Folk devils and financial panics

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As share prices tumble across the world the pressing question must be, why? Why should there be a 5.5% collapse in value in the space of a single ‘Black Monday’ in the City? The answers are complex of course, and the subject of intense debate. According to one position, catastrophic falls are simply an adjustment (if an extreme one) in a market system that, above all, works. The occasional crisis is simply the price to be paid for a competitive economic regime which is naturally efficient and has produced long term growth and prosperity.

At the critical end of the spectrum, there is an explanation which poses financial crises and full blown recession as endemic. On this view capitalism is contradictory and destructive at its very core, depending as it does on inequality, insecurity and the arbitrary impoverishment of millions of people in times of crisis. Organising economic affairs on the basis of systematic greed, it might reasonably be said, is a recipe for disaster. For what it’s worth I tend to agree with this second position.

Whatever kind of economic analysis is used, though, it’s significant that these explanations remain just that – economic. I think this is too narrow a framework. For one thing, it doesn’t say anything about the immediate subjective factors that trigger a financial crash, make it persist or indeed come to an end. What matters here is what’s going in the minds of financial traders, how they feel as buyers and sellers of stocks and shares. Indeed, during a financial crisis it suddenly becomes clear that the whole system depends on confidence. And when that disappears traders simply follow one another downwards in a circle of fear and uncertainty. ‘Sell! Sell! Sell! ‘ they yell.

Media studies can shed light on this phenomenon. At the turn of the 1960s Stanley Cohen suggested that in portraying the seaside street battles of British youth – the mods and rockers – the media came to represent them as ‘folk devils’. This produced a ‘moral panic’ in society at large, to which the media responded by going further in its representation of bad behaviour. Soon the youth themselves were playing up to the images in the press and television. Cohen called this process, the ‘media amplification spiral’.

Something similar is surely at work among City dealers who not only watch colleagues around them, but see media reports on the activities of fellow wheelers and dealers across the world. Sure enough, on BBC news last night I watched a designer-suited and booted gaggle emerging from their offices at dusk. So young, so angry, so frightened – this could have been a group of mods on the run at Margate, Bank Holiday, 1964. In fact I was witnessing quite a different kind of youth subculture, one whose fear and anxiety is focused on share prices and the state of their performance related bonuses. Today, as the descent continued I couldn’t help thinking that Cohen’s model fits all too well.

What to do? The new standard method for dealing with wayward youth is of course the ASBO. Which prompts the thought: might not capitalism be reformed by means of an anti-social behaviour order? Why can’t we slap one on those boy traders – keep them at home till all the financial foolishness blows over?