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Humans. Still Stupider than Tulips?

March 3, 2015

tulips

379 years ago a month ago today, the Amsterdam Tulip Market crashed. I should have reblogged this a month ago. It’s snowing outside and it feels like February.

The Great Tulip Crash of 1637 is one of the great events in economic history, often cited as the first “stock market crash” on record. Whether it really was or not is almost immaterial since economics is as much about what’s believed to be true as what “really” is true.

By the 1630s, the mania for tulips in Amsterdam had reached the point where their actual identity as tulips became irrelevant amid escalating projections of what their resale value might be. Soon, instead of tulips, the market was being crowded with options to buy tulips as and when they became available. A futures market, in other words. The more astute Dutch commentators referred to this futures market as “windhandel” – literally “trade in wind” since it described a form of feverish economic activity in which no commodity actually changed hands.

Tulip Bulbs, especially the wonderfully veined petal varieties such as the Semper Augustus started to register ludicrous prices from the mid 1630s onwards. Indeed, it is rumoured that one such tulip bulb commanded a notional price of 10,000 guilders just before the crash, enough to feed a conspicuously greedy Dutch family for least at a year.

1637 should have been the year that humanity learned that money is not real and that the people who seem to be getting rich quicker than anyone else often have no secure comprehension of how or why they are doing so and are the last people who should be dictating national economic policy. And that to organise an entire economy for the exclusive benefit of the people who are getting rich quicker than anyone else is a proven recipe for fiscal meltdown. 1637 should have been the year that everybody learned this.

The event inspired this passage from one of my favourite poems by Andrew Marvell – “The Mower Against Gardens”:

The tulip, white, did for complexion seek,

And learned to interline its cheek:

Its onion root they then so high did hold,

That one was for a meadow sold.

Another world was searched, through oceans new,

To find the Marvel of Peru.

This tulip is wearing too much make up, the lily is being gilded, and any natural beauty it may have possessed is being soiled in order to enhance a hypothetical exchange value.

For Marvell’s “Mower”, the economic insanity of Dutch tulipmania is merely a subset of a larger crime against nature. Marvell’s protest against horticultural formalism and genetic engineering treats the inflated value of the tulip as a crime against the tulip and, more importantly, against all that was divinely intended for the tulip. Marvell felt that the essential value of the tulip was degraded at the same time and in the same ratio as its exchange value was being inflated.

3rd February 1637 should be commemorated every year all around the world as “Human Beings Can Be Really Stupid Day”. In a modern plutocracy, we have no power to prevent similar economic meltdowns from happening over and over and over again, but at least, we’ll be able to meet the next crash (and the one after that) with a degree of stoic resignation.

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