Sandwichman wrote: > What Akerlof and Schiller are trying to do here -- propose a > counter-narrative to the traditional rational actor model in economics -- is > laudable and timely. However, it is also awkwardly executed. The rule is a > counter narrative must be at least as parsimonious as the dominant story it > seeks to displace (Occam's razor). A & S's "animal spirits" is a loose and > baggy monster made even looser and baggier by the catch-all category of > "stories". It's also a doubtful stretch to try to pin credit for their > concoction on Keynes. Sure, he referred to animal spirits somewhere but he > also talked about green cheese (in reference to money illusion). So what > makes money illusion an 'animal spirit' rather than a 'green cheese'?
In Keynes, "animal spirits" seems to be a pretty important part of what he calls the "the state of long-term expectations": >> Even apart from the instability due to speculation, there is the instability >> due to the characteristic of human nature that a large proportion of our >> positive activities depend on spontaneous optimism rather than on a >> mathematical expectation, whether moral or hedonistic or economic. Most, >> probably, of our decisions to do something positive, the full consequences >> of which will be drawn out over many days to come, can only be taken as a >> result of animal spirits — of a spontaneous urge to action rather than >> inaction, and not as the outcome of a weighted average of quantitative >> benefits multiplied by quantitative probabilities. Enterprise only pretends >> to itself to be mainly actuated by the statements in its own prospectus, >> however candid and sincere. Only a little more than an expedition to the >> South Pole, is it based on an exact calculation of benefits to come. Thus if >> the animal spirits are dimmed and the spontaneous optimism falters, leaving >> us to depend on nothing but a mathematical expectation, enterprise will fade >> and die; — though fears of loss may have a basis no more reasonable than >> hopes of profit had before. >> It is safe to say that enterprise which depends on hopes stretching into the >> future benefits the community as a whole. But individual initiative will >> only be adequate when reasonable calculation is supplemented and supported >> by animal spirits, so that the thought of ultimate loss which often >> overtakes pioneers, as experience undoubtedly tells us and them, is put >> aside as a healthy man puts aside the expectation of death.<< (http://www.marxists.org/reference/subject/economics/keynes/general-theory/ch12.htm, section VII) Animal spirits seems to be necessary given the important role of (fundamental) uncertainty in life. Given the totally unpredictable and Black Swan-laden nature of the future, there's no reason to get out of bed. But the human drive to live -- animal spirits -- gets us out of bed. The problem for me is that "animal spirits" is too much of a _deus ex machina_, brought into explain things after the fact. Alternatively, it's used to justify "pro-business" policies (which may actually hurt business in the end): if the government raises taxes on the rich, stops the introduction of salmonella into public school lunches, or whatever it threatens to hurt "animal spirits" (business confidence). While such totally subjective forces do play a role in history (what would Lenin have done without his animal spirits?), what's more important are the objective circumstances that allow animal spirits to play that role and that limit their impact, along with the objective factors that shove animal spirits in one direction or another. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
