After all, when we are constantly comparing each other in the market place, it's easy for that competition to diffuse into our social lives. As long as we have a capitalist economy that encourages competition, cutthroat from time to time, I think Keynes' prediction is a long way from coming true. For a deeper analysis of Keynes' essay and of the possibility of living the "good life" as Keynes put it, I can recommend Skidelsky's "How Much is Enough? There is a vast amount now written on what is a very short essay: e.
Rather than delving extensively into what people have said about it, I prefer to go back to the essay itself and summarise it: let it largely speak for itself. An online version is here though one has to scroll down to find it or use the search function in your web browser. This essay was written in the second year of the Great Depression.
Keynes, Automation, and the Future of Work
Ever the optimist, however, Keynes did not think that the pessimists of his era were right about the long term prospects for capitalism, and in that sense his essay is directed against both Marxists and some pessimistic conservatives. The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption; the improvement in the standard of life has been a little too quick; the banking and monetary system of the world has been preventing the rate of interest from falling as fast as equilibrium requires.
What are the economic possibilities for our grandchildren? First, Keynes notes that the impressive economic growth that the West attained since the industrial revolution was the result of truly revolutionary technological development, accumulation of capital and compound interest. What is the result?
In spite of an enormous growth in the population of the world, which it has been necessary to equip with houses and machines, the average standard of life in Europe and the United States has been raised, I think, about fourfold. The growth of capital has been on a scale which is far beyond a hundredfold of what any previous age had known. And from now on we need not expect so great an increase of population. If capital increases, say, 2 per cent per annum, the capital equipment of the world will have increased by a half in twenty years, and seven and a half times in a hundred years.
Think of this in terms of material things — houses, transport, and the like. At the same time technical improvements in manufacture and transport have been proceeding at a greater rate in the last ten years than ever before in history.
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In the United States factory output per head was 40 per cent greater in than in In Europe we are held back by temporary obstacles, but even so it is safe to say that technical efficiency is increasing by more than 1 per cent per annum compound. There is evidence that the revolutionary technical changes, which have so far chiefly affected industry, may soon be attacking agriculture.
We may be on the eve of improvements in the efficiency of food production as great as those which have already taken place in mining, manufacture, and transport. In quite a few years — in our own lifetimes I mean — we may be able to perform all the operations of agriculture, mining, and manufacture with a quarter of the human effort to which we have been accustomed.
Economic Possibilities for Keynes’s Grandchildren | The Sceptical Economist
Those countries are suffering relatively which are not in the vanguard of progress. 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.
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Keynes might have thought that this would surely be enough to provide all the stuff desired for life, that we Americans would have long ago embraced his hope and lifted our eyes to higher ground. But if he were around today, I think he might be disappointed. Follow everything happening at the Mercatus Center from week to week by subscribing to This Week at Mercatus.
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