The Economy and Emotions

Abstract

This chapter has three parts. It first identifies what the sociology of emotions offers to understanding economies and how that understanding might be extended. It then considers prominent figures in both sociology and economics—Smith, Spencer, Durkheim, Veblen, Weber and Marshall as well as Keynes and various contemporaries—and their treatment of emotional factors. There are key points here which are often overlooked: the role of macro-processes in generating emotional states; the place of emotion-generating uncertainty in economic life; and closely related, the state of disequilibrium and change as “normal” in economies. The chapter concludes by extending this discussion to the place of emotions in four areas of finance: the role “emotion rules” play in financial markets; money itself; periods of inflation and deflation; and trust and confidence in the economy. To guide the discussion, the chapter adopts as basic distinctions on the one hand, macro and micro approaches and on the other, orthodox and heterodox positions.