Economic View: It Pays to Understand the Mind-Set

In the New York Times:

In 1934, the journalist Johannes Steel wrote a remarkably prescient book, “The Second World War,” which described the social psychology that laid the groundwork for global tragedy.

Mr. Steel was trying to peer into people’s minds and infer their actual world views and motivations — in part by examining prewar cycles of social provocation in Germany and Japan and Italy. His timing about the war was wrong — he expected it to start in 1935, not 1939 — but he was correct about many fundamentals. Yet his early readers were often skeptical and blithely assumed that there would be no war.

So it has been with more recent analyses, based in large part on social psychology, foreshadowing the global economic crisis of the current day. No one got it exactly ight, but the insights of the approach exemplified by Mr. Steel and used by some nalysts today are worth taking very seriously.

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