Sunday, June 10, 2012

Mark Stein — A culture of mania: a psychoanalytic view of the incubation of the 2008

In this theoretically informed study I explore the broader cultural changes that created the conditions for the credit crisis of 2008. Drawing on psychoanalysis and its application to organizational and social dynamics, I develop a theoretical framework around the notion of a manic culture, comprised of four aspects: denial; omnipotence; triumphalism; and over-activity. I then apply this to the credit crisis and argue that the events of 2008 were preceded by an incubation period lasting for over two decades during which a culture of mania developed. Then, focusing especially on the Japanese and South East Asia/LTCM crises, I argue that a series of major ruptures in capitalism during this incubation period served not as warnings, but as opportunities for a manic response, thereby dramatically increasing the risks involved. I also argue that this mania was triggered and strengthened by triumphant feelings in the West over the collapse of communism. I suggest therefore that this manic culture played a significant role in creating the conditions for the problems that led to the credit crisis.
Read it at SAGE
A culture of mania: a psychoanalytic view of the incubation of the 2008 credit crisis
by Mark Stein | School of Management, University of Leicester

How's that for "irrational exuberance"?

The paper is a free download in PDF.


Dan Kervick said...

Silliness. Capitalism is inherently disposed toward predatory behavior. If you take the locks off the cages and let the predators out, they will do exactly what they did in the pre-2008 period. The predators are still running wild.

Anonymous said...

It's interesting the opposite of manic boom periods are called "depressions" er sounds like manic depression, perhaps the markets need some lithium.