The behavior these people exhibited was comparable to that of psychologically disturbed individuals, says award-winning scholar Dr. Mark Stein, from the University of Leicester School of Management.
According to the expert, there is currently no safeguard in place to ensure that a similar crisis will not happen again. His analysis lists the main causes and indicators of the crisis, as well as a description of the actions taken by those in a position of power.
Stein says that a “shared manic culture” existed in the years leading up to the 2008 economic crisis, which was not addressed by anyone. In fact, it was promoted and allowed to continue, and everyone gladly joined in, PsychCentral reports.
Those who could have done something about it entered an extremely deep denial mode, which then pushed them to engage in risky and dangerous financial practices, insuring and lending without analyzing the implications of their decisions. Details of the study appear in the journal Organization.
“Unless the manic nature of the response in the run up to 2008 is recognized, the same economic disaster could happen again,” Stein says. He lists the four main characteristics of the manic culture as denial, overactivity, triumphalism and omnipotence.
“A series of major ruptures in capitalist economies were observed and noted by those in positions of economic and political leadership in Western societies,” the investigator explains.
“These ruptures caused considerable anxiety among these leaders, but rather than heeding the lessons, they responded by manic, omnipotent and triumphant attempts to prove the superiority of their economies,” he goes on to say.
One of the manic responses to the developing crisis was the removal of regulatory safety checks within the banking system, a massive increase in credit derivative deals, and industrializing credit default swaps.
Stein has been analyzing group dynamics from a psychoanalytic perspective for many years, and he says that similar behaviors can be observed (in hindsight) before most of the world's major financial crash events.
“Witnessing the collapse of Communism, those in power in the West developed the deluded idea that capitalist economies would do best if they eschew any resemblance to those Communist economies, thereby justifying unfettered financial liberalization and the destruction of the regulatory apparatuses of capitalism,” Stein adds.
“The consequences of this manic response have been catastrophic, with the ongoing Eurozone crisis being – in many ways – a result of this,” he concludes.