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Cohan on Corporate Psychopaths and the Financial Crisis

William Cohan told Bloomberg Television’s Erik Schatzker and Stephanie Ruhle that he believes people with characteristics that are attributed to ‘psychopaths’ were at the helm of major financial institutions that caused the financial crisis. (hat tip Cate Long)

Video below:

Yesterday, Cohan wrote:

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.”

Source: Cohan: Did Psychopaths Take Over Wall Street? – Bloomberg

Also see: "James Galbraith: How financial stability creates instability"

P.S. – Of course, I blame government here. Your thoughts?

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

3 Comments

  1. Dave Holden says:

    Sorry no time to watch the video but seems to me this is looking for a “sexy” explanation where one isn’t needed. Crony Capitalism is a systemic thing, the key being moneyed politics,  I’m sure there are all sorts of personality types benefiting from it.

  2. Blissex says:

    I have met a number of these people in both corporate and non-corporate places (lots of them in academia and the arts too) and they have had a good run. Which beggars the question as to why not everybody is like them, it is such a big competitive advantage.

    My guess is that probably that kind of person only thrives in high prosperity, high trust times, because they are in essence lone predators. When circumstances are less sunny there is a strong advantage to operating in packs of predators, or flocks of prey, that is in groups bound by trust and reciprocal support, and the ability to emphatize and be “genuine” comes out as a strong advantage, and being a lone predators is a losing strategy.

  3. Juergen Aschenbrenner says:

    I read about it yesterday at some point. And as I remember the argument goes like, that the rate of change caused these kind of people to rise to these ranks. Might it not have something to do with people adapting first to new conditions (thats why we perceive them as not fitting in) and then got spoiled by money thrown at them? Maybe after all it is rather a matter of distribution than psychopaths calling the shots?