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*Bull/bear reading 8/13...31.8/45.5
Awhile back, reader George L. suggested I take a look at a classic book “The Crowd” by Gustave LeBon. I finally got around to reading it on a recent long flight and so I present this 1895 work.
From the excerpts below you’ll quickly see that LeBon believes crowds almost always act irrationally (as opposed to the more rational individual) and the reason why this concept is perfect for a “Wall Street History” column is because you need only think back to crowd behavior in the late 1990s/early 2000 at the height of tech mania, for example, let alone the bubble mentality that enveloped the real estate sector before it collapsed. All rational behavior was thrown out the window by the masses, except for those reading and taking to heart the lessons of my “Week in Review” column during both periods, quite frankly. So we all know history will keep repeating itself and once the crowd comes to its senses on one bubble, after a little break it moves on to the next one.
[Of course this concept also explains nationalist political movements as well, i.e., ‘revolution,’ which was the prime purpose of the author’s tome in the first place. ]
One tip. Read this twice. It’s a little dense at first but sinks in with repetition.
“(It) is already clear that on whatever lines the societies of the future are organized, they will have to count with a new power, with the last surviving sovereign force of modern times, the power of crowds. On the ruins of so many ideas formerly considered beyond discussion, and today decayed or decaying, of so many sources of authority that successive revolutions have destroyed, this power, which alone has arisen in their stead, seems soon destined to absorb the others. While all our ancient beliefs are tottering and disappearing, while the old pillars of society are giving way one by one, the power of the crowd is the only force that nothing menaces, and of which the prestige is continually on the increase. The age we are about to enter will in truth be the ERA OF CROWDS.”
“Today the claims of the masses are becoming more and more sharply defined, and amount to nothing less than a determination to destroy utterly society as it now exists, with a view to making it hark back to that primitive communism which was the normal condition of all human groups before the dawn of civilization. Limitations of the hours of labor, the nationalization of mines, railways, factories, and the soil, the equal distribution of all products, the elimination of all the upper classes for the benefit of the popular classes, etc., such are these claims.
“Little adapted to reasoning, crowds, on the contrary, are quick to act. As the result of their present organization their strength has become immense. The dogmas whose birth we are witnessing will soon have the force of the old dogmas; that is to say, the tyrannical and sovereign force of being above discussion. The divine right of the masses is about to replace the divine right of kings.”
“Civilizations as yet have only been created and directed by a small intellectual aristocracy, never by crowds. Crowds are only powerful for destruction. Their rule is always tantamount to a barbarian phase. A civilization involves fixed rules, discipline, a passing from the instinctive to the rational state, forethought for the future, an elevated degree of culture – all of them conditions that crowds, left to themselves, have invariably shown themselves incapable of realizing. In consequence of the purely destructive nature of their power, crowds act like those microbes which hasten the dissolution of enfeebled or dead bodies. When the structure of a civilization is rotten, it is always the masses that bring about its downfall. It is at such a juncture that their chief mission is plainly visible, and that for a while the philosophy of number seems the only philosophy of history.”
“It is only by obtaining some sort of insight into the psychology of crowds that it can be understood how slight is the action upon them of laws and institutions, how powerless they are to hold any opinions other than those which are imposed upon them, and that it is not with rules based on theories of pure equity that they are to be led, but by seeking what produces an impression on them, and what seduces them. For instance, should a legislator, wishing to impose a new tax, choose that which would be theoretically the most just? By no means. In practice the most unjust may be the best for the masses. Should it at the same time be the least obvious, and apparently the least burdensome, it will be the most easily tolerated. It is for this reason that an indirect tax, however exorbitant it be, will always be accepted by the crowd, because, being paid daily in fractions of a farthing on objects of consumption, it will not interfere with the habits of the crowd, and will pass unperceived. Replace it by a proportional tax on wages or income of any other kind, to be paid in a lump sum, and were this new imposition theoretically ten times less burdensome than the other, it would give rise to unanimous protest. This arises from the fact that a sum relatively high, which will appear immense, and will in consequence strike the imagination, has been substituted for the unperceived fractions of a farthing. The new tax would only appear light had it been saved farthing by farthing, but this economic proceeding involves an amount of foresight of which the masses are incapable.”
“Moreover, by the mere fact that he forms part of an organized crowd, a man descends several rungs in the ladder of civilization. Isolated, he may be a cultivated individual; in a crowd, he is a barbarian – that is, a creature acting by instinct. He possesses the spontaneity, the violence, the ferocity, and also the enthusiasm and heroism of primitive beings, whom he further tends to resemble by the facility with which he allows himself to be impressed by words and images – which would be entirely without action on each of the isolated individuals composing the crowd – and to be induced to commit acts contrary to his most obvious interests and his best-known habits. An individual in a crowd is a grain of sand amid other grains of sand, which the wind stirs up at will….
“The conclusion to be drawn from what precedes is, that the crowd is always intellectually inferior to the isolated individual, but that, from the point of view of feelings and of the acts these feelings provoke, the crowd may, according to circumstances, be better or worse than the individual. All depends on the nature of the suggestion to which the crowd is exposed. This is the point that has been completely misunderstood by writers, who have only studied crowds from the criminal point of view. Doubtless a crowd is often criminal, but also it is often heroic. It is crowds rather than isolated individuals that may be induced to run the risk of death to secure the triumph of a creed or an idea, that may be fired with enthusiasm for glory and honor, that are led on – almost without bread and without arms, as in the age of the Crusades – to deliver the tomb of Christ from the infidel, or, as in ’93, to defend the fatherland. Such heroism is without doubt somewhat unconscious, but it is of such heroism that history is made. Were peoples only to be credited with the great actions performed in cold blood, the annals of the world would register but few of them.”
“When studying the fundamental characteristics of a crowd we stated that it is guided almost exclusively by unconscious motives. Its acts are far more under the influence of the spinal cord than of the brain. In this respect a crowd is closely akin to quite primitive beings. The acts performed may be perfect so far as their execution is concerned, but as they are not directed by the brain, the individual conducts himself according as the exciting causes to which he is submitted may happen to decide. A crowd is at the mercy of all external exciting causes, and reflects their incessant variations. It is the slave of the impulses which it receives. The isolated individual may be submitted to the same exciting causes as the man in a crowd, but as his brain shows him the inadvisability of yielding to them, he refrains from yielding. This truth may be psychologically expressed by saying that the isolated individual possesses the capacity of dominating his reflex actions, while a crowd is devoid of this capacity….
“Any display of premeditation by crowds is in consequence out of the question. They may be animated in succession by the most contrary sentiments, but they will always be under the influence of the exciting causes of the moment. They are like the leaves which a tempest whirls up and scatters in every direction and then allows to fall. When studying later on certain revolutionary crowds we shall give some examples of the variability of their sentiments.”
“A crowd may be guilty of murder, incendiarism, and every kind of crime, but it is also capable of very lofty acts of devotion, sacrifice, and disinterestedness, of acts much loftier indeed than those of which the isolated individual is capable. Appeals to sentiments of glory, honor, and patriotism are particularly likely to influence the individual forming part of a crowd, and often to the extent of obtaining from him the sacrifice of his life. History is rich in examples analogous to those furnished by the Crusaders and the volunteers of 1793. Collectivities alone are capable of great disinterestedness and great devotion. How numerous are the crowds that have heroically faced death for beliefs, ideas, and phrases that they scarcely understood! The crowds that go on strike do so far more in obedience to an order than to obtain an increase of the slender salary with which they make shift. Personal interest is very rarely a powerful motive force with crowds, while it is almost the exclusive motive of the conduct of the isolated individual. It is assuredly not self-interest that has guided crowds in so many wars, incomprehensible as a rule to their intelligence – wars in which they have allowed themselves to be massacred as easily as the larks hypnotized by the mirror of the hunter.”
“It cannot absolutely be said that crowds do not reason and are not to be influenced by reasoning.
“However, the arguments they employ and those which are capable of influencing them are, from a logical point of view, of such an inferior kind that it is only by way of analogy that they can be described as reasoning.
“The inferior reasoning of crowds is based, just as is reasoning of a high order, on the association of ideas, but between the ideas associated by crowds there are only apparent bonds of analogy or succession. The mode of reasoning of crowds resembles that of the Esquimaux [Eskimo] who, knowing from experience that ice, a transparent body, melts in the mouth, conclude that glass, also a transparent body, should also melt in the mouth; or that of the savage who imagines that by eating the heart of a courageous foe he acquires his bravery; or of the workman who, having been exploited by one employer of labor, immediately concludes that all employers exploit their men.”
“It is tradition that guides men, and more especially so when they are in a crowd. The changes they can effect in their traditions with any ease, merely bear, as I have often repeated, upon names and outward forms.
“This circumstance is not to be regretted. Neither a national genius nor civilization would be possible without traditions. In consequence man’s two great concerns since he has existed have been to create a network of traditions which he afterwards endeavors to destroy when their beneficial effects have worn themselves out. Civilization is impossible without traditions, and progress impossible without the destruction of those traditions. The difficulty, and it is an immense difficulty, is to find a proper equilibrium between stability and variability. Should a people allow its customs to become too firmly rooted, it can no longer change, and becomes, like China, incapable of improvement. Violent revolutions are in this case of no avail’ for what happens is that either the broken fragments of the chain are pieced together again and the past resumes its empire without change, or the fragments remain apart and decadence soon succeeds anarchy.
“The ideal for a people is in consequence to preserve the institutions of the past, merely changing them insensibly and little by little. This ideal is difficult to realize. The Romans in ancient and the English in modern times are almost alone in having realized it.”
[LeBon quotes from remarks he himself had made fifteen years earlier….]
“ ‘Man, like animals, has a natural tendency to imitation. Imitation is a necessity for him, provided always that the imitation is quite easy. It is this necessity that makes the influence of what is called fashion so powerful. Whether in the matter of opinions, ideas, literary manifestations, or merely of dress, how many persons are bold enough to run counter to the fashion? It is by examples not by arguments that crowds are guided. At every period there exists a small number of individualities which react upon the remainder and are imitated by the unconscious mass. It is needful, however, that these individualities should not be in too pronounced disagreement with received ideas. Were they so, to imitate them would be too difficult and their influence would be nil. For this very reason men who are too superior to their epoch are generally without influence upon it. The line of separation is too strongly marked. For the same reason, too, Europeans, in spite of all the advantages of their civilization, have so insignificant an influence on Eastern people; they differ from them to too great an extent.
“ ‘The dual action of the past and of reciprocal imitation renders, in the long run, all the men of the same country and the same period so alike that even in the case of individuals who would seem destined to escape this double influence, such as philosophers, learned men, and men of letters, thought and style have a family air which enables the age to which they belong to be immediately recognized. It is not necessary to talk for long with an individual to attain a thorough knowledge of what he reads, of his habitual occupations, and of the surroundings amid which he lives.’
“Contagion is so powerful that it forces upon individuals not only certain opinions, but certain modes of feeling as well. Contagion is the cause of the contempt in which, at a given period, certain works are held – the example of Tannhauser may be cited – which, a few years later, for the same reason are admired by those who were foremost in criticizing them.
“The opinions and belief of crowds are specially propagated by contagion, but never by reasoning. The conceptions at present rife among the working classes have been acquired at the public-house as the result of affirmation, repetition, and contagion, and indeed the mode of creation of the beliefs of crowds of every age has scarcely been different.”
“ ‘In an era of equality,’ Tocqueville justly remarks, ‘men have no faith in each other on account of their being all alike; yet this same similitude gives them an almost limitless confidence in the judgment of the public, the reason being that it does not appear probable that, all men being equally enlightened, truth and numerical superiority should not go hand in hand.’”