In 1930, the greatest economist of the age, J M Keynes, sat down and wrote about the future in an essay called Economic possibilities for our grandchildren. It was a pep talk for a depressed time, when people wondered if the great wave of progress of the 19th century had ended. There was no need to be down, Keynes argued. This was a time of readjustment and problem solving, and our pessimism would evaporate if we could “take wings into the future”. “What can we reasonably expect the level of our economic life to be a hundred years hence?” asks Keynes. “What are the economic possibilities for our grandchildren?”
We’re still a few years off that 100 year mark, but we’re well into the lifetimes of those grandchildren. Did Keynes get things right?
Well, he was certainly correct that there was more wealth to come. He projected capital growth of 2% a year, doubling the economy in 20 years. After 100 years, we’d be more or less eight times better off.
Here, Keynes takes an interesting turn. At eight time better off, he argues, we’d have reached a point where all our absolute needs were met. We’ll always want things that make us superior to others – on that kind of need we are apparently insatiable. But for absolute needs, “the point may soon be reached… when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes.”
At that point, the struggle for survival that has characterised humankind’s history would cease. The problem of meeting our needs would essentially be solved, and the door would open to qualitative improvement. How do we live well? Keynes imagined a shorter work week and greater leisure and freedom, more participation in arts and culture. He imagined a whole new attitude to wealth.
If all our basic needs are met, we might begin to change our minds about those who continue to ‘strive’ for more and more. The desire for an endless more would be “semi-pathological”. We might come to see that “avarice is a vice, that exaction of usury is a misdemeanour, and that the love of money is detestable.”
Unfortunately, Keynes said that this projection held, “assuming no important wars and no important increase in population”. The Second World War set that first assumption on its ear, and the long boom in population growth makes it unlikely that we’re anywhere near solving the ‘economic problem’. It’s striking that Keynes makes no mention of distribution in his essay, as that’s where things have gone most obviously awry in the intervening time. Some parts of the world are still struggling with basic survival, while others have too much, dogged by obesity crises and waste.
On a national level however, we are considerably more than eight times better off and levels of absolute poverty are very low, but there’s no sign of us moving into the ‘promised land’ that Keynes saw. We appear to have mistaken growth on paper with actual productivity, and the last decade of economic growth has actually been the accumulation of debt and therefore illusory. With climate change and resource depletion, we cannot assume that the future looks more or less like today.
Did we throw away the economic possibilities that Keynes foresaw, or were they never realistic in the first place? I don’t know. If we have dropped the ball, then we’ve squandered the hard work of the generation that slogged its way out of the Great Depression for us. What a tragedy it would be if we missed the prosperity we’d already won for ourselves because we didn’t know when to stop wanting more.
Keynes kind of sees this too. “The strenuous purposeful money-makers may carry all of us along with them into the lap of economic abundance” he writes, and we certainly still idolize the ‘job creators’ of business. “But it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.”
I think Keynes gets a lot of things wrong in his essay, but it is still a profoundly important little work, because it asks the right questions – questions that modern economics is still avoiding. What is the economy for? What is the end goal of all our hard work? How much is enough?