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David Tuckett, the former editor of the International Journal of Psychoanalysis and a training and supervising analyst in the British Psychoanalytic Society, has written a masterful book of applied psychoanalysis. At the interface of psychoanalysis, sociology, economics, and finance, this is a unique, scholarly, rather dense book, which will probably not get the broad readership its ideas deserve. However, Minding the Markets is a terrific example of how psychoanalytic thinking can be used rigorously and creatively to shed light on contemporary problems.
Tuckett set out in the early 2000s to study decision making and judgment in the financial markets. In 2007, in the very early stages of the credit crunch that would lead to the financial crisis of 2008, he interviewed 52 asset managers in the UK. His timing was fortuitous! Tuckett collected a rich set of data bearing on the uncertainty, risk taking, and herd mentality that contributed to the asset price bubble that was then forming. He used psychoanalytic ideas to construct an in-depth understanding of the mental states that contributed to the most serious financial crisis in recent memory.
Tuckett's argument works on three levels, and I will elaborate on each. First, he applies a psychoanalytic framework based on Bion's ideas to the interviews with asset managers in order to probe the deeper causes of the financial crisis. In doing so, he shows how a psychoanalytic consultant constructs an understanding of the unconscious relationship to a role and the defensive function of organizational structures and cultures. Second, Tuckett offers a powerful critique of standard economic theory and suggests it be replaced by the nascent discipline he calls “emotional finance.” And third, he analyzes the root causes of the financial crisis of 2008, and makes suggestions for how to prevent future calamities.
Tuckett's analysis starts with the very nature of the financial assets (usually stocks) that the managers deal with day to da