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Article in Journal ()

Animal Spirits Revisited

Citation
Dow A & Dow S (2011) Animal Spirits Revisited, Capitalism and Society, 6 (2), pp. 1-23.

Abstract
The term ‘animal spirits’ has returned to academic and public discourse in a way which departs significantly from the original use of the term by Keynes. The new behavioural economics literature uses the term to refer to a range of behaviour which falls outside what is normally understood as rational. This treatment follows from the mainstream dichotomisation between rationality and irrationality. However Keynes explained that, given fundamental uncertainty, rationality alone was insufficient to justify action. Animal spirits was the name he gave to the (psychological) urge to action which explained decisions being taken in spite of uncertainty; animal spirits for him were neither rational nor irrational. Nor are they beyond analysis. We explore how the nature and role of animal spirits can vary according to context (as between different sectors, types of firm and within firms). This analysis indicates ways in which policy can promote structural change to strengthen animal spirits in the long term as well as offset short-term weakening in animal spirits.

Keywords
animal spirits; rationality; Keynes

Subject headings
Keynes, John Maynard, 1883-1946.; Keynesian economics

StatusPublished
AuthorsDow Alexander, Dow Sheila
Publication date12/2011
URLhttp://www.degruyter.com/…7.xml?format=INT
PublisherDe Gruyter (previously Berkeley Electronic Press)
ISSN 1932-0213
LanguageEnglish

Journal
Capitalism and Society: Volume 6, Issue 2 (2011-12)

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