Why do the animals fail to recognize how things are changing as the time goes on, in Animal Farm by George Orwell?
There are two major reasons that I would give for this.
First, the pigs are the ones who control the information that the other animals get. By doing so, they control what the other animals think they know. Most of the animals, for example, cannot remember what the commandments used to be and so they do not really notice that they are changing. Similarly, Squealer shapes their reality with all his statistics and such. The animals do not know enough to realize that they are being manipulated. So one aspect of this is that the pigs are controlling the way that the animals perceive reality.
Second, most of the animals are just not interested enough to pay attention. They are (like Boxer) totally dedicated to the revolution. Or they are just interested in how things are in their own lives. In other words, they are not interested in critically assessing the way their society is going.
I should add one thing. Later in the book, they do notice that some things are going wrong. But then the pigs come up with a new strategy -- repression. With all the killing and such, the animals come to be afraid to disagree with Napoleon.
So part of it is that the animals are afraid to speak up and part of it is that they (for the reasons I mentioned above) don't notice the changes.
I think that Squealer is a large part of this answer. His control of the media and his ability to "spin" what the pigs are doing into truth helps to create a sense of normalcy to all that is happening on the farm. It is this ability to create truth to can be readily accepted by the other animals that ends up consolidating the power of the pigs on the farm. Each time there is a potential or propensity for dissension, Squealer is deployed to create a media diversion or reconfiguration of how reality is perceived. It is because of this and its constant and unabashed presence that prevents the animals from collectivizing into a form of dissent or rebellion. It is this element that ends up defining the power of the Status Quo and precludes any significant social or political rejection of it.
The first and most important reason why the animals are not able to perceive the changes that are taking place around them is that they are gullible and foolishly and blindly believe and accept all that their leaders say. The most extreme case of gullibility and blind faith in their leaders is Boxer who often remarks, "Napoleon is always right."
The second and more obvious reason why the animals are not able to understand the implications of the changes that are taking place around them is because of the subtle and complete control of information by Squealer who is reputed to be able to "turn black into white."