Narcissistic Behavior and the Economy: The Role of Virtues

Surendra Arjoon

Narcissistic Behavior

Several prominent commentators and academics have recently accused Ivy League schools of breeding narcissistic leaders and executives who have been instrumental in fuelling the global financial crisis. The director of economic policy studies at the American Enterprise Institute, Kevin Hassett, argues that though firms did a terrible job in assessing risks, it is precisely those in charge who exemplified narcissistic mentalities manifested primarily through their grandiose sense of entitlement and their lack of humility (Hassett 2009). In a Times online article entitled: “Harvard’s Masters of the Apocalypse,” Broughton (2009) makes similar claims that MBAs (acronym for Mediocre But Arrogant, Mighty Big Attitude, Me Before Anyone, and Management By Accident) are a swollen class of jargon-spewing, value-destroying financiers and consultants who have done more than any other group of people to create our economic misery and concludes that MBAs and business schools need a dose of modesty. Chris Bones, dean of Henley Business School, in addressing the crisis of confidence in business leadership, suggests that the crisis stems from the creation of a narcis- sistic cadre of senior executives who knew no right but their own perception, and who brooked no criticism or check on their ambition (Bones 2009). In a panel discussion at the University of Darden Business School, professor Ed Freeman pointed out that ignoring ethics and responsibility is what drove the financial crisis: “Finance without responsibility is saying I can do whatever I want. But we must go out and create value in a sustainable way. If we don’t address the theoretical problem—guess what? We’re going to have this again. We have to put ethics at the center of business education” (Freeman 2008). Harvard Business School leadership guru, Bill George, remarked that the United States’ financial crisis was not caused by the failure of the complex instruments but by the failure of leaders on Wall Street who all too often sacrificed their firms’ futures in order to maximize their personal gains (George 2009). It seems that greed and personal gains were substituted for robust risk management. Brunell and Gentry (2008) describe how narcissists have the necessary skills and qualities that propel them into leadership roles, and when they are in charge, other aspects of their makeup (for example, the feeling that rules do not apply to them) can have disastrous consequences. Conger (2002) highlights the dangers and temptations where narcissistic leaders can lose touch with reality (for example, a strong sense of self-importance may blind them to divergent points of view or to whistle-blowers, thus leading to poor strategic and organizational decision-making as witnessed in the case of Enron and WorldCom) by promoting self-serving and grandiose aims. Twenge and Keith Campbell (2009), drawing from extensive empirical research and cultural analysis, suggest that the financial crisis is, in part, a con- sequence of the narcissistic cultural epidemic from which the United States is suffering. Interestingly, Baumeister (1999), in reviewing the literature on crime and violence, concludes that contrary to popular beliefs, like many corporate leaders, outlaws tend to often display narcissistic personality disorder (NPD). Narcissistic personality disorder is characterized by an extravagant sense of self- importance, a sense of superiority, self-centered and self-referential behavior, exaggeration of talents, boastful and pretentious behavior, grandiose fantasies of unlimited success, the belief that one is so special or unique that one can only be understood by equals, an unreasonable sense of entitlement, a yearning for attention and admiration, a willingness to exploit others, lack of empathy, envy and the belief that others envy him or her, and arrogant behavior (Ronningstam and Gunderson 1990, Cohen 2005).

It seems that the growing and complex ethical environment is mirrored by the increase in the variety of personal and mental disorders. The first edition of the Diagnostic and Statistical Manual of Mental Disorders (published in 1952 by the American Psychiatric Association) was a pamphlet that listed sixty dis- orders; the current fourth edition (published in 1994) has hundreds of disorders including subcategories and combinations (the list includes disorders associated with adjustment, anxiety, dissociation, eating impulse-control, mood, sexual, sleep, psychotic, somatoform, substance, and personality). Kets de Vries and Miller (1986) further note that pathological organizational types seem in many ways to mirror the types of dysfunctions common to the most widely discussed neurotic styles among individuals. Until recently, NPD had not been the subject of many studies and had received relatively little empirical attention. Naturally, the fields of psychiatry and psychology have played a dominant role in furthering our understanding of NPD, especially as it relates to diagnosis, leadership, and factor structure (Brunell, Genry, Campbell, Hoffman, Kuhnert, and DeMarree 2008; Buono 2001; Corry, Davis Merritt, Mrug, and Pamp 2008; Gabbard 2009; Goldman 2006; Goodie 2009; Horwitz 2000; Kay 2008; Miller, Keith Campbell, Young, Lakey, Reidy, Zeichner, and Ronningstam 2009; Pryor, Miller, and Gaughan 2008; Russ, Shedler, Bradley, and Westen 2008; Trzesniewski, Brent Donnellan, and Robins 2008; Twenge, Konrath, Foster, Keith Campbell, and Bushman 2008a; Twenge, Konrath, Foster, Keith Campbell, and Bushman 2008b).

Empirical studies have supported clinical observations that pathological nar- cissism characteristics can be expressed in temporary traits or in stable, enduring personality disorder manifested as: grandiosity (the most distinguishing and discriminating evidence-based criterion), vulnerable and fluctuating self-esteem, strong reactions to perceived challenges or threats to self-esteem, self-enhancing interpersonal behavior, self-serving interpersonal behavior, interpersonal aggres- sion and control, fluctuating or impaired empathic ability, and exceptionally high or perfectionist ideals and standards (Ronningstam 2009). Reich (1960) sees pathological narcissism as stemming from early traumata (that is, threats to one’s bodily intactness at a time when the ego is not sufficiently developed to be able to master them) and so compensatory measures are instituted. The individual is unable to accept reality and to develop a mature superego. Imbesi (1999) also observes that when placed in structured settings where rules were imposed on them, NPD children had a deliberate, premeditated quality of aggressive impulses. 

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