I did my homework quite properly and intensively, because there was much that was not only naïve but diffusely derivative, some of it funny: seven times Mr. Reich stated that there was no more chunky peanut butter; the Corporate State had the power to deliver only homogenized peanut butter. The Corporate State gave us snowmobiles “instead of snowshoes, so that the winter forests screech with mechanical noise,” yet four times the author celebrated light motorcycles “to restore a sense of free motion,” and he obviously never tried to read or think near a quiet road patrolled by a kid with a new Honda. Moby Grape was celebrated for the positive feelings of “It’s a beautiful day today,” which did seem to me to ignore “Oh, what a beautiful mornin’ ” (Consciousness I) and Peggy Lee’s “Now it’s a good day” (Consciousness II). That was fun and games; my real barbs came for the greenhouse thinking.

  Yet, five minutes after the discussion started, I threw my notes away, because there wasn’t any debate. My distinguished seniors had read the book and they were so furious they weren’t even listening, their faces were becoming purple over their white wing collars. What in the world could be so threatening? On the spot I had to switch sides and become the public defender, because the argument from the other side was: It does not exist. And the point I have been making is that however imperfectly assessed, Something Else Is Going On.

  Jean-François Revel’s tract, largely a pamphlet to needle his fellow Frenchmen, says that only in America can the true revolution take place: “It is the revolution of our time . . . it is the only revolution that ... joins culture, economic and technological power, and a total affirmation of liberty for all in place of archaic prohibitions.” (It is nice of somebody to say we are still trying.) And he mentions some of the political activities that have taken place: sit-ins, civil-rights marches, student strikes and so on.

  But it is important to separate out, for this discussion, the political aspects. Martha Mitchell may have looked out the window and seen the milling students as the 1917 St. Petersburg mobs, but few others did. And it becomes important to separate out what is style. Long hair may or may not represent something profound, but if you compare yearbook pictures of the class of 1872 and 1972 the beards and the sideburns look much the same; the only difference is that in 1872 Daddy had a beard or muttonchops too. If we leave out politics and style, that brings us back to behavior; within that, loosely, there is a revolutionary idea. And that is: Where did all those bright people get us, anyway ? Weren’t McGeorge Bundy and Robert McNamara two of the smartest people walking around? “Consciousness II,” wrote Reich, “rests on the fiction of logic and machinery; what it considers unreal is nature and subjective man . . . Consciousness III is deeply suspicious of logic, rationality, analysis, and of principles.”

  We don’t have to look very far for a prime example of the causes of a suspicion of logic, rationality and objectivity. If we do not stop the Communists in Vietnam, they will think we are chicken, they will take over Asia, and so on. We analyze the problem. We will send x numbers of men, we will drop y numbers of millions of tons of bombs. Every day our television screens will carry the body-count report: Them, 5357, Us, 422; Villages pacified today, 324. The next day the score is the same, and the next. They see the score and we see the score. Therefore we win the war and achieve our principles, and the Communists will learn the lesson. It is all there, measured, in what Yankelovich called the McNamara fallacy:The first step is to measure whatever can be easily measured. This is okay as far as it goes. The second step is to disregard that which can’t be measured or give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can’t be measured easily really isn’t very important. This is blindness. The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide.

  Thus the use of feeling, emotions, ritual and magic by the unconscious revolutionaries as a rebellion. “The marked tendency,” says Theodore Roszak in The Making of a Counter-Culture (a literary essay which isn’t really about that at all) “has been to consign whatever is not fully and articulately available in the waking consciousness for empirical or mathematical manipulation to a purely negative catch-all category (in effect, the cultural garbage can) called the ‘unconscious’ or the ‘irrational’ or the ‘mystical’ or the ‘purely subjective.’ ”

  Reich:Accepted patterns of thought must be broken; what is considered “rational thought” must be opposed by “nonrational thought”—drug-thought, mysticism, impulses. Of course the latter kinds of thought are not really “nonrational” at all; they merely introduce new elements into the sterile, rigid, outworn “rationality” that prevails today.

  That is the real end of the Protestant Ethic—not only everybody stoned, man, but the end of the rationality that led to the burgeoning of capitalism.

  “It is as if,” Yankelovich wrote, “the great victories in succeeding centuries won by Protestantism, individualism, rationalism, science and industrialization all were gained at a terrible cost—the sacrifice of community.” And to define community he quoted from still another sociologist, Robert Nisbet:Community encompasses all forms of relationships which are characterized by a high degree of personal intimacy, emotional depth, moral commitment, social cohesion, and continuity in time. Community is founded on man conceived in his wholeness rather than in one or another of the roles, taken separately, that he may hold in a social order.

  Max Weber, one of the founders of sociology whose phrase gave us the melody for this sonata, and who was the masterful historian of rationalism, wondered whether all the secularization and rationalism would not strip life of its mystery, charm, and meaning.

  But obviously—and “obviously” is admittedly a rational adverb—the complex technological society is not going to go away. Some small numbers of people may try to go away from it, to manage on communes with The Last Whole Earth Catalog as a textbook. (I wouldn’t knock that, and I found myself inordinately tickled to have a book of mine included in the catalog among the kerosene lamps and potter’s wheels.) The rest of us are left to cope, to try to reintegrate what is missing into what we have. We can use a seeming-rational approach to try to assess, for our own rational and managerial ends, what the changes in ethic and spirit mean, but totally to accept a nonrational world is to say goodbye to our role.

  Anyway, irrationality and mystery and magic are no strangers to us in the money markets. That was one of the points of The Money Game, to show that while the language of the game was built on rationality and precision, the Game itself was played by behavior, and with all sorts of totems and taboos that would do credit to any tribe in New Guinea with an anthropologist in residence.

  Changes do not occur overnight. The moral code which accompanied the accumulation of capital for the past several hundred years has encouraged us to applaud and honor purposiveness. In his remarkable and extraordinary essay “The Economic Possibilities for Our Grandchildren,” Keynes wrote:Purposiveness means that we are more concerned with the remote future results of our actions than with their own quality or their immediate effects on our own environment. The “purposive” man is always trying to secure a spurious and delusive immortality for his acts by pushing his interest in them forward into time. He does not love his cat, but his cat’s kittens, nor, in truth, the kittens, but only the kittens’ kittens, and so on forward for ever to the end of cat-dom. For him jam is not jam unless it is a case of jam tomorrow and never jam today. Thus by pushing his jam always forward into the future, he strives to secure for his act of boiling it an immortality.

  It may be that the era of purposiveness, with its inherent dictum of sacrifice is winding down, however slowly. That does not mean another era of something else is immediately at hand. The counter-culture may not be a proper guide to the future because it is defined by its opposition; it is easier to describe what it is against than what it is for. But it may serve to stimulate some sort of synthesis, to make us broaden the idea of what is “rational,” to help crack the consensus. Long before the term “counter-culture” came to be bandied, Keynes had delineated the lopsidedness of the accumulative society. “We have been trained too long to strive,” he said, “and not to enjoy.” Perhaps in a hundred years, he wrote—a hundred years from 1931, that is—the chief problem of mankind would be to live agreeably and wisely and well.

  What would bring us to that point? Science and compound interest, incremental technology and accruing wealth. Some of the members of our affluent and post-affluent society are already into that spirit, as we have seen.

  But alas, our views of both science and compound interest are changing. Science is no longer the unmitigated good the late Victorians saw, the radio added to Pasteur added to the electric light added to the steam engine. There is even some doubt about how incremental scientific growth is: in The Structure of Scientific Revolutions, Thomas Kuhn argues that each generation of scientists rewrites its textbooks to make everything a continuous flow. And as for compound interest—well, Keynes did say, in a phrase usually overlooked, “assuming no important wars and no important increase in population.” Compound interest does not solve our economic problems if population compounds faster, because per capita is our divisor.

  Unexpected turns in the road do have a way of materializing ; it was only a generation ago that some of our industrial societies were worried about how to get the birth rate up. If we could indeed count on the cushion of science and compound interest, then indeed we could look forward to the day when (Keynes again) “there will be great changes in the code of morals ... All kinds of social customs and economic practices, affecting the distribution of wealth and of economic reward and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.”

  But what do we do on Monday morning?

  All of these exercises come under the perilous heading of long-term expectations, and we know that the long-term investor must seem—Keynes again—“eccentric, unconventional and rash in the eyes of average opinion.” If the long-term investor succeeds, that confirms the belief in his rashness, and if he does not, “he will not receive very much mercy. Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.” Meanwhile:Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.

  If we are left with capital and not community, we still have to do our best to make our garden grow. Even the Enlightened One said that some hours must be spent in chopping wood and carrying water. But it would be folly not to be aware, even for parochial purposes, of the changes going on around us, and that awareness is not a traditional sensitivity in the rational preciseness of a game played with numbers.

  Meanwhile the mechanism and the structure of the markets in which our game is played have survived. The currency and the Supercurrency are still there. Maybe some of the players have gotten a little heavier. All of us have to make choices on the uses of our energies; some things are as they are and not as they ought to be, but this is the way the world is. If you are still for the Game, why, may you prosper; I wish you the joys of it.

  Some Notes

  THERE are no footnotes in this book. That makes for occasionally bumpy sentences. Try working “according to the August, 1971, issue of the Bulletin of the Federal Reserve Bank of New York” into a smooth sentence sometime.

  As a great deal of time went by and it was possible to walk through much of the research, all in waist-high piles of manila folders all over the room, the footnote thought occurred and we called the publisher. What about footnotes ?

  “How many pages of footnotes?” said the good publisher.

  We thought we could get it all in under a hundred pages.

  “A hundred pages of footnotes?”

  We thought maybe we could get it down to seventy-five or eighty, and use small type.

  “Eighty pages of footnotes?”

  What was the matter with that?

  “Well, this book will be in the stores, and what if somebody comes in and picks it up and opens it from the back! We want him to buy the book, you know.”

  Well, could we have two editions, one with footnotes?

  The publisher took on the tone publishers take with their children and their authors: weary, soothing, and menacing at the same time.

  “Just go back to work, eh? And we’ll worry about this another time.”

  So: All the citations are in place. If there is no citation, the source can be assumed to be The New York Times, The Wall Street Journal, or firsthand first-person interviews.

  I have a considerable debt, gratefully acknowledged, to the writings of John Maynard Keynes, both in the General Theory and in Essays. Thanks also go to: the front side of the third floor at 50 Memorial Drive in Cambridge, which houses some of MIT’s interested and sympathetic economists; to Colyer Crum and Tony Athos of the Harvard Business School; to Daniel Bell, chairman of the Department of Sociology at Harvard University; to Daniel Yankelovich; to Robert Heilbroner; to Bennett Kremen; to David Norr; to Don Hessler and Bert Tripp of the University of Rochester; to Felix Rohaytn and Bill Donaldson; to some former colleagues, who could be eyes and ears, including but not limited to John Thackray, and particularly Chris Welles; Barbara Munder and Julie Rohrer helped with the research, and Mrs. Rohrer ably did a number of interviews too.

  TABLE 1

  SECTOR STATEMENTS OF SAVING AND INVESTMENT (BILLIONS OF DOLLARS)

  TABLE II

  FUNDS RAISED, NONFINANCIAL SECTORS

  (1961 TO 1971)

  Billions of Dollars

  Source: Board of Governor, Federal Reserve System of the United States

  TABLE III

  THE RUNOFF IN COMMERCIAL PAPER:* SUMMER 1970

  (IN MILLIONS OF DOLLARS—NOT SEASONALLY ADJUSTED)

  (FEDERAL RESERVE BANK OF NEW YORK ONLY)

  Source: Federal Reserve Bank of New York

  Portfolio of the University of Rochester

  THE CLASSIC HIGH-GROWTH APPROACH:

  THE UNIVERSITY OF ROCHESTER

  This approach says, “You never sell the good ones.” As of December 31, 1971, the investments of the university were as follows:

  The University of Rochester has broken its portfolio into “per share” units to facilitate comparisons with other institutions. The unitized record is as follows:

  Value Per Share

  December 31, 1957 $1.64

  December 31, 1958 1.89

  December 31, 1959 2.13

  December 31, 1960 2.23

  December 31, 1961 2.44

  December 31, 1962 2.26

  December 31, 1963 2.70

  December 31, 1964 3.17

  December 31, 1965 4.13

  December 31, 1966 4.06

  December 31, 1967 4.95

  December 31, 1968 4.78

  December 31, 1969 4.95

  December 31, 1970 4.46

  December 31, 1971 5.60

  COMMON STOCKS

  Shares MISCELLANEOUS

  BUILDING 50,000 Caterpillar Tractor Company

  120,000 Masco Corporation

  210,000 Ryan Homes, Inc. 25,000 Standard Brands Paint Company

  100,000 U.S. Home Corporation

  90,500 Wickes Corporation 185,000 Sybron Corporation

  CONSUMER

  65,000 Avon Products, Inc. OFFICE EQUIPMENT

  50,000 Disney (Walt) Productions 100,000 Automatic Data Processing, Inc.

  82,000 Kresge (S.S.) Company 60,000 Burroughs Corporation

  10,000 Levitz Furniture Corporation 130,000 International Business Machines Corporation

  100,000 McDonald’s Corporation 485,000 Rank Organisation Ltd., ADR

  100,000 Penney (J. C.) Corporation

  899,330 Xerox Corporation

  95,000 Petrie Stores Corporation

  100,660 Taylor Wine Company, Inc. PETROLEUM

  210,000 Amerada Hess Corporation

  ELECTRONICS 160,000 Louisiana Land & Exploration Company

  19,400 Hewlett-Packard Company

  39,750 Texas Instruments, Inc.

  PHOTOGRAPHY

  FINANCE 899,800 Eastman Kodak Company

  30,000 Lincoln First Banks, Inc. 100,000 Fuji Photo Film Company, Limited, ADR

  50,000 Security New York State Corporation

  HEALTH CARE

  79,500 Becton, Dickinson & Company TELEPHONE

  150,000 Rochester Telephone Corporation

  60,000 Merck & Company

  About the Author

  “Everyone who is anyone in U.S. investment knows ‘ADAM SMITH,’ ” wrote Newsweek. While originally he had a fanatic following in the financial community, his reputation has now spread far beyond. Professor Paul Samuelson, America’s first Nobel laureate in economics, called his book, The Money Game, “a modern classic.”

  1 Ironically, the original partners who fired me—those who were directly responsible for the performance problems—paid no price at all. They took full control of Wellington Management and earned enormous rewards in the great bull market that would begin in 1982. Nonetheless, they too apparently learned from their experience in the crash and ultimately restored Wellington to its earlier incarnation as a sound, respected, and conservative money manager.