About “The Delusions of Crowds” by William J. Bernstein


A WOMAN in Waco, Texas who adhered to the QAnon myth used her car to repeatedly hit another vehicle because she believed the driver “was a pedophile and had kidnapped a girl for human trafficking” . Swissair executives believed their company deserved its “flying bank” nickname and adopted an ultra-confident McKinsey & Company strategy of gobbling up small airlines instead of forging alliances; they went bankrupt within a decade. Burbank Unified School District banned Kill a mockingbird classrooms because defense attorney Atticus Finch was a “white savior” and reading it could cause “harm”. Enthusiastic supporters of former President Donald Trump have beaten police officers with flag poles and called on the Vice President to come out of a collective fantasy that the 2020 election has been ‘stolen’.

The power of group thought to lead otherwise cautious people into irrational movements was known long before dozens of people danced to the death in the streets of Strasbourg in 1518. In its authority Crowd frenzy: why people go crazy in groups, economic historian William J. Bernstein goes into chilling detail about some of the most egregious episodes of group thinking, in which humans set aside critical reasoning to form an affiliate group, taking on bad decisions in synchronization. “Novelists and historians have known for centuries that people do not deploy the mighty human intellect to analyze the world without passion,” he writes, “but rather to rationalize how facts conform to their emotionally derived preconceptions. . It turns out that this cognitive bug is much more pronounced in a group.

The illusion of crowds complicates the argument presented in The wisdom of crowds. Bernstein is not against all group assumptions. It turns out that an amalgamation of several decisions can be quite precise. He quotes a famous experiment in which schoolchildren are asked to write secret conjectures about how many beans there are in a jar; a mathematical average of the numbers gave an almost perfect answer. But when the schoolchildren were asked to discuss their assumptions and produce a composite result, the assumption was far from realized. As anyone who has served on an academic committee can tell you, strong personalities, peer pressure, and the fear of appearing stupid often produce far more drastic or extreme results than any individual would choose on their own.

Bernstein’s anti-hero is Charles Mackay, the premonitory author of the 1841 study Memories of extraordinary popular delusions, in which he reviewed the long history of follies in which multitudes believe, most notably the famous rise of tulip bulbs in the Netherlands. “It seems, however, that Mackay, whose name today is almost synonymous with the word ‘mania’, almost completely missed the enormous he experienced,” writes Bernstein. Mackay was the editor of the Glasgow Argus and covered the initial enthusiasm for rail projects in a jostling register that looked, in hindsight, exactly like an example of the collective euphoria he spent so much time trying to understand and translate.

Besides having written several books on smart investing, Bernstein is a skilled neurologist who convincingly explains the two main cognitive systems at work – sometimes at war – in the mind. He calls this dyad System 1 and System 2:

During the twentieth century, neuroscientists discovered that there are two different types of human thought processes: reasoning that arises from the newer evolutionary cortex that covers the limbic system.

This stacked physiology makes rationality “a fragile, dangerously balanced lid over the bubbling cauldron” of the limbic system that responds much better to simplistic good versus evil concepts and narratives than to frustrating and complex data abstractions and answers. “When compelling narrative and objective facts collide, the former often survives, an outcome which has cursed mankind from time immemorial.”

Whether through greed or accident, two groups of influencers have come to manipulate this vulnerability into the armor of the mind: religious charlatans, especially end-time ones, and financial con artists. These evil twins from Bernstein’s book take alternate roles in its chapters as he unwraps some of the most gloomy group illusions of the past 500 years. Bernstein makes these episodes fresh and impressive; he has a knack for extracting archives to tell familiar stories in unexpected detail. The result is the fortuitous education of the reader as to how Muhammed’s words have been checked for accuracy; the culture of Enron’s accounting department; the first eccentric careers of Christian eschatologists; the science behind fMRI readings; the poetry of Hesiod; the splash made by the film Jaws; the horrors of local theocracies that arose in northern Europe after Martin Luther; the 1979 siege of the Mecca mosque. Bernstein’s mastery of detail is vast; his ability to weave the facts into a clear narrative is also assured.

The hand of government sometimes turns madness into clouds of unhealthy vapor. When the modern state of Israel was established in 1948, a generation of evangelists rushed to the Book of Revelation to align loosely worded verses from the first century with Associated Press dispatches from Jerusalem. When the British Crown decided to consolidate its national debt by creating a company to transport kidnapped slaves to the South Pacific, the stock dealers put to death the greed of ordinary citizens who grabbed shares. Mackay himself wrote of this episode: “The public mind was in a state of unhealthy fermentation. Men were no longer content with the slow but sure profits of a prudent industry. The hope of unlimited wealth for the next day made them carefree and extravagant for today. His words could have replaced the Sunbelt mortgage frenzy of 2007, the NASDAQ explosion in the late 1990s, or any number of recent American speculative windfalls that have left their most aggressive investors in ruins.

The heroes of this book are the scientists Bernstein cites and channels, and in particular the evolutionary psychologists who postulate that “the Manichean state of mind probably evolved from the need for tribal cohesion in early hunter-gatherer societies.” . Here is the cauldron, suggests Bernstein, in which real-world data that should be at the peak of knowledge is instead used primarily to justify the irrational conclusions of the limbic story machine: the “press officer” for the identifier , as one scientist puts it. Or, as economists like to say, “if you torture the data long enough, it’ll eventually confess.”

The success of the project depends on the extent to which Bernstein has convinced the reader that the pecuniary dreams of investors essentially originate from the same psychological place as those believers who are prone to disbelieving prophetic remonstrances, and not – as Christ put it. said, in a tradition – wasting time calculating “the day or the hour” of the last overall curtain. Bernstein asks curtly at one point, “Considering the zero accuracy of end-time predictions, why are we so influenced by these compelling narratives?” There is a desire for a stronger bridge between the eschatological argument and the financial argument, and there are points where the highlighting of some of the worst episodes of religious delirium seems to be brought to the fore in such a way as to completely rule out spiritual motives, to the manner of the sophisms of composition practiced by the New Atheists. Gather the fools of the story, in other words, and elect them the representatives of the whole.

A central irony of this otherwise excellent book, therefore, is that such a key point is evaded by an account from an author who repeatedly warns us of the dangers of intuitive conclusions. As he says: “[P]people greatly prefer stories to data and facts; When faced with such a daunting task, humans default to storytelling, and perhaps the most enjoyable story of all is one that involves the effortless wealth of buying new technology.

That, or a seductive policy that promises a return to the glorious land evoked by Hesiod. Bernstein’s lucid and entertaining story is a warning that the primitive mind lurks beneath the glow of so-called rationality, and that a departure to the heartwarming certainties of group thinking is closer than we can realize. . As he says near the conclusion: “[O]The human tendency to mimicry should never be underestimated, and in particular how beneficial everyday mass delusions that help businesses and entire societies run smoothly can quickly turn into fraudulent or genocidal mass delusions.


Tom Zoellner is LARBpolitical editor and author of The National Highway: Dispatches from a Changing America.

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