Capitalism Doesn’t Have to Be This Way

In the last century, a group of elite bankers—unlike today’s tech and finance barons—saw that their firm couldn’t thrive unless society did too.

Brown Brothers Harriman building.
John Williams / Alamy

About the author: Zachary Karabell is founder of The Progress Network at New America and author most recently of Inside Money: Brown Brothers Harriman and the American Way of Power.

When is enough enough? This simple, vital question—How much monetary gain does a person or a company need in order to feel satisfied?—has little place in the finance industry or in contemporary capitalism more broadly. The capitalism that has become dominant in the years since the 1980s is not about enough; it’s about more, and no amount of more is ever enough.

For many of its critics, capitalism, in all its versions, is a maximizer of more. The relentless pursuit of profit, the drive to multiply shareholder value that undergirds most large public companies, and the demand that revenue grow faster than the overall economy or the population—all of these impulses prevail on Main Street, on Wall Street, and in Silicon Valley. This is one reason why such an enormous gulf has opened up between the richest Americans and the rest, and why large banks, behemoth energy companies, multinational industrials, huge private-equity firms, and large tech companies have flourished.

But today’s paramount form of capitalism is not the only possible variant, nor was the volatile, boom-and-bust, panic-prone one that prevailed for most of two centuries through the Great Depression. An alternative form of capitalism placed a higher value on social stability than on the pursuit of more. Exemplifying that approach—one that embraced a less rapacious culture of enough—is the oldest bank still in business in the United States today: Brown Brothers Harriman. For 220 years, the company has tried to make reliable returns through a clear-eyed management of risk—not the avoidance of all potential downsides but a healthy recognition that, when it closed its ledgers each night, it needed to be prepared for the world to change the next day. Beyond limiting their own risk, the leaders of Brown Brothers believed—as I show in my new book—that domestic discord and global instability were to be avoided if possible and planned for if not, and they understood that the ebbs and flows of money could either boost the fortunes of all or beggar the nation.

The company’s story is particularly important now, as the United States tries to define post-pandemic capitalism amid widespread suspicion that the system is failing many Americans. Brown Brothers was one of a handful of banks at the apex of the system for much of the 19th and into the mid-20th century, and it is far older than the financial firms, such as Goldman Sachs, Lehman Brothers, and Morgan Stanley, that became famous (or infamous) in recent decades.

Starting with its founder, Alexander Brown, an Irish linen merchant who made his way to Baltimore in 1800 fleeing the sectarian violence of Belfast, and then run by his four sons, the firm was a creator of our system of paper money; the company issued letters of credit that were trusted more than even the U.S. dollar until well after the Civil War. To its eternal discredit, Brown Brothers was, like many northern businesses, deeply enmeshed in the antebellum cotton trade—a role for which the company now apologizes—though its partners were founding members of the antislavery Republican Party.

For much of the 19th century, the firm almost single-handedly managed the foreign-exchange system between the British pound and the U.S. dollar until the dollar became the world’s currency after World War II. It also underwrote the first railroad (the Baltimore & Ohio), created the first traveler’s checks, established one of the first modern wealth-management businesses, funded businesses as varied as The Nation and Time and Newsweek and CBS and Pan American World Airways and the first steamships, and then eventually sent a triad of partners—the future ambassador Averell Harriman, future Defense Secretary Robert Lovett, and future senator Prescott Bush (yes, from that Bush family)—into the highest levels of government. The three were exemplars of their class, a white, Anglo-Saxon Protestant elite that proceeded to shape the entire postwar global system of the United Nations, the precursor to the World Trade Organization, the dollar-denominated currency system established at Bretton Woods in 1944, the national-security establishment in Washington, the Marshall Plan aid to Europe, and American military preparations during the Cold War.

Like American history writ large, the company’s legacy was messy. In the 1850s, the renowned preacher Henry Ward Beecher repeatedly cited Brown Brothers in his sermons denouncing American materialism. Just as it was complicit in slavery, the firm was entangled in the rise of American imperialism in Latin America. In the 20th century, it spurred U.S. military intervention in Central America when it appealed to President William Howard Taft to send Marines to Nicaragua so that the bonds the firm held would be paid back. Still, in the 1940s and ’50s, Harriman and Lovett were featured on the cover of national magazines as heroes who had elevated the United States to a position of global power and as stewards of the postwar international system that they helped design.

Brown Brothers was the epitome of an elite that saw itself as bound to lead, and whose public service represented a form of noblesse oblige. Altruism wasn’t the driver. It was rather a specific sense that they and their class could not ultimately thrive unless the commons thrived as well. They had attended schools such as Groton and Yale that inculcated ideas such as “To reign is to serve.” That ethos coalesced into a more coherent governing creed of “the Establishment,” which explains in part the rules-based, American-led order that followed World War II. It was an order meant to preserve capitalism against communism, to spread the gospel of wealth globally, and to allow the United States and the dollar to thrive, which would lead to the worldwide efflorescence of the middle class and so redound to the benefit of American capital and American companies.

But mention Brown Brothers today, and most Americans will shrug. Even in the financial world, the name evokes a response of “Are they still around?” or a tut-tutting shake of the head as if to say What a great firm—how sad what happened to it. Yet, the firm very much exists today, with 5,000 employees; a couple dozen partners; $2 billion in revenue, more or less; and $500 million in profits. If it were a public company, it would almost certainly be worth in excess of $10 billion, given what its peers are valued at. That’s modest in comparison with tech companies such as Amazon and Google, whose market capitalization exceeds $1 trillion—but hardly nothing in a country where the minimum wage is at most $15 an hour.

One of the odd offshoots of Brown Brothers was, in fact, the infamous investment bank Drexel Burnham Lambert. It was cleaved off from Brown Brothers Harriman’s investment bank after the New Deal’s Glass-Steagall Act of 1933 (which Brown’s partners reluctantly supported as a necessary regulatory corrective that would restore public confidence in Wall Street). Drexel and its junk-bond king Michael Milken would eventually come to define a particular era in finance—an era epitomized by the 1987 movie Wall Street. Michael Douglas portrayed its main character, Gordon Gekko, as a composite of Milken and another disgraced financier, Ivan Boesky. Gekko declares, in all seriousness, “Greed is good.” That trope lives on; Martin Scorsese’s 2013 film The Wolf of Wall Street was the same story told differently. That the story of Milken and Drexel, which imploded in the late ’80s, became a parable of plutocratic excess while the 220-year-old Brown Brothers has become an afterthought speaks volumes about how capitalism came to be articulated and understood in subsequent decades.

The Brown Brothers partners understood that working to bolster other institutions in society was ultimately to their advantage, even if that meant surrendering some upside. They worked with government rather than attempting to thwart regulation, and they served in government in order to shape the system. They were the epitome of America’s ruling class, yet felt a duty to serve. In contrast, today’s finance and tech barons—the products of a more fluid era, more meritocratic schools, and a wider variety of family backgrounds—appear to feel no duty except to their shareholders.

For Brown Brothers, the governing principle was ever as Alexander Brown declared: “Shoemaker, stick to thy last.” Do what you do, do it well, do it in moderation, and keep doing it. Not a sexy creed. A world composed solely of Brown Brothers bankers, with their rectitude and risk aversion, with their proclivity to shun the spotlight, build primarily on the capital of the partnership, and not bet the house on borrowed money, would never underwrite Elon Musk.

The balance in the past 40 years has become skewed. In today’s version of capitalism, being content with earning enough—rather than stratospherically more—has gone out of fashion. The United States is about to plunge into debates over how the government should regulate tech, how society’s resources should be distributed, and how capitalism itself should be defined. These are healthy, vital debates for public officials to have. But being satisfied with enough starts with each person and each firm. That mindset can’t be easily mandated, but it can be cultivated. In a world where so many still don’t have nearly enough, the success that Brown Brothers enjoyed can be more than enough.