I want to briefly
highlight two phrases which are important in understanding the development of
speculative bubbles associated with capitalism and which focus particularly on
human psychology and behavior.
John Maynard Keynes
coined the term "animal spirits" to explain the ‘boom-bust’ pattern observed in
capitalist systems. The term animal
spirits refers to the spontaneity of human behavior exhibited as consumer
confidence which leads to fluctuations of the business cycle. In the following video Peter Hall, Vice-President and Chief Economist of Export Development Canada describes how these animal spirits can inhibit the return to 'normality' after a financial crisis.
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