Just over 100 years ago, the sociologist Max Weber wrote his seminal book, The Protestant Ethic and the Spirit of Capitalism, in which he portrayed the pursuit of profit as virtuous and described work as a kind of religious duty. The attainment of wealth was seen as the fruit of labor, a blessing from God in return for hard work, piety and frugality.

Weber comes to mind thinking of the recent comment from Goldman Sachs (GS) Chairman and CEO Lloyd Blankfein (pictured) that the world's most successful bank is doing "God's work." It's hard to imagine that $16.7 billion in executive bonuses to millionaire bankers during a crippling recession is what Weber had in mind. In an effort to put its money where Blankfein's God-talk is, Goldman Sachs has announced it will partner with Warren Buffett, the very personification of virtuous capitalism, in a $500 million project to help small businesses.
As Stephen Kalberg, an Affiliate at the Center for European Studies at Harvard University, wrote in an introduction to later editions of the book, Weber argued that "the rise of modern capitalism involves a 'tempering' of all acquisitive desires; indeed such a 'restraining' of avarice -- and its channeling into a methodological orientation of work -- is indispensable for the systematic organization of work and production in permanent businesses."

In Tuesday's announcement, Goldman Sachs said it has pledged to the small business project just over 3% -- $500 million -- of what it hopes to pay its bankers and traders in bonuses this year. "Small businesses play a vital role in creating jobs and growth in America's economy," said Blankfein. "We are pleased to work with our partners in this initiative to support small-business owners, particularly those in underserved communities."

Through the 10,000 Small Businesses project, Goldman Sachs will contribute $200 million in educational grants and offer "practical business education delivered through partnerships between local community colleges, universities and other institutions." The first partner will be La Guardia Community College in Queens, N.Y.

Goldman will also participate in a "mentoring and networking" program with "national and local" partners. And it will invest $300 million "through a combination of lending and philanthropic support" to "small businesses in underserved communities."

Vague Mea Culpa

In a savvy move, the bank -- known on Wall Street as "Goldmine Sachs" for its prodigious money-making -- has teamed up with Buffett, the world's most famous investor and the model of patient, long-term value investing -- which has the veneer of more virtue than the high-volume digital speed-trading that now characterizes so much of finance.

Buffett also happens to be Goldman's largest investor, so it's in his interest to improve the public image of the bank, which has endured a slew of negative publicity in the wake of the financial collapse and ensuing recession.

At an investor conference Tuesday, Blankfein offered up a vague mea culpa. "We participated in things that were clearly wrong and have reason to regret," he said, according to The New York Times, which reported that the firm had hired Brunswick, a prominent PR firm. "We apologize."

In the fall of 2008, at the height of the financial panic, Buffett invested $5 billion in Goldman Sachs in what amounted to a symbolic vote of confidence in Wall Street as the financial system supposedly teetered on the brink of collapse. Of course, at the bargain-basement price Buffett received, the investment will surely pay off in spades for the bridge aficionado. But negative publicity of the sort Goldman has seen lately can only impose downward pressure on his investment. And Warren Buffett takes care of his investments.

"Our recovery is dependent on hard-working small-business owners across America who will create the jobs that America needs," Buffett said. He later added: "I would not be doing this if I didn't think there was going to be a significant net benefit to small-business owners in this country." Buffett will join an advisory council that includes Blankfein and Michael Porter of Harvard Business School.

"A Down Payment"

Goldman's initiative is not to be dismissed -- $500 million isn't spare change. But it's important to remember that the company wants to hand out some 40 times that in bonuses to its employees, many of whom are millionaires, this year. Blankfein and others argue that compensation must be structured to retain talent -- and they're right -- but is it too much to ask for a little Protestant modesty around the holidays?

This week, Andrew Stern, president of the Service Employees International Union, has been leading protests outside Goldman's Wall Street headquarters opposing the bonuses. Stern didn't seem that impressed by Goldman's move. "It's a down payment, a step forward and hopefully a precursor of a different discussion -- in the long run, how do we build an economy where everyone can share in the success?" he told the Times. "But if this is an isolated public relations activity, it's insufficient."

How about if each Goldman employee took half their bonus -- a total of $10 billion -- and used it for direct small business loans. That would get people back to work. Weber would approve.

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