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Societies for the History of Economics <[log in to unmask]>
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Barkley Rosser <[log in to unmask]>
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Thu, 19 Feb 2009 19:24:26 -0500
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Regarding history of thought issues, Cantillon and Adam Smith both 
wrote about the Mississippi and South Sea bubbles extensively.  They 
came up with that curious term "fictitious capital," that Marx would 
also use later, and which Michael Perelman has written about some, 
both in the past and more recently.

In terms of histories of bubbles themselves, Eugene White is good as 
is the classic Manias, Panics, and Crashes by Charles Kindleberger, 
with the fourth edition probably the best (the fifth was done by 
someone else after he died).  The book Tulipmania by Peter Garber is 
also good, although I disagree with his arguments.

Regarding the history of though aspect, I am not sure there is a 
single paper that really nails it.  Probably something that should be 
done, although there is some of this in Kindleberger's book.  Besides 
Cantillon, Smith, and Marx, John Stuart Mill also wrote on bubbles, 
and very intelligently and with serious relevance to modern 
views.  Also, of course, there were a lot of writings in the wake of 
the 1929 crash, with Fisher and Keynes obviously important.  There 
were papers in the 1950s by Baumol and Telser and one by Paul 
Samuelson in 1957, that are excellent, although they were forgotten 
after lots of people bought into Milton Friedman's argument that 
speculators must lose money in general and get driven out of the 
market.  This led to a long dry spell during which there was a 
tendency to simply dismiss discussions of bubbles, a tendency 
heightened when the ratex revoltuion came along, although Zeeman's 
paper in 1974 in the Journal of Mathematical Economics is an 
exception (using catastrophe theory). Unsurprisingly after the 1987 
crash, the literature began to expand, although the paper, "Noise," 
by Fischer Black in the JOF in 1986 was a harbinger of what was to 
come.  I discuss many of these figures and this literature in 
Chapters 4 and 5 of my book, From Catastrophe to Chaos: A General 
Theory of Economic Discontinuities (first edition, 1991, Vol. I, 
second edition, 2000), Kluwer.

Barkley Rosser

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