The Ethical Economics
Study Center

Wall Street (1987)

This movie tells the story of the heady days of the financial industry on Wall Street during the 1980s. The story revolves around a highly successful corporate raider, Gordon Gekko (Michael Douglas), and his protege wannabe Bud Fox (Charlie Sheen). Fox is highly ambitious and quickly discovers that the way to success in the industry is by bending the rules, in particular, seeking and using insider information to one's advantage.

The movie reveals the nefarious practices that were rampant in the financial sector in the 1980s (modeled on real life figures such as Ivan Boesky and Michael Milken) and undoubtedly remain a key characteristic in the financial industry today. These practices include the use of insider information, promises made in financial deals with no intent to fulfill, and the distribution of false information to manipulate stock prices.

The intent on the part of the financiers in Wall Street is always to accumulate more power and wealth, with little regard for the consequences of their financial decisions on the working class employees. The workers' point of view is shown in the movie through Bud Fox's father Carl (Martin Sheen), who is a union leader in an airline company which is a takeover target in the film. As such Bud Fox is torn between his ambition to accumulate wealth and power like his mentor Gordon Gekko and his desire to maintain his loyalty to his father.

Although the film intended to show that business dealings based on lies would ultimately lead to the protagonists' own destruction (Gordon Gekko and Bud Fox go to prison at the end), instead the film's display of the glamorous lifestyle of wealthy financiers and a highly convincing "Greed is Good" speech by Gekko actually inspired many people to go work on Wall Street.

As highlighted on the pages in this website, the mistake Gekko makes in his speech is to assume that fulfilling self-interest is good regardless of how it is acquired. He has no hesitation using unethical practices to acquire more personal wealth. However, when deception is used to acquire wealth, it means that wealth is effectively stolen from someone else rather than arising from an increase in economic efficiency.

Evaluation of these situations is sometimes tricky though. Oftentimes it is very difficult to tell if financial transactions are unethical or illegal (see this case on high-frequency trading as an example). Corporate raids need not be unethical. If one company acquires another, splits it into sub-companies, and closes down the inefficient ones, the adjustment costs imposed on the shuttered firms are not inappropriate. Thus, we can't just look at say, lost union jobs, coming on the heals of a corporate restructuring and conclude that the deal was dishonest. Creative destruction is a natural part of a dynamic capitalist system, however the path to that destruction can and should be done with full information to all parties involved in the decisions. If it is, then the parties are engaging in ethical capitalism. If not, then the parties are getting rich dishonestly like Gorden Gekko did.

More Info




Wall Street - Trailer


Wall Street - Greed Speech


Reflection Questions

  1. Why is the use of inside information illegal? How does the law define inside information?
  2. If a business promise is not written explicitly into a contract, then it is not legally enforceable. Is a false promise in this case still unethical?
  3. What role does Carl Fox play in providing an alternative ethical point of view? Does a labor union always advance the interests of economic efficiency?
  4. Do labor unions ever act greedily according to this site's definition?
  5. What role does loyalty play in the decisions of Gekko, Bud and Carl Fox? Do you think loyalty works to promote or hinder ethical behavior?