With Europe headed for what appears to be economic and social catastrophe and the US trailing not far behind, it’s hard not to conclude that something has gone very wrong somewhere along the line.
How could any rational person ever have thought that Greece and Germany could share the same currency? That housing prices never go down? That cutting taxes increases government revenues? That the Western powers could win a land war in Afghanistan?
But maybe no rational person ever did believe any of these things. Perhaps the legions of true believers in the West, who embraced these false gods with such enthusiasm, were in the grip of a massive and widely shared manic episode.
In a new paper, “A culture of mania: A psychoanalytic view of the incubation of the 2008 credit crisis,” Mark Stein, a professor at the University of Leicester argues that millions of people living in the capitalist West have responded irrationally to a variety of important events over the last few decades. Economic and political crises have generated not understanding and needed reform, but behavior that typifies a manic individual, writ large: denial, assertions of omnipotence, triumphalism and wild over-activity. The Asian economies crashed in the ’90s? That’s because they weren’t blessed with Western values and institutions. The Soviets collapsed? Couldn’t happen here! In fact, nothing can ever go wrong in the land of free markets! So bring on eternally rising house prices, from Las Vegas to Madrid, blessed by Allan Greenspan and the magicians at Goldman Sachs. What could possibly go wrong?
The problem with mania, though, as we are all still learning, is that it’s always followed by depression. You can download the paper here.
Photo by Flickr user sass_face.