Saul Kaplan: Unleash the Animal Spirits

A friend asked me this week, what is the single most important thing holding our economy back?  Without hesitation I said our psychology is bad and negativism is getting in the way.  We have allowed cynicism to slow progress, growth, and innovation.  I am as cynical as anyone.  Here in New England we are born with a well-developed cynical streak.  In my home state of Rhode Island we have taken the art of cynicism to entire new heights.  I am convinced we won’t climb out of this economic mess until we become more confident in our selves, our communities, and our opportunities.  Psychology matters.  A strong innovation economy creating higher wage jobs result from the decisions made every day by organization leaders and entrepreneurs.  It is the sum total of these decisions on the margin to hire one additional employee or to invest one additional dollar which determine the trajectory of our economy.  While many factors influence these choices in the end it comes down to psychology or confidence.  We must find a way to move beyond our cynicism.

The imperative is to unleash the animal spirits.  John Maynard Keynes had it right in his book, The General Theory of Employment, Interest, and Money, when he described animal spirits as the emotion which influences human behavior measured in terms of consumer confidence.  Keynes got the math right. Positive activities depend on spontaneous optimism rather than mathematical expectations. Our decisions to do something positive can only be taken as the result of animal spirits, a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.  Amen.

Keynes stood on the shoulders of earlier philosophers who also asserted that psychology matters.  David Hume, one of the most important historical contributors to Western philosophy, has been credited with laying the foundation for cognitive science.  In his seminal work, A Treatise of Human Nature, Hume lays out his framework for a naturalistic science of man that examines the psychological basis of human nature.  His views in 1739 were heretical and in direct opposition to the prevailing views of the rationalists, exemplified by Descartes.  Hume concluded that belief rather than reason governed human behavior.  I love Hume’s famous quote, “Reason is, and ought only to be the slave of the passions.”

Before accusing me of being Polyanna-ish  (optimist for sure) or having my head stuck in a history book (only partially stuck) consider what is going on around you.  Everybody is pointing at everybody else.  It’s the government’s fault.  It’s the big bad industrial complex.  There isn’t enough resource to go around.  Democrats and Republicans are beating each other up incessantly while nothing changes (a pox on both of their houses).  Change is hard. Life isn’t fair. And so it goes. Add your barriers and excuses here. OK, Can we move beyond admiring the problem now?  How we love to admire the problem.  Enough already.

We have an incredible opportunity in front of us.  We must overcome our cynicism and bring passion to the fore as we optimistically try more stuff. Sure there are challenges but we live in a technology rich era with an unprecedented opportunity to enable purposeful networks focused on solving the big issues of day.  How about starting with health care, education, energy, and economic prosperity?  If we are waiting for institutions to lead the way we are going to be waiting a very long time.  Clay Shirky has it right in his recent books, Here Comes Everybody and Cognitive Surplus.  We are connected, communicating, and leveraging social media platforms in powerful ways.  Collectively we are blessed with a cognitive surplus that is huge, obvious, and accessible to solve real world problems and redefine how value is created, shared, and captured.  We just need to get on with it.  It is time to stop admiring the problem.  The biggest obstacle in our way is a negative psychology and lack of confidence to act.  Time to unleash the animal spirits.