Economics as Propaganda
If you take loving kindness out of the human brain there’s not much left except the will to win.
Psychologist Martha Stout
The malicious influence of the small proportion of the population with dangerous personalities is not confined to the monsters of history, or to times of violent upheaval. Even in peacetime they play a role in undermining democracy and law and order in every country and at every level of society. Their influence is not confined to developing nations, or to places where autocratic governments hold power. The financial and political crises which have rocked the United States and Europe since 2008 occurred because people with dangerous personality disorders were able to rise to positions of power within financial institutions and effectively bankrupt much of the western world. And they did so in the oldest and most established democracies on the planet.
The story of the 2008 financial crisis is not simply a tale of the misdeeds of a few greedy bankers. It is the story of how the entire financial system was corrupted to the point that many people at all levels within the system were incentivised to pursue their own short-term interests regardless of the consequences of their actions.
The list of culprits is very long. It includes bankers and politicians, investors, ratings agencies, regulators and central bankers. It also includes the myriad of academic economists who provided the neoliberal propaganda that enabled the nightmare to unfold.
The list of culprits also includes the citizens of the rich nations caught in the boom, many of whom borrowed to unsustainable levels to fuel the housing bubble. Understanding how ordinary people can be swept up in a culture of greed is essential for understanding the crisis and preventing a recurrence.
However the real story of the financial crisis is how neoliberal ideology enabled people with dangerous personality disorders to rise to positions of responsibility at all levels of the financial system. Once in positions of authority, these individuals simply did what comes naturally to them. They pursued their own self-interest with no regard for the consequences of their actions. It is true that the construction of a global financial system characterised by greed-without-consequences required the participation of a great many psychologically normal people. That should not blind us, however, to the fact that without the catalytic role of people with dangerous personality disorders such a blatantly immoral system would never have been constructed at all.
The Dangers of Financial Capitalism
The ascendency of financial capitalism, and with it the promotion of a new generation of pathological elites to the heart of the world’s most established democracies, has created three dangerously corrosive effects.
First, financial capitalism is undermining democracy and the rule of law – two of the most effective means we have devised to protect ourselves from people with dangerous personality disorders. The immense sums of money available to pathological elites in the financial industry are such that they can readily corrupt democracy. Over recent decades corporate financing of elections and corporate lobbying have both increased dramatically. Between 1998 and 2008 the US financial industry spent $5 billion on lobbying and campaign contributions to political parties and candidates. The US financial industry now employs five lobbyists for every member of Congress. A so-called revolving door between Washington and Wall Street has been established which allows senior figures to alternate between key positions in government and finance. This relationship enables Wall Street firms with long rosters of former government officials to gain disproportionate influence over government policy.
Second, it is serving to promote people with dangerous personality disorders into positions of immense power. Over half a century ago, Joseph Schumpeter praised capitalism for undermining hierarchies of hereditary privilege and replacing them with a meritocracy based on entrepreneurial energy and talent. Today, global financial capitalism serves as a golden staircase to power for people who are dangerously psychologically disordered.
Finally, and crucially for all our futures, those in charge of financial capitalism are entirely incapable of developing the new economic model needed to address the daunting challenges of global inequality and global warming that we all face. Rather than tackle these challenges, the elites in the rich world are intent on perpetuating a predatory form of capitalism which has been expressly designed to enrich themselves, regardless of the consequences for present and future generations.
Economist David Harvey has written that a new global economic order is urgently required, based on a nobler concept of freedom and a worthier system of governance than those that currently underpin financial capitalism. The development of a fair and ethical global economic system capable of addressing the needs of the majority of humanity will clearly not emerge, however, as long as narcissists and psychopaths continue to write the rules.
Click here to read excerpts from Chapter 5 on the role pathological elites play in perpetuating global poverty.
Also please feel free to leave a comment if there is anything you have read so far that you strongly agree with or strongly disagree with.