The philosopher Peter Sloterdijk tells the story of the Roman emperor, Vespasian, who mockingly sniffed a coin to see how it smelled. Sloterdijk argues that there are only two schools of thought about money: those who say it smells and those who say it doesn’t. For some people, it’s always been obvious that money has a stink about it, whether it’s blood, sweat or feces; nowadays we might talk about the many fragrances of oil, bouquets of greenhouse emissions, or the ever-present whiff of tear gas. But today it is much easier to find people who think that money has no smell at all; in fact, that it’s becoming cleaner and fresher all the time, all those electrons scrubbing off any lingering scents from the dollar bills in your pocket.
Likewise, we might say that there are only two schools of thought concerning the world of people ruled by economic interests and passions, the world of markets and the world market. Either the market drives people crazy, stoking greed and fear, making all of us ever more stupid in the effort to follow the pack; or markets serve as an immense catalytic converter, turning a swarm of self-interests into the least bad kind of consensus, or perhaps even the best kind of collective good. The first view was famously expounded by Charles MacKay, whose mid-nineteenth-century book, Extraordinary Popular Delusions and the Madness of Crowds, offers a panorama of modern mass hysterias and financial follies that started with the South Sea Bubble and John Law. Of course, that history hasn’t stopped yet.
The second view, with some important inflections and qualifications, has been put forth most intriguingly by James Surowiecki, in his 2004 book The Wisdom of Crowds. The book is incredibly rich in argument, anecdote, and implication. For me, what’s most fascinating is the suggestion that the “wisdom of crowds” might manifest itself in radically new ways, setting off all kinds of experiments in collective decision making and self-organization.
The Wisdom of Crowds is a book that leans into the future, treating optimism as a research tool. It grew out of Surowiecki’s regular work as a financial journalist for a number of publications, but especially for The New Yorker. He has carved a special place for himself in that eminent publication, just after The Talk of the Town, where the Financial Page performs the remarkable balancing act of talking about business matters to a readership that may include tycoons and starving poets alike. Surowiecki catches major stories in the updraft, writing about important phenomena like sovereign wealth funds and collateralized debt obligations with generous insight and aphoristic bite. The book offers a view of the financial world somewhere between Frank Norris and Floyd Norris. He helps us to see that, for better and for worse, the financial world is more or less the same one where we all live; that sense of perspective helps to make Surowiecki’s writing consistently absorbing and provocative.