If you may permit me, and with gratitude for the kind reception you once devoted to me, to have the attention of your just glory to remark that your star of justice, your joyful star, is in risk of being tainted by the most obscuring and indelible of threats.
Professor George Akerlof, Nobel Laureate of 2001, spoke in these terms to Bloomberg Radio on the 1st of April.
I feel that the most important animal spirit about the job market is what is creating the number of jobs we have. And for that, I think confidence is one. I think that stories about the economy is another. And the general feeling by the public, that the possibility that people may sell snake oil… And there is a long chapter about that.
Only today I heard Professor and Judge(!) Richard Posner speaking to Bloomberg Radio:
Animal Spirits is a John Maynard Keynes expression, and he said – and I think very insightfully – that because businessmen operate in a very uncertain framework, you known, uncertain environment… If you build a plant and its not gonna yield revenues for several years, you are really taking a shot in the dark. Because in a few years your markets may change, competitors may eat you alive, and so on. So you need some feeling of confidence, spirit, daring. And in a depression the economic environment becomes so uncertain, that people begin to freeze. So you see a lot of hoarding…
(Posner also adds that Frank Knight was an influence on Keynes. Sure, and the Easter Bunny was roommate to Santa Claus. No?)
Here is what John Maynard Keynes actually wrote:
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 mathematical expectations, 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 the result of animal spirits – a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.
It is, I hope apparent, that Keynes idea of an urgency to action, the animal leap away from reason and best judgment, has nothing to do with either “confidence” or the drive of the “entrepreneur.” It is not the memory of man Keynes that I wish to preserve from blemish. It is mine and the public’s right to sanity in preserving the meaning and sense of words, their power to guide our thoughts. In Akerlof or Posner there is just nothing animal about them spirits.
I have but one passion: to enlighten those who have been kept in the dark, in the name of humanity which has suffered so much and is entitled to happiness. My inflamed protest is simply the cry of my soul. Let them dare, then, to bring me before a court of law and let the proceedings take place in broad daylight! I am waiting.
With my deepest respect, Sir.