The term "animal spirits" can refer to sacred beings, or may also be used to describe a state of liveliness or a willingness to act. In some spiritual practices, animals are viewed as spirits, guides, allies, or ancestors. Alternately, humans with animal spirits may be seen as exuberant or lively. Still another way of defining this concept relates to economics and refers to strong investor confidence or spending.
The idea of animals possessing or being imbued with spirit is ancient. People have worshipped them, performed special rituals if an animal needs to be killed, or specifically avoided killing them. From sacred cows in India to the totems of American aboriginals, humans have often shown a tendency to relate to or attribute power or sanctity to certain animals. This principle may extend all the way to concepts like ahimsa, where all life is valued and should not be taken or, alternately, only one or two creatures might be considered spirit representatives in some religious practices.
Western Europe and America have defined this expression in two separate ways that lack a spiritual component. High human energy does resemble the power of animal energy. This has often led people to view animal spirits as lively and exuberant behavior.
Several 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, which was written in the 17th century. Lovers of Jane Austen may remember that the undisciplined sister, Lydia, of the 19th century novel Pride and Prejudice also had “…high animal spirits.” Possessing this attribute was often considered attractive, and it shouldn’t be considered a precursor to the type of ruin and disgrace Austen’s character causes.
The use of animal spirits to reference economic theory began in the early 18th century with the writings of William Wood. He connected the term to confidence and greater spending. Undoubtedly, more memorable usage occurred 200 years later in John Keynes’ General Theory of Employment, History and Money. To Keynes, this concept meant the desire to act in spending and investment, out of a sense of confidence and a will to action. Without these things, he argued, people could not be inspired to spend by simply being shown the logical reasons why they should.
Keynes’ definition has become the prevailing one in the 21st century. According to certain economic theories, consumers need to be engaged to spend or invest. High animal spirits means the willingness to take a chance on investments due to confidence in a product or because not acting seems like an unacceptable alternative. Whatever can be done to evoke confidence, willingness to take risks, and a zeal for spending may benefit the market.