Gold Rush vs. War: Keynes on reviving animal spirits in times of crisis

Michele Bee and Raphaël Fèvre ()
Additional contact information
Michele Bee: Università del Salento = University of Salento [Lecce]
Raphaël Fèvre: GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur

Post-Print from HAL

Abstract: This paper aims to exploit fully the heuristic virtues of Keynes' famous ‘old bottles' story, deploying a multi-layered argument and drawing out its broadest implications. In essence, we show that through this story Keynes was making a very serious point about anti-crisis policies: the need for authorities to stimulate animal spirits by relying on people's natural impulse to action. Rather than taking the place of entrepreneurs and paying people to dig holes, Keynes seems to be arguing that public authorities should put entrepreneurs in a situation where they are so enthusiastic that they go into debt to dig holes, just like during a gold rush. At the same time, it is a question of restoring the banks' willingness to lend for these overoptimistic projects in a period of total depression. This article explores the conditions that make public intervention as effective as possible through the enthusiasm and individual initiative that can be generated by an artificial gold rush. Such intervention therefore can be as minimal as possible, without having to resort to the opposite authoritarian solution of war. Since the gold rush builds cities and war destroys them, Keynes spent considerable energy convincing his contemporaries that liberal-democratic countries would have to take the former path if they wanted to avoid the latter.

Date: 2024
New Economics Papers: this item is included in nep-his, nep-hpe and nep-pke
Note: View the original document on HAL open archive server: https://hal.science/hal-04414654
References: View complete reference list from CitEc
Citations:

Published in Cambridge Journal of Economics, In press, ⟨10.1093/cje/beae001⟩

Downloads: (external link)
https://hal.science/hal-04414654/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04414654

DOI: 10.1093/cje/beae001

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().