It may be best to think of bankers’ behavior at such times as driven by
primitive neurological patterns, the same patterns of brain structure that have
survived millions of years of Darwinian evolution. The fact that dogs and
rodents today have some of these same fear-management brain structures is
evidence for their common Mesozoic origins. Fear is a normal emotion for all
mammals and higher animals, and it is supported by brain structures. The
extinction of fear is a process that must take place over time to release the fear
after the danger has passed.
Scientists first observed the action of these brain structures indirectly. In
1927, Ivan P. Pavlov, a Russian physiologist, reported his research on dogs. If
dogs were repeatedly given a dose of acid on their tongue as a metronome
clicked in the background, then later the sound of the metronome alone, without
the acid, would induce the same involuntary reactions as if acid had been
applied. In a subsequent phase of the experiment, Pavlov repeatedly turned on
the metronome but withheld the acid, and the dogs’ aversive reaction was
gradually extinguished. Later, the brain structures involved in such reactions
were discovered. In rats, the neurons of the lateral amygdala (an almond-shaped
area of the brain) play a fundamental role in both the fear-acquisition stage and
the fear-extinction phase, increase their firing during fear acquisition, and reduce
their firing during extinction of the fear. Not all of the neurons reduce their
firing, keeping a residual fear intact. Neuroscientists have concluded:
Collectively, there is much evidence suggesting that a distinct neural circuitry
involving interactions between the amygdala, vmPFC [ventromedial
prefrontal cortex], and hippocampus underlies the ability to extinguish fear,
and that this circuitry is preserved across evolution.5
Rats show much the same circuitry, and involuntary triggering of fear, that
humans do. In humans, thickness of the ventromedial prefrontal cortex is
correlated with success in fear extinction.6 Some human neurological disorders,
such as post-traumatic stress disorder (PTSD), represent failures of extinction,
and studying these disorders can reveal the underlying structures of fear
management.7 It seems safe to say that the evolutionary process of optimizing
the neural circuitry for fear and its extinction has not yet been completed in
humans, because civilization is only a few millennia old.
A mental state akin to PTSD may afflict a whole population at times. In his

1951 book The Captive Mind, the Polish poet Czesław Miłosz, describing his
impressions of the whispered and unofficial narratives that existed late in the
Stalinist regime, noted that the atmosphere of fear created by this regime was
profoundly important. The fear was of disappearing at the hands of the secret
police, of being forcibly transported with one’s family to Siberia and, once there,
starving or freezing to death:
Fear is well known as a cement of societies. In a liberal-capitalist economy
fear of lack of money, fear of losing one’s job, fear of slipping down one rung
on the social ladder all spurred the individual to greater effort. But what exists
in the Imperium is naked fear. In a capitalist city with a population of one
hundred thousand people, some ten thousand, let us say, may have been
haunted by fear of unemployment. Such fear appeared to them as a personal
situation, tragic in view of the indifference and callousness of their
environment. But if all one hundred thousand people live in daily fear, they
give off a collective aura that hangs over the city like a heavy cloud.8
It is reasonable to suggest, as Miłosz does, that the fear of losing one’s job is
less intense than the fear of being deported to Siberia, and that fear at any level
relies on the same brain circuitry. Then, in difficult situations with no logical
answer or solution—for example, in the decision whether to make a risky
investment—the human mind may delegate the decision to some brain circuitry
that is similar to rats’. In such cases, memories of bitter past experience, as well
as memories of others’ experience transmitted in the form of narratives, may
determine the actions taken, and at certain times they may lead to unfortunate
economic decisions.
The decline in fear may reflect a gradual process of fear extinction that may
be reversed if the narrative experiences a dramatic new development or
mutation. Recent narratives about rogue states’ possession of nuclear weapons
seem possibly intense enough to renew the fear of nuclear annihilation, but
apparently they have not done so. Just as it is difficult or impossible to predict
which motion picture will be a box office hit, it is difficult to predict which
narrative will eventually have economic impact.