Social mood shapes the ideologies that are espoused by their proponents and embraced by their adherents. New York Times columnist Thomas Friedman wrote two widely heralded books on the buzzword of globalization: The Lexus and the Olive Tree (1999), and The World is Flat (2005). Social unity strengthens during positive social mood, and the concept of globalization embraces unity on a worldwide level.
Friedman suggested the world had become "flat" because globalization created a more level playing field on the international economic and social landscape. His books implied this inclusionary development had become a permanent fixture for the foreseeable future.
But these books were written when globalization had reached a zenith at the beginning of the 21st century, following two decades of rising financial markets and elevated mood. This widely recognized trend was primed for change just as the books became bestsellers.
Newsweek columnist Robert Samuelson noted during the bear market in 2008 that countries were becoming more nationalistic and globalization was coming under attack as its "intellectual and political foundations have weakened." The world becomes less flat and a lot more bumpy when social mood turns down. Barriers are erected and nations move toward self-defensiveness and trade protectionism.
The first "flattener" Friedman described was the fall of the Berlin Wall in 1989 that symbolized the end of the Cold War. The wall fell during an era of rising international markets, including the great 1982-2000 bull market in the U.S.
But when the markets turned down after 2000, relations between Russia and the U.S. chilled so much that some commentators declared the onset of "a new Cold War." Numerous other international tensions surfaced after the era of international good feeling peaked around the turn of the century.
By 2011, following the savage market decline of 2008-2009, a Time magazine article, "Why the World isn't Getting Smaller," declared that globalization "was never all it was cracked up to be. The world is just not as flat as pundits would have us think." The article cited threats to the survival of the European Union, the rise of populist politics throughout the world, and the rise of nationalism in places like Russia, China, and Brazil.
Positive social mood often produces triumphalist sentiments and pronouncements. During the exuberant 1980's bull market, political scientist Francis Fukuyama wrote a highly influential essay in 1989, "The End of History", that argued that the advent of Western liberal democracy heralded "the end of history as such: that is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government."
Whoa, the FINAL form of government? Doesn't history still have a long way to go before we can declare that liberal democracy has won?
During the powerful 2000-2002 bear market, Fukuyama's next book had a decidedly more downbeat tone and conceded history might have a future after all. Our Posthuman Future, published in 2002, expressed grave concern about the effect of biotechnology on the foundation of liberal democracy because of the potential of genetic engineering to alter human nature and how we understand human rights. Fukuyama worried that biotechnology threatened to "alter human nature and thereby move us into a 'posthuman' stage of history." From a triumphant bull market "end of history" to a fearful bear market "Posthuman" history, this influential thinker's ideological preoccupations reflected the mood of the times. Social mood shapes ideology.
Here is another example of the relation of intellectual trends to social mood. At the beginning if the 1960s, Harvard sociologist Daniel Bell, a leading American intellectual of the post-war era, published a book called The End of Ideology. This was during a roaring bull market that had lasted more than a decade. As New York Times columnist David Brooks noted, the book "reflected the view, common at the time, that the United States was about to leave behind the brutal, ideological politics that had characterized the 1930s and the early cold war. The 1960s, it was believed, would be a decade of cool pragmatism. Keynesian models would be used to scientifically regulate the economy. Important decisions would be made empirically."
What happened instead was the onset of a long period of bear markets starting in 1966, with accompanying societal disruption and fiercely ideological politics. This was the era of the Vietnam War and revolutions in civil rights and women's rights. Ideology did not end, as Bell predicted; instead it intensified. As Brooks wrote, "People lost faith in old social norms, but new ones had not yet emerged. The result was disorder. Divorce rates skyrocketed. Crime rates exploded. Faith in institutions collapsed. Social trust cratered."
Positive social mood in the early 1960s created widespread anticipation of harmonious politics; subsequent negative social mood produced the reality of conflict and division. Social mood plays the tune and social events and intellectual trends harmonize with it.