This is a comment on The Concept of “Animal Spirits” is a Red Herring, a June 27, 2011 blog post, by the blogger “Lord Keynes”, on exploring what Keynes really meant by people needing the urge to act, as well as a rational expectation…
Thanks for helping clarify the original meaning of “animal spirits” and helping bring out “the real J.M. Keynes”. I agree:
Keynes uses “animal spirits” in the sense of “a spontaneous [human] urge to action rather than inaction.”
The sense in which his use and Descartes’, as
“the fiery particles of the blood”
are consistent is seen when observing that both would be referring to how people need to be aroused and have inspiration to act, i.e. to make emotional leaps in decision making, and not just form rational expectations.
That is indeed quite different from our having to be subjective in forming expectations with uncertainties. As you say “The concept of “animal spirits” as used by Keynes is not even necessary to the modern subjective expectations theory. “ But then that is the subject you discuss, and seem to drop the question of what Keynes really thought was important about the need for “animal spirits” to allow people to act.
A related puzzle for understanding “the real J.M. Keynes” is his mysterious Chapter 16 of The General Theory. It’s his concluding chapter to his grand theory of how to stabilize growth. He oddly spends the whole chapter on the natural limits of his own model, however.
Missed by nearly everyone it seems is that he is discussing what to do when growth becomes unprofitable, and a new model for stabilizing the economy will be needed. A compact summary of my writings on it, from a natural systems perspective, interprets Keynes’ insight into natural limits of money as it would apply in today’s terms of discussion.
What’s special about a natural systems view is that the self-organizing systems of nature generally develop by a growth process, much like economies do. Growth itself displays a kind of “animal spirit” of nature, an “urge to act” without foreknowledge of the consequences. Growth is a process creating unique individual things beginning with a burst of self-organization that then only discovers its end when emerging into a new environment.
You see it in the germination for plants, nucleation of new cultures or storms of any kind, and in the gestation for new organisms, visible as a distinctly explosive growth process that is clearly instrumental. It’s also implied theoretically, from the physics of energy conservation, that bursts of self-organization are needed for bridging small and large scales of change. So it seems to be at the heart of nature’s way of solving the “chicken and egg” problem, of beginning something from nothing.
So, I think what Keynes seems to be asking in Chapter 16 is what sort of “animal spirit”, what urge to act”, might arise among the beneficiaries of growth to act as a group and bring their financial demands for growth to an end.
It clearly would be in the interests of both each individual and the whole, to keep the system as a whole from becoming unprofitable. As rational as that expectation is and clear that nature seems to be presenting us with that choice, we’d still need the urge to act on it and haven’t.