Integrating rationality and spiritedness to correct a misleading dichotomy

Sarah Moore () and Richard E. Wagner ()
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Sarah Moore: George Mason University Emeritus
Richard E. Wagner: George Mason University Emeritus

The Review of Austrian Economics, 2025, vol. 38, issue 1, No 4, 55-71

Abstract: Abstract Economists have long labored under a misleading dichotomy between rationality and spiritedness where a market economy reflects the cool sobriety of rational calculation that sometimes is thought to be impaired by irrational animal spirits. Within this scheme of thought, those individuals who constitute society are effectively reduced to a societal average or representative agent, where aggregation is reflective of choice, rather than interaction. In contrast, we theorize by distinguishing market and state enterprises as creating an observed disordering due to the institutions that govern them. Within this alternative scheme of thought, reason and spirit are both features of the human organism, with individuals varying in the degrees to which their actions entail these features. What results is recognition that orderliness and volatility are both ineradicable features of human population systems, and, moreover, that polity and economy inject non-congruent modes of action into entangled systems of political economy.

Keywords: Rationality; Animal spirits; Thymology; Behavioral economics; Integrated personality structures; Entangled systems of political economy; D83; E71; P16; Z13 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11138-023-00630-2

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