The Future of Work Part 1: John Maynard Keynes
As the global depression spiraled towards its depths in 1930, John Maynard Keynes wrote a cheerful article on the future of work: Economic Possibilities for our Grandchildren. He argued that it wouldn’t be too long before capital accumulation and technological change would come near to solving the economic problem of material subsistence, of producing enough goods and services to provide everyone with the necessities of life and largely relieving them of the burden of work.
The paper begins with a very brief description of the problems of the time:
We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another. The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption; the improvement in the standard of life has been a little too quick; the banking and monetary system of the world has been preventing the rate of interest from falling as fast as equilibrium requires.
This statement anticipates the views of Karl Polanyi in The Great Transformation, and of Hannah Arendt in The Origins of Totalitarianism. They argue persuasively that massive technological changes led to changes in social structures which were profoundly upsetting to large numbers of people. Polanyi says that a decent society would take steps to relieve people of these stresses, perhaps by forcing a slower pace of change, or perhaps by legislation to protect the masses. Arendt claims that for a while, imperialism offered a solution by absorbing some of the excess workers. Both believed that the stresses of constant change and displacement of workers played an important role in the rise of fascism.
Keynes then points out the history of growth in world output. From the earliest time of which we have records, he says, to the early 1700s, there was little or no change in the standard of life of the average man. There were periods of increase and decrease, but the average was well under .5%, and never more than 1% in any period. The things available at the end of that period are not much different from those available at the beginning. He argues that growth began to accelerate when capital began to accumulate, around 1700.
It’s interesting to note that this sketch of economic history accords nicely with that provided by Thomas Piketty in Capital In The Twenty-First Century. This is Piketty’s Table 2.5. Compare this with Figure 2.4, The growth rate of world per capita output since Antiquity until 2100.
Keynes argues that since 1700 there has been a great improvement in the lives of most people, and there is every reason to think that will continue. Certainly there was the then current problem of technological unemployment, with technology displacing people faster than the it was creating new jobs. But he says it is reasonable to think that in 100 years, by 2030, people will be 8 times better off, absent war and other factors. He says there are two kinds of needs, those that are absolute, and those with the sole function of making us feel superior to others. The latter may be insatiable, he says, but the former aren’t, and we are getting closer to satisfying them. In so doing, we are getting close to solving the ancient economic problem: the struggle for subsistence.
That problem is indeed ancient. It shows up in Genesis, 3:17. Adam and Eve have eaten the fruit of the Tree of Knowledge of Good and Evil, and the Almighty punishes Adam with these words:
To Adam he said, “Because you listened to your wife and ate fruit from the tree about which I commanded you, ‘You must not eat from it,’ “Cursed is the ground because of you; through painful toil you will eat food from it all the days of your life.
To be relieved of this ancient curse should be a wonderful thing. Keynes doesn’t think it will be an easy transition though. The struggle for subsistence is replaced by a new problem: how to use the new freedom, how to use the new-found leisure. He thinks people will have to have some work, at least at first, to give us time as a species to learn to enjoy leisure. He thinks that those driven to make tons of money will be seen once again in moral terms: as committing the sin of Avarice. They will be ignored or controlled in the interests of the rest of us.
As it turns out, this wasn’t one of Keynes’ better predictions. It isn’t clear that there is such a thing as a minimum absolute needs, for example, and technology has not yet removed the need for all work. Still, the goal of solving the economic problem seems sensible, and his discussion of the problems of a possible transition seems accurate.
People want to work, and they want everyone else to work too. There have been a number of reported interviews with Trump voters, many of who claim that this has become a give-away society. People complain that it pays better to be out of work than in work because of all the free stuff you get, health care (Medicare), free phones, food stamps, SSDI, free housing and so on, so they voted for Trump thinking he’d fix it so that only the deserving poor would get that free stuff. They think people don’t want to work, which feels like projection, and if they have to work, everyone should. Work has a number of social benefits, including a sense of purpose, responsibility, and pride. How are these to be handled in Keynes’ Eden?
The pace of technological change has picked up. It not only affects blue-collar workers, it’s starting to hit on doctors, lawyers and even translators. Here’s an article on improvements in translation based on neural network machine learning from the New York Times Magazine; and here’s a report from the White House on the impact of artificial intelligence on jobs. And here’s an article in the NYT’s Upshot column discussing the White House Report, and a rebuttal from Dean Baker.
These problems are crucial to the future of democracy. They concern the nature of our institutions and our social structures, as well as questions about our nature as human beings. I’ll take these up in more detail in future posts in this series.
Update: Here’s a link to the Keynes paper discussed in this post.
“…Keynes then points out the history of growth in world output. From the earliest time of which we have records, he says, to the early 1700s, there was little or no change in the standard of life of the average man. There were periods of increase and decrease, but the average was well under .5%, and never more than 1% in any period…”
This isn’t history it is ideology. Keynes was well aware of this.
It takes but a moment of thought to realise that the second sentence is complete nonsense: everyone knows that there were enormous leaps in productivity in the millenia before 1700. There were enormous technological changes (invention of ploughs; use of draught animals: horse collars, etc ad nauseam) improvements in seed selection, the development of new plants-potatoes, maize,- and their spread to new regions.
As to living standards these rose and declined many times, and dramatically too. They had much to do with social relations and property, law and custom.
The third sentence is pure conjecture and most unlikely to be correct, whatever it means-which is by no means clear.
Keynes inherited all the ideological baggage of liberal capitalism, according to which modern history begins with capitalism-‘modernity’. He assumes the crudest sort of stadial historiography and takes its validity for granted.
The problem is that his assumptions are untrue and that arguments constructed on such premisses are fatally flawed.
You wrote, “Keynes inherited all the ideological baggage of liberal capitalism,…”
From whom did he inherit it?
What of Keynes have you read?
Wasn’t Keynes correct that capital investment is a positive-sum game and that economic rents are zero-sum.
Isn’t a major cause of inequality–which I think Ed was driving at–that capital always gets expensive and is less and less available to the 99%?
Is the rise in the cost of capital behind the rises in the cost of heath care and education?
bevin, you wrote, “It takes but a moment of thought to realise that the second sentence is complete nonsense:”
Here’s Keynes’ second sentence. “From the earliest time of which we have records, he says, to the early 1700s, there was little or no change in the standard of life of the average man.”
Weren’t all or most of the technological changes you mentioned present by the time humanity started keeping “records?”
Ed, many thanks.
I’m going to have to read it again, several times, when I get some spare time.
This sentence, however, jumped out at me and it’s a bullseye.
“There have been a number of reported interviews with Trump voters, many of who claim that this has become a give-away society.”
Problem is, it ignores that the elites get the vast majority of federal welfare.
1. From the Office of the Comptroller of the Currency:
“The notional amount of derivative contracts held by insured U.S. commercial banks and savings associations in the first quarter increased by $12.0 trillion (6.6 percent) to $192.9 trillion from the previous quarter (see table 10).”
For perspective on $193 trillion of insurance coverage that the FDIC (Federal Deposit Insurance Corporation) provides at no charge, annual U.S. GDP—Gross Domestic Product—is around $18 trillion.
“Congressional appropriations to the Pentagon from 2001-2016 have totaled more than $8.5 trillion.”
Social Security’s Trust fund is around $2.3 trillion.
“Pay as you go” is for the little people. Doesn’t apply to welfare for the elites.
“Senate passes pay-go rule on party-line vote”
“60 Democratic senators voted to adopt the pay-go measure (short for “pay-as-you-go”), which would require that new spending measures be offset in the budget by other funds, typically raised through tax increases or cuts to spending.”
“Pay As You Go” Medicare”
Not everyone agrees that derivatives fall under the Federal Deposit Insurance Corporation’s mandate. In 2011 the Journal of Finance published “Should Derivatives Be Privileged in Bankruptcy?”
“Under OLA, all Qualified Financial Contracts (QFCs), which include swaps, repos, and other derivatives, are transferred into a solvent bridge bank, such that counterparties are fully protected and therefore “prohibited from terminating their contracts and liquidating and netting out their positions” (see p. 9 in FDIC (2011)).” (p.38)
From Footnote 1: Similarly, under FDIC receivership there is essentially no stay on derivative contracts. If not transferred to a new counterparty by 5 pm EST on the business day after the FDIC has been appointed receiver, derivative, swap, and repo counterparties can close out their positions and take possession of collateral.” (p.46)
From the article’s abstract: “Derivatives enjoy special status in bankruptcy: They are exempt from the automatic stay and effectively senior to virtually all other claims.”
From Ellen Brown’s “A Crisis Worse than ISIS? Bail-Ins Begin:”
Dodd-Frank states in its preamble that it will “protect the American taxpayer by ending bailouts.” But it does this under Title II by imposing the losses of insolvent financial companies on their common and preferred stockholders, debt holders, and other unsecured creditors. That includes depositors, the largest class of unsecured creditor of any bank.
Title II is aimed at “ensuring that payout to claimants is at least as much as the claimants would have received under bankruptcy liquidation.” But here’s the catch: under both the Dodd Frank Act and the 2005 Bankruptcy Act, derivative claims have super-priority over all other claims, secured and unsecured, insured and uninsured.”
The FDIC imposes a $250,000 cap on deposits. Why doesn’t that apply to derivatives?
Since the depositors in FDIC banks do not have a claim on any income from derivatives, why should they incur any liability for them?
We need to get this populist message out.
The “future of work” sounds like an oxymoron given that in all likelihood by the end of this century most work will be performed by robots or AI servers, and therefore “work”–at least as performed by humans–very likely has no future.
Keynes certainly has some insightful commentary on these issues. From an economic perspective however, Keynes is just as wrong as Freedman or any other of the verity of “schools” of economics.
No where in Keynes can you find any attempt to deal effectively with dynastic wealth. Keynes and today Piketty and all those in between and of the opposing “schools” of economics only talk about the future and leave the present and the thrust of history out completely. It is well known, history is replete with examples, the most recent one being the New Deal and its failure along with all the other failures.
The problem with these myth makers claiming to be scientists is that they simply ignore the already accumulated and vast dynastic fortunes. So then taxes are raised and restrictions are placed on capital – for the future – leaving the great fortunes in place. The day after these taxes and restrictions are passed the vast fortunes simply begin the age old process of bribing and buying government and reversing it all. In the case of FDR it took the blink of an eye maybe 50 years or so for great wealth to wipe out FDR but be even further enriched.
China offers a lessen, tens of thousands of lives, generations, father and son built the Great Wall to keep the barbarians out – after all that, all it took was the handing over of a few coins to enter through its doors freely.
The failure of economics to recognize the distortion and harm vast wealth has on society and commerce is a disgrace and provides strong evidence of a mythology – without dismantling and neutralizing the existing great fortunes and the power they have there is no chance for anything like an equable society. It is the unsaid truth Keynes refused to utter.
Economics is not a science and is not based on reasonable assumptions about human behavior. Economics is a myth nurtured and established as “scientific authority” by the ruling elites to serve them and protect their fortunes. Economics is not predictive of human behavior, is not a science or social science – it is a myth.
Addressing the problems set forth here will only be stunted by studying a mythology rather than examining real life. Keynes has little to offer.
The coming of AI is presenting old problems with orders of magnitude more impact on human life. These issue must be addressed correctly and not by relying on already discredited economics and economists. Look around, Keynes failed miserably along with all the rest.
Fretting over there being no work and people just wondering aimlessly around the planet in some daze is a straw man. If we started tomorrow how long do you think it would take to repair and build proper infrastructure for everyone, housing for everyone, schools, hospitals? Many years. There will be plenty of work for some time to come while we discuss what to do with our leisure.
Or more realistically, the human race will “evolve” with genetic engineering and digital enhancements for the elite oligarchy while the rest of us drown in the rising seas.
WRT Keynes, incorrect.
Here’s one example.
“THE outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.”
That’s from Chapter 24 “Concluding Notes on the Social Philosophy towards which the General Theory might Lead” of his, “The General Theory of Employment, Interest and Money.”
As I read the quote I don’t see any addressing of the issue as he acknowledges it, he indicates the distribution should be changed and and made more equitable – in the future – he does not address the already accumulated vast fortunes or the power they would continue to wield. That is my point, it has been shown over and over than no matter what new distribution scheme you come up with if you leave the existing fortunes in place they will simply – and quickly – use their wealth presage and power to put things back to suite their interests – from FDR to Neoliberal inequity in the blink of an eye (50+/- years). And pathetic “prosperity” during even those years.
Keynes always was a two bit economist. Kalecki wrote 90% of what was in The General Theory a few years prior but in Polish so it went under the radar. Kalecki also describes just how inadequate interest rate manipulation would be in achieving full employment, while detailing the petty concerns the rich and business leaders would have for any other path to full employment. Published in 1943, the man was practically a psychic.
Speaking of work, I’m home today, and the others are out, so it’s just me and the two dogs. They are just lying there, and they look at me every time I pass by on the way to do this or that. I wonder if they think something like “What is he doing? My life would sure be more active and exciting if I could do human stuff.” And I think about that, and I think in return, “Trust me, you don’t want to be a human. You have a warm home, you get fed twice daily plus the table scraps from Mom, a nice soft bed to sleep on, walks down the street with lots of sniffing, and the incredible perk of being made so, so happy, time after time, every day of your life–when one of us comes home.” Who could ask for more?
bloopie2:” And I think about that, and I think in return, “Trust me, you don’t want to be a human. You have a warm home, you get fed twice daily plus the table scraps from Mom, a nice soft bed to sleep on, walks down the street with lots of sniffing, and the incredible perk of being made so, so happy, time after time, every day of your life–when one of us comes home.”
Two dogs: (looking at each other and roll eyes) “She hasn’t got a clue. Let her wait at home for 8 hours.. with nothin to do but lay there, while holding back a huge crap and dying of thirst cause she forgot to let us out or filling our water bowl before leaving, and THEN, have to pretend to be happy when she decides to come home. And then expects us to go out in that freeezing cold to pee .. BARE NAKED… of all the nerve. Let her try it. I’d trade places in a heartbeat. Oh, one more thing.. about those table scraps.. yeah, well at least those are better than that normal crap you call “dog food”(rolls eyes again) Let her try eating it… bla!(spits) Dogs life my ass. (both nodding their head in agreement)
quote”Or more realistically, the human race will “evolve” with genetic engineering and digital enhancements for the elite oligarchy while the rest of us drown in the rising seas.”
Bravo. Give this man this years award for GREAT MOMENTS IN COGNITIVE DISSONANCE.
On the other hand, before we reach that point, God may just throw up his hands in total disgust, and say..”FUCK IT. I’m done with you morons.” Although,, Trump, in a monumental nuclear hissy fit meltdown, may beat him to it. Either way, before that happens, I’m just hoping the human race, before they die of starvation, will discover there is power in numbers and drag these Oligarch/Politician/Bankers sonsabitches out of their granite palaces and burn them alive in the streets. Whatever happens next won’t matter anyway.
btw… 10+ to everything you said.
Speaking of a Trump nuclear meltdown… and he hasn’t even taken the Oath of Office yet…
quote”In a series of impromptu statements about nuclear weapons, Donald Trump is threatening to upend longstanding U.S. nonproliferation policy, even as his advisers contradict him and muddy his intentions.”unquote
His “advisors” will eventually get a clue. They are useless.
Meanwhile….Trump redefines the word megalomaniac.
Urgh. Mr. Nobel peace prize President already laid out $1 trillion in Nuclear upgrades and Clinton’s brain dead calls for a Syrian no fly zone were a very thinly veiled pledge to go to war with Russia. But Trump’s trigger happy. The Clinton’s sure did master Rove’s ‘attack your enemy where you are weakest’ strategy.
Thanks, Ed. Glad to see more of your work.
To this, I would add a sense of shared purpose, of community, to which all contribute except the excused: the sick, the too young, the too old. I suspect it is as built-in to our species as our awareness of symmetry and its absence. Like as most traits, it is vulnerable to abuse, such as by the constant stream of propaganda, largely from the right, extolling differences of race and work ethic, in order to garner electoral support and political power.
From the movie, “The Big Short.”
“When unemployment goes up 1%, 40,000 people die. Just don’t (unprintable) dance.”
Federal Reserve is the lender of last resort. FDR had it right. Federal government as employer of last resort makes sense.
Although Bevin and Blueba raise interesting points about Keynes, I won’t be defending Keynes in detail. He was a brilliant man, with a broad range of actual experience in the economic and artistic worlds, widely read and an excellent writer. The essay I cite and the others I have previously cited stand for themselves, and would hardly benefit from any defense I could put up. Indeed, as John Casper shows, Keynes was quite aware of the history of capitalism, and as aware of the importance of dynastic wealth as Piketty, who calls for increased taxes on wealth, both a graduated annual tax on large fortunes and a large Estate Tax.
The point of this essay is to show that our jobs problem is larger than just the Great Recession following the Great Crash. It’s a function of another coming leap forward in technology. That is exactly Keynes’ central point in the essay. He says the rate of change of technology is a problem because it will lead to a much lower level of necessary work.
If anything, Keynes underestimates the problem of disappearing jobs. Today we see the ugly results in many communities: opiod and alchohol abuse, illnesses resulting from bad habits, suicide and more. As earlofhuntington reminds us, work is the basis for a sense of community and teamwork for many of us, which is a pleasurable feeling.I can attest from years of group singing that there is a feeling of peace and joy that is hard to express that comes from that kind of teamwork.
Keynes is far more than merely an economist. Can you imagine this essay coming from Milton Friedman or Gary Becker? I can’t. Remember, Adam Smith is more than an economist too. His other major work, The Theory of Moral Sentiments https://en.wikipedia.org/wiki/The_Theory_of_Moral_Sentiments is much more than an economics book. Much of Keynes is in the same vein.
Ok, I’ve finally decided everyone here, including every fucking “economist”, poster, cum what may moron who never had to eat biscuits and karo syrup for their entire childhood, like my dad, needs a taste of what REAL fucking poverty looks like.. because, under Trump…. YOUR CHILDREN ARE FACING IT…mother fuckers…
You don’t have a FUCKING CLUE.
Sorry to hear about your Dad’s childhood poverty. Glad he was able to survive it.
While I agree with your concerns about Trump, please apologize to Ed.
No one here, especially Ed, is insensitive to what your Dad went through. No one here is “pro-poverty.”
WRT jobs and protein, emptywheel’s not too far from Lake Michigan. Can the Great Lakes be a source for both? IIRC using the total catch in Lake Michigan in 1900–white fish, chubs, smelt,…–would wholesale for around $57,000,000 today. Money manager capitalism destroyed most of that protein source and commercial fishing industry. Remediating that requires enormous federal investment to rebuild the food chain and manage the invasives that destroyed it. Turbine forests in the wind-rich Great Lakes would be a nice source of green energy that’s coveted by Big Data for their data centers, which require fresh water for cooling. Could drones protect migrating bird species from the turbine blades? Whether floating solar panels on the Great Lakes in winter–because the absence of ice-cover warms the lakes–are practical is above my paygrade, but I’d like to see working prototypes. Preventing the warming of the lakes may be more valuable than any electricity the panels generate. Do vertical farms in the Great Lakes make sense? The can produce year-round. As Ed pointed out, if any of these technologies get federal funding, we can count on the elites to make every attempt to loot this technology for their own enrichment.
None of that gets back directly to your concerns about childhood poverty. If we had a buffer of workers employed by a federal job guarantee, it would shrink when the economy was booming.
“None of that gets back directly to your concerns about childhood poverty. If we had a buffer of workers employed by a federal job guarantee, it would shrink when the economy was booming”
Excuse me? My concerns? About childhood poverty? Fuck you. Get the fuck out of here. You still don’t get it. Along with every so called economist. You don’t know shit till you lived it. COMPRENDE?
Son, this tells me you really are clueless. It wasn’t just my dad. It was an entire generation across this planet. Now.. please help me here. Since then..when did these so called “economists” figure out the problem why children are still starving somewhere on the planet. Please call me when you have an answer.
wait.. wait.. I have another question. Please tell me how governments allow multinational corporations…aka ..the Oligarchy of the Planet.. to offshore MULTI TRILLIONS of various currency’s, while the rest of the planet endures the wrath of these scumsucking maggots plague upon their world. Please? When you finally have the answer, please Twitter it so the rest of us get a clue how we can organize, to finally drag these scumsucking monsters from their granite palace’s and burn them alive in the street. COMPRENDE?
1. Since according to you I’m “clueless,” why are you asking me?
2. What are your answers to your questions?
3. Aside from being a keyboard warrior, what actions have you taken for justice?
4. Your Mom never experienced childhood hunger?
5. Did you?
You wrote, “You don’t know shit till you lived it.”
6. Do you really know what your Dad went through?
7. What’s your Twitter handle?
8. Are you using your Dad’s suffering to draw attention to yourself?
9. Where’s that apology to Ed?
You left him out of your last tantrum. Why not mend at least one fence?
ps 2.. I’m feeling generous tonight. Because you seem so fucking clueless, I’m going to give you one…
moreover, shove your goddamned so called “economics” up your fucking ass.
Meanwhile, every move you make, every purchase you make , every doctor visit, every inch of every two foot of movement you make, every time you open your refrigerator, or order pizza or go to a restaurant, every time you drive, every time you do ANYTHING.. is now being profit motive analyzed, or stored for future crime. Welcome to your and your progeny’s future.
And this doesn’t even touch on the wellspring of your smartphones full potential.. Hahahahahahahahaha.. your a moron if you carry a smartphone.
Laborers in the Vineyard
“For the kingdom of heaven is like a master of a house who went out early in the morning to hire laborers for his vineyard. After agreeing with the laborers for a denarius a day, he sent them into his vineyard. And going out about the third hour he saw others standing idle in the marketplace, and to them he said, ‘You go into the vineyard too, and whatever is right I will give you.’ So they went. Going out again about the sixth hour and the ninth hour, he did the same. And about the eleventh hour he went out and found others standing. And he said to them, ‘Why do you stand here idle all day?’ They said to him, ‘Because no one has hired us.’ He said to them, ‘You go into the vineyard too.’ And when evening came, the owner of the vineyard said to his foreman, ‘Call the laborers and pay them their wages, beginning with the last, up to the first.’ And when those hired about the eleventh hour came, each of them received a denarius. Now when those hired first came, they thought they would receive more, but each of them also received a denarius. And on receiving it they grumbled at the master of the house, saying, ‘These last worked only one hour, and you have made them equal to us who have borne the burden of the day and the scorching heat.’ But he replied to one of them, ‘Friend, I am doing you no wrong. Did you not agree with me for a denarius? Take what belongs to you and go. I choose to give to this last worker as I give to you. Am I not allowed to do what I choose with what belongs to me? Or do you begrudge my generosity?’ So the last will be first, and the first last.”
Jack Bruce. 25th November 1967
He predicted today.
It has taken me 41 years of paid labor as an employee to realize I am only a worker to the owners and I now fully realize the absolute necessity to abolish the wage system altogether.
There are some things that economics cannot account for, no matter how brilliant the Economist : things like drought, floods, climate change or the work of a madman like Stalin starving the people in Ukraine.
Provided there are adequate resources ( including climate), unemployment, to my mind, is not one of them. So too is poverty and hunger not one of them. Unemployment can always be eliminated with the help of government. It is government, after all, that creates the means to move resources. It is called money. When not enough iphones are sold or money lent for investment to reach full employment, the federal government using our currency can employ all the excess people. Roosevelt proved that with the WPA and CCC. That we did not institutionalize it is our mistake and that of the politicians. Somehow we learnt from them, and some of their Economist friends, that debt would ruin us all and make us bankrupt. Someday I hope to hear how that works, since I ( or we) own the printing presses.
I agree with Martin that economists aren’t going to solve the problem of childhood poverty, and given the biases of the neoliberals among them and the mainstream normals, I don’t think they even care that much. When you consider the tests they use for determining whether a policy is good, ideas like Kaldor-Hicks Efficiency: if it makes some better off and they could pay others for their losses and still be better off, whether or not any payment is ever made. Obviously these people don’t care about anyone except winners in the Magic Market.
There are partial solutions to the problem of childhood poverty, but they are political, and require redistribution of wealth through taxes in large amounts and the commitment of substantial human and economic resources. I used to think the best we could hope for is the return of a safe, stable middle class that feels obligated to help those less fortunate, and those injured so they could succeed. But now I worry that selfishness has such a deep-rooted grip on the psyches of too many of us for that ever to happen. I hope not. This election has really shaken my confidence in this country.