J’Accuse…! (or “on the spirit of animals”)

Mister President,

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.

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11 thoughts on “J’Accuse…! (or “on the spirit of animals”)

  1. In the name of the president, we solemnly sentence George Akerlof and Richard Posner to 300 hours’ community work each, to be devoted to raising funds and establishing a “watchmen department” in their respective universities. Half of the faculty will be historians of economic ideas and practice aged under 40.
    The meeting is adjourned

  2. huuum, never thought it would come to this but here are two cents in defense of Posner (gulp!).My nick is chicago boy after all.

    If you follow the link on your ‘possibly related posts’ you will in turn find a link to Posner’s New Republic review of Akerlof and Shiller’s Animal Spirits. There you’ll find the judge dissing Akerlof and Shiller for misinterpreting Keynes’:

    “They want a pedigree, or a sacred text, to lend authority to their thesis…Akerlof and Shiller think that by “animal spirits” Keynes meant “noneconomic motives and irrational behaviors,” and they imply that he wanted government to “countervail the excesses that occur because of our animal spirits.” This is a misreading. The passage in The General Theory is not about excesses, and it does not argue that “animal spirits” should be damped down. It is about the danger of paralysis in the face of uncertainty (“if the animal spirits are dimmed and the spontaneous optimism fades, enterprise will fade and die”). As Keynes’s biographer Robert Skidelsky explains, The General Theory argues that “actual output is normally below ‘potential’ output; in depressions disastrously so. It is only in moments of ‘excitement’ that the economic machine works at full blast. This helps explain why economic progress has been so slow and fitful.”

    So Posner seems to be channeling Urgency-then-Freeze Boom and Bust cycles. Akerlof seem to be channeling confidence vs. underconfidence.

    To me, the real irony of these born again keynesians is that they are all both falling in the proverbial error of some HET and post-keynesians, eager holders of the truth and of the unbearable ‘let me tell you what Keynes really meant’

    1. I had not know that Judge Posner felt the urge (the animal spirit) to correct the “born again Keynesians” in “what Keynes said.” But since he plays the game I feel validated in asking the Judge to face the evidence and listen to the witnesses. Its just not erudite to read Schumpeter into Keynes. Its historical crime to naturalize “animal spirits” into the ideal state of the full employment economy, blind to the negative load attached.

      I may assume that all of Judge Posner’s pets are scared and hoard food in the yard. Because its just bad metaphor to call something animal spirits and then have nothing animal about it.

      To this again my statement of passion: we need to save language from the economists (and the judges).

  3. Tiago, I read you as claiming we should be prosecutor rather than merely witnesses (“save language from”). If my interpretation is right, I’m not sure I agree.

    Should we really fight against the “misuses” of “animal spirits,” with the risk of looking like truth holders as Chicago boy says, or simply point out that “animal spirits” is a term often used in the current period of crisis (more than times of prosperity???), with a meaning significantly different from Keynes’, and try to find the story behind that? Why unkeynesian economics feel the urge to quote keynes in this way? What is “animal spirit” loaded with, why does it seem a magical incantation? Is Keynes so unclear for economists that Posner chooses to refer to Keynes’ “biographer.”

    Also, my recollection from the macroeconomic courses I took as a student is that Posner’s version is the standart way of teaching “animal spirits”. Why is it so? Has “animal spirit” become a specific educational device? I also recalled that several macro teachers quoted Keynes, and that the meaning of the word was debated.

    1. I raise my case as witness, like Zola. I have no desire to head the Congregation of the Doctrine of the Faith for history of economics matters. The questions of co-option, slanting, and cultural and popular fascination around these two words are interesting and require us to keep a clear mind and not look for condemnations. But in the immediate listening to these two gentlemen profess their expertise, without hesitation, to sell books to the public, I had to react. It is a stain. A stain over our ability to look to the past and learn from it. It makes public debate (and language) a little poorer.

  4. @Tiago: I will probably paraphrase a certain Mr. Mata here (as well as a certain Mr. Moscati) by saying: “More History, please!”. In defense of Akerlof and Posner, I will say that it’s a fair game to caricature past economic thought to build modern canons. That’s what economists do all the time. What is problematic of course is that by doing so, they appear not only as experts of current economics but as historians of the field as well … that’s infuriating of course … but I am sure that literature professors must hear some rubbish about Yeats or Shakespeare being told by bestselling authors all the time. Self-restraint is a noble virtue, but it’s a scarce virtue as well !
    The problem I have with your post – except that it made me laugh out loud – is that you seem to assert that the historian of economics is a better exegete than anyone else. I doubt it. I think that you can easily read Keynes’s excerpt and convince someone that Akerlof’s or Posner’s interpretation is acceptable. What historians can do, on the other hand, is to provide an account of the context surrounding Keynes’s writing and to study the dispersion of his concepts. When Keynes had his General Theory published, he wanted to introduce concepts taken from other fields to criticize the isolation and self-indulgence of what appeared as mainstream economics in the 1930s. What happened in the meantime is that mainstream economics itself has changed, its boundaries have moved and those “foreign” concepts are not so “foreign” anymore. In the process, of course, the concept of “animal spirits” has been affected, it’s been transformed to fit into the mold of postwar neoclassicism. This process is, in my opinion, what historians of economics have to testify for.

    1. There is a reason why I have never written a program for the history of economics. (I won’t say what it is.) Does “account of the context” describe what I do?

      This post is not a manifesto.

      The post is a polemically written observation that the wise Akerlof and Posner don’t care to know what they talk about. Sometimes meanings move through time because scholars labor on their definitions, reassign boundaries and replace methods. Other times meanings are different because scholars are clumsy and don’t care to think about analogies, metaphors, or old texts. If you hear the audio of these radio broadcasts you can tell the difference. Akerlof has “animal spirits” on the cover of his book but can’t answer a question about what that means. Its marketing and its noise to fill silence.

      My struggle is not to recover lost meaning, it is against noise.

  5. Echoing Beatrice and Yann, and thus turning against your will your post into a manifesto to some extend, I want to see how far can we stretch your argument, as I understand it. What I get is that you find that Akerlof and Posner impoverish the public debate, or create noise, by marketing old ideas that they seem not to understand “precisely” what they are/means –and here I see that you don’t want to assert that there is ONE right meaning of those ideas, but that they failed to explain what THEY mean by “animal spirits”.
    How different is Akerlof’s and Posner’s behavior, in a public debate (radio), than that of, say, Lucas when asserts in articles published in economic journals that Keynes’s General Theory is all about a disequilibrium macroeconomic model? When I read such claim, I had a similar feeling that I sense Tiago had: that Lucas probably even didn’t care to open Keynes’s book and justify/argument in favor of his particular interpretation; he just created a straw man to be bashed (academically). An historian, in my view, can call this a poor scholarship (not historical scholarship, but poor scientific scholarship in general) and this is the origin of the discomfort that I seem to share with Beatrice and Yann: in the limit this calls for, or opens the possibility to all that exegesis on what is an appropriate understanding of Keynes’s or Friedman’s or Samuelson’s work.
    In my view, both Lucas, Akerlof and Posner had some understanding on what they think Keynes wrote, part of it probably NOT coming from reading Keynes’s GT, I bet. This is a poor scholarship because they wouldn’t do the same by saying that “such a function seem to have a maximum if we use that theorem that probably says that…”. In other words, they are comfortable in using ideas that they attribute to old economists without even checking old texts, something that they will surely not do in proving a theorem in their paper (in this case they will open math books and be very precise).
    In summary, we know that scientists and historians find very different uses for the past they construct. Nonetheless, I think that this discussion shows that there is a complex (unstable?) balance between asking for better scholarship and becoming the “head the Congregation of the Doctrine of the Faith for history of economics matters”.

    1. I think there is a difference between public debate vs academic papers — even though as a sort of sociologist of professions I am reluctant to play the differences too hard. An academic paper gets scrutinized by the community of editors, referees, colleagues. As historians we have chosen not to become judges of past choices (be writing theorems, or what I have worked on recently, academic freedom cases) but to reconstruct the meanings, and actors’ strategies. In this there is no disagreement among us.

      Yet, it does not follow that we need to be so in the PRESENT! It does not follow that we need to be so when it is about public debate, about opinion that shapes public imagination and our democracies. If I was to turn this to a manifesto, I merely want to claim that in public debate about the history of economics, historians of economics should have something to say!

      NOTE: I categorized the post as “Media” “Politics” and “Publics”, when i did not categorized it as “Our Profession” it was intended to keep methodology of history and public history as separate.

      Thanks one and all for helping me clarify my boggy arguments.

  6. @Tiago: We do not try to tell you that your argument is “boggy”, your post is utterly interesting, indeed! What I find particularly striking is related to an observation we had at the HOPE conference that no book written by an economist has been as influential as books by political scientists over the past decades – when someone tried to cite Galbraith as a counter-example, the reaction of historians of economics has been that he was not a “real” economist! If we take as granted that economists make poor bestselling authors, this is rather puzzling that they find useful to use historical arguments to market their books!

    1. On the specific subject of the Conference/Galbraith conversation, it is significant that the non-economists were surprised to hear that he was not a “real” economist. Clearly, from a non-disciplinary perspective (even presentist) Galbraith would qualify as an economist.

      Also, incidentally, playing historian of economics, vide his series for the BBC, THE AGE OF UNCERTAINTY.

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