In the immediate aftermath of the Rebellion, the mood among the animals is exultant. Newly liberated, they are hopeful for the future. In this first phase of Animal Farm, life does seem to have improved dramatically, with the animals no longer under human oppression. They are happier, more productive, and enthused by the knowledge that their work belongs solely to themselves.
However, at the same time, even in this earliest phase, Orwell hints at a more unpleasant picture running beneath the surface. For one thing, he implies that, within this anti-human enthusiasm which follows the Rebellion, there is a dangerous element of fanaticism as well. Thus, in the same passage in which we observe the animals destroying human tools of brutality, they at the same time destroy the ribbons (which have neither a positive nor negative use, and will furthermore upset Mollie), even as Boxer destroys his straw hat (which had a very much positive utility in protecting his head). Additionally, in these early chapters, we also observe the growing dominance and privilege of the pigs. The end of Animal Farm's second chapter, depicting the disappearance of the milk, proves a critical turning point in this respect.
As time goes on, the conditions on the farm will continue to deteriorate, with the utopian dream of Animalism going unfulfilled. The pigs betray these original principles in favor of their own greed and self-interest, and later, Napoleon will create a dictatorship, maintained through the use of brutal oppression.