A Goldman Sachs sign on the floor at the New York Stock Exchange. Image: REUTERS/Brendan McDermid

Why Goldman Sachs matters

From Rishi Sunak to Mark Carney, how one bank's famous alumni reveal a lot about modern power
October 5, 2021

What does Rishi Sunak (UK chancellor) have in common with Huw Pill (new chief economist at the Bank of England), Mario Draghi (ex-European Central Bank chief, now Italian PM), Mark Carney (ex-Bank of England governor) and Robert Rubin (ex-US Treasury secretary)? One answer is that these men have, or had, power in the global financial system. Another is that they are alumni of an old Wall Street institution: Goldman Sachs.

A coincidence? No. Goldman alumni have long disproportionately filled government roles, to the point where a few politicians make a point of having shunned the institution. Ahead of this autumn’s Budget, Sunak’s ministerial shadow, Rachel Reeves, pointedly told the BBC she once rejected a Goldman job for a “public service” Bank of England role. Each year the institution sucks in bright students—and later propels many into influential roles elsewhere. If the policymaking world worships the capitalist creed, Goldman Sachs is a seminary.

Is this a bad thing? Back in the financial crisis, the bank was described as a “vampire squid” by writer Matt Taibbi, since its far-reaching tentacles were so adept at sucking profits out of markets. But it would be a mistake to view the presence of Goldman alumni in government as a dastardly plot. This is no Dan Brown novel. Nor is conventional economic analysis much use in understanding the pre-eminence of the “Goldman family.” Instead, it is best to borrow the tools of social anthropology, and look at how half-stated cultural patterns reinforce its elite position. The symbols, rituals and social bonds of this professional tribe—like those of any tribe—matter.

The anthropologist Pierre Bourdieu is useful here. He noted that as well as controlling economic capital (that is, wealth), elites cement power using cultural and moral capital (the symbols of power), or social and political capital (useful networks). Goldmanites are like most investment bankers in being skilled at amassing the first type of capital, albeit to a startling degree.

However, Goldman’s leaders try to wrap this with moral capital too. Its bankers learn to view wealth as meritocratic, since getting a Goldman job, let alone becoming a partner, is ferociously difficult. Personal achievement is praised: Lloyd Blankfein and Gary Cohn, two recent leaders of Goldman, came from working-class backgrounds. Employees are encouraged to be discreet about their wealth: shabby briefcases are the norm. They are also encouraged to “give back,” perhaps by donating money to the arts, which builds cultural capital in a world where a seat on the board of a gallery commands prestige.

Last but not least, bankers are adept at networking. All investment banks take pride in their alumni groups, not least because investment banking (like the military) expels most workers at a young age, forcing them to find new careers. But Goldman’s alumni network is uniquely well organised, giving its bankers access to useful would-be clients, while also channelling many financiers into non-profit and policy roles, giving them interesting things to do in their second life, after banking their bonuses. The pattern creates a useful aura of political connection—and valuable information flows. Goldman might argue that it also benefits governments, by providing talented people ready to take policy jobs at what are, in their eyes, low salaries.

But there is a drawback: the Goldman tribe has a mentality of valuing profits and efficiency at all costs—along with “liquidity” (the idea that assets should be traded in free markets as water flows, to set prices according to supply and demand). Goldmanites often fail to see how offensive this mindset looks to others—precisely because they are so embedded in their tribe. Don’t expect a Goldman banker to explain how they are converting economic capital into the cultural and political variety—and back. But that, of course, is why the rest of us should use the anthropologist’s lens—and grapple with Goldman as a symptom, not cause, of how modern power works.