With the Dow pushing 8,000, all eyes have been on the stock market. In fact, more Americans have been playing around on Wall Street than at any time in the last 30 years - maybe ever. That popular interest has helped drive the daily volume on the New York bank wire, which captures most of the global activity denominated in US dollars, to over $1 trillion a day. What does it all mean? Unfortunately, with the Dow pushing 8,000, most people are disinclined to pose that question. But this is precisely the time when we should be doing just that.

In Wall Street, Doug Henwood not only asks the question, he answers it. Far from financing real production - the expansion of existing businesses and the birth of new ones - Wall Street has almost nothing to do with such mundane activities. Far from giving good signals to corporate managers, the stock market is a volatile arena, populated mainly by traders with the emotional maturity of young teenagers, whose fads are best ignored. And far from serving any useful role, shareholders, who have been angling for more and more say in corporate strategies over the last 10-15 years, do little but demand more money for themselves while presuming to offer advice to managers whose businesses they don't even begin to understand. Wall Street's preference that the corporations they' re increasingly running for sure-thing, quick-payback investment and R&D projects may be boosting profits now, and with them stock prices - but at what long term costs?

That puts Wall Street at the heart of the downsizing fad of recent years, which has put virtually every American in a constant state of fear about losing his or her job. Press reports on downsizing have typically blamed abstract forces like "technology" and "globalisation" for layoffs and pay cuts, while portfolio managers with six- and seven-figure salaries have escaped scrutiny. That's one of the many oversights that Henwood's Wall Street corrects.

There's one thing Wall Street's financiers very good at, however: making the rich, investment bankers most prominent among them, already richer. Henwood, relying on figures supplied by the Federal Reserve, shows just how it is that the rich get richer while everyone else is happy just to stay in place. The richest 1/2% of Americans control 29% of all financial wealth - more than the poorest 90% of the population (which controls just 22%). The top 5% of stockholders control 95% of all the stock held by individuals. Yet somehow we' re being led to believe that the 1990s mutual fund mania has led to a democratisation of finance. Some democracy.

Henwood's Wall Street is comprehensive, definitive, and always readable. It explains just how the markets work, describes all the major players and their roles, and clarifies the seemingly incomprehensible webs of claims and obligations that characterise the modern American financial system. And unlike most other books on finance, Wall Street unveils the mechanisms of social and political power hidden behind financial transactions - including the self-serving nature of demands for "unlocking shareholder value." Financiers would love nothing more than for the public to kneel in rapt deference to their mysterious reign. Read Wall Street and you'll never be mystified again. (From a disarmingly modest press release)


Book description

A scathing dissection of the wheeling and dealing in the world's greatest financial centre. Spot rates, zero coupons, blue chips, futures, options on futures, indexes, options on indexes. The vocabulary of a financial market can seem arcane, even impenetrable. Yet despite its opacity, financial news and comment is ubiquitous. Major national newspapers devote pages of newsprint to the financial sector and television news invariably features a visit to the market for the latest prices. Does this prodigious flow of information have significance for anyone except the tiny percentage of people who have significant holdings of stocks or bonds? And if it does, can non-specialists ever hope to understand what the markets are up to? To these questions Wall Street answers an emphatic yes. Its author Doug Henwood is a notorious scourge of the stock exchange in the pages of his acerbic publication Left Business Observer. The Newsletter has received wide acclamation from J.K. Galbraith, among others, and occasional less favourable comment. Norman Pearlstine, then executive editor of the Wall Street Journal, lamented, `You are scum ... it's tragic that you exist.' With compelling clarity, Henwood dissects the world's greatest financial centre, laying open the intricacies of how, and for whom, the market works. The Wall Street which emerges is not a pretty sight. Hidden from public view, the markets are poorly regulated, badly managed, chronically myopic and often corrupt. And though, as Henwood reveals, their activity contributes almost nothing to the real economy where goods are made and jobs created, they nevertheless wield enormous power. With over a trillion dollars a day crossing the wires between the world's banks, Wall Street and its sister financial centres don't just influence government, effectively they are the government.

"It's like the story of Little Town," an influential actor says in Rationality and Power when choosing a metaphor to describe how he manipulated rationality to gain power, "The bell ringer . . . has to set the church clock. So he calls the telephone exchange and asks what time it is, and the telephone operator looks out the window towards the church clock and says, 'It's five o'clock.' 'Good,' says the bell ringer, 'then my clock is correct.'"

In the Enlightenment tradition, rationality is considered well-defined, independent of context; we know what rationality is, and its meaning is constant across time and space. Bent Flyvbjerg shows that rationality is context-dependent and that the crucial context is determined by decision-makers' power. Power blurs the dividing line between rationality and rationalisation. The result is a rationality that is often as imaginary as the time in Little Town, yet with very real social and environmental consequences.

Flyvbjerg takes us behind the scenes to uncover the real politics--and real rationality--of policy-making, administration, and planning in an internationally acclaimed project for environmental improvement, auto traffic reduction, land use, and urban renewal. The action takes place in the Danish city of Aalborg, but it could be anywhere. Aalborg is to Flyvbjerg what Florence was to Machiavelli: a laboratory for understanding power and what it means for our more general concerns of social and political organisation. Policy-making, administration, and planning are examined in ways that allow a rare, in-depth understanding. The reader is a firsthand witness to the classic, endless drama that defines what democracy and modernity are, and what they can be.

The result is a fascinating narrative that is both concrete and general, current and timeless. Drawing on the ideas of Machiavelli, Nietzsche, Foucault, and Habermas, Flyvbjerg reads the Aalborg case as a metaphor of modernity and of modern politics, administration, and planning. Flyvbjerg uncovers the interplay of power and rationality that distorts policy deliberation. He demonstrates that modern "rationality" is but an ideal when confronted with the real rationalities involved in decision making by central actors in government, economy, and civil society. Flyvbjerg then elaborates on how this problem can be dealt with so that more fruitful deliberation and action can occur.

If the new millennium marks a recurrence of the real, Flyvbjerg's Rationality and Power epitomises this development, setting new standards for social and political inquiry. Richly informed, powerfully argued, and clearly written, this is a book that no one trying to understand policy-making, administration, and planning can afford to overlook.