Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay

Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay Thumbnail
Watch a video version of this article on YouTube.

Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay is a study on crowd psychology and is extremely relevant to the present day, despite being written back in 1841. It explores how easily we can be misled and how illogically we can think when popular opinion influences us.

Peter Thiel once said “The most contrarian thing of all is not to oppose the crowd but to think for yourself”. This I believe to be true. We were warned against blindly following the masses by Charles Mackay a long time ago. There have been many fads in recent years but they are by no means a recent phenomenon. People have been doing crazy things for centuries.

Mackay’s central theme in the book is that the tendency of humans to develop a herd mentality leads to individuals in the herd to act and react to various stimuli. The reactions are very similar and predictable and this “madness” leads to a downward spiral with undesirable effects. His book highlights several stories from history of various manias that took place. There are lessons to be learned from them in the present day. Here are two of my favourites from the book.

Act 1
Tulipomania

Europe in the 1600s. In the Netherlands, the simple tulip was seen at the time as a novelty item for the very rich. From here, the tulip bulb developed into more of a status symbol for the middle and upper classes in society. At this point the value of tulip bulbs began to significantly increase. The mania didn’t stop there though. The bulbs started being purchased by investors and were traded for exorbitant amounts of money, property and anything else of value. 12 acres of land were being offered for a single bulb. As the prices went up, so did the wildness of the speculation from some people. Looking to make a profit, even the poor invested their life savings into buying tulips due to the fact that everybody else was, an illogical reason of course. This speculation led to a lot of people losing a lot of money when the market price for overvalued tulips inevitably fell back to their fundamental value.

Much of this “madness” still occurs today. People sleep outside an Apple store for days to buy the new iPhone on the day it comes out, when they could just walk in the store and purchase it a few weeks later. The real estate bubble and subsequent house price crash in 2007 is a prime example of a large-scale mania. It is easy to identify a bubble in hindsight, but if you are involved in the bubble, it is imperative to spot it before it bursts if you don’t want to lose a lot of time or money. Always be aware of when the market value of a product is more than its intrinsic value, so you don’t get swept up in the “madness”. You can succeed by independently developing your own plan.

Act 2
The Witch mania

Across Western Europe in the 16th and 17th centuries, many witch trials took place. The trials came about because at the time, bad luck was attributed to supernatural causes. This mass-superstition proved to be extremely dangerous with thousands of innocent people dying as a result of the cases. Many of the trials had very low standards of evidence and often came about as a way to settle old scores between neighbours or acquaintances.

In England, a self-styled “Witch-finder general” called Matthew Hopkins travelled around East Anglia, making a point of appearing wherever there was an accusation of somebody being a witch. He would assist the judges with his knowledge on witches, leading to them carrying out many miscarriages of justice. He charged a large sum for his services, using the fear of witchcraft, which had spread like wildfire amongst the public, to extort money from the local authorities. He received extra money for identifying a witch and devised tests such as tying the accused’s hands and feet together and putting them in the river. If they sank, they were innocent (but drowned). If they floated, they were deemed to be a witch and burnt at the stake.

Modern day witch hunts continue to this day. There is evidence of this all around us. From entire groups of people being persecuted in various parts of the world to the online abuse of individuals where the pitch forks have been replaced with keyboards. When a person is accused and identified on social media, there is often no fair trial, no hearing of both sides of the story and no critical analysis. When sharing information online, we need to be careful, especially if that information condemns or vilifies another individual. Nobody wants to be the target of a witch hunt, but we should also not want to participate in one.

In an interesting twist to our witch-finder story, the imposter Matthew Hopkins met an untimely death due to his own notoriety, using his own witch-finding method. An angry mob from a village he was visiting believed that to find so many witches, he must have been a wizard who had acquired a book from Satan. The book listed all the names of the so-called witches and he was therefore working with the devil. He was thrown in the river and tested using his own method. Some say that he sank, others say that he floated and was then tried and executed. What’s sure is that either way, with no other evidence, he met his demise at the hands of the angry mob.


Buy the book Extraordinary Popular Delusions and The Madness of Crowds, which helps me provide more great content for free.

Adam Holownia

Adam Holownia

Adam Holownia loves reading and writing about successful people from history. He has spent the last five years sharing what he's learnt online. He is the creator of educational YouTube channels Eudaimonia and The Art of Improvement which together have over 400,000 subscribers.

His first book, Mastering Machiavelli, is a collection of essays, breaking down key concepts and themes from the highly influential work, The Prince, written by Niccolò Machiavelli. It is almost everything he knows about Machiavelli, packed into a short digital book.