Animal spirits

Animal spirits is the term John Maynard Keynes introduced in the General Theory to describe the non-rational psychological forces — confidence, hope, fear, herd instinct — that drive investment decisions in conditions of radical uncertainty. Unlike the rational optimizer of neoclassical theory, the Keynesian entrepreneur acts on convention: the belief that the future will resemble the past, or that others believe it will. When animal spirits are high, investment flows even without clear evidence of future returns; when they collapse, investment freezes even in the presence of favorable fundamentals. The concept is not a behavioral bias to be corrected but a constitutive feature of decision-making under uncertainty. Keynes's point was not that people are irrational but that rational calculation is impossible when the future is structurally unknowable. In such conditions, animal spirits are not a failure of reason; they are the form reason takes when probabilities cannot be assigned. The modern attempt to formalize animal spirits as sentiment