ABSTRACT

This chapter explores that possibility by examining a topic of some relevance; namely, perceived instability in financial markets with its very widespread consequences for human development and welfare. The active behaviour of the believing group is sufficient to move prices and to become self-rewarding, feeding the belief they are really in the presence of the phantastic object which leads to growing excitement and a belief in a more and more contagious new reality. Sceptical analysis of the claims that something completely new was happening to the economy might have provoked cautious analysis just as the rather excited and flamboyant claims being made for the new situation might have caused alarm. The "new economy" and all its valuation metrics were now mostly dismissed as "fantasy". The foregoing analysis shows how a psychoanalytic understanding of emotional processes can throw light on the behaviour of economic agents in these circumstances.