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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