The covers of New York’s taboloid dailies have been gloating, along with much of America, about Martha Stewart’s legal problems. (For those of you who might not have heard of her, Stewart is a very famous American homemaking advisor, with her own magazine, TV show, and line of products such as towels, sheets, rugs, and housewares.) She’s accused of insider trading – specifically, of selling her stock in Imclone the day before it was publicly announced that the company failed to get approval for its new cancer drug from the FDA. She’s also accused of lying in her testimony about the incident.
I’m not surprised by the charges or her apparent guilt. What fascinates me is how quickly and vehemently everyone in America has turned on her. Stewart appeared unstoppable. Even though KMart, who sold her goods, looks to be going out of business, the only question that most Americans wondered was ‘where would she take her product line?’ So successful in her own company’s IPO, Stewart was eventually invited to serve on the Board of Directors of the New York Stock Exchange. (I know – this part really sounds nutty, but it’s true. Perhaps the NYSE thought she’d spruce up their image.)
Stewart is not the first American hero(ine) to be skewered after being catipulted to fame and fortune. We like to crucify our heros – it’s part of the Christian mythology, after all. But the degree to which Stewart’s fall is being celebrated has as much to do with what she symbolizes as anything she, herself, did wrong.
Martha Stewart was the poster child for aspirational values in 1990’s America. Born a New Jersey middle-classer, she managed to cater her way to New England, and become the leading authority on how to create a tasteful centerpiece. Her KMart line even promised, like any good NASDAQ IPO, to bring the lowest rung of the ladder down to a level where anyone could participate. Now, we could all enjoy the beauty of Old Lyme or the Hamptons from the frugal comfort of Queens.
Sure, anyone could tell from the way she interacted with guests on her show, or even with those who interviewed her, that Stewart had problems. We knew she was divorced and mean. But she also perfectly embodied the psychology of the late 90’s market craze: don’t look behind the curtain; appearances are everything; get your piece. Her style was not one of grace or bounty, but of elitism. And her promise was positively Reaganomic. Anyone, even a middle class loser, could one day ‘pass’ for wealthy. She was teaching regular Americans how to do what Jews had attempted to do for a century: assimilate into a fictional world of Mayflower-authentic blue blood wealth and apparent happiness.
Serving as a temporal bookend to the craze started by the character Gordon Gecko, Martha represented the joy of greed. While Gecko insisted that “Greed is good,” Martha claimed the more Biblical epithet, “It’s a good thing.”
So, along with Tyco and Enron and America’s faith in capitalism itself, down goes Martha Stewart. The two paths to salvation – style and cash – merged in Stewart, a caterer to the pyramid-builders who eventually sat atop of an investment pyramid, herself. She taught us that if we only learned the rules of good hostessing and proper baking, we, too, could have a giant duck on a classy picnic table, appropriate to the season.
But following the rules doesn’t work. Not for centerpieces (which always come out looking amateurish and desperate) or for stock investing (where the rule-followers finish last). This is the real lesson of Wall Street in the late 90’s. Capitalism is a game, with rules. Just as many rules – perhaps even more rules – than bureaucratic communism. The shell-game of capital creation is dependent on those rules being followed.
After the crash of ’29 – largely a result of intentional disinformation by companies to the investment world – these rules were strengthened. Businesspeople applauded the implementation of regulations which would guarantee fair markets — the fundamental prerequisite for capitalism to work.
Now, however, we are coming to realize that the very people we were entrusting with refereeing the sport of Capitalism – auditors and government – were, themselves, creating loopholes and participating in the spoils. Everyone from Dick Cheney to Andersen Consulting was busy cashing in on the retirements savings of middle class Americans, while cooking the books and passing new laws to help obscure their manipulations.
Yes, capitalism depends on faith. Not faith in the infinite and inevitable expansion of the market – but simple faith that the rules are being followed. But capitalism’s vulnerability is that it is an economic system based on the presumption of greed. The capitalist believes that the rules of the marketplace are enough to bridle capitalism’s tremendous power, and turn it towards the public good. Capitalists are then free to run around like greedy little children, while everyone benefits from their energies.
We may have reached an era in which such a scheme no longer works. We may need to find a better motivator for prosperity than personal wealth at the expense of others. Likewise, we need a better reason to cook a wonderful dinner than Martha Stewart ever gave us: to bring more people to the table.