a theory of financial crisis

A former British academic argues that the current financial crisis happened because psychopaths, who lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people”, took over the financial instructions.

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] Boddy argues in a recent issue of the Journal of Business Ethics [that] 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.”

William D. Cohan, “Did Psychopaths Take Over Wall Street Asylum?“, Bloomberg View, 2 January 2012.

Sounds reasonable to me.

HT: Michael Obersteiner

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