The Wizard of Oz is one of the most beloved American stories ever. The novel (1900) is still in print and the film (1939) is still screened regularly. Together they have left an indelible imprint on U.S. language and culture: “Follow the yellow brick road!” “I don’t think we’re in Kansas anymore!” “There’s no place like home!” The story has even given names to at least two popular rock bands (Toto and Kansas).
Oz’s magic is easy to understand. Apart from showcasing the talents of Judy Garland, it has many features that perennially appeal to Americans. It’s a story of virtue and optimism, a story about the triumph of brains, heart, and courage over evil and deception.
It’s also a story about the gold and silver crisis of the 1890s, and about the “little people” fighting the moneyed interests of Wall Street.
That’s hardly what you think about when you watch Dorothy dance off down the yellow brick road with the Cowardly Lion, the Scarecrow, and the Tin Man. But the original novel appeared after the depression of the 1890s, and author L. Frank Baum was well aware of the currents of resentment and anger coursing through U.S. society at the time. As recounted by George Akerloff and Robert Shiller in Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, the yellow brick road and Dorothy’s slippers (silver in the novel, changed to ruby in the film because it looked better on screen) “were metaphors for the intense conflict over the gold standard and the proposed free coinage of silver.” The movie’s Munchkins represented the poor working class, the Wicked Witch of the West stood in for the business elite, and the Wizard was President William McKinley (“the great deceiver”). In 1896 McKinley had defeated populist candidate William Jennings Bryan in what some have called the first modern presidential campaign, in which big money and mass communication techniques were combined to carry the day for business interests.
The Wizard of Oz embodied the kind of story that circulated within popular consciousness about what was happening in the economy. Akerloff and Shiller argue that such stories are one of the ways that psychology shapes economies. The 1890s depression, the Great Depression of the 1930s, and today’s recession all share the fact that stories spread by “person-to-person contagion” helped drive them. In 1925, for instance, one of the stories was “that stocks had always had excellent long-term performance.” After the Crash in 1929, say Akerloff and Shiller, “the stories changed completely,” turning to “unfairness, corruption, and deception.” In the run-up to 2008–09, the stories were about skyrocketing real estate values. Now, they’re about big banks milking taxpayers to pay their executives huge bonuses out of the bailout billions.
The point I’m finally getting around to here is that this phenomenon of contagion—stories that spread like viruses—is amazingly powerful, at least when it serves peoples’ interests to believe it. The housing bubble, driven by stories of people who had bought low and sold high and by the availability of easy credit to ordinarily unqualified buyers, grew to astounding dimensions before bursting—because what renter wouldn’t want a house without a down payment, or the need to have a job or credit record? Bankers, too, were swept up in the something-for-nothing frenzy.
But couldn’t this power of stories, as horribly destructive as it was this time, work for us as well as against us? If we need a new story, what should it be? What kind of story would offer comfort and inspiration at a time when both are in short supply, but also encourage us to change direction, not just hold on till we can go back to our old ways?