The Corporate Psychopaths Theory of the Global Financial Crisis
From the Journal of Business Ethics:
http://www.springerlink.com/content/9072633443675517/
Abstract
Bloomberg op-ed:This short theoretical paper elucidates a plausible theory about the Global Financial Crisis and the role of senior financial corporate directors in that crisis. The paper presents a theory of the Global Financial Crisis which argues that psychopaths working in corporations and in financial corporations, in particular, have had a major part in causing the crisis. This paper is thus a very short theoretical paper but is one that may be very important to the future of capitalism because it discusses significant ways in which Corporate Psychopaths may have acted recently, to the detriment of many. Further research into this theory is called for.
http://www.bloomberg.com/news/2012-0...iam-cohan.html
It took a relatively obscure former British academic to propagate a theory of the financial crisis that would confirm what many people suspected all along: The “corporate psychopaths” at the helm of our financial institutions are to blame.Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”
As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”
How do people with such obvious personality flaws make it to the top of seemingly successful corporations? Boddy says psychopaths take advantage of the “relative chaotic nature of the modern corporation,” including “rapid change, constant renewal” and high turnover of “key personnel.” Such circumstances allow them to ascend through a combination of “charm” and “charisma,” which makes “their behaviour invisible” and “makes them appear normal and even to be ideal leaders.”
Stable Environment
Until the last third of the 20th century, he writes, companies were mostly stable and slow to change. Lifetime employment was a reasonable expectation and people rose through the ranks.
This stable environment meant corporate psychopaths “would be noticeable and identifiable as undesirable managers because of their selfish egotistical personalities and other ethical defects.”
For Wall Street -- a rapidly changing and highly dynamic corporate environment if there ever was one, especially when the firms transformed themselves from private partnerships into public companies with quarterly reporting requirements -- the trouble started when these charmers made their way to corner offices of important financial institutions.
Then, according to Boddy’s “Corporate Psychopaths Theory of the Global Financial Crisis,” these men were “able to influence the moral climate of the whole organization” to wield “considerable power.”
They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”
Boddy doesn’t name names, but the type of personality he describes is recognizable to all from the financial crisis.
He says the unnamed “they” seem “to be unaffected” by the corporate collapses they cause. These psychopaths “present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings and investments, and as lacking any regrets about what they have done. They cheerfully lie about their involvement in events, are very convincing in blaming others for what has happened and have no doubts about their own worth and value. They are happy to walk away from the economic disaster that they have managed to bring about, with huge payoffs and with new roles advising governments how to prevent such economic disasters.”
‘Reasoning Aptitudes’
In closing his short essay, Boddy recognizes that the theory is relatively untested and would benefit from “further development and research” into the “personalities and moral reasoning aptitudes of the leaders” of the companies that got into serious trouble in the financial crisis.
In an e-mail correspondence with me, he said his article has been warmly received and has been downloaded 9,440 times in the past 90 days. “Apparently this is a lot for an academic article and it is more than the next four most-downloaded papers combined,” he wrote.
He also has a prescription for how to prevent psychopaths from getting into positions of power on Wall Street and elsewhere.
“Anyone who makes decisions that affect significant numbers of other people, concerning issues of corporate social responsibility or toxic waste, for example, or concerning mass financial markets or mass employment, should be screened to make sure that they are, at the very least, not psychopaths and at most are actually people who care about others,” he wrote.
Makes sense to me.
Sounds like the Gordon Gecko philosophy ("Greed is Good") run amok. I can't help but think of Mitt Romney's Bain Capital ("Corporations are People") that used corporate take-overs to pad shareholders' profits, at the expense of real working people. And the Citizens United decision....which now has candidates like Gingrich complaining about multiple millions of dollars from anonymous super-PACs running negative ads. Plus, guys like Corzine...who exploited the revolving door between Wall Street and politics to enrich themselves...and our "insider trading" debacle in congress.
Are the 'lunatics' running the asylum?
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There seems to be an inverse relationship between someone knowledge of their field and their vilifying of political enemies.
Originally Posted by Loki
). All of you've seen it in Wall Street and read about it in Liar's Poker, although I suppose those should really be taken with a pinch of salt. Either way, you can probably afford to be sensible about this thread even though it was posted by GGT and even if it galls you more than the thought of eating three vegetarian meals per week.
), some people have a disposition and may or may not get "nurtured" into developing the condition, and some people will somehow live and die completely unaffected by all the environmental exposure that would break a normal person.
