Foreign Affairs - 11.2019 - 12.2019

The Virtue of Monopoly

November/December 2019 185

preferences when it comes to market

structure and rules. When those mem-

bers have similar amounts o¡ power, the

result is often a democratic compro-

mise in which the greater good prevails.

But when ̄nancial institutions garner

for themselves an outsize degree o¡

power and in¥uence, they can end up

skewing the market structure in their

favor, at the expense o¡ ideals such as

liquidity and trustworthiness. That, in a

nutshell, is what has happened in the

global stock market—with the largest

banks and brokerage companies refash-

ioning markets to serve their own ends.

Mattli’s book is the result o¡ years o¡

research into the history o¡ the New

York Stock Exchange and its member

companies. Granular

detail about market

regulation might not

sound like the stu
 o¡

a great read. But

Mattli spent a lot o¡

time in the ’Å”Œ’s

archives and inter-

viewed many o¡ its

former employees

and traders. As a

result, Darkness by

Design has an uncom-

mon richness to it.

Take a story that

neatly illuminates

how much has

changed for the worse

under today’s regula-

tory regime. Bob

Seijas, a 33-year

employee o¡ the ’Å”Œ,

told Mattli about a

coworker who in the

1980s was ̄ned

$50,000 (well above

big investors—pension funds, insurance

companies, mutual funds, and exchange-

traded funds—are much more likely to

be holding the wealth o¡ the 99 percent.

Ordinary investors are being ripped o


every day; they just don’t see it, be-

cause it is happening behind the scenes

o¡ their life insurance policies and their

index-fund investments.

A FATEFUL BATHROOM BREAK

Mattli is a political scientist, and his

great insight is to consider the stock

market more as a political entity than

an economic one. To Mattli, markets

are ̄rst and foremost “political institu-

tions governed by power relations.”

Di
erent members have di
ering

ILLUSTRATION

BY
DAVID

PLUNKERT