Rational Philosophy

On industrious criminals and the lure of lucra.

As law enforcement officials round up members of the Gambino, Bonanno and Genovese crime families, I find myself pausing at a phrase in the NY Times piece on the arrests — “the scope of the schemes carried out by [La Cosa Nostra's] members are limited only by their imagination and industriousness.” Imagination and industriousness. These are not dull-witted layabouts. Surely with such imagination and industry members of these families could make money legally, but they have found a niche and a sure-fire way of maximizing profit — exploit what’s illegal. For the mob, illegality becomes leverage. Looked at purely as a business philosophy it makes a lot of sense. If cable companies can make money selling cable access legally, for instance, the mob knows it can make more money pirating cable channels and selling them illegally. It’s all about knowing your business and seeing the angle.

I’m not trying to justify or glamorize illegal activity, just unearth a philosophical truth.

Jerome Kerviel saw the angles, too. Driven by a desire to demonstrate his trading genius, he ended up demonstrating instead that he was a lousy trader but an excellent fraud. He figured out how to work around the Societe Generale’s controls and systems to make trades that he shouldn’t have been making, then cover these up with more trades that he shouldn’t have been making, until the bank was in the hole for $7.2 billion.

Research suggests that Monsieur Kerviel’s urge to trade, even in the face of losses, may not be so unusual. Making money can stimulate the same kind of gratifying response as having sex, apparently. “If you make money and make money again,” says Jason Zweig who wrote a book on the subject, “it is very similar to a chemical addiction and it becomes very hard to let go.” Brain imaging of drug addicts and traders supports the theory.

Two philosophical questions present themselves: What is the connection between material success and a rational theory of life? And why would imaginative and industrious people stick with a business model founded on illegality?

Unlike taking drugs or having sex, making money, while it can have physiological effects, stimulates our sense of gratification entirely mentally. The only impulse is one’s consciousness of making money.

So, the concept of making money must be closely connected to something directly felt. Money represents bartering power and prestige. If you have a billion under your belt, having another billion isn’t going to buy you anything that the first billion can’t buy you. So the directly felt thing must be not increased bartering power but prestige. (This is just what Kerviel described when he explained his feelings about trading, even though he kept his trades secret — he wanted to be seen as brilliant.)

People experience these kinds of feelings whether they’re risking any real bartering power or not. If we play gin rummy for points with no money on the game, for instance, the same powerful feelings of gratification can arise when we win. This confirms that a sense of increased prestige, a sense of being a winner, is sufficient to cause the rush. If I end a game of gin rummy with 100 points, what does that matter to me if my opponent has 101?

The answer to the second question follows from the answer to the first. I imagine that members of La Cosa Nostra would tip my second question on its head and ask “why make money legally if you can make it illegally?” If we’re talking about the rush of success, making money illegally must up the ante by adding considerable risk to the transaction. The possibility of getting caught must speed the flow of juices in the same way that for Kerviel the fluctuations of the market made his trades unpredictable. The greater the risk, the greater the feeling of gratification when one succeeds.

Just as the market eventually caught up to Kerviel, so too the law has caught up to the Gambinos, Bonannos and Genoveses. While crime and fraud can inspire imagination and industry, they’re not the most rational of pursuits.