Memoirs of Extraordinary Popular Delusions and the Madness of Crowds
This book by Charles Mackay examines various historical instances of mass delusion and crowd psychology, including financial bubbles like the South Sea Bubble and the Mississippi Scheme, as well as alchemy, witch hunts, and other collective follies. First published in 1841, it explores how irrationality and herd behavior have repeatedly led entire societies into widespread manias and panics.
Background
- Published in 1841 by Scottish journalist Charles Mackay, this book is a foundational text in crowd psychology and behavioral economics. It catalogs historical bubbles, manias, and mass delusions — from the Dutch Tulip Mania (1630s) to the South Sea Bubble (1720) and alchemy, witch hunts, and crusades.
- The book's central theme is that otherwise rational people can collectively embrace absurd or destructive ideas when social contagion overrides individual judgment. This concept has become essential to understanding financial crashes, conspiracy theories, and political movements.
- Mackay's work was revived in the late 20th century by figures like economist John Kenneth Galbraith and investor Warren Buffett, who saw parallels in modern stock-market frenzies. It remains a classic reference for anyone studying mass psychology, market irrationality, and the recurring nature of speculative excess.