Keynes speculating on economic and social possibilities

Economist John Maynard KeynesThe great man wrote a short essay, published in 1930, entitled Economic Possibilities for our Grandchildren, which can be found in the book Essays in Persuasion. In it he speculated on a time 100 years in the future (not so far from today) when the ‘economic problem’ had been solved, and the changes that this might bring about in human behaviour and society. Here is a short extract:

“When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money motive at its true value. The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.”

Predicting the future is a difficult business, the moreso the further ahead we try and look. It seems that Keynes would have been disappointed with the world as it is today, in terms of the solving and transcending of the material or economic problem. In many already rich countries, overwork exists alongside unemployment and inequality. Some countries, few in number, have in recent decades made great strides in development and have joined the elite club of the richest. But poverty is still a major problem globally. It is not clear that the current orthodoxy and its influence on economic policy-making is sufficient to solve this in a sustainable fashion, in which the environment is protected even as humanity advances.


2 thoughts on “Keynes speculating on economic and social possibilities

  1. Keynes’ stance here strikes me as uncharacteristically naive. As you write, prediction is a hard business, and, may I add, it is one of the few human activities in which it is impossible to become an expert or specialist, which may explain why Keynes handles the matter of divining the future rather clumsily.

    He exaggerates the incidence of “the love of money as a possession,” failing to look into the depth structure of acquisitiveness and success reflected in income and wealth. People tend to have serious reasons other than enjoyment of pure pecuniary possession, even in those times that Keynes has had first hand experience of, when thrift was a high cultural value and likely to be pursued in excess by some people.

    It is not always easy not to try to make money for an entrepreneur whose business might fail, if he does not go on trying to be successful, or for someone like Bill Gates and the many rich who have become rich and keep on working and making money because they love their work.

    In fact, Keynes provides us with a case in point. He was so brilliant, and so passionate about his work, his visions and projects he couldn’t help making good money in the process, and in the end, he worked himself to death so committed was he to his callings — instead of loving “money as a means to enjoyments … of life.”

    It is particularly naive of Keynes to expect a time beyond the horizon when people no longer disagree on what counts as “distasteful and unjust”.

    • Yes maybe he was being a bit naïve and allowed his thoughts to become a bit fanciful. In his General Theory, one of the key points is that the demand for money and hoarding (as Marx put it) can prevent the interest rate from falling under certain conditions and constrain aggregate demand and reduce growth in output and employment. It seems he already had these ideas in mind when he was writing this essay. If the financial system does not automatically channel savings into investment, or if there are insufficient investment opportunities, then saving can become a vice, and the potentially dysfunctional ‘love of money’ is one way of putting this. It becomes more complex if one analyses the global economy, as surpluses of savings over investment can flow abroad and can lead to further problems if they fuel unsustainable consumption booms.

      To return to your comments, although the desire to accumulate wealth may reflect a love of work, clearly it can be pursued through base instincts too. Maybe capitalism is good at utilizing both sorts of motivation, often but not always to the benefit of the wider society. This is a strength and maybe a weakness at the same time, as it leads to much criticism of aspects such as the commercialisation or commodification of more and more aspects of life. I have sympathy with socialists who adopt such critiques, but am doubtful about their solution, which turned out in many countries to be much worse and in itself unsustainable.

      I remain mindful of human progress, but for individuals, striving all the time may not produce lasting happiness. In fact it may reflect constant or recurring dissatisfaction rather than contentment. With that in mind, hopefully the Gates Foundation is one way for a very rich man to ‘give back’ as much as he can.

      As always I appreciate your comments.

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