Reminiscences of a Stock Operator is a 1923 roman à clef (that is: a story about real life events that is overlaid with thin facade of fiction) about the life and times of legendary stock market trader Jesse Livermore.
Just a quick note for those who might be puzzled by this case: we’re setting up for a sequence on Asian conglomerates. This is ostensibly about capital expertise (the way Williamson manipulates Livermore for market structure reasons is worth reading about) — but there is another reason we’re publishing this case, which will become clear soon.
I was discussing this case with a friend of mine that is an ancient historian, and he mentioned a book called “The Gift: The Form and Reason for Exchange in Archaic Societies” by Marcel Mauss as a study into the phenomenon of power of the kind displayed in this case.
I haven’t read it yet, but my friend explained that Mauss studied how gifts in ancient societies created obligations that bound people together which also implied it could be used as an instrument of power. This seems to perfectly mirror how Dan Williamson used his ‘generous’ loan to effectively bind Livermore and control his trading. I’ve added the book to my reading list, as it seems like it could provide some interesting historical cases for understanding these kinds of power dynamics in business (and other domains in life).
Excellent observation! This reminded me of David Graeber’s discussion of the topic in “Debt: The First 5000 Years”, which turns out was heavily informed by Mauss’ work.
Graeber then takes it in a different direction, though, that is worth noting when he says that trying to interpret gifts through economic logic does not work. He argues that a better framework is one he provocatively calls communism because the its bedrock principle is “from each according to their abilities, to each according to their needs.” This is the essence of collaboration, because as he phrases it,
If someone fixing a broken water pipe says, “Hand me the wrench,” his co-worker will not, generally speaking, say, “And what do I get for it?” - even if they are working for Exxon-Mobil, Burger King, or Goldman Sachs. The reason is simple efficiency (ironically enough, considering the conventional wisdom that “communism just doesn’t work”): if you really care about getting something done, the most efficient way to go about it is obviously to allocate tasks by ability and give people whatever they need to do them.
If we apply this to this case study, Williamson changed the nature of his relationship with Livermore from an economic relationship (based on exchange) to a communist one, which he was then able to exploit for his own ends. Livermore’s statement that he should have paid Williamson back when he had the means to do so in order to extricate himself perfectly matches this vein, because as Mauss argues perfect reciprocation for a gift was actually insulting because it implied that the relationship could now be severed since neither party owed each other anything.
Fascinating stuff!