The History of Animal Spirits
The Dream Never Sleeps
In every one of us there lives a piece of Gilgamesh, something of Plato, a piece of an ancient prince or Aragorn. And we are most often not even aware of it. There is something in us that is strong and out of our control, which seems to control us more than the other way around. “Dreams, they talk to you, dreams they walk with you,” to use a phrase from the movie Blue Velvet. It could be said that we do not have dreams; dreams have us. There is something that moves us forward, stimulates our rationality, gives our lives purpose, meaning. This mystical residue, if you will, in the rationalistic-causal equation of the matrix of the world was what Keynes called Animal Spirits. And as Akerlof and Shiller put it, “we will never understand important economic events unless we confront the fact that their causes are largely mental in nature … [theory] has ignored the role of animal spirits. And it has also ignored the fact that people could be unaware of having boarded a rollercoaster.” 1
In this chapter I will attempt to support one of my main arguments in this book: Although economics presents itself as a science that highly values rationality, there are surprisingly many unexplained factors behind the scenes, and a religious and emotional zeal that accompanies many schools of economic thought. The study of meta-economics is important: We should go beyond economics and study what its beliefs are, what’s “behind the scenes.” There is at least as much economic wisdom to be learned from our own philosophers, myths, religions, and poets as from exact and strict mathematical models of economic behavior.
For this reason it is good to examine the phenomenon of animal spirits as a kind of counterpoint to the frequently mentioned homo economicus. Perhaps due to this it will be better shown how extreme and misleading it is to rely on this strictly rational and mechanical model that mainstream economics bases itself on.
1 Akerlof and Shiller, Animal Spirits, 1.