x Abu Dhabi, UAEMonday 24 July 2017

Consumerism the great illusion as the rich just get richer

As people in the developed world wonder how their countries will return to full employment after the Great Recession, it might benefit us to take a look at a visionary essay that John Maynard Keynes wrote in 1930.

The essay John Maynard Keynes wrote in 1930 equipped governments with tools to counter the unemployment caused by slumps. AP Photo
The essay John Maynard Keynes wrote in 1930 equipped governments with tools to counter the unemployment caused by slumps. AP Photo

As people in the developed world wonder how their countries will return to full employment after the Great Recession, it might benefit us to take a look at a visionary essay that John Maynard Keynes wrote in 1930, called Economic Possibilities for our Grandchildren.

Keynes' General Theory of Employment, Interest, and Money, published in 1936, equipped governments with the intellectual tools to counter the unemployment caused by slumps.

In his earlier essay, however, Keynes distinguished between unemployment caused by temporary economic breakdowns and what he called "technological unemployment" - that is, "unemployment due to the discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour".

He reckoned we would hear much more about this kind of unemployment in the future. But its emergence, he thought, was a cause for hope, rather than despair. For it showed that the developed world, at least, was on track to solving the "economic problem" - the problem of scarcity that kept mankind tethered to a burdensome life of toil.

Machines were rapidly replacing human labour, holding out the prospect of vastly increased production at a fraction of the existing human effort. Keynes thought that by about now (the early 21st century) most people would have to work only 15 hours a week to produce all that they needed for subsistence and comfort.

Developed countries are now about as rich as Keynes thought they would be but most of us work much longer than 15 hours a week, although we do take longer holidays and work has become less physically demanding, so we also live longer. But the prophecy of vastly increased leisure for all has not been fulfilled.

At the same time, "technological unemployment" has been on the rise. If most people still work a 40-hour week, a substantial and growing minority have had unwanted leisure thrust upon them in the form of unemployment and forced withdrawal from the labour market.

We have largely failed to convert growing technological unemployment into increased voluntary leisure. The main reason for this is that the lion's share of the productivity gains achieved over the past 30 years has been seized by the well-off.

Particularly in the United States and Britain since the 1980s, we have witnessed a return to the capitalism "red in tooth and claw" depicted by Karl Marx.

The rich and very rich have got very much richer, while everyone else's incomes have stagnated. So most people are not, in fact, four or five times better off than they were in 1930.

Modern capitalism inflames through every sense and pore the hunger for consumption. Satisfying it has become the great palliative of modern society, our counterfeit reward for working irrational hours. Advertisers proclaim a single message: your soul is to be discovered in your shopping.

Aristotle knew of insatiability only as a personal vice; he had no inkling of the collective, politically orchestrated insatiability that we call economic growth.

The civilisation of "always more" would have struck him as moral and political madness.

And, beyond a certain point, it is also economic madness. This is not just because we will soon run up against the natural limits to growth. It is because we cannot go on for much longer economising on labour faster than we can find new uses for it. That leads to a division of society into a minority of producers, professionals, supervisors and financial speculators on one side, and a majority of drones and unemployables on the other.

Such a society would face a classic dilemma: how to reconcile the relentless pressure to consume with stagnant earnings. So far, the answer has been to borrow, leading to today's huge debt overhangs in advanced economies. Obviously this is unsustainable.

The truth is that we cannot go on successfully automating our production without rethinking our attitudes toward consumption, work, leisure and the distribution of income. Without such efforts of social imagination, recovery from the current crisis will simply be a prelude to more shattering calamities in the future.

Robert Skidelsky's new book, co-authored with Edward Skidelsky, is How Much is Enough?

* Project Syndicate