“to return to some of the most sure and certain principles of religion and traditional virtue - that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow. We shall once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and day virtuously and well, the delightful people who are capable to taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin." (vol. IX, pp. 330-1) <http://www.eco.utexas.edu/facstaff/Cleaver/ 368keynesgrandchildren.html>]
Robert Shiller: "A failure to control the animal spirits" in the March 8 FT
http://www.ft.com/cms/s/0/453e55ca-0c0c-11de-b87d-0000779fd2ac.html
> We are seeing, in this financial crisis, a rebirth of Keynesian
> economics. We are talking again of his 1936 book The General Theory
> of Employment, Interest and Money, which was written during the
> Great Depression. This era, like the present, saw many calls to end
> capitalism as we know it. The 1930s have been called the heyday of
> communism in western countries. Keynes’s middle way would avoid the
> unemployment and the panics and manias of capitalism. But it would
> also avoid the economic and political controls of communism. The
> General Theory became the most important economics book of the 20th
> century because of its sensible balanced message.
>
> In times of high unemployment, creditworthy governments should
> expand demand by deficit spending. Then, in times of low
> unemployment, governments should pay down the resultant debt. With
> that seemingly minor change in procedures, a capitalist system can
> be stable. There is no need for radical surgery on capitalism.
>
> Adherents to Keynes’s message were so eager to get this simple
> policy implemented, on both sides of the Atlantic, that they failed
> to notice – or perhaps they intentionally disregarded – that the
> General Theory also had a deeper, more fundamental message about how
> capitalism worked, if only briefly spelled out. It explained why
> capitalist economies, left to their own devices, without the
> balancing of governments, were essentially unstable. And it
> explained why, for capitalist economies to work well, the government
> should serve as a counterbalance.
>
> The key to this insight was the role Keynes gave to people’s
> psychological motivations. These are usually ignored by
> macroeconomists. Keynes called them animal spirits, and he thought
> they were especially important in determining people’s willingness
> to take risks. Businessmen’s calculations, he said, were precarious:
> “Our basis of knowledge for estimating the yield 10 years hence of a
> railway, a copper mine, a textile factory, the goodwill of a patent
> medicine, an Atlantic liner, a building in the City of London
> amounts to little and sometimes to nothing.” Despite this, people
> somehow make decisions and act. This “can only be taken as a result
> of animal spirits”. There is “a spontaneous urge to action”.
>
> There are times when people are especially adventuresome – indeed,
> too much so. Their adventures are supported in these times by a
> blithe faith in the future, and trust in economic institutions.
> These are the upswing of the business cycle. But then the animal
> spirits also veer in the other direction, and then people are too
> wary.
>
> George Akerlof and I, in our book Animal Spirits (Princeton 2009),
> expand on Keynes’s concept and tie it in to modern literature on
> behavioural economics and psychology. Much more clarity about the
> psychological underpinnings of animal spirits is possible today.