Tuesday, April 27, 2010
The Madness of Tulips
I've recently been talking about finance and the problems of the crisis. Tulips are said by some to be the first commodity to produce a "bubble" and at the height of tulip mania in the 1630s, bulbs were bought and sold for many times the yearly income of the ordinary person. A Scottish journalist, Mackay, wrote a book about the phenomena, which he called extraordinary popular delusions and the madness of crowds. There is, as always, contention about the bubble itself and the relationship between crowds of people and the pursuit of wealth. Nonetheless in 1637, the whole tulip thing reached the end when people just could not pay and the tulip trade collapsed. What is extremely interesting is that 1980s economists tried to debunk much of what Mackay said! But of course, 1980s economists debunked a lot of things and promptly pushed us into the greatest recession the world has seen. So even, or perhaps especially the crowd can hardly be impressed with the record of such economists to date. Jung did not like or trust the collective much, preferring individuals and individual behaviour. In so doing he tended to decry much collective behaviour, describing it as unsubtle. and prone to tulip mania. The crowd is a blunt instrument to be sure, but nothing much really shifts without this aggregate of people behaving as one. So here is the tulip collective, doing its best in the spring sun in Pembroke Road.