Corporate Psychopaths, did they cause the financial crisis? – a critical look at Boddy’s 2011 Corporate Psychopath Theory

Boddy article can be retrieved here:

The financial crisis of the last decade remains an area of academic significance. Academics, professionals and the media play the blame game in order to seek out a deeper understanding of why the crisis occurred and exactly who was responsible (Babiak and Hare 2011, Boddy 2011, Ronson 2011). Whilst there have been many theories as to why the crisis occurred, it is universally accepted that a combination of consumer credit lifestyle and irresponsible behaviour by the banks, played a larger part (Ronson 2011). Boddy in his 2011 article ‘the corporate psychopaths theory of the global financial crisis’,  takes this blame game one step further and purports the concept of the corporate psychopath as a factor that not only contributed to the crisis but was entirely responsible. His 2011 article and pre-crisis articles explore the ‘corporate psychopath theory’, linking the notion of the psychopathic personality causing havoc and destruction within the financial sector.

Boddy is not the first to explore and develop this idea, other academics have alluded and touched on this concept far before the financial crisis (Hare 1999), but Boddy is the first one to expound it into a theory (2011). His main line of argument within his article is that due to the nature of the financial service, psychopaths are attracted into the industry and flourish. These “malevolent” beings (2011:256) are consequently able to destroy the organisation from within, due to their lack of morality and tunnel vision pursuit of profit. The key driving factor to this article is that Boddy’s argument and concept is plausible; corporate psychopaths may exist and may have indeed contributed to the crisis. However, his article is fatally flawed due to his questionable reasoning that enables him to get to his conclusion.

Firstly, his view of the financial industry from the past is idealised. He views that managers within the industry worked “selflessly” and entirely for the organisation’s benefit (2011:255), completely disregarding the fact that people are motivated at work for a variety of reasons and there are many motivational theories that advance this; disregarding the self in favour for the organisation is a form of a corporate sacrifice and is unlikely to motivate long term (Ronson 2011). He furthers this point but considering that these “imposters” are responsible for the loss of “nobless oblige, equality and fairness” (2011:257) that preceded the crisis. The reader is left questioning if these core ideals were ever a part of the banking industry, one that is based on maximising and exploiting credit as a consumer product. Furthermore, within such an idealised view of the industry, it is further questionable how such an infiltration of such “evil” people could remain unnoticed and unchallenged. Consequently, the banking industry as fair and ethical, until infected and disrupted by corporate psychopaths (Boddy 2011), is an unlikely starting point.

Secondly, Boddy fails to give the reader a definition of a psychopath within the corporate working place. Instead he takes the established medical view of a psychopath with their characteristics and makes assumptions of how they “could” affect the work place and what may happen. He fails to support his reasoning with a research study within the industry, any identification of psychopaths or specific personality traits; he fails to create a corporate psychopath profile built on evidence. The reader is forced to make the logical conclusion based on their own established perception of what a psychopath is and what the impact could be of such people existing within corporations. This conclusion that a psychopath within a corporation could cause untold told demand is logical but when further explored, the evidence backing the existence of such a being is lacking.  Moreover, any research he does present is either his own, making the study biased or are from “experts” and undisclosed studies, making them unreliable and seemingly biased. Consequently, the reader is left questioning his agenda for pursuing and developing this theory. The end of the article serves to reveal this agenda; he developed this theory before the financial crisis and is seemingly using the crisis as a platform of evidence to back his theory and his concept of the corporate psychopath.

Moreover, he persuades the reader to believe his theory through emotive words which are highly charged. He refers to them as “malevolent, “defective” and “egotistical” (2011:257), but he does not provide evidence to support these broad character traits. Furthermore, he points to the pursuit of an individual’s personal development aims and ability to manipulate to achieve them (Babiak and Hare, 2006) as a being psychopath specific, when in reality these broad traits and abilities are not essentially a sign of mental illness and is misleading. It could be suggested that all successful people manipulate and pursue their own aims, but this doesn’t characterise them as evil.

Consequently, his argument becomes an exploration of different personality types in regards to success. He is exploring why certain people are able to remain unemotionally uninvolved and pursue success to the end. This is a key area of research in terms of why some people are successful and some people are not (Ronson 2011). However, Boddy hones in on the emotionless factor and the ability to act without conscience as the core corporate psychopath trait; the banker’s ability to have lost millions of people’s money and walk away seemingly unaffected. However he fails to acknowledge that the corporate banking industry is built and moulded around high risk activity. Moreover, corporations are multi-layered organisation and in order to invest and work effectively, there has to be an element of dehumanisation. If a banker worried about what his investment might do to a specific family, then he wouldn’t be able to work effectively within the organisation. Consequently, it is this ability to dehumanise and take risks that make them successful bankers which applauded when things go right which they did for many years, so surely when things go wrong, this should be accepted as an inevitable part of the game.

Moreover he fails to consider that these bankers when successful, are hailed as success stories and shining lights. For years, the top executives were untouchable. It hasn’t been until things unravelled and went wrong, that the media and public began to question them and there has been an element of victimisation (Ronson 2011). Consequently, his view is completely unbalanced and his agenda is to blame and prove his theory, not to effectively research the real reasons behind the crisis. Furthermore, he makes the assumption that these people “display several traits” of a psychopath (2011:256), which implicitly communicates to the reader, that they don’t display all the traits of a psychopath and therefore by medical definition, they aren’t a psychopath. Psychopaths are only medically termed a psychopath when they go through official testing and the “psychopath test”, therefore Boddy’s theory can only be speculation until there is an official diagnosis of a corporate one (Ronson 2011).

Conveniently, Boddy’s “Corporate psychopath” theory allows the banking industry to create an invisible scape goat. He points to an undisclosed, unidentified, unnoticed sector of people within the formally “ethical” banking industry. Consequently due to their ability to remain a secret, makes their identification to prove his theory impossible and can only ever be speculative. This theory allows the banking industry, its structure, ethos and make up to be completely absolved of blame; applying his theory the industry is powerless to the infection of the corporate psychopath and their internal destruction.  Therefore, removing responsibility completely from the industry and placing it back onto the individual for their actions, fails to acknowledge the industries inherent ethos, which is accepted as a significant factor within the financial crisis (Ronson 2011). Moreover, it paints an industry that is at the mercy of the individual’s actions and motives, which is very questionable due to its power and the UK’s government’s inability to fully, sanction and control their actions; the banks as corporations are indisputably globally powerful (Ronson 2011).

Thus, Boddy’s article should be approached with an open mind as it does provide a concept that is worthy of consideration and further research. However, until further research takes place it remains a speculative theory based entirely on assumptions and lacks evidence. However, instead of absolving this industry like intended, his theory raises more questions about the ethos of an industry in which a corporate psychopath could flourish and go unnoticed. For a more balanced view with concrete research about the existence of psychopaths in everyday life, one might seek out Jon Ronson’s, “psychopath test”; a conceptually brilliant worthwhile read.

Babiak, P. and R. D. Hare (2011) Snakes in Suits When Psychopaths Go to Work. New York: HarperCollins.

Boddy, C. (2011). The Corporate Psychopaths Theory of the Global Financial Crisis. Journal of Business Ethics 102: 255-259

Clarke, J. (2005) Working with Monsters. How to Identify and Protect yourself from the work place psychopath. Sydney: Random House.

Hare, R. (1999). ‘Without Conscience: The Disturbing World of the psychopaths among us’, Psychology Today 27 (1), 54-61

Ronson, J. (2011). The Psychopath Test. London: MacMillan