Lawyers in Recession?Where Did We Go Wrong?

• Author: Adam Newhouse
• Pages: 3-11

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CHAPTER 1

Lawyers in Recession—

Where Did We Go Wrong?

It’s All in the Story

The stories no longer merely explain the facts; they are the facts.10

—George A. Akerflof & Robert J. Shiller

Pesky Spirits

Ever since John Maynard Keynes announced his new economic the-

ory, no analysis of causes of economic recessions is complete without

acknowledging the significance of Animal Spirits—the term popularized

by Keynes and referring to the elusive triggers of our economic behav-

ior neither subservient to reason nor reducible to a mathematical for-

mula. As the theory goes, our gut-feeling inclination to spend money

is propelled primarily by Animal Spirits, our spontaneous urge to do

things, rather than by “the outcome of a weighted average of quantita-

tive benefits multiplied by quantitative probabilities.”11

Feeding on the level of general public confidence and optimism,

Animal Spirits stand behind the ups and downs of our economic well-

being. As our trust and confidence in business sink, a general economic

slowdown reflects our apathy. And that’s exactly what happened in the

10. George A. Akerlof & Robert J. Shiller, Animal Spirits: How Human Psychology Drives

the Economy, and Why It Matters for Global Capitalism 54 (Princeton Univ. Press 2009).

11. John Maynard Keynes, The General Theory of Employment, Interest and Money 134–

35 (Classic Books America 2009) (1936) (“Most, probably, of our decisions to do something

positive, the full consequences of which will be drawn out over many days to come, can

only be taken as a result of animal spirits—of a spontaneous urge to action rather than inac-

tion, and not as the outcome of a weighted average of quantitative benefits multiplied by

quantitative probabilities.”).

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