America's Animal Spirits

What characterizes all these choices identified by Tocqueville is that none of them seem based on a rational calculation of knowns and unknowns. Who builds one’s dream retirement home only to sell it off before the roof is even finished? Who in their right mind suddenly abandons a blissful family life to enter that graveyard of happiness otherwise known as politics? Moreover, such actions often mean breaking existing conventions in order to do something that isn’t immediately explainable to one’s family, friends, and colleagues. Instances of this behavior are widely perceived as being, in a word, “strange.” That is never a strong incentive to think or act unconventionally.

In Animal Spirits: The American Pursuit of Vitality from Camp Meeting to Wall Street (2023), the American cultural historian and professor of history at Rutgers University, Jackson Lears, seeks to identify and explain the role of strange thoughts and actions in shaping America in surprising ways. To provide a more concrete definition of this behavior, Lears draws upon the British economist John Maynard Keynes: specifically, Keynes’s use of the phrase “animal spirits.”

In his General Theory of Employment, Interest, and Money (1936), Keynes uses the phrase three times while describing the choice of entrepreneurs to invest in ways that augment a firm’s capital stock. For Keynes, “animal spirits” describe “a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.”3

In other words, animal spirits are what cause someone to do something (invest, start a business, etc.) that a strict assessment of the economic conditions would never lead someone to do. It leads people, Keynes believed, to overcome fear of business losses or failure more generally. Indeed, Keynes posits that, absent animal spirits, “enterprise will fade and die.”4

Keynes, it should be noted, did not coin the expression. It goes as far back as Erasistratus of Chios (310-250 B.C.) as he tried to describe the relationship between our bodily movements and our perceptions of the outside world.5 As Lears shows, the idea can be found in the writings of people as different as the English romantic poet William Wordsworth (1770-1850) and the historian Henry Adams (1838-1918). Keynes’s deployment of the phrase, however, was a way of trying to explain a feature of commercial life in modern capitalist economies that can’t be captured by the neat econometric models that Keynes (and, I would add, his most famous economic opponent, F.A. Hayek) had little time for. While Lears stressed that he, like Keynes, does not want to undervalue the place of statistics and empirical measurement in understanding reality, he agrees with Keynes (and Hayek) that these things “can easily be overvalued and misused as tools of interpretation and prediction” (p. 14).

Therein, I suspect, lies one of Lears’s primary motivations for using the idea of animal spirits to explain the enduring presence of what he calls “vitality” in America and the way that it has shaped American life. “Animal spirits,” according to Lears, “constitute a crucial part of what it means to be human, as well as an essential reminder of the animality humans share with the nonhuman world” (p. 5). It is thus a general way of describing the spontaneity and impulsiveness which marks all aspects of human life.

Such vitality especially reveals itself in the world of commerce, and dynamic competition and entrepreneurship have long characterized America. The last of these has always impressed visitors to America. “Almost all [Americans],” Tocqueville wrote in his journal, are “entrepreneurs.”6 Part of the essence of entrepreneurship is, after all, the inherent challenge that it presents to the status quo, whether that status quo exists in business, medicine, or religion.

For Lears, the sheer power of animal spirits in America is part of what challenges a widespread existing narrative about America: one of the United States as a nation of buttoned-down utility-maximizers, managers, and workers obsessed with realizing ever-greater efficiencies in a rather mundane and utterly predictable manner. For Lears, this distracts us from the reality that there have been plenty of Americans who have broken out of the iron cage of rational calculation and conventionality in areas that go far beyond the economy.

The list of figures who exemplify this type of American is, by Lears’s account, longer than we realize and they have influenced virtually all fields of inquiry and parts of American society. They include, among others, Theodore Roosevelt (1858-1919), philosopher and psychologist William James (1842-1910), and the novelist Norman Mailer (1923-2007). A good number of American bankers, according to Lears, have been conduits for the workings of animal spirits during economic booms and busts, not least because they have not reacted in strictly rational ways to the turbulence of markets. The workings of spirit and the material, for Lears, are not as separate as often supposed in the conditions of a modernity that generally insists on the strict separation of the two.

At times, Lears’s portrayal of the vast gallery of vitalists and the areas of American life in which animal spirits have manifested themselves is not easy to follow. We move among topics like finance, war, electricity, religious revivalism, psychoanalysis, science, and poetry at a bewildering pace.

Though he proceeds in a more-or-less chronological fashion, Lears shifts back and forth between topics like bank failures, money markets, feminism, radical empiricism, modernist art, sport, and Broadway musicals with a rapidity that makes the thread of Lears’s argument often hard to follow, if not incoherent at times. The effect, however, is to underscore Lears’s point: that animal spirits in America are constantly at work and show themselves at unexpected times and in unlikely spheres of life.

Though Lears plainly views animal spirits as beneficial, he acknowledges that they can have a dark side. At first glance, the Yale economist Irving Fisher (1867-1947) may seem the least likely of vitalists insofar as he sought to apply the quantifying effects of statistical analysis to virtually every area of public policy. Yet Lears shows that Fisher “also worshipped at the shrine of energy and vitality” (p. 255). That took Fisher—like most Progressives—straight into the realm of eugenics. For Fisher, this involved the commitment “to isolating ‘defectives’ so that “‘we can save the bloodstream of our race from a tremendous amount of contamination'” (p. 255). By “race,” Lears specifies, it is unclear whether Fisher meant “the human race or merely the Anglo-Saxon one.” What’s not in question is the way in which a concern for “revitalizing the American people” (p. 255) drove some enthusiasts for energy to embrace distinctly unscientific and ultimately destructive ideas.

Efforts to tame animal spirits also feature in Lears’s account of their workings in America. The rise of managerialism in the 1950s, for instance, is seen as part of an overall shift towards technocracy that has sought to control the ups-and-downs of American life. Ironically, Lears states, this owed a great deal to the rise of Keynesian economics after World War II as part of an effort “to smooth out the rough spots in the business cycle by balancing inflation and unemployment” (p. 343). Lears maintains that this represents the Keynesian tradition’s abandonment of Keynes’s “larger social vision” (p. 255).

To the extent that Keynesianism was translated into econometrics by American economists like Paul Samuelson after 1945, Lears’s commentary rings true. Lears, however, underestimates the centrality to Keynes’s thought of his desire to promote management of economies from the top-down in the effort to diminish—if not eliminate as far as possible—turbulence in the economy. In short, Keynes himself was far more part of what Lears calls “the managerial age” (p. 353) than Lears supposes. Had he lived, Keynes may well have disputed the mathematization of his political economy. Keynes’s emphasis upon aggregates of supply and demand does, however, lend itself to such quantification; his disciples were not wrong in supposing that their work represented a logical consequence of this dimension of Keynes’s thought.

That in turn reflects a confusion that mars some of Lears’s conclusions. On the one hand, Lears describes Ronald Reagan as ushering “in a new era that celebrated entrepreneurial risk-taking (especially among those most insulated from its downside) and reanimated the flow of animal spirits on Wall Street. Reagan’s successors, Democrats and Republicans alike, followed his lead in deregulating finance capital and participating in its renewed potency” (p. 376).

Yet the same “neoliberalism,” according to Lears, “involves the merger of technocratic expertise and market fundamentalism” (p. 376). It brings, he says, “instrumentalist market assumptions into every corner of human experience, accelerating the pricing of everyday life—down to and including the calculation of a human being’s monetary value” (p. 377). On the face of it, this does not fit Lears’s own description of Reagan-style neoliberalism.

What, then, from Lears’s standpoint, is “neoliberalism”? Is it a revival of animal spirits via entrepreneurship, regulation, and dynamic markets, accompanied by the spread of irrational exuberance, especially in capital markets? Or is it a version of managerial technocracy? Is it both? This is unclear from Lears’s account.

In the end, however, Lears’s book does indeed capture just how much outbreaks of animal spirits have influenced the American experience, and the good which has flowed from those dimensions of human life which do not cohere neatly with modernity’s emphasis on empirical rationality. At times, Lears may struggle to capture the vast canopy of unpredictable forces and Americans who have challenged the conventionalities of their time. Nonetheless, Lears gives us good reason to believe that, for all its problems and potential to release dark forces, vitality will continue to animate America in unpredictable ways that escape the most comprehensive of models.

Footnotes

[1] Jackson Lears, Animal Spirits: The American Pursuit of Vitality from Camp Meeting to Wall Street. Farrar, Strauss, and Giroux, 2023.

[2] Alexis de Tocqueville, Democracy in America, ed. Eduardo Nolla, trans. James T. Schleifer, A Bilingual French-English Edition, Vol. 3 (Indianapolis: Liberty Fund, 2010), 944.

[3] John Maynard Keynes, The Collected Works of John Maynard Keynes, Vol. VII, The General Theory of Employment, Interest, and Money, eds. Elizabeth Johnson and Donald Moggridge (Cambridge: Cambridge University Press for the Royal Economic Society, 1936/2013), 4th ed, pp.161-162.

[4] Ibid., pp. 161-162.

[5] See Sidney Ochs, A History of Nerve Functions: From Animal Spirits to Molecular Mechanisms (Cambridge: Cambridge University Press, 2004), 22-26.

[6] Alexis de Tocqueville, Journey to America, trans. George Lawrence (New Haven: Yale University, 1959), 271.