John Maynard Keynes and the Economic Possibilities for Our Grandchildren
John Maynard Keynes and the Economic Possibilities for Our Grandchildren
Why isn't the Keynesian dream a reality today
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John Maynard Keynes and the Economic Possibilities for Our Grandchildren
John Maynard Keynes was a colorful man revered as an economist, investor, and hedge fund pioneer. He was bisexual and married Russian ballerina Lydia Lopokova at the age of 42. His former lover Duncan Grant was the best man at their wedding. Among other things, he is famous for his words from his deathbed, “My Only Regret Is That I Have Not Drunk More Champagne In My Life”
In 1930, right in the middle of the Great Depression, Keynes wrote “The Economic Possibilities of Our Grandchildren” to argue that the fears about economic stagnation were overblown and that the world was experiencing unparalleled technological advancement and capital accumulation. Keynes forecasted that the standard of living would be so improved that no one would need to worry about making ends meet. He said that our grandchildren would work about three hours a day, and even this reduced schedule would represent more labor than was necessary.
“For the first time since his creation man will be faced with how to occupy the leisure, which science and compound interest will have won. Yet there is no country and no people, I think, who can look forward to the age of leisure and of abundance without dread. For we have been trained too long to strive and not to enjoy,” he said.
Economic possibilities for your grandchildren
It is 2024. The Keynesian dream hasn’t materialized for most people. Was Keynes mistaken? Have the productivity gains from technology not been enough? AI can code, write essays, match us with cab drivers, book tickets, and schedule our meetings. Why hasn’t work shrunk given all the productivity gains? Will we continue to strive without enjoying?
I think technology has delivered its promise on many fronts. The same work that would take hours earlier can be finished with a few clicks. That said, the nature of work has changed. For most jobs, more than the quantity of effort, judgment has become the defining factor. Even though doing individual tasks has become efficient, people spend more time working on more complex challenges.
Let’s take the example of professional translators. Despite the capability of large language models to automate and produce decent-quality translations, the median wages have increased. The role of translators has evolved to tackle more challenging works and ensure that subtle nuances are retained in the final product. The first draft could be created by AI, but taking that first draft into something ready for publication remains a demanding and time-consuming activity. This allows the translators to be creatively engaged and work on more interesting problems.
AI and other technology-induced productivity gains have enhanced expectations across professions. For researchers, simply putting together a literature review is not enough. They need to be able to demonstrate a deeper understanding of how different papers connect and put forward a cogent analysis that is beyond what a machine is capable of doing.
For our grandchildren, the real challenge would be to learn to work with technology and continually level up their output. It won’t be all fun and games. The rate at which machines improve is often much faster than humans. Finding out ways to deliver products and services with a human touch, marked with a judgment quotient developed over a period of collaborating with machines would be the defining factor.
Will they work 15 hours a week? It is unlikely. Voltaire once said, “Work saves us from three great evils: boredom, vice, and need.” People often burn out and wish to work less because they end up spending time on stuff that either doesn’t pique their curiosity or seems inconsequential. Even if all basic needs were met and technological gains would lead to enough economic surplus, people would likely look for ways to develop themselves. This is captured in the perfectionist philosophy, an ethical theory that defines the good life as the development and exercise of human excellences or virtues to their fullest potential. It posits that human beings have certain capacities or attributes that are intrinsically valuable and worth cultivating, such as rationality, creativity, and moral virtues.
Through my work at Network Capital, I have met people who had massive success fairly early in life. The one thing they all did was to take a break, find a new mission, and get back to work. You can call them success addicts or boring workhorses defined by their professions, but I believe it comes down to the intrinsic human desire to do something that matters.
To sum up, the economic possibilities for our grandchildren would be infinite, almost as vast as the challenges that would be thrust upon them along the way. To realize their potential and navigate choppy terrains, they will work, hopefully on stuff they care about, which is likely to be more than Keynes estimated.