“The Economy's Favored Children”: The Narcissistic Relation and the Financial Crisis

Abstract

AbstractThe financial crisis that began in 2008 was rooted in an ideology of business deregulation and free markets. Deregulation was accompanied by explosive increases in the use of financial leverage by US banking institutions and in their use of complex credit derivatives presumed, or imagined, to restrain and to manage risk, but which failed to do so. Despite its age, Freud's theorizing narcissism holds unappreciated value for understanding psychological components of the crisis. Centered on a scene of wishful onlooker as audience to idealized child, narcissism describes a relational and intergenerational phenomenon. Accounts of the acts and words of ambitious banking players in the crisis, read through the lens of the narcissistic relation, suggest that their actions were fueled both by self‐idealization and by an idealizing external audience willing to grant them unprecedented freedom from external restraint and to trust in their special genius. Observing the operation within this crisis of narcissistic dynamics, idealizations and failures of self‐restraint permits better understanding of the relationship of the public to the exalted social figure of the entrepreneurial businessperson at our historical juncture, illuminates aspects of a large‐scale American denigration of government accompanying idealization of this figure, and suggests the utility for North American psychoanalysis of revisiting longstanding assumptions of “normative” superego functioning. Recent work considering the origins of the crisis in Kleinian and Lacanian conceptual frames will be reviewed, critically considered, and integrated, where possible, with this perspective on the narcissistic relation and its place in accounting for the financial crisis. Copyright © 2014 John Wiley & Sons, Ltd.