CORPORATE PSYCHOPATHS

In an interview Professor Robert Hare, the author of The Psychopath Test, explained that he drew his profiles on psychopaths from serial-killers housed in prison populations. But then Professor Hare offered this observation:

"I should have spent some time inside the Stock Exchange as well. Serial killer psychopaths ruin families. Corporate and political and religious psychopaths ruin economies. They ruin societies." 

I bring this up because, in an effort to help explain the 2008 market collapse, Clive R. Brody followed Hare's lead and wrote "The Corporate Psychopaths Theory of the Global Financial Crisis" (Journal of Business Ethics, 2011). This paper offers insight into the personalities that exist in large firms and suggests that the short term interests of Corporate Psychopaths lead companies to focus on short term rent collecting (profits) rather than long term performance and market stability.

Brody's theory on Corporate Psychopathy flies in the face of organizational theories which have convinced many in the general public that markets are always efficient, and that they operate magically to promote the public good. This is simply not the case.

The human condition is such that market players, in the pursuit of more power and profits, will engage in activities contrary to the interests of society.  Lord Acton (1834-1902) saw this clearly:

"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that. All power corrupts; absolute power corrupts absolutely." 

Acton's "gangsters" are our modern psychopaths. But none of this is really new.

In Federalist #51 James Madison tells us that "If men were angels, no government would be necessary." Madison understood that we've always had psychopaths, or gangsters, to disrupt society. It's why we have governments.  

To help us understand modern gangsters, or the Corporate Psychopath, Brody offers a theory that suggests the trail of evidence for the 2008 market collapse does not end with the bubble producing policies of Alan Greenspan. Policies are simply a tool of the modern gangster. Instead Brody suggests that we need to look at the perfect storm of market players sharing similar personality traits, which are described this way:

Psychopaths are the 1% of people who have no conscience or empathy and who do not care for anyone other than themselves. Some psychopaths are violent and end up in jail, others forge careers in corporations. The latter group who forge successful corporate careers is called Corporate Psychopaths.

After painting a picture of the corporate psychopath Brody draws from the literature in psychology to explain:

... [Corporate Psychopaths] lack a conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people. The area of the brain known as the amygdala has been described as the seat of emotion and fear and is reported to be important in processing socially relevant information and it is therefore theorized that disruption of its functions could lead to cold and socially inappropriate behaviour ... This abnormal brain connectivity and chemistry of psychopaths makes them 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 ...

Brody points out that what keeps "Corporate Psychopaths" flowing through the business world is their ability to come off as "charming, sophisticated, and successful." This is dangerous because the charm of the Corporate Psychopath really masks their penchant to "lie, bully, and cheat" as they callously "disregard or cause harm to the welfare of others."

Worse is how the traits of the Corporate Psychopath lead them to ignore how their actions impact others.

Former chair of the Federal Reserve Alan Greenspan - an honorary Corporate Psychopath, if there ever was one - is a poster child for the condition. A follower (disciple?) of serial-killing groupie Ayn Rand, Alan Greenspan made it clear that his policies didn't have anything to do with the market meltdown because - get this - the 2008 financial crisis was the type "that comes along only once in a century."

Serendipity caused the market meltdown? Where's the rational, calculating, market analyst we grew to know and love at the end of the 20th century?

There's more. Much more. But read the article. It's short and accessible, especially for an academic piece.

- Mark