Collective Affects and Speculative Bubbles in Financial Markets: A Spinozist Perspective

Abstract

The thinking of the philosopher Baruch Spinoza is gradually entering the field of social science. In this paper, we are particularly interested in applying his theory of affects to the analysis of passionate collective behaviours at work in the field of financial markets. The general hypothesis that underpins our work is the idea that, in a context of radical uncertainty about the future, the succession of common affect regimes translates into passionate sequences that determine investor behaviour and produce market dynamics. Using an analysis of the stock market cycles of Taffler, Bellotti, and Agarwal (2018), Taffler, Agarwal, and Wang (2019), we show that the Spinozist concept of common affects can help us to understand the mechanisms in the production of collective emotion and to account for the speculative dynamics at the origin of the great financial bubbles.

Citation

Bourghelle, D. and Rozin, P. (2021), "Collective Affects and Speculative Bubbles in Financial Markets: A Spinozist Perspective", Bourghelle, D., Pérez, R. and Rozin, P. (Ed.) Rethinking Finance in the Face of New Challenges (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 15), Emerald Publishing Limited, Leeds, pp. 225-244. https://doi.org/10.1108/S2043-905920210000015036