It’s time for the next step in the evolution of our species.
John Maynard Keynes wrote an essay in 1930 entitled “Economic possibilities for our grandchildren“, in which he tried to explore what our economy could look like in a hundred years time. We are now 90 years after the first publication of this essay. So where do we stand?
If you don’t know who Keynes was, he was one of the most influential economists of the last century and has shaped modern macroeconomic policy like no other.
Keynes already warned of technological unemployment 90 years ago. What he meant was that machines are going to do the work so efficiently that human labour is no longer required. Sounds familiar? Because the same is constantly being repeated now in relation to AI. The machines are going to take our jerbs!
But instead of agonising over the loss of jobs, Keynes went further and predicted an age, where we would solve the economic problem.
Keynes envisioned that we would all be economically around 8 times better off in 2030 than we were in 1930. If you compare the real GDP of the USA 2019 and 1930, and divide it by the population at the time, we have a real GDP per capita of $ 8267 in 1930 and $57,971 in 2019. So we are actually 7 times better off today in an economic sense. And there are still 11 years to go.
So he got that one pretty spot on. Where he struggled a little bit was the eternal problem of every great vision: overestimating the human factor!
Fulfilling our needs
According to Keynes, there are two kinds of human needs:
- Absolute needs, which always exists regardless of how we relate to others around us. For example: Enough to eat. These needs are satiable. Once we have enough, we have enough.
- Relative needs, which always need to be superior to those of our fellow humans. For example: A bigger car than my neighbour. Those needs are insatiable.
What Keynes now expected is that as soon as our absolute needs are fulfilled, a sufficient number of people have enough to eat, clothe themselves, move around etc. we decide to devote our time to non-economic purposes. We can live a life of leisure and purposeful endeavours.
The economic problem of all of biological life is the struggle for subsistence. We need to somehow do enough labour (collect food, work …) to keep our biological machine running. So once we fulfill our basic needs easily with a little bit of labour, we can finally be free to engage in purposeful activities.
But therein lies the problem: “Thus we have been expressly evolved by nature-with all our impulses and deepest instincts-for the purpose of solving the economic problem. If the economic problem is solved, mankind will be deprived of its traditional purpose.” Since the beginning of time, we have been trained to work to survive. Now we have forgotten how to enjoy life.
What does it mean to enjoy life?
When he looked at the lives of the rich in his day, who were leading that life of leisure and were bored out of their brains, he hoped that in the future, people would find better uses for their newly won free time than the rich people of his day had. I partially disagree with Keynes there, because we have more and more evidence that hunter gatherer societies didn’t spend nearly as much time as agricultural societies with subsistence work. The economic problem might only have come from the invention of agriculture and not be as hard-wired as he thought. So there is hope that we haven’t forgotten how to use leisure time!
He didn’t expect people to stop working all together. He thought that they would just spend as little time as necessary to earn enough for subsistence and to have a bit of a routine and then follow non-economic pursuits with the rest of the time. A 15 hour work week or 3 hours a day of income work should be enough for that!
Well wouldn’t that be nice! Unfortunately, thanks to social media, we can compare the size of our cars and other things with many more people around the world now. Our relative needs have gained total control in the needs department. Sure, there has been a reduction in official working hours since Keynes’ time, but all in all, inflation and advertising have increased spending on necessary and non-necessary consumption greatly and with the need for financing all that, our work hours are still quite high.
Rich people are losers
With the pursuit of non-economic “duties” Keynes envisaged a loss of social importance of the accumulation of wealth. And how deliciously this world-famous economist deconstructs the value of money: “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.” – basically calling people who live to get rich mentally ill people. There will always be a few of these, but “the rest of us” can let them do their thing, and just enjoy life once we earn enough to live. Oh boy, was he wrong with that! I can’t see an end to the quest to “get rich or die trying”.
It makes sense to think that we would stop working once we have enough and start pursuing other enjoyments in life. How could he get it so wrong?
To be fair, Keynes did set a few conditions to his predictions, which would have mainly affected the increase in economic well-being. No major wars, control of population (which was a popular topic at the time), trusting science in scientific matters and not producing too much more than is needed. Even though we failed on most of these, and still incredibly don’t trust science in some countries’ political elites, we managed to increase economic well-being of the majority of the population in developed countries roughly to what Keynes imagined. But are we working less and pursuing leisure?
First of all, although alleviation of poverty has improved greatly in the last few decades (mainly because of the rise of China), many countries still struggle with ensuring the basic necessities for their citizens through economic possibilities and choices. So there is still a way to go.
Meanwhile, in developed nations, we overshot the “goal of necessity” by a huge margin and ensure consumption is ever-increasing by importing useless, short-lived items, which are produced under terrible conditions in far-away places.
The majority has not managed to devote time to leisure as much as Keynes envisaged through inflation, urbanisation (and therefore a massive rise in unproductive rent-expenses) and ever increasing variable costs through subscriptions, services and other little opportunities to spend your income each month. Smashed avo-brekkie on toast anyone?
For those of us lucky enough to have the choice: Think about if you could work less to gain leisure time and how you would spend this time in a fulfilling way. Would you go out and help those in need? Pursue the arts? Travel? Or just watch Television?
The economic struggle of centuries is finally paying off . Wouldn’t it be too bad, if we would pass on the opportunity to evolve the species to the next level?
So work less, live more!