Chapter 9 Recurrence and Mutation In previous chapters we’ve focused on the elements of narrative economics, exploring how popular stories go viral, morph into epidemics, and influence economic and political events. We illustrated the discussion with several real- world examples, including Frederick Lewis Allen’s insights into the Great Depression, John Maynard Keynes’s analysis of the narrative origins of World War II, the Bitcoin narrative, and the Laffer curve narrative. In this part of the book, we consider nine of the most important narrative constellations. These perennial narratives won’t completely go away, and they pop up in many mutated forms. They touch on some of the most important themes in the air today: the idea that machines will replace all workers and cause mass unemployment, that a return to the gold standard would provide greater monetary stability, that real estate and stock markets hold special value, and that businesses or labor unions are evil. These ever-shifting and ever-renewing narratives affect economic behavior by changing the popular understanding of the economy, by altering public perceptions of economic reality, by creating new ideas about what is meaningful and important and moral, or by suggesting new scripts for individual behavior. The chapters in this part demonstrate these perennial narratives’ overarching and ever-shifting influence on society today, explaining how many of the challenges that we tend to attribute to discrete contemporary forces are in fact influenced profoundly by narratives—stories that took root generations and even centuries ago but that reappear in newly configured expressions. Engaging with these examples challenges the way we think about the economy, from large-scale phenomena such as depressions and wars, through major economic forces such as the stock market and real estate, through socially sustaining institutions such as work and technology. As we’ve seen, a disease epidemic, such as influenza, measles, or mumps, can recur after a mutation changes its contagiousness. Disease epidemics tend to recur after a mutation overcomes acquired immunity, though sometimes the mutation is a result of a change in environmental conditions that increase the disease’s contagion. With influenza, for example, there are regularly recurring epidemics and occasional massive and dangerous epidemics, depending on subtle differences in the viral genome or environmental conditions. Thus the 1918 flu pandemic, often called the Spanish flu, cost more lives than World War I did. The Spanish flu in epidemiology mirrors the trajectory of the Great Depression of the 1930s in economics, except that narratives rather than viruses carried the “disease” of the Great Depression. In both cases, the virulence was especially intense and surprising. So, before we move into the details of perennial economic narratives, it is helpful to detail the ways in which these two essential mechanisms—recurrence and mutation—define and inform economic narratives. How Economic Narratives Mutate Just as mutations in influenza may spark a new contagion of a disease with manifestations similar to those of previous outbreaks, so too do economic narratives mutate. But we must be careful in separating the threads of similarity and difference. Typically, when a narrative reappears, say in another country or a few decades later, the mutated narrative tends to have features different from those of the original narrative—a different celebrity, different visual images, a different punch line. For example, in chapter 12 we discuss the gold standard narrative and the bimetallism narrative, which have some deep similarity to the Bitcoin narrative but with William Jennings Bryan substituted for Satoshi Nakamoto. The next new money narrative will have yet another celebrity’s name. Just as Bryan is mostly forgotten today, Nakamoto will likely be mostly forgotten in the future. Someone who creates a highly successful new electronic currency in the future will best craft a contagious story about it, as by attaching a popular celebrity’s name to it. This variation may be necessary for contagion. A mutation in a narrative can also occur when some event transpires to change associations of the narrative. For example, some public event may underscore that a narrative is or is not politically correct. People of course hesitate to repeat stories that would now associate them with such a scandalous event.1 Mutations in a narrative or in the environment surrounding the narrative may cause it to become an economic narrative by tying it better to economic decisions. A mutation may also occur that increases contagion but twists the story so that it ceases to be the same economic narrative. It may then morph into some different moral or lesson afterward. For example, as we shall see below, a narrative about labor-saving machines replacing jobs (chapter 13) created a sense of fear during the Great Depression of the 1930s, but the same narrative mutated (chapter 14) to create a sense of opportunity during the dot-com boom of the 1990s. These cases can be confusing to those who study a narrative, for some key words in the narrative may come up in searches for a much longer span of time than the period when they had a specific economic interpretation. Narratives may be relevant to economic events even if the timing of the narrative’s appearance does not coincide with the event. When it goes epidemic, a narrative may inspire a latent fear, such as a fear that technology will someday replace one’s job, which may result eventually in changes in economic behavior years later when some other narrative or news creates a sense that the feared replacement is imminent.