What poet, playboy, and prophet of investment bubbles Charles Mackay, plagiarizing in 1841 on the Dutch tulip bubble, can tell us about crypto's rise and fall
Tim Harford / Financial Times : Tweets: @johnkoetsier , @pkedrosky , @ftweekend , @prashanth_krish , @profjohnturner , @thecompoundnews , and @financialtimes Tweets: John Koetsier / @johnkoetsier : Worth reading. What the tulip bulb craze in Holland in the 1600s, the railway mania in England in the 1800s, gold, and Birkin bags can tell us about crypto and NFTs >> What the poet, playboy and prophet of bubbles can still teach us https://www.ft.com/... Paul Kedrosky / @pkedrosky : Charles Mackay got bubbles wrong, argues @timharford. Mackay over-dramatized the tulip mania, but missed railways, in part because he misunderstood how manias around seeming necessities can look very different from ones around frippery. Familiar tale. https://www.ft.com/... #xp https://twitter.com/... @ftweekend : ‘Newly wealthy 17th century Dutch merchants began to do what wealthy classes of people often do: they paid a lot of money for rare and beautiful things they could show off to their friends.’ @timharford on the guru of economic bubbles, Charles Mackay https://www.ft.com/... Prashanth / @prashanth_krish : Is gold a frivolous investment or a necessity of the age? Gold is chiefly valued because people expect that they will be able to find someone to take it off their hands, quite likely at a profit. That is almost a textbook definition of a bubble https://www.ft.com/... John Turner / @profjohnturner : What the poet, playboy and prophet of bubbles can still teach us - @TimHarford piece in @FTMag. Great to see @BoomBustBubbles being cited https://giftarticle.ft.com/... @thecompoundnews : “The railway mania was even bigger than the South Sea Bubble, and Mackay obviously knew it. But he couldn't quite bring himself to say so directly.” 🌷🚂 - @timharford https://www.ft.com/... @financialtimes : In this week's @ftmag, @timharford dissects the questionable legacy of Charles Mackay - and explains what we can still learn from him about the economic bubbles of our time, from Birkin bags to NFTs: https://www.ft.com/...
Context & Ripple Effects
Tim Harford's FT essay is a revisionist strike at the most-quoted book in bubble literature: he argues Charles Mackay over-dramatized the Dutch tulip mania, misunderstood railway mania, plagiarized parts of his 1841 account, and — per Paul Kedrosky — invented details like the '40 bidders' figure. That matters because Mackay's 'madness of crowds' framing is the template journalists and regulators reach for every time a mania peaks.
The crypto cycle has already been narrated through competing bubble scripts: the 2018 comparison of Bitcoin and ICOs to the dot-com era argued crashes still leave behind the next Google, while Tim O'Reilly's decentralization-and-recentralization cycles piece insisted Web3's real shape only becomes legible after the pop. Harford's critique lands in the middle of that argument, weakening the historical authority of the harshest script.
First-order effects
- The standard rhetorical move — 'crypto is tulip mania' — loses its evidentiary anchor, since the tulip story itself rests on a plagiarized, partly fabricated account that Mackay got wrong.
- Commentators who leaned on Mackay's canon, from the FT's own weekend readership to the economists like John Turner cited alongside Kedrosky, now have to defend conclusions built on a compromised source.
Second-order effects
- Calls for regulatory action against crypto, such as the New York Times argument that the sector bought an illusion of respectability through high-status associations, will have to rest on observed conduct rather than borrowed bubble history.
- The rival narrative — that busts prune speculation while leaving durable companies behind, as the 2018 dot-com parallel predicted — gains relative strength whenever the mania framing is shown to be historically shaky.
Third-order effects
- If the pattern holds, each asset mania gets re-historicized after the crash, with scholars dismantling the popular accounts that shaped policy and market memory during the boom — meaning today's crypto post-mortems may be as unreliable as Mackay's was.
- The durable question shifts from 'is this a madness of crowds?' to which infrastructure survives the bust, echoing O'Reilly's point that a technology's real form is only visible after its speculative phase ends.
The trend: Bubble historiography is being revised just as crypto's bust forces a rewrite of the narratives that framed its rise, with Mackay's flawed canon as the case study.