Popular Delusions and the Madness of Crowds

According to legend…

In 1600, in the garden of a nobleman, a traveling gentleman saw a rare, exotic flower — a tulip.  Impressed by its unique beauty, he sent bulbs to Amsterdam, where their popularity caught on.

The rare flower became a fad among gentlemen, and eventually, “…it was deemed to be in bad taste for any man of fortune to be without a collection of them.”[i]  The mania grew until it affected every cavity of society.  In 1636, a wealthy trader would paid half his fortune for a single bulb.

Tulip futures appeared on the European stock exchanges.  Speculators moved in, making fortunes when prices rose, buying again when prices fell.  Everyone, from nobles to chimney sweeps, dabbled in tulips.  There was no reason for it.  It was a pure popular delusion. Extraordinary Popular ... Charles MacKay Best Price: $5.19 Buy New $12.95 (as of 12:05 EDT - Details)

There have been many astonishing delusions in history.  In 1487, Kramer & Speyer wrote a book called The Witch’s Hammer, which explained how recognize witches and correctly torture them into confessing, and tens of thousands of witches were then burned at the stake throughout Europe.  In 1910, when Halley’s Comet passed Earth, people bought “comet pills” to protect themselves from alleged poisonous gasses in the comet’s tail.  In 1933, bands of ecstatic Nazi youths broke into every large library, hauled out the books Hitler hated, set them ablaze, and danced wildly around the bonfires.[ii]

There have been magnetic health cures.  Popular admiration of murderers and thieves.  The escalation of the Viet Nam war by so-called “experts.”  And now, it’s socialism, the most destructive trend in history, igniting the minds of the masses.

How do these weird ideas spread?

How is it that millions of people fix their minds on a vague notion then “go mad in its pursuit?”[iii]

Are spirits guiding the crowd?  No, that’s mysticism.  (The only “spirit guide” is the guy who gives you directions in a liquor store.)  There is one scientific reason — and one reason only — why ideas like this spread.

Profit.

One by one, people encounter an idea — they hear about a new health cure, a way to get rich, a social system to give them a better life — and they grasp at that straw.  And when they hear everyone is doing it, they’re vindicated.  The new idea must work because everyone says so. Breakout: Technology V... Chas Holloway Buy New $16.95 (as of 02:50 EDT - Details)

We can’t stop the mad rush towards socialism.  That’s like shouting “stop wind!” In a hurricane.  There’s only one thing any free market advocate can do do.  Show, in an intriguing way, how freedom is more profitable than the planned nightmares of centralization.

People must see a better future through freedom.  They must picture the clear benefits of a free world.

People go for socialism because they think it’s their only hope for a better life.  Profit.

Don’t want to live in that world?  Then we’d better get good at explaining — in a clear and fascinating way — what freedom is, instead.

[i] Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay, pub. 1841.

[ii] Before the Deluge by Otto Friedrich, Harper Perennial ,1972, 1995, pg. 385.

[iii] Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay, pub. 1841; preface.