Tulip Mania - Social Mania and Legacy

Social Mania and Legacy

The popularity of Mackay's tale has continued to this day, with new editions of Extraordinary Popular Delusions appearing regularly, with introductions by writers such as financier Bernard Baruch (1932), financial writers Andrew Tobias (1980), psychologist David J. Schneider (1993), and Michael Lewis (2008). At least six editions are currently in print.

Goldgar argues that although tulip mania may not have constituted an economic or speculative bubble, it was nonetheless traumatic to the Dutch for other reasons. "Even though the financial crisis affected very few, the shock of tulipmania was considerable. A whole network of values was thrown into doubt." In the 17th century, it was unimaginable to most people that something as common as a flower could be worth so much more money than most people earned in a year. The idea that the prices of flowers that grow only in the summer could fluctuate so wildly in the winter, threw into chaos the very understanding of "value".

Many of the sources telling of the woes of tulip mania, such as the anti-speculative pamphlets that were later reported by Beckmann and Mackay, have been cited as evidence of the extent of the economic damage. These pamphlets, however, were not written by victims of a bubble, but were primarily religiously motivated. The upheaval was viewed as a perversion of the moral order—proof that "concentration on the earthly, rather than the heavenly flower could have dire consequences". Thus, it is possible that a relatively minor economic event took on a life of its own as a morality tale.

Nearly a century later, during the crash of the Mississippi Company and the South Sea Company in about 1720, tulip mania appeared in satires of these manias. When Johann Beckmann first described tulip mania in the 1780s, he compared it to the failing lotteries of the time. In Goldgar's view, even many modern popular works about financial markets, such as Burton Malkiel's A Random Walk Down Wall Street (1973) and John Kenneth Galbraith's A Short History of Financial Euphoria (1990; written soon after the stock market crash of 1987), used the tulip mania as a lesson in morality. Tulip mania again became a popular reference during the dot-com bubble of 1995–2001.

In this century, journalists have compared it to failure of the speculative dot-com bubble in 2000 and the most recently, to the subprime mortgage crisis. Despite the mania's enduring popularity, Daniel Gross of Slate has said of economists offering efficient market explanations for the mania, that "If they're correct ... then business writers will have to delete Tulipmania from their handy-pack of bubble analogies."