This book is a study of the characteristics of crowds as well as the tremendous impact they can have. In terms of investing, I picked up a lot of similarities between his "crowds" and the mob-like behavior of Mr. Market. But beyond that, this work made me think a lot about how much this psychology of crowds has come up in my past experiences and in everyday life. The full text is available here for those interesting in reading the book. Otherwise, I took very comprehensive notes below- sorry for the length. Note this book was written in 1896.
"The substitution of the unconscious action of crowds for the conscious activity of the individual is one of the principal characteristics of our time."
"Crowds, doubtless, are always unconscious, but this very unconsciousness is perhaps one of the secrets of their strength."
"Today, it is the traditions which used to obtain in politics, and the indvidual tendencies and rivalries of rulers which do not count; while on the contrary, the voice of the asses has become preponderant."
"When the structure of civilization is rotten, it is always the masses that bring about it's downfall."
Mind of Crowds
-Disappearance of conscious personality and the turning of feelings and thoughts in a definite direction.
-Characteristics common to crowds
1. People in a crowd act different than they would in isolation. Why? The greater part of our daily actions are the result of hidden motives which escape our observation.
2. People resemble each other most in their unconscious elements. It is the conscious element- education, hereditary conditions, etc- that they differ.
3. It is precisely these general qualities of character, governed by forces of which are unconscious, and possessed by the majority, that in crowds become common property. Individuality is weakened, and the heterogeneous is swamped by the homogeneous.
4. Because crowds possess common ordinary qualities, they can never accomplish acts demanding a high degree of intelligence.
-How are the characteristics formed in crowds?
1. People in crowds feel greater power due to numerical standpoint.
2. There is less responsibility when in a crowd.
3. Acts in a crowd are contagious, to such a degree that an individual will even sacrifice personal interests for the crowd.
4. Individual is no longer conscious of his acts. (They mention something similar to the Zimbardo experiment, where people kept shocking and harming other people as long as the person conducting the experiment kept nudging them foreward)
5. "Suggestions will be followed like a hypnotized person, only stronger due to reciprocity o crowd." They "immediately transform the suggested ideas into acts."
-Isolated, a person can be a cultivated individual. In a crowd, he is a barbarian, a creature acting on instinct.
Conclusion: Crowd is always intellectually inferior to the isolated indivudal, but from the point of view of feelings and acts they provoke, it can be better or worse than the individual. (ex: is the crowd performing criminal or heroic acts?)
Sentiments and Morality of Crowds
- Individual's brain shows him the inadvisability of yielding to reflex reactions. Not so in a crowd.
- Impossibility disappears for the individual in a crowd.
- Events witnessed by a crowd are easily transformed; due to contagion effect it is all perverted similarly.
- In a study by a psychologist, it became clear that witnesses in numbers may give circumstantial relations which are completely erroneous, but whose result is that, if their descriptions are accepted as exact, the phenomena they describe are inexplicable by trickery. (Basically saying, a crowd is just as likely to see an event incorrectly, but because they have so many people supporting the view it becomes impossible to deny their claim)
- People no longer see the object itself, but the image-evoked in his mind.
- Conclusion: the collective observations are unreliable.
Exaggeration and Ingeniousness of Sentiments of Crowds
- A crowd is only impressed by excessive sentiments.
- An orator wishing to move a crowd must make an abusive use of violent affirmations. To exaggerate, to affirm, to resort to repitions, and never to attemp to prove anything by reasoning are methods of argument well known to speakers at public meetings.
- Intellectually, a crowd can only go down. Sentiment can go up or down.
Intolerance, Dictatorialness and Conservatism of Crowds
- Dissent is not tolerated in crowds.
- Crowds respect force, slightly impressed by kindness.
- Crowds are in fact, conservative. They show incessant mobility only on superficial matters- they want to keep traditions and status quo.
- "Had democracies possessed the power they wield today at the time of the invention of the mechanical loom or the introduction of steam power and of railways, the realizations of these inventions would have been impossible, or would have been achieved at the cost of revolutions and repeated massacres." (I disagree, but in general we do see a lot of resistance to change)
The Morality of Crowds
- Crowds are too impulsive and mobile to be moral, but certain qualities such as abnegation, self-sacrifice, disinterestedness, devotion, equity may be exhibited.
- Individual knows he cannot gratify instincts; in a irresponsible crowd, he can. But appeals to glory, honor and patriotism are particularly likely to appeal to moral side of a crowd.
- And, if people had always satisfied their immediate interests, it is possible that no civilization would have grown up on our planet and humanity would have had no history.
The Ideas of Crowds
1. Ideas of the moment- infatuations.
2. Fundamental ideas- religious beliefs or democratic ideals.
- Ideas may be modified in order to lower them to level of intelligence of crowds. Usually in the direction of simplification.
Reasoning Power of Crowds
- Arguments of crowds are inferior in terms of reasoning.
- Associate dissimilar things possessing a merely apparent connection.
- Judgments accepted by a crowd are the ones enforced on them, not the one adopted by themselves after the discussion.
Imagination of Crowds
- "All great statesmen of every age and every country, including the most absolute despots, have regarded the popular imagination as the basis of their power, and they have never attempted to govern in opposition to it."
- To capture the imagination of crowds, don't use intelligence or reasoning. Rather, cunning rhetoric, something clear and marvelous/mysterious.
Conviction of Crowds
- Convictions of a crowd take on a sort of religious sentiment.
- At the heart of the matter is the soul of the masses
Opinions and Beliefs of Crowds
- Remote factors set up the groundwork, such as the work of philosophers, scientific thought, etc.
- Immediate factors of the moment such as speeches, resistance, etc, spark the crowd.
- Some important remote factors: race, traditions, time, institutions, education.
- By far the most important remote factor.
- Education does not necessarily make a man more moral or happier. Maybe more professional.
- Primary danger of the system of education is that it is based on the idea that intelligence is developed by the learning by heart of text-books. The endeavor has been made to enforce a knowledge of as many books as possible. A man does nothing but acquire books by heart without judgment of personal initiative ever being called int play.
- The conditions of success in life are the possession of judgment, experience, initiative, and character- qualities which are not bestowed by books. Books are dictionaries, useful to consult, but of which it is perfectly useless to have lengthy portion's in one's head. (my emphasis)
-Crowds are swayed by images, words, and formulas.
- As soon as living beings are gathered together, they place themselves under a chief.
- Leaders are typically men of action rather than thinkers.
- The multitude is always ready to listen to the strong willed man.
- It is the need not of liberty but of servitude that is always predominant in the soul of crowds.
- To imbue the mind of a crowd with ideas and beliefs, the leaders must use affirmation, repetition and contagion.
- Affirmation, free of reasoning, is one of the surest means to enter mind of crowd.
- Affirmation has no real influence unless it is constantly repeated.
- Napoleon: only one figure in rhetoric of serious important, namely, repetition.
(This section reminded me of the use of propaganda in Nazi Germany)
- After affirmation and opinion, a current of opinion is formed and it is contagious. Imitation is in reality an effect of contagion.
- The precise moment at which a great belief is doomed is easily recognizable; it is the moment when its value begins to be called in question. Every general belief being little else than fiction, it can only survive on the condition that it not be subjected to examination.
- The opinions of crowd tends to become the supreme guiding principles in politics.
- The idea of prestige is very important in leading crowds.
- On societies- the inevitable decline is always marked by the weakening of the ideal that was the mainstay of the race.