by Barry Edelson


Whose Culture Is It, Anyway?


Goldman Sachs and the mythical power of the individual


If we feel a little sorry for Greg Smith, the Goldman Sachs executive who announced his resignation in the New York Times a few weeks ago, it ought not to be because the bank's deteriorating "culture" compelled him to abandon a promising and lucrative career. His public denouncement of his former employer should make us wonder how such an intelligent and well-educated person could be so ignorant about the nature of human organizations.

The culture that Smith describes, in which clients are dismissed as so much collateral damage on the drive to ever higher margins, may very well exist at Goldman Sachs. But more than likely, in a corporation employing tens of thousands of individuals, there are any number of cultures operating simultaneously. Anyone with a decade of work experience in any sphere whatsoever ought to have deduced that no entity on earth is the sum of its press releases. No matter how the people at the top choose to depict themselves or their results, and however assiduously they attempt to inculcate a set of corporate "values" in their employees, it is preposterous to suppose that anyone swallows the boss's words whole. Nor are they even meant to, as statements of noble intent are very often accompanied by discreet winks of the eye, not to mention strategic efforts to ensure deniability. Inevitably, even among the company faithful, unity of purpose invariably succumbs to the cruel reality of decision making. None of the cheerleading that goes on at sales meetings, nor the bonding that appears to take place at company gatherings, can overcome the instantaneous eruption of anger and bitterness when some ass-kissing dolt is promoted over his peers, or when vacations are cancelled because someone at the top made some stupid mistake that everyone else has to work overtime to correct. There isn't a single working place on the planet, whether it employs six people or 60,000, whether it is a hugely profitable model of management efficiency or teetering on the brink of bankruptcy, in which you can't find a sizable number of employees who don't think the boss is a bastard, an idiot, or a fool.

It would appear that Smith confused his employer's culture with its mission statement. The former is a complex organism that derives from the interactions of numerous individuals and is largely impervious to the influence of any one of them, while the latter is a carefully crafted declaration of what the leaders of an organization want people to believe about it. Anyone who believes that a company built for the express purpose of making vast sums of money is actually guided by some higher ideal is just asking to be lied to. Scott Adams, creator of the Dilbert cartoons, defines a mission statement as "a long, awkward sentence that demonstrates management's inability to think clearly." An even more cynical view would hold that it deodorizes even the most noxious activities with the language of high purpose.

A recent reading of "Guns, Germs and Steel", Jared Diamond's now classic exploration of why some human societies advanced more quickly than others, illuminates the Greg Smith problem most pointedly. Diamond's book is a direct refutation of the "Great Man" theory of history — the one we were all taught at school — which supposes that the actions of a small number of extraordinary (mostly male, and not usually very nice) people are alleged to have shaped the course of human events and hence the lives that everyone else must lead. The book recounts the sweeping history of mankind while never once mentioning a single individual except to make a point about the larger trends of human civilization. His dramatic account of Pizarro's conquest of the Inca, for example, in which a few dozen men on horseback and with firearms wiped out an army of thousands, shows how the defeat of the native population by more technologically advanced Europeans had little if anything to do with the bravery or decisions of the conquistador on one side or the emperor Atahualpa on the other. The very same imbalance of factors — primarily in agriculture, animal domestication, immunity to infectious disease, steel weaponry and seafaring navigation — led to the wholesale slaughter and enslavement of millions up and down and the American continents. Diamond demonstrates emphatically that there wasn't anything the least bit inferior about the people living in pre-Columbian America or their cultures. There just wasn't anything that any particular ruler could have done to forestall the calamity of confronting a civilization that had leapt ahead by many centuries of development through the sheer luck of its geography. Only when the plains Indians of North America acquired horses and guns of their own were they able to mount an effective armed resistance that lasted for several hundred years, showing themselves more than willing and intelligent enough to adopt new technologies and methods of warfare.

The essential component that is missing from Smith's excoriation of Goldman Sachs is context. Did he not realize that he was working for a financial institution and not the Red Cross? Did he not read the newspapers at any time in the last decade, when the rapaciousness of Wall Street traders was even more than normally unrestrained? Perhaps he suffered from the Rosa Parks syndrome, believing that he had the power as a single individual to change the culture of the bank. What he apparently did not understand was that Parks, though she unquestionably acted bravely in defying Montgomery's discriminatory bus regulations, did so in a time and place when there was a chance that it could actually make a difference. In 1955, after Brown v. Board of Education had already been decided and the civil rights movement was already organizing, there was a meaningful context for Parks' actions. Had she defied a bus driver a half century earlier, she would have been arrested and forgotten. Her actions may have accelerated an already incipient change in the culture, but she could not possibly have engendered that change all by herself.

What he also fails to appreciate is that a culture doesn't form a patchwork, as if the people who live within these borders or work for a company adhere to a single culture, while the people over there follow another. Imagine instead a vast, indecipherable Venn diagram, with millions of intersecting areas of common interest. Given this immense complexity, even a dictator doesn't often manage to change a culture. Witness the greeting of the Pope in Cuba last week, with hundreds of thousands pouring into the streets to see him. (It is presumed that the Cuban government did not order these people to show up and give the Pope a nice hello, according to the totalitarian custom, which would have been an act of unsurpassable irony.) After a half century of officially sanctioned atheism, and decades of near continuous rant from their bearded leader, many still consider themselves among the faithful. The same is true in Russia and many other parts of the former Soviet empire, where even 70 years of Communist indoctrination and repression were insufficient to wean the proletariat from the church's gilded teat. Of course, there are many nonbelievers among the liberated masses of the East, but so are there growing legions of them throughout the democratic West, as well. This is not to suggest that despots cannot do great harm to great numbers of their subjects, but the one power that is beyond their grasp is altering the wider arc of civilization, which sweeps each and every one of us into its irresistible current.

In our extremely individualistic culture, we are perhaps more apt than others to buy into the myth of the great leader who can effect lasting change. Those who worship at the altar of FDR and the New Deal, for example, forget that the reforms he introduced into American society would not have been possible minus the particular circumstances of the era: the Great Depression, an ascendant labor movement, and many outspoken people who unabashedly identified themselves as socialists. All developed societies were moving in that direction at that time and America would have also adopted some of these reforms sooner or later, or quickly lost its singular place in the world. Similarly, those who genuflect to the memory of the sainted Reagan imagine that the Soviet Union collapsed from sheer terror when they heard the great man's rhetorical flourishes, but does anyone reasonably suppose that the crumbling edifice of Soviet Communism wouldn't have imploded eventually no matter who was president?

We imagine that electing a president of impeccable moral virtue will magically reverse the coarsening of our culture, as if any individual has such power. Whether the White House has been occupied by philanderers or faithful family men, by philistines or eggheads, the culture has followed the path of its own unwavering trajectory, shaped by hundreds of millions of overlapping tastes and proclivities. Totalitarians have tried mightily to control their people as if they were their own children, but actual parents have a hard enough time influencing the tastes and opinions of their children. And if Stalin, Mao, Castro and countless other tyrants failed to change the fundamental character of their countries, what chance does the head of an investment bank have?

Astonishingly, Americans are in some ways the same people that de Tocqueville observed in the 1830s, despite subsequent waves of immigration, a civil war, prominence on the world stage, vast social upheavals and a technological revolution. Likewise, the Cubans remain recognizably Cuban, the Russians fundamentally Russian, even after decades of a terrible national ordeal. Change is no more an act of will in large populations than it is for a solitary person. It would be nice to think that Greg Smith is right about the culture at Goldman Sachs, that it went bad in just the last few years. That would suggest that it could be easily reversed by the concerted efforts of a few of its leaders. But the reality is much more complicated, because the company, like the country, is very old, and its culture has been taking shape for generations. Consider Jon Corzine, whose questionable decisions and behavior at the now defunct MF Global makes one wonder what kind of leader he was at Goldman Sachs in the 1990s. Corzine didn't shape the culture of Goldman Sachs because he was CEO; he became CEO because he fit the culture. Smith was the odd man out. We should feel sorry for him because he just doesn't know it.

March 31, 2012


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