The Crowd. G. le Bon

Sunday, 13 April 2008 18:03

The Crowd. G. le Bon

A book whose relevance seems to only grow with time since its first publication in 1898. Le Bon's "crowd" is in most examples a group of people at the same physical location, seeing and hearing each other immediately, and responding to the stimuli they immediately observe. These days there emerges a global crowd interconnected by modern means of communication unheard of in le Bon's age. As both the crowd and its scope of attention are thus expanded, the basic dynamics likely remains the same, as does the human nature. The relevance of the book grows with the crowd phenomenon it describes -- that is, in proportion to the growth of the mass media and means of communication.

Here at ForexAutomaton.com where our business is to turn mood swings of the financial market crowd into profit opportunities, we cannot but add this book to our bookshelf (if not keep it on our desktop, as did Lenin according to some sources). What le Bon does using the methodology of the social siences, we do using that of the precise sciences. He describes, we measure. If you think markets become more efficient as their liquidity grows, think again or read le Bon: a larger crowd is still a crowd. And a crowd is driven by its own dynamics, and is less rational -- and possibly is easier to predict and control -- than any of its individul members, no matter who they are. This applies to a crowd of nineteenth century's leading scientists in one of le Bon's anecdotes as it may apply to a crowd of Wall Street CEOs in what created the subprime crisis episode of 2007-200?.

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