Transaction Man: The Rise of the Deal and the Decline of the American Dream
Nicholas Lemann’s most recent book, Transaction Man: The Rise of the Deal and the Decline of the American Dream, is an account of the United States economy in the 20th and 21st century, how it has transformed over time, and the impacts of such transformation on all of us. Specifically, Prof. Lemann examines three remarkable economic and social thinkers who he calls, “Institution/Organization Man,” “Transaction Man,” and “Network Man,” who epitomized and helped create the three main eras of American economy.
In this interview, Prof. Lemann explains these three eras in detail, why none of these models has successfully brought sustainable prosperity to the American people, and how his vision of pluralism might provide a synthesis and possible solutions to today’s urgent social problems.
We also chat about Prof. Lemann’s other life of being a publisher – founding and leading Columbia Global Reports, which pioneers in an innovative approach of “long-form journalism” by releasing short books (around 100 pages each) that explore various fascinating issues by leading scholars in the fields.
“Institution Man” = Adolf Berle, Franklin Delano Roosevelt’s chief theorist of the economy, who 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.
“Transaction Man” = Michael Jenson. 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 may be. This narrative took place very much under the backdrop of “financialization” and heavy deregulations starting in the 1970s, which allowed capital providers and fund managers to suddenly play the role of textbook capitalist.
“Network Man” = Reid Hoffman. Today, Silicon Valley titans like LinkedIn co-founder and venture capitalist Reid Hoffman hope “networks” can reknit our social fabric and efficient startups like Uber and Airbnb can replace much of the existing infrastructure.
Some of our questions include:
In service of maximizing shareholder value, investors and their allies dismantled the corporate and government edifices that had done so much good — high wages, company research labs, rigorous regulation, and redistributive taxation… But isn’t that just the inherent nature of capitalism – creative destruction? In the sense that the need for ever more excessive goods and wealth eventually trumped structural innovations for the society?
Seeing the growing disillusionment people are having with Silicon Valley and the demand for antitrust regulations against tech giants, would you say that the Network Man model will soon begin to crumble as well? Or has that crumbling already started a while ago?
The “Institutional Man” version of corporate-based society was rendered with deep dissatisfaction of the excluded, prevalence of racism and sexism, and many other problems. After coming out of that age and going through transaction man’s era, we’re seeing deep inequality and a public call to rethink capitalism – does it mean that such transformation has largely failed?
Wall Street grew so powerful that it was even able to survive a 21st-century financial crisis – with generous help from American taxpayers. Should we not have saved the financial sector? Would that have prompted a rebirth of American society that would give way to a rosier vision?
In this hyper-connected world, we’re constantly bombarded by news stories, blogs, articles, etc. Fewer people seem to be spending time reading books now. Intellectuals like Nassim Nicholas Taleb have long made the assertion that reading more news and short articles does not fundamentally improve one’s knowledge system – news (high-frequency information) is likely full of noise, whereas history (much low-frequency) is largely stripped of it. Do you agree with this claim? If so, What is your way out of this problem? How do you make sure that you don’t rely on your predictions and analysis on news blips but rather long-lasting observations on history and our world?
Nicholas Lemann
Full bio: Professor Nicholas Lemann is a veteran American journalist and author of six books, including his latest Transaction Man: The Rise of the Deal and the Decline of the American Dream. He is the Joseph Pulitzer II and Edith Pulitzer Moore Professor of Journalism and Dean Emeritus at the Columbia Journalism School. Previously, he has worked at The Atlantic Monthly, The Washington Monthly, The Washington Post, and a variety of other newspaper and magazine companies, writing about politics, education, business, social policy, and other topics.
