Why were yuppies suddenly gripped by a fever for investment banking? Most accounts of the era blame greed—a new ethic of cupidity that displaced whatever youthful idealism remained from the 1960s. These morality tales, focusing on figures like Michael Milken and Ivan Boesky, make an implicit claim that individual avarice somehow explains the excesses of an entire era. Journal ists unfailingly repeat the motto “greed, for lack of a better word, is good,” uttered by financier Gordon Gekko in Oliver Stone’s 1987 film Wall Street (and based on an actual Boesky quote), as if those words alone explain why finance assumed such an important place in the American economy.
That story, however, gets it exactly backward. Instead of uncovering the material forces that brought finance to the fore—and brought yuppies to Wall Street—“greed” narratives are retrospective accounts of a culture struggling to understand the newly financialized order. Greed was always good on Wall Street. That didn’t change in the 1980s. But what set the decade apart were the economic and institutional changes that elevated Wall Street, making it irresistible to an entire generation of young professionals.
What were those changes? First, investment banks benefited from a range of loosened regulations that, when coupled with new technologies and leveraged by new securities, made investment banking fantastically profitable. These included shelf registration, relaxed international capital controls, eased restrictions on bank deposits, the rise of index and money market funds, lax oversight of corporate mergers and takeovers, and the creation of banking free-trade zones.
Second, Wall Street firms were the among the first employers to exploit universities’ new career-services offices, which helped to funnel a large and diversifying population of women, white ethnics, and minoritized graduates into finance careers. Another factor was the slackening appeal of industrial companies, which had long absorbed the greatest number of young graduates. The 1980s marked the first time that finance captured a larger relative share of profits in the American economy than either manufacturing or services. Soaring profits meant higher compensation for bankers, of course.
This was doubly true for students from disadvantaged backgrounds, who hoped to use their educational credentials to catapult themselves up the class ladder.
But it also leant Wall Street rising cultural cachet. White-collar professionals who might have previously become middle managers in a Midwestern conglomerate were now drawn to the superior pay and excitement of a career at Lehman Brothers or First Boston. The turn to finance also had a geographic dimension. By choosing investment banking, an industry almost entirely based in Manhattan, students were expressing a predilection for its unique lifestyle and consumption options.