Why Animal Spirits Matter for Global Capitalism
Akerlof and Shiller identify five distinct elements in what they call “animal spirits”:
confidence, or the lack of it;
concern for fairness, that is, for how people think they and others should behave - for example, that a hardware store shouldn’t raise the price of snow shovels after a blizzard despite the increased demand;
corruption and other tendencies toward antisocial behavior;
“money illusion,” meaning susceptibility to being misled by purely nominal price movements that, because of inflation or deflation, do not correspond to real values;
and reliance on “stories” - for example, inspirational accounts of how the Internet led to a “new era” of productivity.
The omission of these five aspects of “animal spirits,” they argue, blocks conventional economics from either understanding today’s crisis or providing useful ideas for dealing with it.