II. HUMAN NATURE

It is evident that Keynes believed in the existence of something called “human nature,” as he referred to it on various occasions in his writings. For example, in The General Theory he used human nature to justify his fundamental psychological law on the relation between income increases and consumption increases (Keynes [Reference Keynes1936b] 1973, p. 96), and to explain the human temptation to take a chance on an investment over and above any profit that might be involved (ibid., p. 150). It also underpinned his understanding of the multiplier in relation to conditions of stability: “that the multiplier, whilst greater than unity, is not very great, is highly plausible as a psychological characteristic of human nature” (ibid., p. 251). His concomitant analysis of “the struggle for money-wages” was similarly linked to human nature; for Keynes, the subjective factors that partly determined the propensity to consume included “those psychological characteristics of human nature” that were unlikely to change over a short period of time (ibid., p. 91).

Elsewhere Keynes praised Walter Bagehot’s Lombard Street for being true to human nature, which meant accurately characterizing the “psychology of the City” and the behavior of the London money market, and the “springs of motive” of business more generally (Keynes [Reference Keynes1926] 1981, pp. 465, 471). Commentators have rarely emphasized this point, but the famous passage on animal spirits in The General Theory begins with a significant reference to human nature. Apart from speculative instability within capitalism, “there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism. … Most, probably, of our decisions to do something positive … can only be taken as a result of animal spirits—of a spontaneous urge to action (Keynes [Reference Keynes1936b] 1973, p. 161).

In this passage Keynes clearly located the origins of the “innate urge to activity” that was derived from animal spirits in a “characteristic of human nature” (ibid., p. 163). Even though Keynes did not precisely define what he meant by “human nature” as he was using it, it is evident that he did believe that it existed in some form or another, and that it was linked to human psychology in some way.

Although usages of the notion of human nature in Keynes’s writings are relatively rare, the fact that it was used in such significant ways within The General Theory suggests that he did think it was an important factor in understanding economic behavior more generally. And while he did believe that human nature was ‘universal’ across all individuals in a given period (Hodgson Reference Hodgson2001, p. 220), it was not ‘universal’ in the sense of being static over time, but rather, as will be shown below, it had (at least in part) evolved through ongoing interactions with the environment.

Outside of his economics writings, the most substantial discussion of the idea of human nature occurred in Keynes’s biographical memoir, “My Early Beliefs,” which provides context for understanding more clearly what he meant by this term. Keynes divided his own attitude to human nature into two phases. In the early phase he had equated human nature with individual self-interest and the pre-Freudian idea that people were “reliable, rational, decent people,” influenced by objective standards of truth, who had “pure motives and reliable intuitions of the good” (Keynes Reference Keynes1949, p. 99).

However, in the later phase, by which time he had realized that “whole categories of valuable emotion” and traditional wisdom had been left out of his account, “powerful and valuable springs of feeling,” volcanic impulses, and even wickedness were now included in human nature, and so-called irrational outbursts of emotion were recognized as having definite behavioral value (ibid., pp. 100–101). The earlier ‘thin rationalist’ understanding of human nature was therefore replaced by a more emotionally driven, multi-layered account in which both ‘good’ and ‘bad’ motives interacted, and the ecological “pattern of life amongst communities” was recognized as being important to understanding human economic behavior. ^{Footnote 2}

It is clear that both A Treatise on Money and The General Theory were composed at a time in which their author believed in the later, more complex, and morally ambiguous conception of human nature. For example, in The General Theory, the choice offered vis-à-vis the scope of human tyranny was for it to extend over bank balances or over fellow citizens (Keynes [Reference Keynes1936b] 1973, p. 374); i.e., tyranny could be only mitigated, not eliminated completely. Part of the evolution in Keynes’s understanding of human nature can be traced to the impact of external socio-political developments such as World War One and the Bolshevik assumption of power in Russia, as a result of which his earlier ‘rational and good’ conception of human nature was exposed as naive. In particular, his wartime experiences exposed him to the personal suffering of others on a grand scale, at least in an abstract way, as he worked in the UK Treasury to organize the financing of the Allied military campaign.

Another part of this evolution in the understanding of human nature can be traced to elements ‘internal’ to economic theory, as Keynes began to turn away from traditional components of economics such as the quantity theory of money and Say’s Law, towards a more multi-layered understanding of how psychological, political, sociological, technological, and conventional economic/financial elements interacted within the capitalist system as a whole. For example, although A Tract on Monetary Reform utilized the quantity theory of money in its Cambridge form, its operation was seen as being dependent on certain “established habits of business and banking” (Keynes Reference Keynes1923, p. 42). This meant that there was an important behavioral component to it: i.e., the equation of exchange did not function mechanically. This multi-layered approach can also be seen in Keynes’s post-World War One analysis of the delicately balanced psychological underpinnings of the behavior of different classes within nineteenth-century European capitalism, and how this balance had benefited European society as a whole by facilitating a large accumulation of fixed capital (Keynes [Reference Keynes1919] 1971, p. 11).

III. INSTINCT

It is also evident that Keynes believed in the existence of something called “instinct,” as again he referred to it on various occasions. “Instinct” is conventionally defined as the faculty of acting in such a way as to produce certain ends, without conscious foresight of the ends or formal education in the means (James Reference James1891, 2, p. 383).

In A Treatise on Probability, instinct was considered in relation to the method of induction. Keynes wrote that a “‘tendency or impulse or instinct’ … may be required … if some of those universal conclusions of common sense … are to be supported with rational foundations” (Keynes [Reference Keynes1921] 1973, p. 275n1). Instincts here were seen as providing a rational means of underpinning the conclusions of common sense or practical wisdom (Gruchy [Reference Gruchy and Wood1949] 1990, p. 257). Elsewhere he wrote of the “impulses and deepest instincts” of humankind as being the result of the natural processes of evolution (Keynes Reference Keynes1930, p. 366), and judged that they were “often founded on wisdom” (Keynes [Reference Keynes1913] 1971, p. 167). More significantly, Keynes saw the “money-loving instincts of individuals” as a central motive force of the capitalist economic machine (Winslow Reference Winslow, Gerard and Hillard1992, p. 212), and identified a puritanical instinct for saving (Dostaler and Maris Reference Dostaler, Maris and Smithin2000, p. 251).

However, a few apparently isolated references to ‘instinct’ might not on first sight seem that important in the works of a major twentieth-century economist, but if this conclusion were to be drawn, then it would be mistaken. Consider the following sentence, in which Keynes linked an understanding of instinct to economic theory: “Adam Smith began the long struggle of science against instinct in his celebrated campaign against the mercantilists” (Keynes [Reference Keynes1914] 1983, p. 325).

Directly before this sentence, Keynes had declared that there were two kinds of people on monetary matters: mercantilists, who believed in the sufficiency of gold to cure financial ills; and inflationists, who believed in the sufficiency of cheap credit and paper to promote prosperity. He judged that the “truth lies with neither” kind of person (ibid.). Elsewhere he declared that the “original sin of mercantilism” was “inherent in the mind of the natural man” (Keynes [Reference Keynes1913] 1971, p. 125), and that, according to Sigmund Freud, gold satisfied strong human instincts (Dostaler and Maris Reference Dostaler, Maris and Smithin2000, p. 243), even though Freud had linked it with miserliness and excrement (Freud Reference Freud1954, pp. 188, 240). Keynes saw instinct here as something that economic theory could supplant, as gold-loving, mercantilist, and inflationist instincts were all in error.

He did not then outline what he thought was the correct approach to monetary policy, but it can reasonably be inferred from statements such as the “path of true monetary policy is a very narrow one” that a median position between the two extremes was (for Keynes) the correct answer. Elsewhere he expanded on the point about instinct sometimes being misleading:

As is apparent from his use of the phrase “blind instruments of selection,” by “the mighty process,” Keynes meant evolution in the natural world. He was consequently proposing that a collective form of “deliberate reason” should replace the “blind instruments of [natural] selection” as represented by instinct when these blind instruments were consciously perceived as doing more harm than good. Note that Keynes was suggesting only that a point might be reached when instincts required supplanting by collective reason—i.e., such a point might not be reached—and that the process of replacement had already been ongoing for “many generations” on an individual level.

But exactly what, for Keynes, were these instincts that might need replacing? He provided various clues that can assist in answering this question. For example, while discussing induction as a method of analysis, he wrote of “the savages, from whom we have inherited the most fundamental inductions of our knowledge” (Keynes [Reference Keynes1921] 1973, p. 274). These inductions of knowledge were evidently passed on via biological inheritance, just as instincts are, so they are a plausible example of something that Keynes could have taken as instincts.

Keynes provided two other concrete examples of instincts, the first being what he called a “fundamental instinct.” This was the urge to continue unchecked the reproduction of the species, which was discussed in relation to proposals to modify the “laissez-faire of nature” by means of birth-control techniques (Keynes [Reference Keynes1923a] 1981, p. 124). If this urge to reproduce was an example of a biological instinct, then, with his second example, Keynes considered a cultural instinct: “British” instincts in relation to preferred forms of government (ibid., p. 348). The mercantilist and inflationist instincts discussed previously could plausibly be categorized as cultural instincts. Thus, Keynes had articulated two basic categories of instinct: biological and cultural, or innate and learnt. ^{Footnote 3}

The psychologist most associated with the idea of instinct is William James. Although there are no references to James’s The Principles of Psychology in Keynes’s works, he certainly knew of James’s other work, as there is an explicit reference to James on religious experience in A Treatise on Probability (Keynes [Reference Keynes1921] 1973, p. 332). However, it is much more likely that Keynes had obtained his initial understanding of the concept of instinct from the psychologist James Sully, whose book Outlines of Psychology Keynes had studied in detail in 1905 for the civil service entrance examination (Barnett Reference Barnett2015a, p. 308).

Sully considered the need to “trace back a psychical phenomenon to a primordial instinct” via the concept of evolution, and explained in a section headed “Origin of Instinct: Heredity” that the “normal human brain … is like the human organism as a whole, the result of the hereditary transmission of specific or typical characters from progenitor to offspring” (Sully Reference Sully1892, p. 78). He conceived of instincts as expediting certain mental and/or physical processes—for example, walking and speaking—and they existed in connection with the “constitution of the nervous centres” (ibid.). Similar to Keynes, Sully presented a process of “imaging the remote results of our actions” as one means of adjusting future behavior to desired outcomes (ibid., p. 123), although without any explicit reference to calculations relevant to business enterprise.

IV. INTUITION

Something that was linked to instinct in Keynes’s underlying worldview, but was not identical with it, was ‘intuition,’ which he contrasted directly with ‘experience.’ Intuition was therefore an innate feature of the human mind, as opposed to experience, which was accumulated over the lifetime of a person (Keynes [Reference Keynes1921] 1973, p. 94). He explained that “the constitution of the human mind may vary in some degree from man to man. … Some men … may have a greater power of logical intuition than others. Further, the difference between some kinds of propositions over which human intuition seems to have power, and some which it has none, may depend wholly upon the constitution of our minds” (ibid., pp. 18–19). This constitution of mind was some type of mental structure within which both reasoning and intuiting capabilities were contained. Intuition could be employed as a criterion “to judge whether on given evidence the probabilities of two propositions are or are not equal”; i.e., intuition was something that could serve as a supplement to exact judgments of probability (ibid., p. 94).

However, for Keynes, intuition was not, as has been suggested, simply direct acquaintance with sensations (Davis Reference Davis1994, p. 20). Rather, it operated as a form of intellectual perception or ‘mind’s eye’ at a deeper and more profound level of the understanding (O’Donnell Reference O’Donnell1990, p. 339). This is evident from his original analysis of the scientific abilities of Isaac Newton: “I fancy his pre-eminence is due to his muscles of intuition being the strongest and most enduring with which a man has ever been gifted … being a supreme mathematical technician he could dress it up, how you will, for purposes of exposition, but it was his intuition which was pre-eminently extraordinary” (Keynes [Reference Keynes1946] 1972, p. 365).

Thus, Newton’s genius as a scientist was not due primarily to the rational side of his intellect, but due to his “mental muscles” or “muscles of intuition” being very highly developed. This is a rather extraordinary and unusual way to analyze Newton’s abilities in the field of scientific experimentation, but it fits well with Keynes’s wider understanding of intuition.

In terms of how intuition was used more generally, for Keynes it did not simply replace or negate the processes of rational thought (O’Donnell Reference O’Donnell1990, p. 339). When deciding upon the right course of action in relation to a series of alternatives, even when degrees of advantage and probability alternatives were known, he still saw intuition as crucial: “If, therefore, the question of right action is under all circumstances a determinate problem, it must be in virtue of an intuitive judgment directed to the situation as a whole, and not in virtue of an arithmetic deduction derived from a series of separate judgments directed to the individual alternatives each treated in isolation” (Keynes [Reference Keynes1921] 1973, p. 345).

Intuition was here seen as a final decision-making mechanism with respect to right action, even when the problem was determinate and probability outcomes for each alternative were, in principle, calculable. When they were not, “we fall back, therefore, and necessarily do so, on motives of another kind … [they] are decided by habit, instinct, preference, desire, will, etc” (quoted in Carabelli Reference Carabelli2008, p. 27). Intuitions, therefore, just like instincts, were essential features of the psychological mechanisms that underlay specific thought processes, and hence could, in theory, be seen as identical with them.

In addition, Keynes deemed intuition as being of significant importance to the progress of economics. For example, he favored the “vaguer intuitions of [Thomas Robert] Malthus” on the importance of effective demand to prices and profits over the abstract a priori method of David Ricardo (Keynes [Reference Keynes1933] 1972, p. 88). On how prices were determined, it was Malthus, the “intuitive investigator,” who had a firmer hold on what happened in the real world, rather than Ricardo as the father of the “pseudo-arithmetic” doctrine of the quantity theory of money (ibid., p. 95).

Similarly, elsewhere Keynes outlined that Alfred Marshall rightly believed that “those individuals who … have a powerful economic intuition will often be more right in their conclusions … their intuitions will be in advance of their analysis and their terminology” (ibid., p. 211n2). Finally, there is evidence that Keynes sometimes used his own intuitions as a method of passing judgment on economics. In a letter to Nicholas Kaldor from 1941, he wrote regarding a journal article submission that “I should, therefore, suspect it if it led to any conclusion not acceptable to my intuition” (Keynes [Reference Keynes1941] 1983, p. 834).

It is likely that Keynes had obtained his initial understanding of intuition from George Edward Moore, supplemented by ideas from the psychologist George Frederick Stout, whose book Analytic Psychology Keynes had studied in detail in 1905 for the civil service entrance examination. For Moore, intuition only provided a reason for holding a self-evident proposition to be true when there were no logical reasons proving it to be so, and he believed, similarly to Keynes, that intuition should not be seen as an alternative to reason (Moore Reference Moore1903, p. 144). Stout described intuitive thinking as “the operation of an apperceptive system which has become organized in the course of previous experience” that functioned by means of a train of thought, but without the need for words (Stout Reference Stout1896, 2, p. 188). This previous experience could be both individual life-specific and evolutionary. However, in partial opposition to Stout, the older Keynes conceived of intuition more as a form of natural, unconscious reasoning that was inherent in the minds of those who possessed it, not as something that could be learnt by experience.

V. COGNITIVE ARCHITECTURE

It is evident from the above analyses of the concepts of instinct and intuition that Keynes linked human nature directly with innate urges, bio-cognitive instincts, and unconscious intuitions, and it therefore follows that he rejected the idea of the human mind as a ‘blank slate,’ on which only cultural imprints could be made after its inception (Buss Reference Buss2004, p. 32; Pinker Reference Pinker2002). Keynes believed (rightly or wrongly) that every individual was born with a set of inbuilt mental faculties or ‘reasoning programs’ for framing behavior, what he perceptively termed “inborn endowments” (Keynes [Reference Keynes1923a] 1981, p. 124), and that this human characteristic sometimes had an important influence on how the (capitalist) economy functioned (Cosmides and Tooby Reference Cosmides and Tooby1994, p. 330; Barnett Reference Barnett, Wherry and Schor2015b).

This mental capacity included intuition and instinct and various other forms of a priori insight and reflective contemplation (O’Donnell Reference O’Donnell1990, p. 339). The difference between instinct and intuition was that the former operated as a basic urge to action, while the latter was an unconscious method of analysis and judgment. Elsewhere Keynes’s association of spontaneity in action with instinct has been noted and declared a legacy of his theory of probability (Carabelli and Cedrini Reference Carabelli and Cedrini2012, p. 31), but in fact it was more a legacy of his understanding of the evolution of human nature, which had facilitated the availability of some types of direct knowledge that transcended particular sensations and experiences (O’Donnell Reference O’Donnell1990, p. 342). In this respect it is correct to stipulate that in Keynes’s account of rationality, the cognitive aspects that embody human experience were predominant, and that the economic agent’s motives must be studied in relation to these cognitive conventions (Carabelli Reference Carabelli1988, pp. 233, 235).

This emphasis on the inbuilt cognitive architecture of the mind does not mean, however, that Keynes believed that concrete experience, learnt, and/or cultural factors (for example, cultural instincts) were unimportant or non-existent, but rather he believed that they acted alongside (or sometimes against) the pre-existing bio-cognitive instincts that were innate: evolution is a multi-level process (Hodgson Reference Hodgson2002, p. 277). In addition, it is evident that he believed that sometimes instincts and intuitions contained valuable wisdom, but on other occasions it would be advisable to override them with consciously calculated judgments when the latter would evidently lead to superior outcomes.

The evolutionary origins of human instincts are, of course, located in the prehistory of Homo sapiens as a species (Buss Reference Buss2004, p. 49), as great apes evolved into the earliest hominids and eventually into Homo habilis, which in turn evolved into Homo erectus and then fully modern human beings. This might seem an uncontroversial statement, but the idea that money itself originated in human prehistory is a much more contentious idea. Nevertheless, this is what Keynes actually argued in one of his most significant theoretical works.

VI. THE ‘PRIMITIVE’ ORIGINS OF MONEY

Keynes began the first volume of A Treatise on Money with the clear statement that what he termed “Money-of-Account” was the primary concept of the theory of money, alongside the concomitant idea that this Money-of-Account first came into existence along with debts or contracts for deferred payments (Keynes Reference Keynes1930, 1, p. 3). This basic idea is both historically and logically accurate, but its significance has not yet been fully understood, as the associated environmental context of the birth of money has not been adequately considered.

Keynes clarified his distinction between Money-of-Account and what he called “Money-Proper” by explaining that the former was the description or title to the debt, while the latter was the thing that answered the description: i.e., the physical unit or accounting symbol. Money-Proper could exist only in relation to this prior-existing Money-of-Account as a description or claim, and Money-Proper derived its character entirely from this relationship. He recognized that this conception of Money-of-Account necessitated the associated introduction of state or community laws or customs; i.e., it relied upon a series of social relationships to create and enforce it (ibid., p. 4).

So far the analysis might appear to be nothing unusual, but in a rather millennial passage, Keynes then traced the historical origins of Money-of-Account to what he called “the primitive age”:

By “paradisaic intervals,” Keynes meant Eden-like eras, and “interglacial periods” were geological periods that were warmer than average, usually lasting thousands of years, between glacial periods within an ice age. Thus, he was suggesting that money as an “ancient institution” originated in human prehistory, which contradicts the more conventional view that “we can be sure that it goes back no more than 3,000 years” (Lea Reference Lea and Lewis2008, p. 521): the last glacial period (“ice age”) occurred from around 110,000 to 12,000 years ago. ^{Footnote 4} This is a much more unusual account of the origins of money, which can be further illuminated by considering other parts of his work.

Keynes had referred to the notion of an ice age elsewhere in his writings, explaining in “Economic Possibilities for Our Grandchildren” that there had been an “era of progress and invention” in a comfortable interval before the last ice age, which was deemed to be a particularly important period for human development (Keynes [Reference Keynes1930] 1952, p. 361). He explained:

That banking/money was already known “at the dawn of history” and before the last ice age implied that its origins were actually in prehistoric times. In this article Keynes explicitly used the term “the prehistoric age” as a point of contrast against “modern times,” which, he declared, had begun in the sixteenth century, but one period did not follow on directly from the other.

Keynes’s two interrelated ideas that Money-of-Account was a deferred debt and that its origin was located in human prehistory can plausibly be interpreted to mean that it developed out of the reciprocal altruism or “deferred informal exchange” posited by evolutionary psychologists as the underlying basis for all social exchange interactions that occurred among our ‘primitive’ ancestors (Cosmides and Tooby Reference Cosmides, Tooby, Barkow, Cosmides and Tooby1992, p. 169; 2005, p. 588). Evolutionary biologists have similarly suggested that money originated as a formal token or accounting unit for this altruistic exchange, or as a deferred payment of a debt of reciprocity (Dawkins Reference Dawkins1976, p. 202). Keynes aptly expressed this reciprocal relationship by describing money as a link between the present and the future (Dostaler and Maris Reference Dostaler, Maris and Smithin2000, p. 245), just as reciprocal altruism is a process of non-simultaneous or time-delayed exchange.

On this view, money was first created as a solution to the ‘cheater’ problem of the potential failure of social exchange partners to reciprocate over time (Trivers Reference Trivers1971). Although A Treatise on Money might initially seem an unlikely receptacle for evolutionary ideas, the fact that Keynes had them periodically in mind whilst composing it is suggested by his use of the phrase “Survival of the Fittest” (Keynes Reference Keynes1930, 1, p. 296), by a passing reference to Darwin (ibid., 2, p. 154), and by the section title “The Evolution of Managed Money” (ibid., 1, p. 15). Elsewhere he even used the concept “the ambit of men’s altruism” to describe the widening scope of altruistic acts (Keynes Reference Keynes1926, p. 41).

That Keynes meant his concept of Money-of-Account to be seen as something separate from the physical token used as money (Money-Proper) is evident from his idea that Money-of-Account was logically prior to Money-Proper, and that it could be “recorded by word of mouth”: i.e., via language and/or as a linguistic memory (Keynes Reference Keynes1930, 1, p. 3). Elsewhere he asserted that Money-of-Account “facilitates exchanges without its being necessary that it should ever come into the picture as a substantive object” (Keynes [Reference Keynes1937a] 1973, p. 115). It is also relevant that he declared that purchasing power “must always be defined with reference to a particular set of individuals in a given situation” (Keynes Reference Keynes1930, 1, p. 54), just as reciprocal altruism must be so defined.

For this interpretation of Money-of-Account to make sense, Keynes must have had at least an intuitive understanding of what today is called the “environment of evolutionary adaptedness,” or the ancestral period of prehistory in which the current psycho-physiological mechanisms of Homo sapiens were evolved (Mameli Reference Mameli, Dunbar and Barrett2007, p. 26). That he did have such an understanding, at least in a basic sense, is evident from The End of Laissez-Faire (1926), where he discussed the role of Darwin’s The Origin of Species in shaking the foundations of philosophical belief after 1859. Here it was explained that Darwin’s doctrine drew “all things out of Chance, Chaos and Old Time,” evolution being the “mighty process by which we ourselves had risen like Aphrodite out of the primeval slime of Ocean” (Keynes Reference Keynes1926, pp. 13, 14). That Keynes’s concept of “Old Time” was meant to encompass the long period of evolutionary change is evident. This also corresponds to the earlier part of what Keynes recognized as the “Era of Scarcity” (Keynes [Reference Keynes1925] 1952, p. 334), when individuals lived in a Malthusian world at the edge of subsistence constraints (Rubin and Capra 2012, p. 8).

This account of the historical origins of money does not necessarily contradict Keynes’s sympathy for Georg Friedrich Knapp’s state theory of money, as in Keynes’s historical schema of the evolution of money, what he called the “Age of State-Money” followed on from the “Age of Barter/the Age of Money,” and hence the former was an evolutionary development from the latter (Keynes Reference Keynes1930, 1, p. 5). In the Age of State-Money, “the State claimed the right to declare what thing should answer as money” in relation to Money-of-Account (ibid.), this evolution being a “fundamental transition” that long preceded the subsequent transition to “Representative Money” and to “Fiat Money” (ibid., p. 11).

VII. ANIMAL SPIRITS

Long-period evolutionary processes are also involved in one of Keynes’s most famous yet controversial phrases, which he certainly did not invent, but he did use it in a novel way within economics. The term “animal spirits” can be traced back some considerable distance in time to various authors such as the philosopher David Hume and the psychologist G. F. Stout, but there is no unified or consistent meaning that can be detected through all the different usages. This is one reason among many why Keynes’s own meaning has remained the subject of so much controversy.

Elsewhere a ‘literalist’ or Darwinian interpretation of what Keynes meant by “animal spirits’” has been presented, where evolved mechanisms of behavior or ‘physiological spirits’ are seen as part of the underlying processes of psycho-economic calculation (Barnett Reference Barnett2015a, pp. 325–329; Shackle 1967, p. 12; Coates Reference Coates2012, p. 249). ^{Footnote 5} This was argued by reference to concepts from contemporary evolutionary psychology, but in neuroeconomics terms, the equivalent concept would be brain algorithms (Lohrenz and Montague 2008, p. 481).

That Keynes explicitly understood the basic idea of evolutionary psychology is evident from the following passage, in which he discussed the nature of what was termed “human logic,” as against the “formal logic” considered by philosophers such as Frank Ramsey:

These “useful mental habits” or the “human outfit” given to human beings by natural selection are precisely the evolved psychological mechanisms that are the essential feature of the adaptive mental toolbox proposed in evolutionary psychology (Buss Reference Buss2004, p. 49; Fodor Reference Fodor1983, p. 37).

It is almost certainly the case that Keynes obtained this complex and advanced understanding of the “human outfit” through a mixture of his knowledge of Darwin on natural selection plus his study of the works of the two psychologists Stout and Sully, where the links between physiology and ‘psychical dispositions’ or permanent mental products were analyzed (Barnett Reference Barnett2015a, p. 310; van der Schaar Reference van der Schaar2013). Freud is also relevant—he sent a personal thank-you card to Keynes in May 1936 for contributing to the celebrations that marked his eightieth birthday (Keynes Papers, PP/45/111)—in that his work provided a framework for understanding that mental processes had both conscious and subconscious components: the “Freudian cloak” (Keynes Reference Keynes1930, 2, p. 291).

Freud knew of Keynes, as James Strachey was one of his patients (Dostaler Reference Dostaler2007, p. 50), although, as has been noted, the reception of Freud in Bloomsbury was mixed (Winslow Reference Winslow1986, p. 554). The fact that group behavior had its own psychological logic to it was also an important Freudian theme with relevance to economics (Dostaler and Maris Reference Dostaler, Maris and Smithin2000, p. 249): animal spirits were sometimes herd spirits. Financial markets, for example, sometimes operated as flocks of investors, what Keynes in The General Theory called the mass psychology of a large number of individuals (Keynes [Reference Keynes1936b] 1973, p. 154) and elsewhere the unstable psychology of society (Keynes [Reference Keynes1919] 1971, pp. 11, 13), or what Freud called “the group mind” in operation (Freud Reference Freud1922, p. 82). However, it is revealing that Freud traced the origin of this group mind phenomenon to “the herd instinct” as psychology, rather than any of his psychiatric ideas (ibid., p. 83).

In fact, Keynes’s use of animal spirits was more indebted to Darwinian psychology than it was to Freudian psychiatry, the latter being seen today as mostly outdated. The differing relevance of psychology and psychiatry is important to understanding Keynes’s conception of rationality more widely, and these two different subjects should not be conflated (Winslow Reference Winslow1986, p. 554). For Keynes, so-called irrational outbursts of human nature often had hidden behavioral logic and value (Keynes Reference Keynes1949, p. 101; Carabelli Reference Carabelli1988, p. 236). Not necessarily as outlined by Freud—the idea that Freud’s theory of anal-sadism is relevant to Keynes’s view of uncertainty is far-fetched (Winslow Reference Winslow, Gerard and Hillard1992, p. 228)—but as understood by those in the tradition of evolutionary psychology, as the result of long-period adaptive pressures on the evolution of cognitive capacity and their framing role in generating human behavior. What Keynes described as a “false rationalisation” approach was the Benthamite calculus, in which it was assumed that the future was neatly calculable within a precise probability framework. In reality, emotions such as doubt, hope, and fear were central to understanding economic behavior in the real world, these emotions having evolved over a long period of time to fulfill important roles within mammalian cognitive faculties (Keynes [Reference Keynes1937a] 1973, p. 122).

And there is further textual evidence that serves to link Keynes’s concept of animal spirits to the cognitive architecture of the evolved mind. In his biographical portrait of William Stanley Jevons, Keynes explained about Jevons’s early education in subjects such as biology and chemistry:

These “animal feelings” were the main subject of Darwin’s book The Expression of the Emotions in Man and Animals (Darwin [Reference Darwin1872] 1999). Although it is some distance from ‘animal feelings’ to ‘animal spirits,’ their comprehension as partial synonyms (animal spirits would include but not be limited to animal feelings) does make intellectual sense, especially when taken in conjunction with a direct reference to “the origin of species.”

In The General Theory Keynes allocated an important investment function to feelings/emotions as operating alongside conscious rational calculation (Keynes [Reference Keynes1936b] 1973, p. 240). Elsewhere he suggested that ‘inner feelings’ should be examined when important economic policy decisions were to be made (Keynes Reference Keynes1926, p. 54), and sometimes reported on the state of his own emotional spirits in private correspondence (Hill and Keynes Reference Hill and Keynes1989, p. 230). This type of investor consultation with their feelings was partly a mechanism to assist in dealing effectively with the extreme uncertainty about the future that existed in the capitalist economy (Keynes [Reference Keynes1936b] 1973, p. 94; Weintraub, [1975] 1990, p. 54)—“falling back for our motive on whim or sentiment” (Keynes [Reference Keynes1936b] 1973, p. 163)—and partly a means of providing additional support for rational thought processes.

Human sentiment, being part of an emotional cognitive system, contained accumulated evolutionary logic and could sometimes assist in providing a guide to action when the future was neither predictable nor calculable, and therefore was unsuited to only rational analysis (Hishiyama [Reference Hishiyama and Wood1969] 1990, p. 384). Thus, just as with Keynes’s attitude to instincts, which were conceived of as being sometimes wise and sometimes not, he conceived of animal spirits as working alongside conscious reason, not replacing it. He explained with regards to the abilities of pioneers of business enterprise that “individual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits” (Keynes [Reference Keynes1936b] 1973, p. 162).

Animal spirits included the “nerves and hysteria and even the digestions and reactions to the weather” of entrepreneurs, together with the “delicate balance of spontaneous optimism,” hopes of profit and fears of loss, the spontaneous urge to action, and whim, sentiment, and chance (ibid., pp. 162–163). All these elements of animal spirits assisted the rational self in choosing between alternative courses of action; i.e., they acted as underlying psychological/emotional systems of decision making that provided support to the conscious, logical side of entrepreneurs’ mental processes. This conception fits perfectly with Keynes’s later, more complex conception of human nature: animal spirits were certainly neither black-box irrationality nor mere caprice (Dow and Dow Reference Dow and Dow2011, pp. 3, 16), and neither were they reducible to Freud’s analysis of the love of money (Winslow Reference Winslow1986, p. 576).

VIII. KEYNES AND DARWIN

Although this connection has not received much consideration in the literature (an insightful exception is Laurent Reference Laurent1998), Keynes was interested in Darwin from an early age. For example, he referred to the idea that humans descended from apes in a letter to his father in April 1899, when he was just sixteen years old (Harrod Reference Harrod1951, p. 19; Skidelsky Reference Skidelsky1983, p. 423). He had also avidly read the three-volume set of Darwin’s Life and Letters (Laurent Reference Laurent1998, p. 78). His brother Geoffrey Keynes had married one of Darwin’s descendents (Margaret Darwin) in 1917. Lydia Lopokova remarked upon meeting Margaret: “So you are the granddaughter of the man who wrote Genesis” (Keynes Reference Keynes and Keynes1975, p. 7). Hence, as one of his biographers explained, Keynes had a personal link to “the great Charles [Darwin], for whom Keynes had expressed such enthusiasm in his youth” (Harrod Reference Harrod1951, p. 221). This enthusiasm was strengthened by the fact that both Keynes and Darwin were “Cambridge men” (Keynes [Reference Keynes1944] 1972, p. 232).

This interest in Darwin as a scientist is not difficult to explain intellectually, as Keynes conceived of Darwin’s work as standing in the long line of English and Scottish empiricist philosophers of ‘humane science’ such as David Hume, Adam Smith, and Malthus. He believed that in Britain, the humanities and the natural sciences shared a common “continuity of feeling” and approach (Keynes [Reference Keynes1933] 1972, p. 86). Keynes also realized that natural selection was a complex theory that could not simply be reduced to the slogan “the survival of the fittest.” He explained that for “thousands of generations,” survival was “the fortune not only of the fittest but also of the most prolific” (Toye Reference Toye2000, p. 69), indicating he appreciated that the competition to reproduce operated at the level of the gene, not at the level of the individual animal (Dawkins Reference Dawkins1976, p. 36).

Elsewhere Keynes demonstrated that he had understood the gene-based advances in scientists’ understanding of the mechanisms of inheritance made by Gregor Mendel, which supplanted Darwin’s own mistaken ‘blending’ theory of inheritance. Keynes described how “Mendelian biologists are deriving the various qualities of men from the collisions and arrangements of chromosomes” (Keynes [Reference Keynes1921] 1973, p. 468).

However, although Keynes was very interested in the latest advances relevant to Darwin’s theory and its potential application to other fields of knowledge, he rejected the variety of social Darwinism that sought to interpret the idea of the survival of the fittest as being equivalent to (or translatable into) the economic doctrine of laissez-faire (Keynes Reference Keynes1926, pp. 14, 31). Being equally opposed to laissez-faire and state socialism (Barnett Reference Barnett2009, p. 263), Keynes intuitively held a more sophisticated understanding of natural selection as itself being a doctrine in evolution (Toye Reference Toye2000, p. 41). He realized that the parallel between laissez-faire in economics and Darwinism in nature was not a useful one, as the former doctrine (unlike evolution) did not follow on from the facts of how the economy functioned (Keynes Reference Keynes1926, p. 32).

Instead of bringing Darwin into economics via laissez-faire, it would be much more consistent with Keynes’s worldview to do so via reproduction issues. A key, yet separate, part of Darwin’s concept of evolution was sexual selection, which related to how individuals within a sex of a particular species had evolved distinguishing features in order to attract mates of the opposite sex. Keynes clearly recognized sexual selection as being something distinct from natural selection (Keynes Reference Keynes1926, p. 31). His own attitude to what he called “Sex Questions” in politics and economics is insufficiently emphasized in the literature, even though his views on these issues shocked some members of an audience to which he presented them in 1925 (Harrod Reference Harrod1951, p. 363).

He judged that various interrelated topics—marriage laws, contraception, the economic position of women and the family, sexual ‘abnormalities,’ and population growth—were of the “utmost social importance,” and predicted they would become “deeply involved in the solution of certain economic questions” (Keynes [Reference Keynes1925] 1952, p. 332), thereby linking the reproductive issues at the heart of sexual selection to how the economy functioned more generally. He declared that it was “the duty of the State to concern itself with the size of the population,” and he saw aspects of “Sex Questions,” like the suffrage movement, as “symptoms of deeper and more important issues below the surface” (ibid.). These deeper issues are, in evolutionary terms, the struggle of members of a species to survive and then to reproduce, which was a topic that Keynes had discussed in an early manuscript on “Population” (Toye Reference Toye2000, pp. 69–71). Although some of the specific ideas presented in this text are now seen as mistaken and/or outdated, his significant interest in such issues is evident, and it remained with him for his entire life (Keynes [Reference Keynes, Jones and Keynes1937b] 2007).