Auric Mysteries

THE MONEY GAME by 'Adam Smith.' 302 pages. Random House. $6.95.

Who is this author who sports the name of the 18th century philosopher of capitalism and who gambols over the arcane and volatile ground of Wall Street and international finance? John Kenneth Galbraith pleads innocent. Is the Wall Street Journal perhaps sheltering an upstart? No. Impeccable leaks lead to George J. W. Goodman, 37, a former Rhodes scholar, novelist (The Wheeler Dealers), onetime writer for TIME and FORTUNE, and now editor of a journal for mutual-fund managers. A shade under medium height, conservatively sheared, dressed and spectacled, Goodman blends in perfectly with the traffic on Wall Street. He is the archetypal mild-mannered reporter who, in times of imminent absurdity, steps behind a typewriter and strips down to his superego.

"Adam Smith" has been read with glee in the Big Board jungle ever since his antic commentaries about the stock market first appeared in New York magazine. The articles were not only clear and authentic, but also sharply satirical. Based on those articles, The Money-Game is a highly original look at the art of investing, as well as a modest and amusing contribution to popular psychology. Smith/Goodman tells about the young woman who confuses her shares in Comsat with procreative urges ("'Every time they fire off one of those satellites, I think, that's mine, that's my baby!"). And the people who obsessively call their brokers just to feel a part of the big game.

Ego, Not Income. The author believes that 90% of investors are, whether they know it or not, more interested in fantasy and ego massage than in making money. Some are even happier when they lose. He backs up these provocative assertions with references from the works of authorities on human behavior. One is the psychoanalytical historian Norman O. Brown (Life Against Death), who argues that making money with money simply for money's sake is an infantile and perverse attempt to achieve immortality. But, Smith/Goodman says, Brown fails to account for the fun that can be had in mating dollars with other kinds of paper for "effortless" profit. For the happy few with surplus chips and the nerves to separate reality from sublimated desires and anxieties, investing can be a more stimulating game than working.

The name of the game, says the author is "What Is Everybody Else Doing?" For only when the player knows what the crowd is thinking can he stay ahead. Chartists, mathematicians, statisticians, computers and dart throwers all get a chance to show their stuff under his skeptical gaze. Drawing from Gustave le Bon's 1895 book The Crowd, he views the investing public as a highly volatile and irrational mass mind that usually overreacts and does the wrong thing. Yet Smith/Goodman is neither dogmatist nor snob, as evidenced by his parody of Kipling: "If you can keep your head when all about you are losing theirs, maybe you haven't heard the news."

The Gnome's Game. The most disturbing news in The Money Game comes from that classic figure of the financial nether world, the Gnome of Zurich,* whose hunger for gold is only slightly less keen than his appetite for pessimism. The Gnome's credo: Men cannot manage their affairs rationally for very long periods. Hence, politicians promise things that cannot be paid for, trade balances totter, gold reserves slip away, and the dollar faces a crisis of belief.

Such gnomic utterances, and the auric mysteries of the international monetary system, suddenly make the money game more fun to read about than play. Perhaps it is just as well.

* A term coined in 1964 by former British Foreign Secretary George Brown to describe international currency speculators who he believed were out to make a killing at the expense of the pound.

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