Animal spirits are the motor of the economy
Some time ago I took note of the odd appearance of the antique phrase “animal spirits” in an economist’s ruminations on the future of the US economy. Recently I discovered the immediate source of that phrase in economic discourse: it is Keynes, arguing that economic agents are not, and shouldn’t be, entirely rational.
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.
Now the question is: where did Keynes find those animal spirits? A search of Google Books did not turn up any obvious candidates, but perhaps Keynes read Harald Høffding’s then-recent History of philosophy (1908), which includes a number of references.