However, he reserves the lion’s share of the blame for Italy’s technocrats, politicians, and economists, who spun tall tales of the infinite bounty of globalization and signed away the keys to the country. As it turned out, their reasoning that China’s markets would drive Italy’s economic growth was fatally flawed: The emerging Chinese middle class shows no sign of developing a taste for fashion “made in Italy.” Instead, Chinese apparel makers have knocked off the designs, copied the fabrics, and produced them in China for a fraction of the price. Yes, says Nesi, niche businesses with global brands, such as Ferrari and Armani, can still prosper. But their success can accommodate only a few people. “A country the size of Italy won’t fit.”
Prato’s textile industry is going to the Chinese, but not always leaving the city. Nesi points out that Prato now has the second-largest Chinese population in Italy, after Milan. In a city of 200,000 people, about 10,000 Chinese live legally and another 40,000 illegally. They work and sometimes live in about 3,500 businesses, often in squalor. “Even the most powerful words, the most elevated concepts seem to be emptied of meaning in the face of this horrendous story of indifference and exploitation among losers,” Nesi writes, “where all the characters are the victims of a chain of dishonesty that spreads out from a deeply rotten idea of work.”
What will happen next? Nesi has nightmares about an outbreak of ethnic violence between Italians and Chinese, but the story closes with a demonstration in Prato’s piazza, where he, along with thousands of others who have been displaced by globalization, carry a kilometer-long banner of Prato-made fabric. “I am not sure where we are going,” he says, “but we are certainly not standing still.”
A Failure of Values
Sometimes a firm fails even as it thrives financially. How this can come about is the theme of What Happened to Goldman Sachs: An Insider’s Story of Organizational Drift and Its Unintended Consequences, a biography of an organizational culture derived from the doctoral thesis of Steven G. Mandis, who is a Ph.D. candidate in the Department of Sociology at Columbia University and an adjunct associate professor in its business school. The book’s structure may be formal, but its content is fascinating and often reported firsthand. Mandis worked with and for some of the most senior people in Goldman Sachs’s investment banking, private equity, and proprietary trading units between 1992 and 2004, although he never made partner.
Mandis’s objective is to explain how and why the culture and values of Goldman Sachs changed, especially during the period when he was there, but also over the longer term, as the firm grew from a small group of New York–centric investment bankers into a large, global, diversified financial-services corporation. He begins at the memorial service for John L. Weinberg, whose death in 2006 severed the firm’s last close link with its founding values.
Weinberg had run the firm with John C. Whitehead from 1976 to 1984, and then as the sole senior partner until 1990. His father, Sidney J. Weinberg, had led Goldman from 1930 to 1969 and had embodied the essence of relationship banking. During this era Goldman Sachs’s distinctive values were lived every day, even though they were not codified until 1979, when Whitehead articulated them as 12 ethical principles. The firm was known for being “greedy, but not long-term greedy”—a catchphrase coined by a senior partner, epitomizing the firm’s orientation to sustained success for its clients and itself. Goldman was unique among the large firms on Wall Street for the care it lavished on its clients, and for its social network, which had been built on mutual trust and financial interdependence. Its selection and training of employees at all levels was the most rigorous and comprehensive in the industry.