Extraordinary Popular Delusions and the Madness of Crowds

Charles Mackay. Extraordinary Popular Delusions and the Madness of Crowds. New York: L.C.
Page and Company, 1932 [1841]).

Reviewed by T. Hatch

As the title suggests Mackay is looking at the world through a Gibbonesque lens. Instead of concerning himself with the vagaries of the collapse of the Roman Empire Mackay's interest in mass human irrationality is more systematic. Starting with the Mississippi and South Sea bubbles (originally my interest in the book); he deals with alchemy; magnitisers; the Crusades; witchcraft; dueling and a short list of other topics which provide fertile ground for nurturing the ubiquitous seeds of credulity in human beings. In reading this 702 page frolic of a page-turner it was impossible to confine myself to the pertinent chapters that I hoped might reveal some larger truth pertaining to the current financial meltdown/tsunami/clusterf@#k and the inherent irrationality of financial markets.

Barnard Baruch, in his forward to the 1932 edition of this work, lamented that “All economic movements, by their very nature, are motivated by crowd psychology.” Whether the source of speculation is Peruvian gold mines or a perpetual ascent in real estate values any notion of caveat emptor is quickly discarded as unworthy of the popular imagination. Although it was three centuries ago when Robert Walpole argued against the South Sea Act in the British Parliament he might very well have been speaking of any number of more recent financial calamities e.g. the Savings and Loan debacle, the subsequent bubbles in bonds, telecommunication stocks, or more recently the credit derivatives market. “It would hold out a dangerous lure to decoy the unwary to their ruin, by making them part with the earnings of their labour for a prospect of imaginary wealth.” In fact, it appears as if it has.

The disappointing aspect of this book is that so many chapters might have been written after 1841. MacKay had no way of anticipating Joseph Smith, the modern treatment of Santa Claus, the fascination with UFOs, assassination conspiracy lovers, or (the cherry on the parfait) the zealotry of the 9/11truth.org adherents. What the world really needs is another Burckhardt or Huizinga to pen something like “The Persistence of credulity: Why 30,000 years of natural selection have not yet made any difference.” A guy can dream.

Burling 1st floor AZ999 .M2 1932