“Animal spirits” can refer to sacred beings or a state of alertness, and animals are viewed as spirits, guides, allies, or ancestors. In the economy, it refers to strong investor confidence or spending. The term originated from William Wood and was popularized by John Keynes in his General Theory of Employment, History and Money. High animal spirits signify a willingness to risk investments due to confidence in a product or an unacceptable alternative.
The term “animal spirits” can refer to sacred beings, or it can also be used to describe a state of alertness or willingness to act. In some spiritual practices, animals are viewed as spirits, guides, allies, or ancestors. Alternatively, humans with animal spirits may be seen as feisty or lively. Yet another way of defining this concept relates to the economy and refers to strong investor confidence or spending.
The idea that animals possess or are imbued with spirit is ancient. People worshiped them, performed special rituals if an animal needed to be killed, or specifically avoided killing them. From sacred cows in India to the totem poles of Aboriginal America, humans have often shown a tendency to relate to or attribute power or sanctity to certain animals. This principle may extend as far as concepts such as ahimsa, where all life is valued and should not be taken, or alternatively, only one or two creatures might be considered to represent spirit in some religious practices.
Western Europe and America have defined this expression in two distinct ways that lack a spiritual component. High human energy resembles the power of animal energy. This has often led people to view animal spirits as lively and exuberant behavior.
Different uses of the term, when it means high energy or vitality, can be found in famous works of literature. Milton mentions it in Paradise Lost, written in the 17th century. Lovers of Jane Austen might recall that her unruly sister Lydia, from the 19th-century novel Pride and Prejudice, also had “…high animal spirit.” Possessing this attribute was often considered attractive and should not be considered a harbinger of the kind of ruin and dishonor that causes Austen’s character.
The use of animal spirits to refer to economic theory began in the early 18th century with the writings of William Wood. He linked the term to trust and greater spending. Undoubtedly, a more memorable use occurred 18 years later in John Keynes’ General Theory of Employment, History and Money. For Keynes, this concept meant the desire to act in spending and investment, out of a sense of confidence and a willingness to act. Without these things, he argued, people couldn’t be inspired to spend simply by showing them logical reasons why they should.
Keynes’s definition has become the prevailing one in the 21st century. According to some economic theories, consumers must be involved in order to spend or invest. High animal spirits signify a willingness to risk investments because of confidence in a product or because not taking action seems an unacceptable alternative. Anything that can be done to evoke confidence, a willingness to take risks, and a zeal for spending can benefit the market.
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