Impossible possibilities for Keynes’s grandchildren*

Posted: 13 January 2016 in Uncategorized
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Back in 1930, John Maynard Keynes (pdf) famously predicted that over the next 100 years (and therefore for his contemporaries’ grandchildren) the amount of wealth produced would make it possible for people to devote less and less time to work—such that a 15-hour workweek would be standard. The problem, Keynes thus presumed, would not be to provide adequate living standards and work for people, but instead to find adequate ways of filling the growing number of hours of nonwork.

Keynes was, of course, wrong—not in terms of increasing wealth (which has steadily increased since his time) but with the workweek (which did decline until the mid-1970s but has held pretty steady since then.

“So,” Rebecca Stone [ht: ja] asks, “what happened? Why are people working just as much today as in 1970?”

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As it turns out, Benjamin Friedman has recently published an essay in which he attempts to understand how Keynes got it so wrong—in other words, why the possibility of less work has in fact become impossible. The key reason is that Keynes failed to allow for an increasingly unequal distribution of income. With a growing gap between a tiny group at the top and everyone else, real wages and thus median income basically stopped growing in the mid-1970s, which is “roughly coincident with the leveling off of the average workweek.”

Thus, Friedman concludes,

with widening income inequality in recent decades the failure of either the incomes or the consumption of most American families to keep up with the growth of U.S. output per capita bears directly on the initial accuracy but subsequent failure of Keynes’s prediction for work. Until the 1970s, Keynes was right on both fronts: per capita output grew at the upper end of the range he predicted, most families’ incomes grew even faster (inequality was mostly narrowing during that period), and the workweek continued to decline. But with widening inequality from the early 1970s on, the growth of most families’ incomes became far slower than he had predicted, and the workweek stopped declining. The latter combination has persisted ever since.

In other words, what Keynes did not understand is that workers don’t just produce wealth, which they can then enjoy by reducing the amount of work they do. They produce wealth that stands opposed to them, wealth in the form of capital, which is then used to render part of the working population superfluous, thus dragging down the wages of other workers, who are then employed to boost the profits of their employers. The workweek of the employed population doesn’t decrease, even as they are joined to new technologies and are transferred to new sectors of the economy.

Keynes’s grandchildren are in fact producing much more wealth. But the increasingly unequal way that wealth is apportioned across society renders impossible the possibility of shortening the time they work for their employers and increasing the hours of nonwork they can enjoy in their own pursuits.

Only a fundamental change in the way wealth is produced, and thus in the way the economy is organized, will make that possibility actually possible.

*Yes, I know Keynes was gay and, although he was married to Lydia Lopokova for 21 years, he didn’t have any children, let alone grandchildren.

Addendum

And Keynes wasn’t a very good currency trader either.

Comments
  1. Ken Besse says:

    Why is it necessary to bring out that Keynes was gay? I don’t see how it is relevant to your article. You could have just referred to future generations to make your point.

    • David F. Ruccio says:

      I mentioned Keynes’s sexual orientation for two reasons: First, generations of mainstream economists, including some of Keynes’s biographers, simply wouldn’t mention it. Second, one famous Harvard professor decided, back in 2013, to make an issue of Keynes’s homosexuality, asserting that he didn’t care about future generations because he was gay and didn’t have children. I guess I’m just sick and tired of the rarely challenged heteronormativity of mainstream economists and mainstream economic theory.

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