If Boris Johnson were a stock, canny investors would be looking to unload | William Davies

If Boris Johnson were a stock, canny investors would be looking to unload | William Davies:

He has no intrinsic value: like a dubious financial asset’s, the prime minister’s ‘value’ is a bubble at the point of bursting

One of John Maynard Keynes’s most famous claims is that financial markets are driven by “animal spirits”. But Keynes’s reasoning is less well known. The danger of financial markets, he argued, is that traders aren’t focused just on the price and quality of goods themselves, but also on the behaviour of the other traders.

Unlike markets for consumer goods or commodities, financial markets circulate things of no intrinsic value: pieces of paper that are expected to rise or fall in price, but largely because everybody else expects them to. Under such circumstances, herd behaviour and emotions become decisive. The result is volatility – not just when things go wrong, but as a normal feature of such markets. Bubbles are inevitable, and bubbles inevitably burst.

William Davies is a sociologist and political economist. His latest book is This is Not Normal: The Collapse of Liberal Britain

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