‘Great Mirror of Folly’ reflects modern finance

Showing how finance and culture collided in 1720, CU professor and Yale colleagues help make the stock market funny again

By Ryan Stadheim

In the final months of the year 1720, a series of events occurred that briefly shook the foundations of global finance. Thanks to the risky investing tactics of their respective owners, the value of the shares of both the South Sea Company and the Mississippi Trading Company imploded, sending European investors into a spiraling panic.

From the rubble of this collapse, however, emerged a Dutch collection of art and literature that is both breathtaking in its beauty and biting in its satire.

The work, accurately titled HetGroote Tafereel Der Dwaasheid, or “The Great Mirror of Folly” in English, contains an array of plays, poems, pamphlets and portraits produced by artists and writers from all corners of the European continent that poke fun at the inherently unbalanced nature of the investment-banking system.



Although the Tafereel understandably caused quite a stir in the decades following its initial publication, and although interest in its content tends to re-emerge whenever a new financial crisis hits, if not for the tireless work of the University of Colorado Boulder’s Catherine Labio, associate professor of English, and of her colleagues at the Yale School of Management and the Beinecke Rare Book and Manuscript Library, the imaginative contents of this seminal publication would have likely continued to gather dust in some far-forgotten corners of a collegiate library.

Fortunately, a recent conference at Yale sparked renewed interest in the volume, leading to an interdisciplinary collaboration that produced “The Great Mirror of Folly,” a book about a book that contains stunning illustrations of the work’s original contents reprinted alongside detailed analyses of both the artwork and its financial inspiration.

This graphically engaging and intellectually stimulating work is the result of collaboration between professors who belong to the seemingly dissonant academic sectors of humanities and finance.

“Looking at the Great Mirror of Folly from a variety of disciplinary perspectives allowed economic historians to zero in on the reasons for the tendency to think of bubbles as examples of ‘irrational exuberance,’ and it helps cultural historians to understand the limits of literature and art as faithful representations of historical events,” Labio said.

So while “The Great Mirror of Folly” represents an accurate reproduction of the original Tafereel, it also reveals the tendency of artistic interpretation to occasionally blow certain events out of proportion for the sake of entertainment value.



As Labio reveals, “If you look at the evolution of the prices of stocks of the Mississippi and South Sea Companies in 1719-20, it’s clear that a person who bought stocks early and hung on to them through the crash would still have made money. It would be have been quite a ride, but not necessarily a disastrous one.”

Therefore the catastrophic state of affairs portrayed by the Tafereel, which is filled with portrayals of bankers who resemble demons and ghouls as well as images of stockbrokers flinging themselves from windows, might have been slightly over-exaggerated.

However, despite its somewhat overzealous depictions of the consequences of the 1720 collapse, the Tafereel nonetheless intended to “provide a warning for future generations.”

With regard to whether this warning has been heeded, Labio said the answer is something of a paradox: “On the one hand, the warning has been successful: Whenever a new bubble bursts, people are well aware of the fact that this is just the latest in a long series of similar events. On the other hand, the warning has failed miserably, because bubbles pop up with beautiful regularity, and yet people profess surprise every time they occur.”

This isn’t news to anyone with basic knowledge of the stock market. Investing is by nature a sometimes-dangerous game to play, albeit a rather necessary one. However, as both the Tafereel and the hundreds if not thousands of modern digital and print outlets for artistic critique of finance reveal, while we may not always learn from our mistakes, we can at least laugh at them.

See more about “The Great Mirror of Folly” at http://yalepress.yale.edu/yupbooks/book.asp?isbn=9780300162462

Ryan Stadheim is a CU-Boulder student majoring in English.

June 25, 2014