"Economic Possibilities for our Grandchildren" is a good starting point. Keynes made the same point with more precision 15 years later in a letter to T. S. Eliot and a couple years before that in a Treasury Department memorandum on full employment after the war.
http://econospeak.blogspot.ca/2009/08/skidelsky-on-keynes-and-queens.html Here's how Keynes biographer Lord Skidelsky summed up the relationship between the earlier essay and the later letter: My final section can best be introduced by quoting from a letter Keynes > wrote to T.S. Eliot on April 5, 1945: "The full employment policy by means > of investment," he wrote, "is only one particular application of an > intellectual theorem. You can produce the result just as well by consuming > more or working less" (CW, XXVII, p. 384). > > To make sense of this mysterious remark, one has to go back to Keynes' > essay, "Economic Possibilities for our Grandchildren," first read to > Winchester schoolboys in 1928, or even further back to G.E. Moore's Principia > Ethica, the bible of his youth and the source of his ideas about the good > life. Economics, Keynes always insisted, is only useful if it can get us > over the hump of scarcity, as quickly as possible, into the realm of > plenty, when man would confront his "real, his permanent problem--how to > use his freedom from pressing economic cares ... to live wisely and > agreeably and well" (CW, IX, p. 328). "The full employment policy by means > of investment" is Keynes' method of accelerating through the barrier. From > this perspective, the mass unemployment of the interwar years was not just > the result of a random collapse of confidence, but the precursor of what > can happen to rich societies that fail to make adequate preparations for > the good life which wealth makes possible. > > It is typical of Keynes that he should have returned to this vision during > the war itself, as soon as it became clear that the Allies would win. The > core of it is contained in a memorandum he wrote on May 25, 1943, entitled > "The Long-Term Problem of Full Employment." He saw three phases after the > war. In phase I, which he thought might last five years, investment demand > would exceed full employment saving, leading to inflation in the absence of > rationing and other controls. In this phase, the emphasis should be on > securing a high rate of saving in order to reconstruct the war damaged > economy. In phase 2, which he thought might last between five and ten > years, he foresaw a rough equilibrium between investment and full > employment saving "in conditions of freedom," with the state active in > varying the pace of investment projects. In phase 3, investment demand is > so saturated that it cannot be brought up to the level of full employment > saving without embarking on wasteful and unnecessary programmes. In this > phase, the aim of policy should be to encourage consumption and discourage > saving, and so absorb some of the unwanted surplus by increasing leisure, > with shorter hours and more frequent holidays. This will mark the entrance > to the "golden age," the age of capital saturation. Eventually, Keynes > thought, "depreciation funds should be almost sufficient to provide all the > gross investment that is required" (CW, XXVII, pp. 321-324; also see Keynes > to Josiah Wedgwood, July 7, 1943, p. 350). It is the age, foreshadowed in > the General Theory, of the "euthanasia of the rentier," since there will be > no demand for new capital. > > The same objection can raised against this essay in prophecy that was > raised against Keynes' earlier "Economic Possibilities for our > Grandchildren": that it assumes that all material wants in the wealthy > nations will be quickly saturated, and that it completely ignores the > capital needs of the poor countries. In these respects Keynes was a child > of his times. He did not foresee that technology would constantly create > new products and underestimated the ability of advertising constantly to > create new wants. Above all, he did not foresee the postwar population > explosion in the developing countries. This factor, more than anything > else, has rendered his prophecy academic. > > Nevertheless, it does raise some pretty fundamental questions about what > economics is for, as well as the distinctly awkward question of how far the > peoples of wealthy nations should continue postponing their own "golden > age" until everyone in the world has caught up with them. What is certain > is that Keynes would never have worshipped at the altar of GDP. The rate of > per-capita income growth was only important to him as an indication of the > speed at which societies were approaching material abundance. Beyond that > point, he expected that rates of growth would and should slow down. One can > surmise that he would have had little sympathy for "endogenous growth > theory" which promises to postpone the slowdown of rich countries, and thus > the "catch up" of poorer countries, into a far distant future. > > My purpose in this paper has not been to enter into an argument with > Keynes. It has been to show that his thought, from whatever period of his > life one chooses to take it, is richer, more suggestive, and more > unexpected than the textbook Keynesianism that still flourishes, or the > administrative Keynesianism that ruled policy in the 1950s and 1960s. His > views on the minimum sustainable rate of unemployment and his fiscal > philosophy still have a great deal to offer governments. His reminder that > economics needs to retain its connection with the non-economic ends of life > as these have been conceived by moralists and ethical philosophers remains > a necessary warning against blind worship of the golden calf, and against > marketization carried to extreme lengths. So I say: Down with Keynesianism, > and up with Keynes! On Fri, Apr 13, 2012 at 11:50 AM, Arthur Cordell <[email protected]>wrote: > Keith see the url below Economic Possibilities for our Grandchildren > > > http://www.marxists.org/reference/subject/economics/keynes/1930/our-grandchi > ldren.htm > > Keynes saw the world quite clearly. He saw a future where we wouldn't have > create work and worry about unemployment. > > -----Original Message----- > From: [email protected] > [mailto:[email protected]] On Behalf Of Ed Weick > Sent: Friday, April 13, 2012 2:12 PM > To: Keith Hudson; RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION > Subject: Re: [Futurework] "Efficiency's Promise: Too Go od to Be True" > "More > Jobs Predicted for Machi nes, Not People" > > Not sure that you have Keynes and Marx right here, Keith. When I studied > economics, Keynesianism was still very much the vogue. I don't recall that > his solutions were to be applied via the banks or printing money. Rather, > the idea was to involve large scale public works etc. when the private > sector ran out of steam and the public sector had to kick in. I suppose > that borrowing and printing money might have been part of this, but it was > not emphasized. As for Marx, the ideas were very good, but how would you > ever do what he recommended. Well, as Lenin and Stalin demonstrated, the > state would do it, and in doing it, they would convert a humane idea into a > horror show. > > One of the best books I've read on why good ideas go terribly wrong is John > Gray's "Black Mass". If you haven't read it, do take a look. > > Ed > > > ----- Original Message ----- > From: Keith Hudson > To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION ; Tom Walker > Sent: Thursday, April 12, 2012 10:32 PM > Subject: Re: [Futurework] "Efficiency's Promise: Too Go od to Be True" > "More > Jobs Predicted for Machi nes, Not People" > > > Tom, > > Your previous comments over the years on FW concerning the "lump of labour > fallacy" caused quite a change of mind in my own thinking, so I was > interested to read your recent exegesis of the increasing > automation-joblessness problem on your ecologicalheadstand website. There, > you contrast the different approaches taken by Marx and Keynes in trying to > solve the same problem. Here, I'd just like to describe what I think are > the > reasons why they both failed. > > Marx was writing at a time when factory conditions were still atrocious (or > at least had been a few years previously according to the out-of-date > statistics that Engels was feeding him with) and workers (mostly fresh from > the countryside and highly biddable) were being badly exploited by the > factory owners (with the exception of a few such as Robert Owen, and some > of > the Quakers, etc). On the whole, though, workers were slowly beginning to > prosper and, due to gradually improving water and sewage works in the large > cities, children were surviving in larger numbers and the population was > expanding at a fast clip. They were beginning to buy modest versions of the > sort of consumer products that the middle-class were already buying. > Growing > production efficiencies were such that a growing demand could be met and > even if workers were displaced from one factory due to more automation they > could usually find another job in a factory in a slightly newer industry. > Note, however, that when Marx was writing none of the consumer goods were > yet important enough (or pricey enough) that they were transformational > both > in their economic effects (the saving of money to buy the goods) and in > their social use. Within two or three decades, however, workers were able > to > buy a bicycle, for example, which enabled them to be much more choosy about > where they might work for the best wages. > > By the time Keynes was writing most of the iconic consumer goods that we > have today (electrical goods of many sorts, telephone, radio, television, > car) were already in existence for the enjoyment of a growing middle-class > (what I term the 20-class of today), but not yet for most of the population > (what I term the 20-class of today). And they certainly weren't for the > millions of workers in the industries which had been highly profitable > (producing highly exportable goods) in the years before World War I. These > were cotton, coal, ship building, heavy engineering (bridges, railway > locomotives, etc). These were no longer profitable (or exportable) because, > although money had inflated three times during the War, the Bank of England > (then more powerful than the Government) was intent on deflating the pound > until it was as valuable as the pre-war pound. Many workers' wages in the > big industries were ground down and owners couldn't get the capital to > reinstate their machinery, worn-down by the war. Exports were drying up. > Keynes' General Theory was therefore concerned mostly with how to overcome > this large-scale unemployment problem rather than to describe an economic > theory of an economy in equilibrium. Although there was a cornucopia of > consumer goods that were, in theory, available for millions of workers to > buy they simply hadn't enough wages (or had none at all) to buy them with. > > But neither Marx or Keynes were able to imagine a world in which credit > would become so widely available as today (or, rather until 2008). By > 1980/90 or so, not only were workers receiving wages that enabled them to > buy consumer goods that Marx could never even dream of, workers were able > to > get credit for money far beyond anything Keynes could possibly imagine. In > his day (when he wrote his Theory), the big commercial banks were growing > so > fast and so out of control of the Bank of England (or of the Fed in > America) > that instead of keeping up to 20% or even 30% of cash in reserve when they > created credit (to carefully assessed customers) they allowed their > reserves > to decline to almost nothing (0% to 2% or 3%) by the time of the 2008/9 > crash, Instead of being constrained to give credit of something up to 3 or > 4 > times their reserves, they were beginning to give almost unlimited credit. > And, just to make sure (so they thought) they were all in addition buying > and selling insurance policies (derivatives) from one another. In Japan, > America and Europe, the commercial banks felt impregnable until 2008/9 hit > them (though it hit Japan in 1990). (The small number of investment banks > were in far better condition because they were clever enough to invent the > myriad of derivatives with which they conned the high street banks.) > > But despite the limitations of their respective theories, both Marx and > Keynes (geniuses both to be sure) were aware that the very real problem of > almost total automation of consumer goods still existed over the longer > term. Who would be able to buy them? It is this ultimate problem which > neither has been able to solve. Marx's solution (communism) has already > collapsed, Keynes' solution (government controlled money-printing and > attempted bail-outs of the banks) looks very much as though it is not > succeeding. > > Keith > > > At 00:11 13/04/2012, you wrote: > > An invisible thread connects David Owen's The Conundrum ( "Efficiency's > Promise: Too Good to Be True") and Erik Brynjolfsson's and Andrew McAfee's > Race Against the Machine ( "More Jobs Predicted for Machines, Not People"). > Both books address real -- and very important -- problems but they both > arrive at false conclusions. > > The "conundrum," according to Owen, boils down to a lack of commitment > driven by conflicting motives, "Do we honestly care?" he laments at the > end, > citing George Orwell's observation that, "All left-wing parties in the > highly industrialized countries are at bottom a sham, because they make it > their business to fight against something which they do not really wish to > destroy." > > Meanwhile, Brynjolfsson and McAfee prescribe the clichéd panaceas of > education, "flexibility" and entrepreneurship: "Our skills and institutions > will have to improve faster to keep up lest more and more of the labor > force > faces technological unemployment." > > continued at: > > > http://ecologicalheadstand.blogspot.ca/2012/04/efficiencys-promise-too-good- > to-be-true.html?spref=fb > > -- > Cheers, > > Tom Walker (Sandwichman) > _______________________________________________ > Futurework mailing list > [email protected] > https://lists.uwaterloo.ca/mailman/listinfo/futurework > Keith Hudson, Saltford, England http://allisstatus.wordpress.com > > > > > _______________________________________________ > Futurework mailing list > [email protected] > https://lists.uwaterloo.ca/mailman/listinfo/futurework > > _______________________________________________ > Futurework mailing list > [email protected] > https://lists.uwaterloo.ca/mailman/listinfo/futurework > > > _______________________________________________ > Futurework mailing list > [email protected] > https://lists.uwaterloo.ca/mailman/listinfo/futurework > -- Cheers, Tom Walker (Sandwichman)
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