“Economic Possibilities for our Grandchildren” by John Maynard Keynes (Essay Summary)
John Maynard Keynes is widely regarded as one of the most influential economists of the 20th century.
In 1930, he wrote Economic Possibilities for our Grandchildren (free PDF).
Now 88 years later, it’s fascinating to look at what predictions he got right and where he missed the mark.
Intro to Economic Possibilities for our Grandchildren by John Maynard Keynes
Keynes makes it clear that his purpose of the essay is to make long-term predictions — specifically 100 years into the future.
- “What can we reasonably expect the level of our economic life to be a hundred years hence? What are the economic possibilities for our grandchildren?”
- “From the earliest times of which we have record — back, say, to two thousand years before Christ — down to the beginning of the eighteenth century, there was no very great change in the standard of life of the average man living in the civilised centres of the earth.”
- “This slow rate of progress, or lack of progress, was due to two reasons — to the remarkable absence of important technical improvements and to the failure of capital to accumulate.”
- “The modern age opened; I think, with the accumulation of capital which began in the sixteenth century.”
- “From the sixteenth century, with a cumulative crescendo after the eighteenth, the great age of science and technical inventions began, which since the beginning of the nineteenth century has been in full flood.”
He even mentions “technological unemployment” in 1930:
- “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come — namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.”
What Keynes Got Right: Economics & Money
It’s now 88 years later, and he’s nailed this one:
- “Mankind is solving its economic problem. I would predict that the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is today.”
Keynes is right on the mark. From sources I’ve read, modern economists say the actual number is four or five today. Keynes goes on to theorize:
- “This means that the economic problem is not — if we look into the future — the permanent problem of the human race.”
- “Why, you may ask, is this so startling? It is startling because — if, instead of looking into the future, we look into the past — we find that the economic problem, the struggle for subsistence, always has been hitherto the primary, most pressing problem of the human race — not only of the human race, but of the whole of the biological kingdom from the beginnings of life in its most primitive forms.”
Where Keynes Missed the Mark: Work & Leisure Time
His expert prediction on the economic/money side is juxtaposed with a complete miss on his work/leisure prediction.
His predictions here describe what life could be like assuming economic concerns are a thing of the past:
- “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 once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things.”
- “Thus for the first time since his creation man will be faced with his real, his permanent problem — how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”
These are fascinating predictions: reverting to better morals that aren’t based on wealth, honoring people who can teach you how to live a good life of virtue, and learning how to positively use your time on this planet when it isn’t all spent just trying to get by and survive. It sure sounds nice, but the vision of the future he paints gets even better. Since the economic problem has been solved, people don’t have to work as much to meet their needs.
Keynes is often referenced for predicting “three-hour shifts or a fifteen-hour week.”
Now, I don’t need to tell you or rub it in, but this obviously hasn’t happened (yet). So, where did his thought process go awry?
Perhaps he put too much optimism in human beings in developed nations being able to properly prioritize their needs:
- “Now it is true that the needs of human beings may seem to be insatiable. But they fall into two classes — those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows. Needs of the second class, those which satisfy the desire for superiority, may indeed be insatiable; for the higher the general level, the higher still are they. But this is not so true of the absolute needs — a point may soon be reached, much sooner perhaps than we are all of us aware of, when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes.”
What Keynes likely failed to predict was the modern prioritization of those two types of needs. You would think that the absolute needs would be the priority since they fall on the lowest levels of Maslow’s hierarchy of needs, but those “insatiable” second class of needs that “satisfy the desire for superiority” (e.g. keeping up with the Joneses, lifestyle inflation, etc) are very alive and well today. Pervasive digital connection and social media addiction have taken social comparison to new levels. And, at least in the US, people are choosing to work more for more money and more consumption instead of work less for less money and more leisure time.
Another way to look at this choice is a great quote by Peter Drucker (1909–2005), a founder of modern management:
- “In a few hundred years, when the history of our time will be written from a long-term perspective, it is likely that the most important event historians will see is not technology, not the Internet, not e-commerce. It is an unprecedented change in the human condition. For the first time — literally — substantial and rapidly growing numbers of people have choices. For the first time, they will have to manage themselves. And society is totally unprepared for it.” — Peter Drucker
Keynes realizes the power of habit. He acknowledges that this shift will not exactly be easy because we’ve been trained to not enjoy:
- “Yet there is no country and no people, I think, who can look forward to the age of leisure and of abundance without a dread. For we have been trained too long to strive and not to enjoy.”
What would life be like in this future of less working hours?
His predictions could still happen. Other modern day experts like Duane Elgin believe that a path of simplicity will lead to humanity’s evolution. Keynes final thoughts are in line with that thinking:
- “I look forward, therefore, in days not so very remote, to the greatest change which has ever occurred in the material environment of life for human beings in the aggregate.”
- “Meanwhile there will be no harm in making mild preparations for our destiny, in encouraging, and experimenting in, the arts of life as well as the activities of purpose.”
- “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.”
If you’ve made it this far, think about what you are prioritizing in your life. Are you prioritizing accumulation (wealth, stuff, etc) which requires evermore work? Or, are you actively thinking about the point at which you have enough (wealth, stuff, etc) so that you can take back your time, work less, and use your newfound leisure time any way you want? Even though the work and leisure predictions of Keynes aren’t yet here on a mass scale, you can choose to take steps in your own life to make them a reality today.
Originally published at Sloww.