In the 1987 Oliver Stone film Wall Street, Michael Douglas delivered an Oscar-winning performance as master-of-the-universe Gordon Gekko. An unabashedly greedy corporate raider, Gekko delivered a frequently quoted monologue in which he eloquently describes the culture that has become a caricature of the financial industry
Despite the notoriety of this encomium to enlightened self interest, few people know that these words are based on an actual commencement speech, delivered by convicted insider trader Ivan Boesky in 1986, only eighteen months before his conviction, at what is now the Haas School of Business of the University of California at Berkeley.
Millions of people saw Wall Street, and Gekko’s monologue became part of popular culture. Hundreds, perhaps thousands of young people were inspired to go into finance as a result of Douglas’s performance. What makes this phenomenon truly astonishing is that Gekko is not the hero of Wall Street—he is, in fact, the villain. Young people decided to base their career choices on the screen depiction of a fictional villain whose most famous lines were taken from the words of a convict.
What makes Gekko such an attractive role model? Although there is a larger proportion of males in investment trading, this is not only about the association with young males, who in their commonly held belief in their own immortality, take greater risks, nor that males are encouraged to ‘develop a skill orientation towards their environment (Lyng 873). It also leads us to a critique of modern social life.
Twenty first century life does offer many material comforts, but it also ‘propels many of us to the limits of our mortal existence in search of ourselves and our humanity’ (883). Over regulation in institutional roles and conformation to an ordered socialisation can drive individuals to a type of experiential anarchy in which they move beyond the realm of established social patterns to the very fringes of ordered reality. Whilst the individual can be put at severe risk, the risk is made pleasurable through a sense of satisfaction in one’s abilities to navigate such dangerous waters.
Professor of Sociology and Criminal Justice Stephen Lyng adopted the term‘Edgeworker’ from the writings of the gonzo journalist Hunter S Thompson to describe the pleasurable form of voluntary risk-taking found in adventure sports such as skydiving, or in hazardous occupations such as test piloting. Thompson refers to ‘Edgework’ as overcoming a number of important boundaries ‘between life and death, consciousness and unconsciousness, and sanity and insanity.’ I understand this on a personal level both as a skydiver and whistleblower with a preparedness to stretch beyond boundaries mitigated by a healthy appreciation and understanding of risk.
One look at a trading floor and you can appreciate why the sociologist, Charles W Smith compared the concept of an edgeworker to a financial market trader.Institutional investors mirror professional risk takers. They assess, mitigate, manage and trade investment risks. They need to take risks to do their jobs. One company president who viewed himself as an edgeworker, said, “Satisfaction from success is directly related to the degree of risk taken.” However it is not enough to just take risks; it has to be done in a calculated way. A big lesson from the subprime financial crisis was that many investors didn’t understand the risks they had taken. If these investors were edgeworkers they’d be dead.
Individual edgeworkers might be viewed as extraordinary but what happens when a culture such as the financial investment market primarily employs risk takers and amplifies such behaviour by encouraging and rewarding risky action? Success in the face of risk reinforces a sense of group solidarity and belonging to an elite culture between edgeworkers, across professions. But this sense of solidarity extends only to fellow edgeworkers, which puts them at odds with a larger culture. In a corporation, this can lead to a split between a trading desk, or even upper management, and the rest of the corporate culture and society.
As a skydiver and successful whistleblower who secured justice, I have a healthy appreciation for risk. Below I offer my insights on how to develop effective risk cultures:
“Edgeworkers must be flexible enough to innovate an on-the-spot strategy for maintaining control over the situation. “ Investment companies should avoid rigidity and silos and engender flexibility to move, organisationally.
“In the completely novel circumstances of a true edgework situation, the individual can respond appropriately only by absorbing as much information as possible about the environment” Investors should seek to collect as much information and knowledge as possible ahead of committing.
“Edgework is about maintaining control over your mind in chaotic situations that most people would regard as utterly uncontrollable. The best are not frozen with fear but instead have an ability to zero in on what’s critical for survival and success and execute” Training and education from a successful ‘fellow’ edgeworker outside the organisation and who understands pushing power to the edge is important for empowering individuals in chaotic situations.
Lyings’ writings on Edgework offers useful insights into how a risk taking culture can lead funds astray:” When factors traditionally associated with skill are introduced to chance settings, actors develop the ‘illusion of control’ – that is, they behave as if they could exercise control over events that are actually chance determined. The greatest satisfaction or feeling of competence would therefore result from being able to control the seemingly uncontrollable.’
Ironically it is the illusion of control that leads to an edgeworkers success. Edgeworkers are able to control fear, focus attention and thanks to their confidence; these abilities facilitate survival out on the edge.
Over the years spent within organisations and institutions I have observed the tendency to employ ‘another’ business consultant to train and coach financial investment traders in codes of conduct and behaviour and wonder why, to date, this hasn’t been effective. As a response I consider David Hume the philosopher who said that it is only when individuals can find enough in others to mirror things in themselves that they become susceptible to the considerations advanced that change is made.
I suggest it is the edgeworker with the right stuff, with a record of success, that will be better out on the ledge coaching another edgeworker than somebody less familiar and experienced in Edgework. If financial institutions and their employ are going to be asked to take bigger risks in the next decade it is important to help them avoid cratering.
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