The disaster for millions of people who lost their

The
Global Financial Crisis – 10 years on

A
brief account of what went wrong – could it happen again?

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Introduction

“In the modern era, the largest and the sharpest drop in the global economic
activities had an enormous impact on the world” (McKibbin and Stoeckel, 2009,
p. 6). Despite, bringing an era of prosperity and
growth to a sudden halt, the global financial crisis resulted in a recession
that led to a disaster for millions of people who lost their jobs, homes, and
savings (Grant and Wilson, 2012). For example, the
collapse of a 154-year-old investment bank, the Lehman Brothers, distorted the
subprime crisis into a catastrophic global financial crisis that led to the
Great Recession (Sharma, 2014).

 

The Global
Financial Crisis raised many ethical issues surrounding the causes and responsibilities
for the crisis. Well-renowned corporations such as Fannie Mae and Freddie Mac,
Merrill Lynch, Bank of America, Lehman Brothers, American International Group,
with recognised reputations, were involved in corporate financial scandals due
to the questionable activities of some of their senior leaders (Sharma, 2014, p.
1-2). The onset of the global financial crisis led management researchers’
interested in the dark leadership further investigated why dark leadership
arose during the economic crisis. An example of dark leadership is the corporate
psychopath (Boddy, 2011). These leaders are known as dark leaders that are
greedy, and through their actions, they destroy corporations. The senior
leaders involved in corporate scandals walked away with a clean conscience and
huge money. Their actions revealed that they were not concerned about the
corporate collapse which they created, not worried about those who had lost
their jobs, investments, and savings, and even do not show regrets for what
they had done (Boddy, 2011).

 

This paper first elucidated
the plausible theory of the global financial crisis and the roles of the senior
leaders of the corporation in that crisis. Then, it includes the causes and the
consequences of the global financial crisis that began in 2008 and whose
effects are still being felt. It also includes suggestions that a similar
crisis could happen again and what we should do to avoid it. Lastly, it
concludes that the global financial crisis was due to the bad management
theories, greed, economic imbalance, housing bubble, and lax of government
regulations.

 

Corporate
Psychopaths Theory of GFC

According to Boddy
(2005), the term corporate psychopaths marries to the word psychopath from the
psychological literature. The author states that the term corporate denotes the
area of organisation and psychopath means those who work and operates the organisation.
Robert Hare (1980), the world’s leading experts on psychopathy, said: “if he
did not look for psychopaths to study in prison, he would look for them in the stock
market” (as cited in Boddy, 2011, para. 10). Hare has repeatedly drawn
attention that the corporate psychopaths can lead to major destruction in the
organisations. The expert commentators pointed out that the corporate
psychopaths are found in the top-level of the organisation and not at bottom
level. Research on corporate psychopaths by Baliak, Neumann, and Hare (2010) in
the USA, and Board and Fritzon (2005) in Australia had shown that indeed,
psychopaths are found at senior management levels.

 

According to Bolman
and Deal (2015), the senior leaders do quite dump things and have narrow
thinking perspective. They do not have common sense and the ability to think
that their actions can have dire consequences for others. Boddy (2011), states
that “the presence of corporate psychopaths at senior levels of the organisation
favoured working with others money in the large financial organisations has created
the Corporate Psychopath Theory of Global Financial Crisis” (p. 257). The
changes in organisation nature, such as rapid changes in key staff make it hard
to spot the corporate psychopath because their behaviour looks invisible
(Boddy, 2011). Similarly, Westerlaken and Woods (2010), mentioned that those leaders’
extrovert personal charisma and charm make them appear normal and ideal leaders,
so it is difficult to identify that they possess corporate psychopaths.

 

The Corporate
Psychopath Theory of Global Financial Crisis indicated that senior leaders with
most power influenced the moral climate of the organisations that resulted in
the crisis.  Corporate psychopaths are
narrow-minded people who pursue their own self-interests without any
consideration for the corporate social responsibilities (Bakan, 2004). In
addition, the changes in the way people acquired knowledge facilitated the rise
of corporate psychopaths at senior position (Boddy, 2011). The organisations
that collapsed had the corporate psychopaths because corporate fraud, financial
misrepresentation, greed, and unethical behaviour was revealed. Another
consequence of the counter-constructive behaviour was the collapse of huge
companies, resulting in the global financial crisis that we are now in.