Socionomic theory calls for "magical" or "fuzzy" thinking to dominate during eras of negative mood. While in general I agree with the thesis, I've had my own thoughts on this topic over the years. Events in Egypt can help illustrate this.
I personally think that the "magical" thinking actually descends during the fifth wave of the preceding advance (I apply this to large waves, Primary or bigger and for socionomic purposes only, not trading). As "optimism runs extremely high" during fifth wave advances, this giddiness can lead to the magical thinking inherent in bubbles and that becomes obvious - once the bubble pops and folks sober up. By the time the Wave C retrenchment has played itself out, societies have learned to prioritize and focus more clearly on things that matter to survival.
While "magical" thinking certainly does run rampant during the correction phase, I would perhaps limit it a bit - that magical thinking runs strongest in institutions that were most optimistic or revered during the preceding advance. In hard times individuals learn the hard way to think clearly and make hard choices. Marginalized groups, while they perhaps rally around a "magical" political, social or religious idea, learn how to combat the existing power structure and put in the hard work to overturn it or resist it. Whether this is building a new political party or resisting an authoritarian regime, lot's of clear-headed and ruthless thinking will be going on, no matter what glittering generalities seem to drive it.
Case in point, Egypt, where the various groups opposed to Mubarak are learning how to get around the authoritarian clamp-down on internet access and run a resistance campaign:
- How to Lead an Open Source Protest
- A List of Open Source Ad-Hoc Network Routing and Platform Protocols
- Revolution Egypt
Oh yeah, the authoritarian side is learning too:
Welcome to the Revolution, my friends. Egypt is test bed of how popular resistance movements will fare during this coming era of negative mood. The tools to oppose authoritarians have long existed. The people have long held the power to rise up. Something had to change, though, before that could happen. Mood had to shift.
We now are seeing just the first breezes of the whirlwind that we shall reap. It is a wind choked with ancient sand...