 2000), Nick extolled Daley as the exemplar of Wm. Whyte’s “Organization Man,” the instantiation of Arthur Bentley’s value pluralism. Nick coined a type of politicking that he branded "Daleyism":
a politics that combines a cross-racial, working-class, and lower-middle-class voting majority with the financial support of business.
The [Daley] Chicago machine ... was not animated by an abstract vision of the good. It was animated by a concern with maintaining a vast and tightly run organization, whose purpose was to win elections so as to get control over jobs and money.
[Daley’s] overarching idea ... was an instinctive version of 1950s pluralism: each element within Chicago would aggressively pursue its own interest, but all the elements would come together at the bargaining table and negotiate in good faith in order to do what was best for Chicago, which was defined in terms of cleanliness, orderliness, the building of great public works, and economic prosperity.
What Daley ... did not grasp was the liberal-moralist dimension of racial politics in the 1960s.
The civil rights movement was completely at odds with Daley's view of the world. Why would people who wanted to change government policy try to do so through means other than running for office?
Today the machine that controls politics, nationally at least, is television. ... We certainly do not like politicians or interest groups, which were Mayor Daley's lifeblood.
Nick endorses "interest-group politics," Daleyism—the kind of politics that his plucky band of car dealers deploy to win bailout money from Steven Rattner.
Nick dislikes the "true believers" typified by Dick Cheney and the bombastic tv-celebrity of Donald Trump; those brands he defines separately as Cheneyism and Trumpism—far worse in his view than Daleyism.
=========================
miscellany:
The Tribune printed several stories in 2005 on mortgage-loan fraud on Chicago’s south side, like this one (2800 words).
===========
Que es mas macho: Mike Jensen or Mike Milken?
The LA Times reported in 1987 that Milken
"is arguably the most powerful and feared financier in America since World War II." Before Milken's onslaught "the corporate bond market was effectively closed to all companies that did not get an investment grade rating from Standard & Poor’s and Moody’s, which meant that, as Milken explains, 'only 600 to 700 companies out of 25,000' had access to this pool [of capital]." The LAT reporter asserts Milken changed "the financial Establishment's view of [junk] bonds."
https://www.latimes.com/archives/la-x...
March 18, 2023
It is always bracing to be reminded how most things we take for granted and deem permanent are, in fact, relatively recent. The Transaction Man by Nicholas Lemann examines the transformation of the organising principles of Industrial America. A period that runs, by my estimation, from 1880 till date. Some 143 years out of the 247 in which the United States of America has existed as a polity.
The corporation is the motive force of the Industrial Age and the proponent of its singular genius. The meat of the book is a concise history of various attempts to corral the overweening capacity of the modern corporation. The American relationship with corporations went through several phases delineated in the book after a brief flirtation with the idea of turning the clock back fizzled.
1. There was a period of high regulation that saw an empowered government deputise the corporation as a partner in the socio-economic uplift of certain lucky classes and ethnicities. 1950 - 1988 By my estimation (BME).
2. The demise of that era and the rise of the financial elite who sought to achieve increased efficiency and investment returns through greater reliance on market forces. 1988 - 2008 BME
3. The Rise of the FAANGs and the networked age. 2008 to pending.
Despite my attempts to neatly split those eras into defined periods, I am uncertain that each cycle was ever entirely replaced. Clearly, the corporation remains a dominant social entity. Rather, it seems to me that what exists in the USA is a sort of chimaera fusing aspects of all those eras to differing degrees. That interpretation might well tally with the author's view of the importance of politicised coalitions defending their narrow interests against the revolutionary impulses of eggheads with imagined infallible systems.
I very much enjoyed this book, and I hope to return to it better armed with knowledge of the period and personalities it examined. However, it ain't perfect. A bibliography, for one, would have been welcome. It also has two major weaknesses.
First is that its focus on interest groups necessarily ignores the process of capital accumulation. Reading The Transaction Man, one might be forgiven for thinking that corporations sprung whole and mighty like Athena from Zeus' head. Questions of the genius of their founders aside, the reality is that their emergence often rested on a legacy of violently suppressing opposing interest groups. Big rail only emerged because the S'thern veto on the Transcontinental Expansion was erased during the civil war. Big mining relied on scabs and mercenaries to dragoon a recalcitrant labour force. The author often recounts that the social bargain that underpinned middle-class American life in the corporate heyday excluded African-Americans. But Occam's razor would dictate that it did so because Blacks had no Fords or Morgans while Whites did. Similarly, it is doubtful that the existing American population would have provided a sufficient labour force absent the influx of Europeans in the 19th and 20th centuries. But it was precisely those groups who entrenched a racialised exclusion in the northern boom towns that benefitted them and their progeny at the expense of African-American emigrants from the Jim Crow south.
Sometimes, selfish interest groups can cooperate at an impasse, but the corollary is that winner-take-all dynamics are also in play. Sometimes allies defend; other times, they partition.
Its second weakness is its parochial nature. American business methods have undoubtedly been influential globally. But different leading capitalist countries have had different social bargains. It's frustrating to read only in passing about how Japanese competition was one of the nails in the coffin of the '50 -'88 period without some insight into what made Japanese competition so special. Reading the book, one would be forgiven for assuming that the USA was immune to the pressures of economic competition. That limited focus also makes the book useless for understanding the biggest shift of all--the seemingly unassailable economic lead the USA accumulated over the course of the 20th century.
No book is perfect. Knowledge can therefore only be the sum total of learned imperfections. The Transaction Man taught me much.
The corporation is the motive force of the Industrial Age and the proponent of its singular genius. The meat of the book is a concise history of various attempts to corral the overweening capacity of the modern corporation. The American relationship with corporations went through several phases delineated in the book after a brief flirtation with the idea of turning the clock back fizzled.
1. There was a period of high regulation that saw an empowered government deputise the corporation as a partner in the socio-economic uplift of certain lucky classes and ethnicities. 1950 - 1988 By my estimation (BME).
2. The demise of that era and the rise of the financial elite who sought to achieve increased efficiency and investment returns through greater reliance on market forces. 1988 - 2008 BME
3. The Rise of the FAANGs and the networked age. 2008 to pending.
Despite my attempts to neatly split those eras into defined periods, I am uncertain that each cycle was ever entirely replaced. Clearly, the corporation remains a dominant social entity. Rather, it seems to me that what exists in the USA is a sort of chimaera fusing aspects of all those eras to differing degrees. That interpretation might well tally with the author's view of the importance of politicised coalitions defending their narrow interests against the revolutionary impulses of eggheads with imagined infallible systems.
I very much enjoyed this book, and I hope to return to it better armed with knowledge of the period and personalities it examined. However, it ain't perfect. A bibliography, for one, would have been welcome. It also has two major weaknesses.
First is that its focus on interest groups necessarily ignores the process of capital accumulation. Reading The Transaction Man, one might be forgiven for thinking that corporations sprung whole and mighty like Athena from Zeus' head. Questions of the genius of their founders aside, the reality is that their emergence often rested on a legacy of violently suppressing opposing interest groups. Big rail only emerged because the S'thern veto on the Transcontinental Expansion was erased during the civil war. Big mining relied on scabs and mercenaries to dragoon a recalcitrant labour force. The author often recounts that the social bargain that underpinned middle-class American life in the corporate heyday excluded African-Americans. But Occam's razor would dictate that it did so because Blacks had no Fords or Morgans while Whites did. Similarly, it is doubtful that the existing American population would have provided a sufficient labour force absent the influx of Europeans in the 19th and 20th centuries. But it was precisely those groups who entrenched a racialised exclusion in the northern boom towns that benefitted them and their progeny at the expense of African-American emigrants from the Jim Crow south.
Sometimes, selfish interest groups can cooperate at an impasse, but the corollary is that winner-take-all dynamics are also in play. Sometimes allies defend; other times, they partition.
Its second weakness is its parochial nature. American business methods have undoubtedly been influential globally. But different leading capitalist countries have had different social bargains. It's frustrating to read only in passing about how Japanese competition was one of the nails in the coffin of the '50 -'88 period without some insight into what made Japanese competition so special. Reading the book, one would be forgiven for assuming that the USA was immune to the pressures of economic competition. That limited focus also makes the book useless for understanding the biggest shift of all--the seemingly unassailable economic lead the USA accumulated over the course of the 20th century.
No book is perfect. Knowledge can therefore only be the sum total of learned imperfections. The Transaction Man taught me much.
October 28, 2019
I loved the title, and it sucked me in. The book didn't engage me near as much as I expected.
It's a good exploration into three schools of thought, institutions, markets, and networks, and a semi-biography of three leaders at the forefront of each school. Transaction Man is a sort of economic history of the last 100 years through these people and the lands they inhabited- Chicago Lawn, Wall Street, and Silicon Valley.
I tend to hate economists who expect grand theories to work out in messy reality. Based on what we see in today's economy, it hasn't worked out too well. Lemann does a good job laying out the lives and beliefs of the people involved. I wish it all tied up better for me. He ends up in the final chapter dismissing all three models and proposing something called pluralism.
I'm not so sure transaction man and network man aren't the same thing. They both deny a role for government or a social contract and depend on people to be logical market forces and networkers. Interesting book, well researched.
It's a good exploration into three schools of thought, institutions, markets, and networks, and a semi-biography of three leaders at the forefront of each school. Transaction Man is a sort of economic history of the last 100 years through these people and the lands they inhabited- Chicago Lawn, Wall Street, and Silicon Valley.
I tend to hate economists who expect grand theories to work out in messy reality. Based on what we see in today's economy, it hasn't worked out too well. Lemann does a good job laying out the lives and beliefs of the people involved. I wish it all tied up better for me. He ends up in the final chapter dismissing all three models and proposing something called pluralism.
I'm not so sure transaction man and network man aren't the same thing. They both deny a role for government or a social contract and depend on people to be logical market forces and networkers. Interesting book, well researched.
October 30, 2019
The Industrial Revolution came late to the United States, but when it started in earnest following the Civil War its impact on American society was nothing short of revolutionary. Suddenly, an institution called the corporation assumed an ever-greater role in the life of the American people. Its influence was felt not just economically but politically and socially as well—influence so profound and (many thought) pernicious that even the notoriously corrupt Congress was moved to pass legislation to curb the excesses of the huge corporate structures called trusts. And the Sherman Anti-Trust Act, passed in 1890, was just the beginning.
As the Progressive Era unfolded a decade later with the entry of Theodore Roosevelt into the White House, the battle over the role of the corporation in American society rose to the top of the political agenda, and it remained there for decades to come. The debate swirling around that question early in the 20th century is the subject in the early chapters of Transaction Man by the eminent journalist Nicholas Lemann. The book is a brilliant inquiry into the big economic ideas that have dominated the American political process over the past century—and resulted in today's extreme economic inequality.
Three big ideas have guided policymakers
Lemann traces the evolution of the three "big ideas" that have guided economic policymakers in the decades since World War I. He characterizes them as institutions, transactions, and networks. Institutions included large corporations, labor unions, federal government agencies, and other traditional repositories of power and authority—the forces responsible for the unparalleled prosperity of the United States in the decades following World War II. He identifies transactions as the governing reality in the American economy from the 1980s until the first decade of the 21st century—a reality that emerged on the basis of government policies and judicial decisions grounded in the work of the champions of laissez-faire economics of the Chicago School. However, today networks are gaining the ascendancy, a manifestation of the power of Facebook, Google, Amazon, Apple, and Microsoft in the United States and Baidu, Alibaba, and Tencent in China.
These three ideas "have a common thread. They share a kind of conceptual grandeur, a conviction that if we aim at producing a good society by adopting one all-encompassing principle, the result will be positive for everybody." But Lemann soundly rejects this notion. Instead, he finds inspiration in the long-forgotten work of an early 20th-century intellectual named Arthur F. Bentley.
Instead of big ideas, Lemann urges policy to favor pluralism and reduce economic inequality
In a book titled The Process of Government: A Study of Social Pressures, Bentley advocated what Lemann characterizes as pluralism. Instead of building social policy around an overarching idea, he contends that the best and fairest outcome results from the interaction of contending interest groups. Of course, today we might think he was proposing identity politics, but that isn't the case. "Bentley had no use for such broad concepts as class, race, leadership, or the public, because they did not pertain to self-consciously organized group activity. Only groups mattered. Groups could just as easily form around social or moral causes . . . as narrow economic interests. States and cities were 'locality groups,' the legal system as a collection of 'law groups,' income categories were 'wealth groups,' devoted followers of a popular politician were 'personality groups. . ."
Lemann laments the tragic outcome of the neoliberal consensus that emerged beginning in the 1970s, which has born fruit in economic inequality as severe as that during the Gilded Age more than a century ago. And the inequality grew explosively in the economic reversal of 2007-8 that upended the lives of so many millions of people around the world—another consequence of the neoliberal consensus that eviscerated the regulatory agencies which might have prevented it.
A lively focus on individual players
To tell his story, Lemann shows off his journalistic chops, focusing on individual people. Among his principal subjects are:
** Adolf Berle, a wunderkind (admitted to Harvard at thirteen) who became one of the most influential members of FDR's Brain Trust;
** the people of a transitional Southwest Chicago neighborhood called Chicago Lawn, including a Buick dealer, an African-American homeowner and activist, and a priest who was a community organizer;
** the economists of the Chicago School, most notably Mike Jensen;
** Werner Erhard, founder of est;
** the leaders of the investment bank Morgan Stanley, including Dick Fisher and John Mack;
** Bill Clinton's economic team, principally Larry Summers, Bob Rubin, and Alan Greenspan;
** Silicon Valley billionaire Reid Hoffman, founder of LinkedIn and an early principal in PayPal.
Today the Transaction Man mentality rules, and so does economic inequality
At the outset of Transaction Man, Lemann acknowledges his debt to William Whyte, author of the bestselling 1956 book, The Organization Man.
"Today the Transaction Man mentality," Lemann writes, "which is neither liberal nor conservative, is as deeply rooted as the Organization Man mentality was when William Whyte conferred a name on it. When a challenge presents itself—how to educate our children, how to fight poverty, how to change politics, how to improve the tone of a polarized society—any proposed solution that can be characterized as relying on bureaucracies, organizations, government agencies, or established interest groups is doomed to lose the argument. Only innovation, disruption, destructuring, and individualizing can possibly work."
The rise of such businesses as Uber, Airbnb, and other "transaction network" companies is just one manifestation of this reality. "Transaction Man (who may be a woman, of course) often works in a job that is literally transactional, in such fields as trading financial instruments, private equity, venture capital, and hedge funds . . . Transaction Man is often in the business of breaking corporations apart and rearranging them in ways that have made it just about impossible for anybody these days to be an Organization Man."
Minor errors mar the story
On the whole, Lemann does an admirable job of sifting through the historical record to find the hidden threads of his story. However, from time to time, he slips up. For example, he refers to a list of big tech companies noting that "all but Apple had living founders," neglecting co-founder Steve Wozniak, who is very much alive today. And he reports that "the term 'six degrees' comes from a paper by the psychologist Stanley Milgram, published in 1969." The truth is that the term "six degrees of separation" first appeared in print in a Hungarian short story in 1929. Lemann would have benefited from a fact-checker.
About the author
Nicholas Lemann has been a staff writer for The New Yorker for two decades. He came to the magazine after lengthy stints at the Washington Monthly, Texas Monthly, and the Atlantic Monthly. He served for two five-year terms as Dean of the Graduate School of Journalism at Columbia University and is currently Dean Emeritus. He is the author of five books.
As the Progressive Era unfolded a decade later with the entry of Theodore Roosevelt into the White House, the battle over the role of the corporation in American society rose to the top of the political agenda, and it remained there for decades to come. The debate swirling around that question early in the 20th century is the subject in the early chapters of Transaction Man by the eminent journalist Nicholas Lemann. The book is a brilliant inquiry into the big economic ideas that have dominated the American political process over the past century—and resulted in today's extreme economic inequality.
Three big ideas have guided policymakers
Lemann traces the evolution of the three "big ideas" that have guided economic policymakers in the decades since World War I. He characterizes them as institutions, transactions, and networks. Institutions included large corporations, labor unions, federal government agencies, and other traditional repositories of power and authority—the forces responsible for the unparalleled prosperity of the United States in the decades following World War II. He identifies transactions as the governing reality in the American economy from the 1980s until the first decade of the 21st century—a reality that emerged on the basis of government policies and judicial decisions grounded in the work of the champions of laissez-faire economics of the Chicago School. However, today networks are gaining the ascendancy, a manifestation of the power of Facebook, Google, Amazon, Apple, and Microsoft in the United States and Baidu, Alibaba, and Tencent in China.
These three ideas "have a common thread. They share a kind of conceptual grandeur, a conviction that if we aim at producing a good society by adopting one all-encompassing principle, the result will be positive for everybody." But Lemann soundly rejects this notion. Instead, he finds inspiration in the long-forgotten work of an early 20th-century intellectual named Arthur F. Bentley.
Instead of big ideas, Lemann urges policy to favor pluralism and reduce economic inequality
In a book titled The Process of Government: A Study of Social Pressures, Bentley advocated what Lemann characterizes as pluralism. Instead of building social policy around an overarching idea, he contends that the best and fairest outcome results from the interaction of contending interest groups. Of course, today we might think he was proposing identity politics, but that isn't the case. "Bentley had no use for such broad concepts as class, race, leadership, or the public, because they did not pertain to self-consciously organized group activity. Only groups mattered. Groups could just as easily form around social or moral causes . . . as narrow economic interests. States and cities were 'locality groups,' the legal system as a collection of 'law groups,' income categories were 'wealth groups,' devoted followers of a popular politician were 'personality groups. . ."
Lemann laments the tragic outcome of the neoliberal consensus that emerged beginning in the 1970s, which has born fruit in economic inequality as severe as that during the Gilded Age more than a century ago. And the inequality grew explosively in the economic reversal of 2007-8 that upended the lives of so many millions of people around the world—another consequence of the neoliberal consensus that eviscerated the regulatory agencies which might have prevented it.
A lively focus on individual players
To tell his story, Lemann shows off his journalistic chops, focusing on individual people. Among his principal subjects are:
** Adolf Berle, a wunderkind (admitted to Harvard at thirteen) who became one of the most influential members of FDR's Brain Trust;
** the people of a transitional Southwest Chicago neighborhood called Chicago Lawn, including a Buick dealer, an African-American homeowner and activist, and a priest who was a community organizer;
** the economists of the Chicago School, most notably Mike Jensen;
** Werner Erhard, founder of est;
** the leaders of the investment bank Morgan Stanley, including Dick Fisher and John Mack;
** Bill Clinton's economic team, principally Larry Summers, Bob Rubin, and Alan Greenspan;
** Silicon Valley billionaire Reid Hoffman, founder of LinkedIn and an early principal in PayPal.
Today the Transaction Man mentality rules, and so does economic inequality
At the outset of Transaction Man, Lemann acknowledges his debt to William Whyte, author of the bestselling 1956 book, The Organization Man.
"Today the Transaction Man mentality," Lemann writes, "which is neither liberal nor conservative, is as deeply rooted as the Organization Man mentality was when William Whyte conferred a name on it. When a challenge presents itself—how to educate our children, how to fight poverty, how to change politics, how to improve the tone of a polarized society—any proposed solution that can be characterized as relying on bureaucracies, organizations, government agencies, or established interest groups is doomed to lose the argument. Only innovation, disruption, destructuring, and individualizing can possibly work."
The rise of such businesses as Uber, Airbnb, and other "transaction network" companies is just one manifestation of this reality. "Transaction Man (who may be a woman, of course) often works in a job that is literally transactional, in such fields as trading financial instruments, private equity, venture capital, and hedge funds . . . Transaction Man is often in the business of breaking corporations apart and rearranging them in ways that have made it just about impossible for anybody these days to be an Organization Man."
Minor errors mar the story
On the whole, Lemann does an admirable job of sifting through the historical record to find the hidden threads of his story. However, from time to time, he slips up. For example, he refers to a list of big tech companies noting that "all but Apple had living founders," neglecting co-founder Steve Wozniak, who is very much alive today. And he reports that "the term 'six degrees' comes from a paper by the psychologist Stanley Milgram, published in 1969." The truth is that the term "six degrees of separation" first appeared in print in a Hungarian short story in 1929. Lemann would have benefited from a fact-checker.
About the author
Nicholas Lemann has been a staff writer for The New Yorker for two decades. He came to the magazine after lengthy stints at the Washington Monthly, Texas Monthly, and the Atlantic Monthly. He served for two five-year terms as Dean of the Graduate School of Journalism at Columbia University and is currently Dean Emeritus. He is the author of five books.
July 14, 2021
I tend to enjoy these kinds of books. I found this to be the same kind of book as Alvin Toffler’s “The Third Wave”. Toffler divides human history into 3 “waves”, or defining eras. Here, the author divides the post WW1 times into 3 “eras” related to economics. Interesting, and with some similar thoughts as following reading Toffler. The author focuses on a few individuals for each era, making this a reasonably readable book. Interesting framing, but I will need to think through the consequences of looking through this lens, if any. My doubt is because the progression the author describes, from organizational man to transactional man to network man, is how I pictured the world prior to reading the book. Here you get the author’s naming, as well as history and back stories.
November 30, 2019
4 stars might be a little high, because I do have a couple issues with the book, but it is very good.
Lemann breaks down the economic history of the last 100 years into three big chunks and looks at three economic theories and the respective individuals who influenced each one. His treatment of the first two and their impact on American life are strong, but the third (modern times) is a bit of a let down. There is a lot more speculation than insightful questioning of how the Silicon Valley ideal will shape the world(my take here is that Silicon Valley billionaires are dangerous because they believe their economic success is the product of their correct understanding of the world and not luck. I listened to an interview with Mark Cuban and he said if he lost all his money tomorrow he could quickly make himself a millionaire again, that’s hard work and seeing the world right, but becoming a billionaire requires luck. Lemann doesn’t question the SV economic theory or person enough). My experience with start ups is that the role of capital, and the availability of capital, still plays a far greater role in shaping economic impact of our period on middle class than Lemann addresses in his three part breakdown.
Two complaints, the first more complainy (hooray for neologisms) than the second.
1) In the end, I don’t get the title. I understand the rise of the deal to be the marketing of discount items and it’s subsequent impact First on American manufacturing and second on the psychology of American consumers who both want to pay other people less for their goods and labor while overvaluing (and complaining about underpayment for) their own labor. This understanding of the deal never comes up in Lemann’s book, nor does any other which could have argued that I misunderstand what he meant by the rise of the deal. It’s just a good title that disguises the heavier discussion of macroeconomics.
2) the conclusions come a bit out of left field - as in the ideas Lemann thinks we need to fix our economic woes don’t make an appearance in the course of the text. I’m 100% on board with more pluralism and I think Lemann has some solid concluding remarks, but if you’re going to write a book on economics and conclude saying we need political science to solve the problem, then you need to weave that into your account so it has more persuasive power. I have a PhD in political theory, so I completely get what is being said in the conclusion and have a healthy professional distrust of economists who think they are political scientists. But I can easily imagine (and in fact have particular individuals in mind) economists who would read this and be befuddled by the call for pluralism as an economic salve and would dismiss it because they wouldn’t know where to start.
Still, a very good read.
Lemann breaks down the economic history of the last 100 years into three big chunks and looks at three economic theories and the respective individuals who influenced each one. His treatment of the first two and their impact on American life are strong, but the third (modern times) is a bit of a let down. There is a lot more speculation than insightful questioning of how the Silicon Valley ideal will shape the world(my take here is that Silicon Valley billionaires are dangerous because they believe their economic success is the product of their correct understanding of the world and not luck. I listened to an interview with Mark Cuban and he said if he lost all his money tomorrow he could quickly make himself a millionaire again, that’s hard work and seeing the world right, but becoming a billionaire requires luck. Lemann doesn’t question the SV economic theory or person enough). My experience with start ups is that the role of capital, and the availability of capital, still plays a far greater role in shaping economic impact of our period on middle class than Lemann addresses in his three part breakdown.
Two complaints, the first more complainy (hooray for neologisms) than the second.
1) In the end, I don’t get the title. I understand the rise of the deal to be the marketing of discount items and it’s subsequent impact First on American manufacturing and second on the psychology of American consumers who both want to pay other people less for their goods and labor while overvaluing (and complaining about underpayment for) their own labor. This understanding of the deal never comes up in Lemann’s book, nor does any other which could have argued that I misunderstand what he meant by the rise of the deal. It’s just a good title that disguises the heavier discussion of macroeconomics.
2) the conclusions come a bit out of left field - as in the ideas Lemann thinks we need to fix our economic woes don’t make an appearance in the course of the text. I’m 100% on board with more pluralism and I think Lemann has some solid concluding remarks, but if you’re going to write a book on economics and conclude saying we need political science to solve the problem, then you need to weave that into your account so it has more persuasive power. I have a PhD in political theory, so I completely get what is being said in the conclusion and have a healthy professional distrust of economists who think they are political scientists. But I can easily imagine (and in fact have particular individuals in mind) economists who would read this and be befuddled by the call for pluralism as an economic salve and would dismiss it because they wouldn’t know where to start.
Still, a very good read.
February 24, 2020
A mind-stimulating read, especially when considering today's socioeconomic climate. How to make sense of it all? Lemann surveys three successive trends since the Great Depression: New Deal, deregulation run amok and online transaction networks. The book brought back to my mind topics I'd long forgotten about: the 1960s best seller book The Organization Man by William Whyte; the brain behind the New Deal, Adolf Berle; the “mind control” course known as Est and the now odd view of the corporation as a social institution. Interspersed within Lehmann's narrative is the story of how the three megatrends affected a GM Buick dealer in the enclave Chicago Lawn and also how overall mergers, closures, acquisitions and general re-orientations affected the populace there. The future? Well, it might be something called Pluralism. Overarching ideas out, group interactions in. Lehmann only hints at what this might mean so perhaps it's his next book. At any rate, I found this redolent one stimulating enough.
May 30, 2020
A very interesting read. This book brings you along through eras of different economic theory in America and what the emphasis on one or the other did to the ability of people to achieve the american dream. I love macro economic theory, history, and politics so this book was right up my alley. It gave me an understanding of the current of economic theory and lobbyists that propel market conditions and regulation / deregulation of companies, workers, the growing income divide, and capitalism. I found it fascinating.
September 13, 2021
Pretty interesting story of how we got here, economically. Most economists think they have all the answers in their own ideology to make life better for everyone. Dogmatists are usually wrong, but sadly can’t admit it.
May 4, 2021
Lemann tries to address three grand theorists on social/economic organization. He contrasts the Institutional View (August Burley), the Transactional View (Michael Jensen) and the Network View (Reed Hoffman). At the same time he attempts to describe the development of financial economics which in many ways led to a couple of the financial revolutions we have lived through in the last couple of decades.
Burley was an institutionalist and saw the rise of corporations and postulated that government would become the arbiter of the power of corporations - they would define society in terms of the interactions between those two big entities. One of the major errors of Burley's thinking was that it assumed the clash of the titans would actually work in the best interest of the rest of us. So Burley and his political soul mates adopted a series of legislative and regulatory measures to define the engagements.
Jensen is a person who helped to change the financial markets. Lemann seems to understand but deplore the absolutely disruptive effects of financial deregulation. While I think he is right that changing the depression era statutes meant to mediate the roles of various financial institutions would produce negative effects on some, I believe he paints those disruptions with too broad a brush. For example, was the mortgage meltdown caused by the elimination of Glass-Steagall or as a result of liberalizations of lending requirements? The best book on the meltdown is Gretchen Morgensen's Reckless Endangerment. He should have read Smith who argued that when business people get together they will collude - but of course Smith goes on to argue that one needs balance which many of the depression era statutes did not offer.
As side notes he tells some compelling stories of the disruptions to the lives of middle class people in a Chicago neighborhood including the plight of an auto dealer and workers whose lives were altered often catastrophically.
Finally he does some chapters on the evolution of the network economy - with Reed Hoffman's story and his idealistic belief that neither institutional or transactional views will provide benefits to a majority of society at this time.
I found a good deal of his retelling of history to be a bit off. For example, in one section he describes the creation of Intel which was a significant turning point in the technological history of California and then tells and anecdote about the use of the Worldwide Web which is almost 20 years later. While there is a link there is some important intermediate history. The transformative nature of venture capital firms in California during the period (from Arthur Rock to the newer firms) is something that was influenced by deregulation but also by the close community of non-electronic networking that happened in the Silicon Valley.
But there is a second problem I have with Lemann's arguments. Each of the three figures that he explains tried to construct a grand theory of how units of society work together. From my perspective each of them (although I am less responsive to Burley's big ideas than the other two) has flaws which discredit the grand idea. We do indeed need to think carefully about the relationships between government, economic units and society as a whole. I also believe that as we have gotten more into interest group and identity politics that mediating institutions at the state level have been diminished.
So was the book worth the read - of course but I am not sure I think Lemann left so much out that it is only a partial discussion of a much larger set of issues.
Burley was an institutionalist and saw the rise of corporations and postulated that government would become the arbiter of the power of corporations - they would define society in terms of the interactions between those two big entities. One of the major errors of Burley's thinking was that it assumed the clash of the titans would actually work in the best interest of the rest of us. So Burley and his political soul mates adopted a series of legislative and regulatory measures to define the engagements.
Jensen is a person who helped to change the financial markets. Lemann seems to understand but deplore the absolutely disruptive effects of financial deregulation. While I think he is right that changing the depression era statutes meant to mediate the roles of various financial institutions would produce negative effects on some, I believe he paints those disruptions with too broad a brush. For example, was the mortgage meltdown caused by the elimination of Glass-Steagall or as a result of liberalizations of lending requirements? The best book on the meltdown is Gretchen Morgensen's Reckless Endangerment. He should have read Smith who argued that when business people get together they will collude - but of course Smith goes on to argue that one needs balance which many of the depression era statutes did not offer.
As side notes he tells some compelling stories of the disruptions to the lives of middle class people in a Chicago neighborhood including the plight of an auto dealer and workers whose lives were altered often catastrophically.
Finally he does some chapters on the evolution of the network economy - with Reed Hoffman's story and his idealistic belief that neither institutional or transactional views will provide benefits to a majority of society at this time.
I found a good deal of his retelling of history to be a bit off. For example, in one section he describes the creation of Intel which was a significant turning point in the technological history of California and then tells and anecdote about the use of the Worldwide Web which is almost 20 years later. While there is a link there is some important intermediate history. The transformative nature of venture capital firms in California during the period (from Arthur Rock to the newer firms) is something that was influenced by deregulation but also by the close community of non-electronic networking that happened in the Silicon Valley.
But there is a second problem I have with Lemann's arguments. Each of the three figures that he explains tried to construct a grand theory of how units of society work together. From my perspective each of them (although I am less responsive to Burley's big ideas than the other two) has flaws which discredit the grand idea. We do indeed need to think carefully about the relationships between government, economic units and society as a whole. I also believe that as we have gotten more into interest group and identity politics that mediating institutions at the state level have been diminished.
So was the book worth the read - of course but I am not sure I think Lemann left so much out that it is only a partial discussion of a much larger set of issues.
November 24, 2019
This is a book about policy regarding large and powerful corporations and their role in society in the US. The book features the thoughts of four men and their influence since the days preceding and immediately after the depression, the post WW years mid-century, and the late 20th century years until today’s date.
Adolf Berle, Institution Man, was a gifted young man who was the second youngest Harvard law school graduate when he graduated at age 21 Years. Through his family’s social network and his Harvard connections he became part of Franklin Roosevelt’s informal think tank. He was concerned about the growing power of the large corporations whose managers were powerful and not really accountable to its diverse and small individual investor. His solutions included some of regulatory controls passed during the depression and referred to as the “New Deal!” As a result of the “New Deal” the large corporations generally complied, used their cash reserves to do technology research, signed union contracts delivering healthcare, fair wages and pension plans! His worries, while prescient, proved manageable through government intervention! Employees devoted themselves to those companies, a secure career as members and beneficiaries of a secure future with these large organizations.
Micheal Jenson, Transaction Man, was the son of a father and a grandfather who were union typesetters, and he assumed that would be his life. He never planned to go to college. He only went when his high school teacher wrote to a college to asked that they recruit him! He went and then it happened again. His college suggested to Chicago University that they recruit Mr Hoffman, they did and he went! He was interested in the stock market! With others, he began to statistically study how the stock market worked, a subject never had been seriously studied before! He came to believe that regulation was unnecessary and inefficient. He wanted to focus companies on shareholders, “shareholder value” became the mantra, but other stake holders suffered! They also believed that financing should be competed for based on ideas existing in the market place at any given time. That would be the most efficient system for the market. That resulted in new instruments of finance that moved power from the corporations to the financiers, employees and silent share owners and other stakeholders became irrelevant. The assumption was that the lender and the borrower were sophisticated buyers and sellers and the transactions would be proper! The problem eventually became that the assumption was in error. The instruments became so complicated that it was hard to discern the asset that guaranteed solvency and if it actually existed! The chickens roosted in the financial crisis 2008. The “Big Short” an apt name!
Reid Hoffman, Network Man, felt that the way future society would be organized on the networks around groups. He said he thought that opportunities existed to organize internet groups to deal with each of the “Seven Deadly Sins.” Eg Social Net, PayPal, Christian Mingle, Napster, LinkedIn, etc. He believed that society would be arranged by groups and members will also be members of multiple online groups. His vision is that the neither political party nor corporations have the dreams of disempowered people in mind, he thinks the new system of the world, internet networks, are key to populist action! Unfortunately, that has lead to divergent interest and division, not cohesion!
Arthur Bentley, author of the book “The Process of Government: a study of social pressures,” ends this book. He says “all phenomena of government are phenomena of groups pressing one another, forming one another, and pushing out new groups and representatives (the organs or agencies of government) to mediate the adjustments.” Though he probably did not understand the degree to which networks exacerbated the Balkanization of societies that has and is occurring.
My note: mutual respect is a priori requirement in order —“to mediate the adjustments.” So far that is not happening!
Read the book because It describes the changes causing our strife today. Change is hard and frightening, and gives rise to political leaders to promise to save the day! Frightened people hope that they can trust those leaders and follow them, sometimes to their own peril. Hope is not a good enough basis for cohesion! Rapid changes now coming will exacerbate to problem!
The book does little to forecast which comes next, a disappointing weakness!
Adolf Berle, Institution Man, was a gifted young man who was the second youngest Harvard law school graduate when he graduated at age 21 Years. Through his family’s social network and his Harvard connections he became part of Franklin Roosevelt’s informal think tank. He was concerned about the growing power of the large corporations whose managers were powerful and not really accountable to its diverse and small individual investor. His solutions included some of regulatory controls passed during the depression and referred to as the “New Deal!” As a result of the “New Deal” the large corporations generally complied, used their cash reserves to do technology research, signed union contracts delivering healthcare, fair wages and pension plans! His worries, while prescient, proved manageable through government intervention! Employees devoted themselves to those companies, a secure career as members and beneficiaries of a secure future with these large organizations.
Micheal Jenson, Transaction Man, was the son of a father and a grandfather who were union typesetters, and he assumed that would be his life. He never planned to go to college. He only went when his high school teacher wrote to a college to asked that they recruit him! He went and then it happened again. His college suggested to Chicago University that they recruit Mr Hoffman, they did and he went! He was interested in the stock market! With others, he began to statistically study how the stock market worked, a subject never had been seriously studied before! He came to believe that regulation was unnecessary and inefficient. He wanted to focus companies on shareholders, “shareholder value” became the mantra, but other stake holders suffered! They also believed that financing should be competed for based on ideas existing in the market place at any given time. That would be the most efficient system for the market. That resulted in new instruments of finance that moved power from the corporations to the financiers, employees and silent share owners and other stakeholders became irrelevant. The assumption was that the lender and the borrower were sophisticated buyers and sellers and the transactions would be proper! The problem eventually became that the assumption was in error. The instruments became so complicated that it was hard to discern the asset that guaranteed solvency and if it actually existed! The chickens roosted in the financial crisis 2008. The “Big Short” an apt name!
Reid Hoffman, Network Man, felt that the way future society would be organized on the networks around groups. He said he thought that opportunities existed to organize internet groups to deal with each of the “Seven Deadly Sins.” Eg Social Net, PayPal, Christian Mingle, Napster, LinkedIn, etc. He believed that society would be arranged by groups and members will also be members of multiple online groups. His vision is that the neither political party nor corporations have the dreams of disempowered people in mind, he thinks the new system of the world, internet networks, are key to populist action! Unfortunately, that has lead to divergent interest and division, not cohesion!
Arthur Bentley, author of the book “The Process of Government: a study of social pressures,” ends this book. He says “all phenomena of government are phenomena of groups pressing one another, forming one another, and pushing out new groups and representatives (the organs or agencies of government) to mediate the adjustments.” Though he probably did not understand the degree to which networks exacerbated the Balkanization of societies that has and is occurring.
My note: mutual respect is a priori requirement in order —“to mediate the adjustments.” So far that is not happening!
Read the book because It describes the changes causing our strife today. Change is hard and frightening, and gives rise to political leaders to promise to save the day! Frightened people hope that they can trust those leaders and follow them, sometimes to their own peril. Hope is not a good enough basis for cohesion! Rapid changes now coming will exacerbate to problem!
The book does little to forecast which comes next, a disappointing weakness!
December 25, 2020
A well-written, and mind stimulating book that depicts the 3 evolutionary stages that the author dubs as institution-based (during the New Deal era), transaction-based (the deregulatory era of 1980-2009), and the subsequent network-based era of the internet age of the US economy with its 3 thought leaders (Berle, Jensen, and Hoffman) and its 3 corresponding hubs (Chicago Lawn, Wall Street, Silicon Valley) from early 1900s to the present day.
The author does a fantastic job not only presenting the key players of each overarching evolutionary stage (institutions: large corporations, labor unions, federal government agencies ; transaction organization: the powerhouses of finance along with the laissez-faire economics of the “infamous” Chicago school; and networks: the emerging internet behemoths), but also proficiently dissecting the different currents within those stages: new deal versus new nationalism and their approach in how to react to the rise of corporations (one wanted to break them apart, the other contain and use it through the power of state). He’s equally at ease explaining the leading thinkers’ varying degrees of suspicion towards corporations from Riesman and Veblen (quasi-hostile) to Galbraith (more-embracing); the shaping of the “welfare corporation” acting as a social institution; the shift from corporate social responsibilities to short-termism; the emergence of a more market-friendly “new” economic liberalism that sought to manage the economy in a more invisible manner (i.e., through monetary and fiscal policies); and the “republican” economic programme under Clinton among many other complicated and/or controversial topics.
Of all the characters presented, I found Jensen to be the most “colourful”, largely because of his later “theories” of “fixing” people thru his self-styled “phenomenological/ontological” approach which I found rather amusing.
The book closes on an open-ended note where the author seems to suggest that pluralism with its multiple organized interest groups that share the power --rather than a central government that pushed its agenda based on any big idea, is the way forward in the future. The author, however, does not expand on this much, which is the main downside to the book.
The book could also have been improved if the author were to be less generous in providing unnecessary details/descriptions of some of the characters (who needs whether Jensen had a midwestern accent, or which way Berle parted his hair?), and a bit more rational as to how these trends emerged.
Overall, a very solid work though.
The author does a fantastic job not only presenting the key players of each overarching evolutionary stage (institutions: large corporations, labor unions, federal government agencies ; transaction organization: the powerhouses of finance along with the laissez-faire economics of the “infamous” Chicago school; and networks: the emerging internet behemoths), but also proficiently dissecting the different currents within those stages: new deal versus new nationalism and their approach in how to react to the rise of corporations (one wanted to break them apart, the other contain and use it through the power of state). He’s equally at ease explaining the leading thinkers’ varying degrees of suspicion towards corporations from Riesman and Veblen (quasi-hostile) to Galbraith (more-embracing); the shaping of the “welfare corporation” acting as a social institution; the shift from corporate social responsibilities to short-termism; the emergence of a more market-friendly “new” economic liberalism that sought to manage the economy in a more invisible manner (i.e., through monetary and fiscal policies); and the “republican” economic programme under Clinton among many other complicated and/or controversial topics.
Of all the characters presented, I found Jensen to be the most “colourful”, largely because of his later “theories” of “fixing” people thru his self-styled “phenomenological/ontological” approach which I found rather amusing.
The book closes on an open-ended note where the author seems to suggest that pluralism with its multiple organized interest groups that share the power --rather than a central government that pushed its agenda based on any big idea, is the way forward in the future. The author, however, does not expand on this much, which is the main downside to the book.
The book could also have been improved if the author were to be less generous in providing unnecessary details/descriptions of some of the characters (who needs whether Jensen had a midwestern accent, or which way Berle parted his hair?), and a bit more rational as to how these trends emerged.
Overall, a very solid work though.
February 7, 2020
Ill-fitting title, but fascinating book. If you're frustrated seeing local shops shuttered by private equity firms, or remember the horrors of the mortgage crisis (and the unfairness of bailing out the banks, not the people), this book puts these phenomena into historical perspective. I appreciated that there isn't a good guy/ bad guy story here: organizations used to manage our country alongside the government, and the auto dealer stories illustrate that the GM monopoly was not exactly benevolent. However, Lemann points out that the US as it has evolved has become "organization-phobic" (my term) in favor of everything being about the unfettered free market. The book explores how this evolution has happened and puts forth the premise that organizations are critical, that "interest groups" are the foundation of all politics -- defending the role of organizations and groups to represent various facets of a population in a democracy. Two points about this book: 1) the afterward is fantastic and is a great summary. 2) it's an excellent companion to the Michael Lewis "Against the Rules' podcast, a human interest podcast that looks, as Transaction Man does, at stories of how today's system seems unfair yet rewards those who profit from the unfairness. Some quotes from Transaction Man that really sat with me: communities have been ravaged, "left out of some calculation that made sense to someone who lives very far away." and "Our political government is democratic. Our industrial government is autocratic." In the end, Lemann argues for a messy compromise: fight it out, let the organizations thrive, but make sure that it's not just the wealthiest who can influence the government, let democracy work the way it's supposed to, and let organizations and bureaucracies have power -- just not too much power.
January 18, 2020
Birdseye view of the ideas and structures that have pervaded postwar American life; first, we saw regimented institutions, that, while not dynamic, were sources of lasting prosperity for the average American (who was rapidly becoming an "Organization Man"); then, we saw capital's mobility and an innovation in the structure of the firm combine for a lucrative but volatile era of transactions that undid the compact between company and worker; finally, an era of networks that would supposedly give the individual a voice was born in Silicon Valley that is really looking more like the era of institutions redux but without the sense of obligation to its employees...
I liked that each segment focused on the "standard-bearers" of their era to see how and why these ideas were conceived in the first place. And I liked the connections Lemann drew among the great thinkers and doers of each era, to show how powerbrokers adopted these ideas and put them into practice--really showed that individual decision-making is often what drives great societal restructurings (do things have to be the way they are? Could they have gone other ways? Sure)
Great storytelling, great posits, not a lot of solid footing in terms of rigorous proof of why he calls different eras what he does or much in the way of illustrative numbers (was there a critical point when outside capital invested in public companies could become more of an active manager?) but overall engaging and thought-provoking read.
I liked that each segment focused on the "standard-bearers" of their era to see how and why these ideas were conceived in the first place. And I liked the connections Lemann drew among the great thinkers and doers of each era, to show how powerbrokers adopted these ideas and put them into practice--really showed that individual decision-making is often what drives great societal restructurings (do things have to be the way they are? Could they have gone other ways? Sure)
Great storytelling, great posits, not a lot of solid footing in terms of rigorous proof of why he calls different eras what he does or much in the way of illustrative numbers (was there a critical point when outside capital invested in public companies could become more of an active manager?) but overall engaging and thought-provoking read.
May 27, 2020
There is much information in this book--that went right over my head. I do not have a good understanding of economics. If my background knowledge was better, this book would probably have made more sense to me and I would have gained more from it. Lemann makes it very clear how much society has changed during the last century and how it is more and more about the bottom line--many businessmen are only concerned about making profit and don't care about harming the little guy. I did enjoy the vignettes that the author used throughout the book to illustrate the points he was making. It was interesting to learn more about the collapse of the banking system that occurred in 2008. Recently I watched a documentary on PBS about Abacus Federal Savings, a small Chinese family owned bank in Chinatown New York that was the only bank prosecuted during the financial debacle that saw millions of individuals lose so much. I found it so interesting that in spite of the shenanigans as outlined in Transaction Man of the banking behemoths, e.g., J. P. Morgan, no other bank was prosecuted.
In addition to discussing financial institutions, Lemann also covers huge organizations, e.g., General Motors. He ends by focusing on Silicon Valley.
In addition to discussing financial institutions, Lemann also covers huge organizations, e.g., General Motors. He ends by focusing on Silicon Valley.
January 13, 2021
The thesis doesn't entirely make sense, but the book gives you enough tools to disagree with it and help shape your own conception of the corporation.
Lemann goes through three major historical notions of corporate life: organizational (social institution, pensions, unions, lifelong careers), transactional (profit-maximizing, combative, 'lean'), and network (silicon valley, corporate hubs of person-to-person connections like youtube and social media). While his criticisms of these models are clear and valid, Lemann unexpectedly ends by suggesting all three frames miss the point entirely, and that the best model can be found in a 100+ year old poli sci book's conception of pluralism. This framework only lasts 16 pages and lacks the depth to prove coherence (how does democracy protect itself? Which pluralistic interest groups are worthy of more space? What happens when one starts to amass outsized power?). Nevertheless, despite its lack of a pointed thesis, this book offers a good plain english journey that makes the chaos of corporate behavior a little clearer.
Lemann goes through three major historical notions of corporate life: organizational (social institution, pensions, unions, lifelong careers), transactional (profit-maximizing, combative, 'lean'), and network (silicon valley, corporate hubs of person-to-person connections like youtube and social media). While his criticisms of these models are clear and valid, Lemann unexpectedly ends by suggesting all three frames miss the point entirely, and that the best model can be found in a 100+ year old poli sci book's conception of pluralism. This framework only lasts 16 pages and lacks the depth to prove coherence (how does democracy protect itself? Which pluralistic interest groups are worthy of more space? What happens when one starts to amass outsized power?). Nevertheless, despite its lack of a pointed thesis, this book offers a good plain english journey that makes the chaos of corporate behavior a little clearer.
October 6, 2021
I think this book is brilliant. I think it might be too brilliant (in parts) for me and my understanding of finance (very similar to The Big Short). I regret that I didn't carve out time for it better - I read the first half then let it sit for a while as I stalled out. When I came back to read the last 120 pages or so, I found the most engaging and impressive section of the text waiting for me. This book essentially views the last 150 years of American history through the lens of institutions - how we've loved them, mistrusted them, improved them, tried to ignore them and been swindled by them. It's definitely one I would recommend to anyone looking to outgrow absolutist rhetoric about "big business" (sorry, can't really unscrew that pooch) or looking for context for the way we've set up corporations to care for and fail us. The final afterward of the book is some of the best-written, clear-eyed, impactful writing on the modern state of America and the need for pluralism I've ever seen. I'm glad I own this one. I think it's a stunner, and I'll be rereading it for sure.
November 10, 2019
I liked this book. It looked at the relationship between politics and economics in US history. It starts with the Organization Man era (when giant corporations were dominant), then the transaction man era (the ascendancy of finance and Wall Street), and today’s network man era, which is still in progress. But the final chapter, the Afterword, had the greatest impact on me. The discussion about special interest politics resonated strongly with me. I have, for quite a while, attributed the rise of right-wing politics to their superior ability to organize and influence. I compare the success of the Tea Party to the failure of the Occupy Wall Street crowd. Or, I compare the success of the NRA to the groups that advocate gun control. Some groups are better at getting organized to make a difference than others; the ineffective groups talk a lot, but don’t get anything accomplished. It’s hard work, and makes politics messy – but if you want to get changes made you have to do it right.
July 8, 2024
Very insightful book. Covers a lot of the same ground that Adam Curtis does in his documentaries. In this book, the economic history of the 20th and early 21st century US is neatly divided into eras of the Organization Man, Transaction Man, and Network Man, each with his own place in the world and viewpoint about how to improve the lives of the masses. The afterword, in which Lemann makes a case for a "none of the above" solution in pluralism, came as a surprise and offered a clear avenue further research for the author or anyone else with an interest in this subject. Though I don't think Lemann would admit it, I see an affinity between his description of pluralism and the modern anarchist movement, which is similarly skeptical of broad, grandiose and universal solutions.
December 23, 2025
I feel like even though this was written in fairly simplified terms (i .e., for the layman), I was still a bit over my economic intellectual depths. However, the general theists is clear enough - for generations, the US has repeatedly undercut and eliminated legislation that makes for fair competition in the private sector, and in all aspects, the prospects for the average worker on virtually every industry have become less attractive and less sustainable.
And this book doesn’t even address what AI will do to the workforce, and what crypto is doing to investing. Too bad no one in either the public or the private sector actually wants to make America great again (or even just less shitty than it now is)
And this book doesn’t even address what AI will do to the workforce, and what crypto is doing to investing. Too bad no one in either the public or the private sector actually wants to make America great again (or even just less shitty than it now is)
March 27, 2020
Economic history, corporate culture and an explanation of why things are getting harder for the average citizen. Lemann takes us from the rise of the corporation viewed through the lens of a neighborhood on the south side of Chicago. The way the housing shifted, the jobs shifted and the difficulty of hanging on despite a lot of effort of the people featured in this book. The economy has changed, is changing, will continue changing. How do we deal with the people who get mowed over as the machine keeps moving. This book doesn't provide answers, it is more a chronicle of the rise and fall of the system...but somehow the system hasn't changed much. Interesting reading for econ nerds.
January 24, 2022
Liked it, but didn't love it.
This is a book in three sections describing alternative economic philosophies for allocating power and decision-making in the US economy. Strong gov't, Free Market Corporate, or some vague Silicon Valley network model.
I appreciated the Wall Street modernization section in the middle of the book, as I worked in Wall street in the 80's and 90's. The other parts were informative but for me less compelling.
I will say it's an easy read -- consistent with the author's journalistic orientation and experience. I read everything he writes for The New Yorker magazine.
Recommended only if you like this sort of thing.
This is a book in three sections describing alternative economic philosophies for allocating power and decision-making in the US economy. Strong gov't, Free Market Corporate, or some vague Silicon Valley network model.
I appreciated the Wall Street modernization section in the middle of the book, as I worked in Wall street in the 80's and 90's. The other parts were informative but for me less compelling.
I will say it's an easy read -- consistent with the author's journalistic orientation and experience. I read everything he writes for The New Yorker magazine.
Recommended only if you like this sort of thing.
September 29, 2019
A mix of the micro (what happened in time to a piece of Chicago over time) & the macro (the people & their economic policies that took hold of America). If you ever wondered how much blame to place on where we are now Alan Greenspan is responsible for this book will help.
In the end a solution to the "one size fits all/big idea" is proposed that's not all that emotionally satisfying, but it's not really an emotional problem, it just affects how you feel. . .
In the end a solution to the "one size fits all/big idea" is proposed that's not all that emotionally satisfying, but it's not really an emotional problem, it just affects how you feel. . .
December 21, 2019
Great read and short nicely done narrative on the evolution of the view of the corporation and the role of society and economics. The modern examples of families in Chicago and how they are avatars in this evolving socioeconomic milieu seemed a bit forced but the overarching story held together. Another nice addition to the growing library of how people are managing the change of society and the impact of economic theory.
February 10, 2020
The book is really about 2008 crisis, while the author starts from New Deal thinkers.
He tries to compare "real life" people (autodealers in Chicago suburb) along with "ivory tower" thinkers whose ideas ruined their lives.
The problem with the book that all protagonists, especially thinkers (Berle, Jensen, Hoffman) are either boring themselves or the author made them so. So while the book is just 268 pages it's a tedious read without a lot, if any, new information.
He tries to compare "real life" people (autodealers in Chicago suburb) along with "ivory tower" thinkers whose ideas ruined their lives.
The problem with the book that all protagonists, especially thinkers (Berle, Jensen, Hoffman) are either boring themselves or the author made them so. So while the book is just 268 pages it's a tedious read without a lot, if any, new information.
October 16, 2019
Brilliant!
Best line, "the internet is a modern day Rolodex".
Filled with facts & Data that I just geeked out on.
Heard much of this data elsewhere, and found the data presented in a smooth flowing easily digestible format in this book.
Thoroughly enjoyed and read straight through when had planned to read over multiple days.
Best line, "the internet is a modern day Rolodex".
Filled with facts & Data that I just geeked out on.
Heard much of this data elsewhere, and found the data presented in a smooth flowing easily digestible format in this book.
Thoroughly enjoyed and read straight through when had planned to read over multiple days.
February 22, 2022
The structure of Lemann's book, along with his astute analysis, sets out an essential argument for the necessity of participatory democracy -- regardless of whether it comes from the left or right of the political spectrum -- to check the dominance of any single ascendant group within the United States under the banner of some utopian vision of better outcomes.
November 5, 2024
The author's own policy suggestion, such as it is, is buried in the afterword. I feel that he would have been better served to lead with his proposed solution, using contrast with previous "systems" to demonstrate why his proposal is better -- that is, write a policy book rather than a history book. As is, I didn't really understand why he was writing the book at all until I got to the end.
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