Monday, September 26, 2011

Are Market Traders Psychopathic?

Hamburg – Why do traders like the exposed London UBS dealer Kweku Adoboli blow away billions? What’s going wrong at the banks, or with our young professionals? One thing’s for sure; they behave more recklessly and manipulatively than psychopaths – which is the conclusion a recent study conducted by the University of St. Gallen comes to, as SPIEGEL found out.

The cooperativeness and egoism of 28 professional traders were studied. The subjects had to play computer simulations and undergo intelligence tests. The results exceeded the expectations of the Team of Pascal Scherrer and Thomas Noll, forensics experts [“Forensiker und Vollzugsleiter”?] from the Swiss Prison of Pöschwies, north of Zurich.

“Of course we can’t call the traders mentally disturbed”, says Noll, “but the traders did behave, for example, in a more egoistical and reckless manner than a group of psychopaths who took the same test.”

Especially surprising for Noll: In total the bankers didn’t win any more money than the control group. Instead of competently and soberly pursuing maximum profit, “the traders sought only to get more than their competitors. And they put a lot of energy into harming them.”

Noll compared the situation to a neighbour having the same car, “and you go at it with a baseball bat, just so that yours looks better”. The scientists cannot explain this drive to destroy. The UBS dealer Adoboli, who blew two billion dollars, will remain in custody until further notice.
Der Spiegel (My translation.)

“Of course we can’t call the traders mentally disturbed”. Of course not. They’re professionals. They work in respected institutions and were once known as Masters of the Universe. The very last thing such people are is mentally disturbed. They know what they’re doing.

And don’t forget the Invisible Hand. Forget neither that economics is and should remain amoral. We are all, individually and collectively, far better off if we behave more recklessly than psychopaths. This is what the free market promises to deliver. The last thing we want is any of our precious freedom to accumulate wealth in a ‘Devil take the hindmost’ fashion be taken from us. As long as I could not give a fuck how well you’re doing, everything will be just fine, if you’re like that too.

On the BBC yesterday trader Alessio Rastani told his interviewer his version of the truth: “This economic crisis is like a cancer, if you just wait and wait hoping it is going to go away, just like a cancer it is going to grow and it will be too late!” He goes on to point out that national governments are powerless, and that Goldman Sachs rules the world. Alessio wants to help people though. He advises us protect our assets, have good hedge strategies, take advantage of the coming collapse. It doesn’t appear to occur to him that his advocacy is for us to be more like him. His message is that traders do not care. Or rather, the only thing they care about is making more money than their ‘competitors.’ The consequences of this are collapse. His cure is to take advantage of collapse just like traders do.

“Insanity is doing the same thing, over and over again, but expecting different results.” Albert Einstein.

“Of course we can’t call the traders mentally disturbed.” Thomas Noll.

I think Thomas Noll is doing good work, but I side with Einstein here. And I think it really is past high time we recognize that we are slaves to an insane system of perpetual pillage that cannot stop until it devours itself, and most of us with it.


Debra said...

Geez, Toby, I don't feel like a slave.
At a certain level... those traders are introducing RISK into their lives, and into the system, too.
In my opinion, the human species is aggressive.
Try to make us all reasonable, cooperative, loving and caring BOURGEOIS, while sniffing away at our aggressivity is barking up the wrong tree.
So... beating away at the traders (or anyone else for that matter...) for being psychopaths is, for me, a good indication of how hard we are working to domesticate ourselves to death.
Ironically, the more we try to domesticate ourselves to death, the worse "things" will get.
In my opinion.
Yesterday I spent the day in the mountains, reading, sewing up my knitting, sunbathing, picnicking, walking, gathering walnuts.
A nice day, and with really LITTLE human presence.
Whew... 7 billion and still growing, now THAT'S... CANCER..

Toby said...

Balance in all things. But one can overdo balance too, and any balance is whirring and far from equilibrium. I am not calling for domesticity, not even by unintended implication.

Yes, humans are 'aggressive', but your day in the mountains shows there's more to us than that. Or did you aggressively hike, sew, sunbathe etc? So the point about psychopathy, which is a total absence of empathy, empathy being a very human trait, is that it (psychopathy) has both hands on the wheel while our other qualities and needs are not getting a look in. In short, there is too much aggression (to stick with that word a while longer). How many of us in this rat race get to enjoy the kind of day you just did? And is it your aggression that afforded you such a day? Whom did you fight off to enjoy it?

As to slavery, I assert that we (the majority of us) are slaves to the famous System. In a sense we always are 'slaves' (depends on your definition -- I like Graeber's of a slave as a person ripped from those networks that made her or him who he or she was), since there's no such thing as total independence, but The System as we currently endure it is too psychopathic, too 'unempathic', too greedy of our energies, our commitment to it, of our lives. Whatever freedom is, if there is such a thing, it is most certainly not maximized by this mad pursuit of ever-increasing consumption.

And if humans are aggressive, then beating up on people is ok, isn't it? I mean, why on earth not? If we are to have a Hobbesian war because we're all aggressive, then lean back and enjoy the fireworks as we destroy ourselves.

And what of the consequences of this type of 'aggression' (it's really naked and insatiable greed)? Among them number war, poverty and destitution, and those are getting worse. Are we to defend such things merely because humans are aggressive? Study even a little anthropology and you'll see non-stop evidence of the various social measures taken by all variants of human groups to control aggression lest it get out of hand. We are social creatures after all. Were we not, we wouldn't be having this conversation. There would be no such thing as language or culture.

But really, psychopathy is far more insidious than mere aggression. We are talking about a condition of rapacious thrill seeking as condoned by neoliberal economics in the interests of maximizing profits, where the social costs need not be taken into account because a phantom called The Invisible Hand is supposed to ensure maximum possible social good to all. That's what I'm addressing here. This is not a post about how we should all learn to want days of hiking in the hills and sewing our knitting.

Debra said...

Na, Toby, I think it is extremely paradoxical that i, a woman, should address our incredibly destructive desire to get rid of our aggressivity, in ALL its forms.
In YOUR mother country this summer, I saw signs in public places saying that verbal aggression would be prosecuted.
I say.... all that CONCERN, and wanting EVERYBODY to be NICE NICE NICE, and loving and caring, AND EMPATHETIC ALL THE TIME is breeding some pretty drastic reaction. (After all, Toby, that is basically Jesus' big trip/project/mission...under another name.)
How many people go off up into the mountains like me ?
Well, to judge from the looks of the campground, not a lot.
And last evening, when I mentioned that that was what I had done with my day, most people were a little STARTLED to say the least.
Please don't give me a lecture about how PRIVILEGED I am to be able to do that.
Last week, I sent out an E-Mail message to a group of girlfriends inviting them to participate in a "work" group, a reading group ONE EVENING A MONTH.
And I got a message back from someone telling me that she didn't have the time.
I say... BULLSHIT, Toby.
She has the time, she doesn't have the desire.
Never underestimate how crafty we are at telling ourselves "I can't" when the real response is... "I won't".
Most of those out of hand traders are GUYS who are speed junkies, in a certain sense.
The human species IS DYING FOR ADVENTURE (especially its continually castrated men).
And people are looking for it in some outlandish places.
When we get to the 0 risk, 0 war society, (probably over some of our DEAD BODIES, TOO) Toby, DO YOU THINK IT WILL BE PARADISE ON EARTH ??
Not me.
Not in the least.

Toby said...

If you lecture me, I lecture you. That's part of it, isn't it? If you don't want people to be NICE NICE NICE the whole time, you're asking for not-nice. Should I deliver? Shouldn't I? Being middle class, I am more comfortable with 'politeness.'

I wasn't talking about privilege, by the way, I was talking about aggression, or rather that aggression is not the only thing humans are driven by, and your comment was a demonstration of that, so I used it.

So how does this play out now? Do we shout at each other aggressively, enjoy a hearty argument, make up, shake hands, while the world fails to care or notice? It doesn't really matter. I am no enemy of aggression, in the way I am no enemy of peace, or politeness, or restraint, or respect, or whatever. But this was not a post about aggression, even implicitly. Therefore my reaction to your comment was deliberately 'aggressive' for, I hope, obvious reasons.

Empathic all the time? We are indeed that unless we are psychopathic. We sometimes act on it, sometimes not. Same with aggression I guess. It's always there; sometimes we act on it, sometimes not.

As to people saying they don't have the time, of course that's bullshit (mostly anyway), but pure honesty all the time is flat out impossible. As well you know. Not least because we don't know ourselves well enough, nor can we, to be certain what we just communicated was the truth, the whole truth and nothing but the truth.

Cool Breeze said...

Fascinating stuff here.

Toby said...

Hi Cool Breeze,

yeah, I bought his book based on that wonderful video. It's full of fascinating stuff but, as in "The End of Work", suffers from a failure of nerve and seems only to want user-friendly capitalism. In "The Empathic Civilization" he calls it distributed capitalism, which in my understanding is an oxymoron, since capitalism is all about leveraging concentrations of wealth so as to make more wealth, with that wealth concentrating ever more to the owners of capital.

And this failure of nerve is something David Graeber is fond of pointing out. He wrote an opinion piece for the Guardian the other day, maybe you'll find it interesting:

Cool Breeze said...

Thanks Toby. I wasn't even aware of his economic prescriptions, but that's disappointing.

I suppose the information about how we are wired is still educational and/or useful in addressing some of our psychological hurdles with the force fed competition narrative.

I look forward to checking out Graeber's piece. Thanks.

Debra said...

Freud said that EROS was the motor for human action, and I definitely believe that.
Four summers ago I found a book of poetry by Stanley Kunitz, "The Wild Braid", and the over 80 Kunitz who is now dead, said in one of his poems "What makes the engine go ? DESIRE, DESIRE, DESIRE." Eros, dixit Freud, WHO WAS CRUCIFIED FOR DARING TO REMIND OUR STILL PURITAN SOCIETY OF THIS. (Desire and aggression go hand in hand.)
Here is the poem, courtesy of Stanley Kunitz, and it may be his last poem... he died at over a hundred, and a wise man, I believe.

"Touch me"

"Summer is late, my heart.

Words plucked out of the air
some forty years ago
when I was wild with love
and torn almost in two
scatter like leaves this night
of whistling wind and rain.
It is my heart that's late,
it is my song that's flown.
Outdoors all afternoon
under a gunmetal sky
staking my garden down,
I kneeled to the crickets trilling
underfoot as if about
to burst from their crusty shells ;
and like a child again
marveled to hear so clear
and brave a music
pour from such a small machine.
What makes the engine go ?
Desire, desire, desire.
The longing for the dance
stirs in the buried life.
One season only,
and it's done.
So let the battered old willow
thrash against the windowpanes
and the house timbers creak.
Darling, do you remember
the man you married ? Touch me,
remind me who I am."

That poem says a lot to me, Toby, even though I quibble with the "machine". DON'T LIKE THAT WORD.
Freud was right... SEX WILL SAVE US, if we bother crawling back into our smelly, sweating, decaying, but living bodies, and resuming life where it IS, instead of... ON THE PAGES OF THE FINANCIAL TIMES, OR ON THE COMPUTERS, for example...

Toby said...

I think it's more than sex, I think it's the mess of uncontrollable nature/reality seen as repulsive to the paternal, control-freak Uranian mind-set. And so, having said that, I believe the urge to neaten, straighten and make sense of, to explain, is as strong an urge as desire. If it weren't, where would the tension come from?