Extraordinary Popular Delusions and the Madness of Crowds

Mackay 1841 edition front page

Extraordinary Popular Delusions and the Madness of Crowds is a seminal work by Charles Mackay, first published in 1841. The book explores the nature and impact of crowd psychology and mass hysteria, detailing various historical examples of collective delusions and financial bubbles.

Overview

The book is divided into three volumes, each focusing on different types of delusions. Mackay's work is often cited in discussions of behavioral economics, sociology, and psychology.

Volume I: National Delusions

This volume covers a range of historical events where entire nations were swept up in irrational behavior. Notable examples include the South Sea Bubble, the Mississippi Scheme, and the Tulip Mania in the Netherlands.

South Sea Bubble

The South Sea Bubble was a financial scheme in the early 18th century that led to a massive economic collapse in Great Britain. Investors were lured by the promise of high returns, leading to speculative frenzy and eventual ruin.

Mississippi Scheme

The Mississippi Scheme was a similar financial bubble in France, orchestrated by John Law. It involved the overvaluation of the Mississippi Company's shares, leading to widespread financial disaster.

Tulip Mania

Tulip Mania occurred in the 17th century in the Dutch Republic, where the prices of tulip bulbs reached extraordinarily high levels before collapsing. It is often cited as one of the first recorded speculative bubbles.

Volume II: Peculiar Follies

This volume delves into various social and cultural phenomena that have captivated large groups of people. Examples include the Crusades, witch hunts, and alchemy.

Crusades

The Crusades were a series of religious wars sanctioned by the Latin Church in the medieval period, aimed at reclaiming the Holy Land from Islamic rule.

Witch Hunts

Witch hunts were periods of mass hysteria and persecution, often targeting women accused of witchcraft. Notable examples include the Salem witch trials and the European witch hunts.

Alchemy

Alchemy was a proto-scientific tradition practiced throughout Europe, Africa, and Asia, aiming to transform base metals into gold and discover the elixir of life.

Volume III: Philosophical Delusions

The final volume examines various philosophical and scientific delusions, such as astrology, magnetism, and fortune-telling.

Astrology

Astrology is the belief that the positions and movements of celestial bodies can influence human affairs and natural phenomena.

Magnetism

Magnetism in this context refers to animal magnetism, a theory proposed by Franz Mesmer that suggested an invisible natural force possessed by all living things.

Fortune-Telling

Fortune-telling encompasses various practices, such as palmistry, tarot reading, and crystal ball gazing, aimed at predicting future events.

Impact and Legacy

Extraordinary Popular Delusions and the Madness of Crowds has had a lasting impact on the study of crowd behavior and financial markets. It is frequently referenced in discussions of market psychology and herd behavior.

See Also

• Behavioral economics
• Crowd psychology
• Financial bubble
• Mass hysteria