Keynes's General Theory concept of 'animal spirit's 'relies on G. Boole, not R. Descartes

There is only one main source for Keynes’s concept of ‘animal spirits’ - George Boole. Keynes was intent on incorporating into his decision theory from the A Treatise on Probability  the effect of the feelings and emotions on the expectation formation process  of a decision maker. Keynes was, of course, the only economist who read Boole’s The Laws of Thought.

No economists or philosophers ,involved in writing on Keynes’s A Treatise on Probability or the nature of the close connections between the A Treatise on Probability and  Keynes’s General Theory, have ever read Boole’s The Laws of Thought .This is easily demonstrated by the fact that there are no economists or philosophers who have any understanding of the basic fact that Keynes’ s relational ,propositional logic, which permeates all 5 Parts of the  A Treatise on Probability, is built completely on Boole’s earlier relational ,propositional logic and interval valued approach to probability and decision making in The Laws of Thought. One need only read  a few of the articles published in the five centenaries /symposiums on Keynes’s A Treatise on Probability and Knight’s Risk ,Uncertainty and Profit ,published in late 2021 by the Alan Turing Institute(August), Cambridge Journal of Economics(September),Review of Political Economy(October),History of Economic Ideas(November),or the Journal of the History of Economic Thought(December),to realize that  there is no mention made anywhere in any article about the close connections that exist between the foundations of Boole’s work on probability and decision making and the foundations of Keynes’s work on probability and decision making, where Keynes’s contribution is an advanced version of Boole’s earlier version. The number of citations to Boole’s The Laws of Thought in these centenaries /symposiums on Keynes’s A Treatise on Probability is zero.

Just as in the General Theory, where Keynes introduces very briefly a minor discussion of animal spirits, in chapter 12 in section 7 on pages 162-163, consisting of two paragraphs, which deal with the  emotional impact that the  feelings  of the decision makers can have on  their expectations ,Boole’s discussion is limited to three  pages ,pages 244-245 and  272,of The Laws of Thought .Boole  provides a complete discussion in three   paragraphs . Keynes provided   two paragraphs of discussion:

“Here then arises the question, whether there exists any principle of transition, in accordance with which the logical and the numerical interpretations of the same symbolical expression shall have an intelligible connexion. And to this question the following considerations afford an answer. 19. Let it be granted that there exists such a feeling as expectation, a feeling of which the object is the occurrence of events, and which admits of differing degrees of intensity. Let it also be granted that this feeling of expectation

accompanies our knowledge of the circumstances under which events are produced, and that it varies with the degree and kind of that knowledge. Then, without assuming, or tacitly implying, that the intensity of the feeling of expectation, viewed as a mental emotion, admits of precise numerical measurement, it is perfectly legitimate to inquire into the possibility of a mode of numerical estimation which shall, at least, satisfy these following conditions, viz., that the numerical value which it assigns shall increase when the known circumstances of an event are felt to justify a stronger expectation, shall diminish when they demand a weaker expectation, and shall remain constant when they obviously require an equal degree of expectation.” (Boole,1854, p.272;see also the very important pp. 244-245).

Now it would definitely not make any sense to take Boole’s discussion of the emotional effects on the feelings and mental nature of decision makers   out of context and assert that the main conclusion that Boole was emphasizing in his discussions of probability and uncertainty  in chapters XVI to XXI  in The Laws of Thought was ‘animal spirits’ ,when, in fact, the major point of Boole’s book ,as well as Keynes’s A Treatise on Probability and General Theory was  that in any instance of decision making ,that  involved only partial, incomplete and/or missing knowledge (uncertainty), and is lead to the conclusion that only imprecise ,interval valued probabilities  alone can be calculated .Of course, this is identical to the major conclusion of Keynes’s book, which was that in most cases  only inexact measurement and approximation are possible .That meant that exact and definite precise numerical probabilities can’t ,in general, be calculated in the form of mathematical expectations where a decision maker can obtain an “…. outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.” (Keynes,1936, p.161).

Keynes’s discussion on pp.161-163 of the GT has been badly misinterpreted by all economists and philosophers writing on animal spirits because the opening paragraph on pp.161-162 of section 7 has been taken completely out of context and presented long run decision making as a choice between only two options-either rely on animal spirits or rely on precise mathematical expectations when considering the decision to invest in long lived durable capital goods: “Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits—of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South Pole, is it based on an exact calculation of benefits to come. Thus, if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die…” (Keynes,1936, pp.161-162).

In fact, Keynes actually is an advocate of a third option, imprecise approximation and inexact measurement, which he refers to as reasonable calculation. Keynes integrates reasonable calculation into his section 7 discussion of animal spirits on page 162: “It is safe to say that enterprise which depends on hopes stretching into the future benefits the community as a whole. But individual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits, so that the thought of ultimate loss which often overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death.” (Keynes,1936, p.162). Keynes’s final conclusion is that “But individual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits…” (Keynes,1936, p.162).

Keynes has relegated animal spirits to a supplemental and complementary position, where the unreasonable use of mathematical expectations has been replaced by the reasonable use of inexact measurement, approximation and imprecise probability.

This conclusion is in accord with Adam Smith’s and Thomas Aquinas’s conclusions in The Wealth of Nations and Summa Theologica, respectively. (See Brady ,2023,2024 and 2018). The chapter in Keynes’s General Theory that deals with measurement is chapter Four. Pages 39-40 and 43-44 of chapter Four reiterate Keynes’s conclusions, as presented in the advanced chapter on measurement, chapter 15, of the A Treatise on Probability. Keynes’s major goal in section 7 of chapter 12 of the General Theory is to continue his critique of unreasonable calculation (mathematical expectations) and recommendation of reasonable calculation (inexact measurement and approximation) as originally discussed in chapter Four of the General Theory. Nowhere in Keynes’s index to the General Theory is there any reference to Descartes or animal spirits. While Keynes was well acquainted with Descartes, as he was with a great many other artists, philosophers and mathematicians, Descartes, like Plato, plays no role at all in either book. Shiller’s recent claim that “John Maynard Keynes's (1936) concept of ‘animal spirits’ or ‘spontaneous optimism’ as a major driving force in business fluctuations was motivated in part by his and his contemporaries' observations of human reactions to ambiguous situations where probabilities couldn't be quantified. We can add that in such ambiguous situations there is evidence that people let contagious popular narratives and the emotions they generate influence their economic decisions. These popular narratives are typically remote from factual bases, just contagious. Macroeconomic dynamic models must have a theory that is related to models of the transmission of disease in epidemiology. We need to take the contagion of narratives seriously in economic modeling if we are to improve our understanding of animal spirits and their impact on the economy.” (Shiller ,2021, p.1) represents a gross distortion of Keynes’s point, which was NOT that expectations can’t be quantified, but that the quantification involved and required reasonable, imprecise probability models and not the  unreasonable , precise probability models  of  Benthamite Utilitarian classical , neoclassical ,new classical and new neoclassical economics ,using mathematical expectation “interpretation of the General Theory that has little, if anything, to do with Keynes’s main point, which was that the deficiencies in the degree of confidence a decision maker has in his estimate of probability leads to increasing degrees of liquidity preference which led, in the Great Depression, to absolute liquidity preference. Shiller’s interpretation will be considered in another paper. [See Brady (2022)]. The Akerlof -Shiller idea that Keynes’s confidence is an animal spirit has absolutely nothing to do with anything published by Keynes in his lifetime.