Ian Robertson writes: On 11 August 2011, Bob Diamond, chief executive of Barclays [who resigned today], delivered the BBC Today Programme business lecture. In it he declared that “culture” was the critical element in responsible banking, and the best test of it is “how people behave while no one is watching.” We now know that banking failed the test and so must ask why, in [Governor of the Bank of England] Sir Mervyn King’s words, “excessive compensation”, “shoddy treatment of customers”, “mis-selling” and “the deceitful manipulation of a key interest rate”, flourished in the banking sector. Cognitive neuroscience can point to some answers.
Senior bankers hold enormous power, greater than that of many elected national leaders. Largely unaccountable except to occasional shareholders meetings and often quiescent boards, their power is much less constrained than that of democratically elected leaders. And given that power is one of the most potent brain-changing drugs known to humankind, unconstrained power has enormously distorting effects on behaviour, emotions and thinking.
Holding power changes brains by boosting testosterone, which in turn increases the chemical messenger dopamine in the brain’s reward systems. Extraordinary power causes extraordinary brain changes, which in their extreme form manifest themselves in personality distortions, such as those seen in dictators like Muammar Gaddafi.
The “masters of the universe” who have arisen out of a deregulated world financial system were given unprecedented power that inevitably must have caused major changes to their brains. While power in moderate doses can make people smarter, more strategic in their thinking, bolder and less depressed, in too-large doses it can make them egocentric and un-empathic, greedy for rewards – financial, sexual, interpersonal, material – likely to treat others as objects, and with a dulled perception of risk. [Continue reading…]