Published in 1841, Charles Mackay's «Extraordinary Popular Delusions and the Madness of Crowds» is a book that does not age because its subject — collective irrationality — does not age.
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Published in 1841, the first systematic work on the psychology of financial bubbles and collective irrationality. Mackay documents the Dutch tulip mania (1636), the South Sea Bubble (1720), and the Mississippi Scheme (1720), demonstrating that humans repeat the same irrational errors whenever greed and fear seize the masses. Makes 21st-century headlines feel eerily familiar.
Published in 1841, Charles Mackay's «Extraordinary Popular Delusions and the Madness of Crowds» is a book that does not age because its subject — collective irrationality — does not age. Mackay, a Scottish journalist and poet, documented with ethnographic detail the Dutch tulip mania (1636–1637), the South Sea Company collapse in England (1720), and the Mississippi Company catastrophe in France (1720): three of the most studied episodes of mass speculation in economic history. His central argument is as simple as it is unsettling: human beings think in herds and go mad in groups, though they recover their senses individually. The book was rediscovered by 20th-century investors and economists as a precursor to behavioural finance, and authors such as Charles Kindleberger and Robert Shiller cite it as a direct reference. A fair critique: Mackay is a journalist, not an economist, and some of his historical analyses contain inaccuracies documented by subsequent economic historians. The tulip mania, in particular, has been revisited with more rigorous data that nuances Mackay's narrative. Even so, as an exploration of the psychology of bubbles, the book is essential reading.
Recommended for investors, behavioural economists, economic historians, and anyone who wants to understand the psychological patterns underlying financial bubbles; best complemented with more recent economic historiography.
Fact«Extraordinary Popular Delusions and the Madness of Crowds» was originally published in three volumes in 1841 by Richard Bentley in London; investor Bernard Baruch popularised the book in the 20th century by citing it in the preface to a 1932 reprint, following the 1929 crash.
