Bloomberg View columnist Bill Cohan has stumbled on a fascinating academic paper from British scholar Clive Boddy on corporate psychopaths and how they may have caused the financial crisis. [You can download the paper here via Springer Science+Business Media.]
Interestingly enough, Boddy notes that psychopaths are specially able to thrive in Wall Street firms because of its very nature—filled with chaos, high turnover and rapid change. Psychopaths are then able to use their charisma to appear like key leaders within the frenetic atmosphere of Wall Street, yet at the same time remain ruthless and calculating.
On Bloomberg TV this morning, Cohan also added that this kind of work atmosphere has only been prevalent recently as financial institutions have gone public. Back in the days of private partnerships, “there was a collegial nature and… everybody knew everyone else and you couldn’t possibly get to the top if you were a crazy person,” he said.
Boddy lays down the blame pretty hard, as Cohan describes in his column:
They [corporate psychopaths] “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 recognisable 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.”