Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

The Economic Impossibility of John Maynard Keynes

Economics / Economic Theory Mar 19, 2010 - 03:21 PM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleWhat shall we do with those people deprived of work by wealth and technology...?

HOW TO FILL the days, hours and minutes? It's now seven decades since John Maynard Keynes peered into the future and declared that, one day, trying to scratch a living would cease being "the permanent problem of mankind."

On the contrary, the moustachioed baron said in 1930; the problem ahead was that people would have too much leisure, too much free time, and not enough to do.

Keynes was bang on of course, as ever. His vision, detailed in Economic Possibilities for Our Grandchildren, has in fact come to pass 30 years early, despite those very wars and conflicts he thought would impair it. By 2030, and "for the first time since his creation" Keynes wrote, "man will be faced with his real...prob­lem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well."

And lo!

"Shoppers on a North Tyneside high street [in the UK] could be forgiven for thinking that a new business has moved into an empty retail unit in the town," says the local council.

"The vacant Select store in Whitley Road, Whitley Bay is the first [empty shop] to benefit with a design treatment that gives the impression of a high quality delicatessen..."

Yes, the United Kingdom – seat of the industrial revolution – is now so advanced, so highly developed, it doesn't even need real shops anymore.

Welcome to the Potemkin High Street. The mere illusion of commerce will do. How's that for a Keynesian possibility...?

"The economic climate has forced many businesses to bring down the shutters. We need to ensure that...our high streets look attractive to both shoppers and potential business investors," says Judith Wallace, the town council's deputy mayor. "The colourful graphic designs – which can feature a whole range of different shop types – are either taped inside the windows or screwed to the fascia so they can be removed and re-used as required," gushes the council on its jolly little website.

Whitley Road's fake-shop was just one of 60 announcements North Tyneside's government press team have put out in the last four weeks. Three press releases per day might seem a bit much for the local population of 191,000. But you've got to keep people busy, right? Otherwise, "Must we not expect a general 'nervous breakdown'?" as Keynes asked back in 1930.

"We already have a little experience of what I mean – a nervous breakdown of the sort which is already common enough in England and the United States amongst the wives of the well-­to‑do classes – unfortunate women, many of them...who cannot find it sufficiently amusing, when de­prived of the spur of economic necessity, to cook and clean and mend, yet are quite unable to find anything more amusing."

Just how has mankind (and his bored, unfortunate wife) attained this evolutionary step change three decades ahead of schedule? Besides assembly-line production and labor-saving devices, Keynes thought the lower orders would be "deprived of their traditional tasks and occupation by their wealth." But not quite. Hardly the wealthiest people in Britain today, even the long-term unemployed enjoy "conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages" (as Keynes once wrote of London's upper-classes on the eve of WWI). Yet it is other people's wealth, not their own – plus two billion low-cost workers quitting communism since 1989, of course – that has freed what used to be called Britain's "working class" from work.

As in the West Midlands, cradle of the industrial revolution and thus another early entrant to Keynes' brave "Post Employment" future, unemployment amongst the north-east's ex-coal-mining population has risen to 9.8% according to the latest official data. Yet a further one-in-four people of working age on Tyneside has opted out of the jobs market entirely. Whether through choice or not (national data says only 7% of the eight million souls deemed economically inactive have taken early retirement), the welfare state – built in Keynes' name after the Great Depression led to a second Great War – promises to feed, clothe and house people, whatever comes. So it's little wonder that, according to one analysis, more than two-thirds of north-east England's economy came from state spending last year, up from 59% in 2004. Nationwide, the total jobless figure has now risen to 27%, just below the historic peaks of the mid-80s, but only because the public-sector payroll has risen by 950,000 since the current administration came to power a little over a decade ago. Take away those jobs, and the horrific worklessness of 25 years ago would be back, but without the hope of falling inflation and interest rates, plus de-regulation and broadening free trade, to reduce it.

"If the gross domestic product of the entire world were distributed evenly, each of the world's inhabitants would have more than enough to bring everyone out of poverty," notes Nobel-winning Joseph Stiglitz, writing one of several essays recently published to commemorate and examine Keynes' Economic Possibilities. The reason so many of us are working more hours than ever before, he guesses, is that financial rewards have been spread out unevenly. "Keynes ignored distributional issues, and failed to appreciate the extent to which global inequity would increase in the second half of the twentieth century," as a review in the Times Literary Supplement puts it.

But what Keynes' economic model didn't miss, however – or at least, what the constant intervention built on his theories guarantees until the money runs out – is the chance to nip here and give away there...putting up a shop-front of busy-busy bees, just like Whitley Road's fake delicatessen.

  • "Unemployment in the UK has fallen for the third month running," says the Financial Times of the January statistics, "but the workforce shrank sharply as young people took refuge in education instead of seeking jobs..."
  • "A package of tax breaks and highway spending cleared the US Congress Wednesday," says Reuters, "the first of what Democrats hope will be several efforts to bring down the 9.7% unemployment rate..."
  • "Demand for labor has been falling steadily for decades as higher productivity has eviscerated the job count in agriculture and manufacturing," says Edward Hadas at BreakingViews. "Leisure, healthcare and other service industries have taken up some of the job slack...but the ageing population will not necessarily change this overall trend very much."

A keen eugenicist, Keynes once shocked his upper-class chums by demanding assisted suicide for bond holders...the "euthanasia of the rentier" in his that taxes didn't go on repayments, and savings could be more wisely spent by clever chaps such as himself.

How long before some new wit, faced with the economic impossibility of the West's post-work society, suggests the same for the lower orders instead...?

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2010

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules