"ANIMAL SPIRITS"

"In a world where the probability of sales revenues cannot be as reliably predicted as a coin toss, that is, in a world where the future is uncertain (i.e. non-ergodic), the 'robot' manager of the neoclassical model simply could not function. In a non-ergodic world - our world it is Keynes's 'businessmen' who reign supreme. In this world, sales expectations depends on a spirit of entrepreneurship in the community - a spirit which depends in large measure on the cultural and economic environment generated by the values of the community. Keynes referred to this entrepreneurial mood as 'animal spirits' in order to distinguish it from the mechanical robot decision-maker programmed to maximize profits on the basis of statistical evidence obtained from past outcomes. The animal spirited business manager is the primemover of the entrepreneurial economic system. In an uncertain world managers' decisions regarding productive activities are geared towards a mixture of external incentives (the desire for income) and internal incentives (the desire to accomplish something noteworthy, challenging, and respected by the community). The community, via its cultural and civic values, provides the setting for determining the importance of the various elements in the mix of goals entrepreneurs strive for. The use of expansionary governmental fiscal and monetary policy can create additional profit opportunities which in a society where expansive entrepreneurial action is honoured can generate a full employment. The prosperity of any entrepreneurial economic system depends on maintaining an ebullient spirit among managers. Expected increases in demand are necessary to induce manage rs to hire more workers. On the other hand, pessimistic expectations will cause managers to reduce hiring opportunities. If, at any moment of time, realized sales are just meeting entrepreneurial expectations and if managers project current market conditions into the future, employment will remain virtually unchanged. Everything is precariously hinged on the psychology of the business decision-maker."

Source: G. Davidson &  P. Davidson, "Economics For A Civilized Society", 1988.

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Thomas Palley, "Plenty of Nothing",1998.

George Brockway, " The End Of Economic Man",1995.

Paul Davidson,"Post Keynesian Macroeconomic Theory", 1994.

James K.Galbraith, "Created Unequal: The Crisis in American Pay",1998.

Edward Nell, "Making Sense of a Changing Economy: Technology, Markets and Morals",1996.