Post-2008 economists saw speculation’s irrationality as recalibrating politics

Evidence

In the days and years after the 2008 global financial crisis, a range of Nobel laureate economists and central bankers grew increasingly concerned with a strange re-­alignment between markets and politics. Stretching beyond the realm of secondary markets, speculation was also coming to be what made a new type of populist politics tick. Akerlof and Shiller (2010) wrote, in their acclaimed Animal Spirits, that post-­2008 recovery had been inhibited by two key factors: the future’s rising uncertainty and the public’s anger. Shiller (2015), in his earlier best-­selling Irrational Exuberance, had singled out the public’s irrationality as the cause of speculative bubbles and thus a key threat to healthy economies. Alan Greenspan, who first coined the term irrational exuberance in the 1990s, now appeared further alarmed by “irrational populism” at the ten-­year anniversary of the 2008 crisis. These positions all appear to share a seemingly critical view of speculation’s irrationalities and passions, not merely because of their adverse effects on the economy but because of the way they appear to recalibrate the relationship between political institutions, experts, and publics. — Aris Komporozos-Athanasiou, Speculative Communities, 97

Categorization

• XREF: Links to the cognitive/finance literature lineage — Akerlof and Shiller’s Animal Spirits and ‘irrational exuberance’ — which a future finance reading list should include. — connects to: Populism may itself express the public’s irrational exuberance — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 686; Speculation’s tension between rationality and irrationality now defines Western political fault lines — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 100; Markets gained legitimacy as experts lost it after 2008 — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 113 (+1 more)

Broader Connections

• Speculation’s tension between rationality and irrationality now defines Western political fault lines #expands (0.85) — Aris Komporozos-Athanasiou, Speculative Communities, 100