Revisiting Keynes: Economic Possibilities for Our Grandchildren

by Lorenzo Pecchi (Editor), Gustavo Piga (Editor), Gary Stanley Becker

In 1931 distinguished economist John Maynard Keynes published a short essay, "Economic Possibilities for Our Grandchildren," in his collection Essays in Persuasion. In the essay, he expressed optimism for the economic future despite the doldrums of the post-World War I years and the onset of the Great Depression. Keynes imagined that by 2030 the standard of living would be dramatically higher; people, liberated from want (and without the desire to consume for the sake of consumption), would work no more than fifteen hours a week, devoting the rest of their time to leisure and culture. In Revisiting Keynes, leading contemporary economists consider what Keynes got right in his essay--the rise in the standard of living, for example--and what he got wrong--such as a shortened work week and consumer satiation. In so doing, they raise challenging questions about the world economy and contemporary lifestyles in the twenty-first century. The contributors--among them, four Nobel laureates in economics--point out that although Keynes correctly predicted economic growth, he neglected the problems of distribution and inequality. Keynes overestimated the desire of people to stop working and underestimated the pleasures and rewards of work--perhaps basing his idea of "economic bliss" on the life of the English gentleman or the ideals of his Bloomsbury group friends. In Revisiting Keynes, Keynes's short essay--usually seen as a minor divertissement compared to his other more influential works--becomes the catalyst for a lively debate among some of today's top economists about economic growth, inequality, wealth, work, leisure, culture, and consumerism. ContributorsWilliam J. Baumol, Leonardo Becchetti, Gary S. Becker, Michele Boldrin, Jean-Paul Fitoussi, Robert H. Frank, Richard B. Freeman, Benjamin M. Friedman, Axel Leijonhufvud, David K. Levine, Lee E. Ohanian, Edmund S. Phelps, Luis Rayo, Robert Solow, Joseph E. Stiglitz, Fabrizio Zilibotti

Genres: Economics

229 pages, ebook

First published September 1, 2008

Reviews

[Tom Plaskon · Rating 5 out of 5]

This is the most profound book I have read since The Company. Like the The Company, Revisiting Keynes provides us with various analytical lenses that allow us to observe powerful long term historical and economic trends.

What is it about?
In 1930 renowned economist John Maynard Keynes wrote an article entitled "Economic Possibilities for our Grandchildren." In it Keynes predicted that the economic contraction caused by the Great Depression would be transitory and that the economy would return to its long-term trend of between 2 and 3% annual growth. If this happened, it would mean a four to eight fold increase in the standard of living in a hundred years (in Keynes' grandchildren's time). Keynes turned out to be astonishingly accurate with the US achieving 800% GDP growth and the UK achieving 450% GDP growth in the 75 years since he wrote the article.

The second prediction Keynes made did not turn out so well. He predicted that with this massive increase in wealth accumulated by 2030 that people's material desires would be satiated. In 2030, so Keynes thought, people would only work 15 hours a week. This would free up large amounts of time for leisure. The real problem of the future would be not be figuring out how to feed ourselves but what to do with all our free time. Why did this prediction go so wrong when there was already a trend in Keynes' own time toward shorter work weeks?

The book includes the original article by Keynes, as well as 15 reaction pieces written by economists. The articles cover:
- What did Keynes get right?
- What did Keynes get wrong? Why?
- What can we look forward to in the future?

[Lance Cahill · Rating 4 out of 5]

Interesting contributions with the central focus being Keynes’ ‘Economic Possibilities for our Grandchildren’ essay which predicted that the pace of technical innovation will result in the central economic problem (essentially material resource scarcity) being solved; the advent of technological unemployment; increase of living standards by magnitude of 4 - 8x; and a shortened work week.

Beyond the increase in living standard, Keynes’ predictions are shown to be off, but illuminating. Personally, found Joe Stiglitz’s, Richard Freeman’s, and Lee Ohanian’s contributions to be the most interesting.

[Benji · Rating 4 out of 5]

The change in real per capita income in the more fortunate nations in the century that has recently concluded is a change so enormous that it is virtually impossible to comprehend.

Our forebears could not have imagined today's luxuries. Let's hope this increase will continue so I can continue to enjoy my immeasurable psychic and aesthetic pleasures, pleasures whose magnitude are far less obvious and even far less definable than this continuing explosion of output and innovation (: