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The End of Economics

Keynes kind of got it right

By Oliver W. Kim

In 1930, in a little essay titled “Economic Possibilities for Our Grandchildren,” John Maynard Keynes predicted that the “economic problem” could be solved within 100 years. Given steady growth, the standard of living in the developed world would be “between four and eight times” higher than in 1930. With this new wealth, human beings would be free from the Malthusian struggle for survival for the first time in the history. People could afford to work only three hours a day. The love of money would become passé. Homo economicus could be packed away and economics could become a harmless profession like dentistry.

For a piece written as the Great Depression was beginning, Keynes’s optimistic vision of economic growth was remarkably accurate. Real incomes in the United States are now more than eight times what it was in 1930. But Keynes’s intriguing predictions about how we would occupy ourselves once we became rich fell wide of the mark. Only eight percent of full-time US workers work fewer than 40 hours a week and last I checked, the pursuit of money was still in vogue.

Like many good ideas, Keynes’s utopian view was wrong but perceptive. It gets at a question that economists too often ignore: What is the end of all this economic striving?

Keynes thought that the ultimate goal of most economic institutions was their own irrelevance. Greed and avarice were only necessary evils that humanity would outgrow once the economic problem was solved. In the future of plenty, people would “value ends above means and prefer the good to the useful.” The love of money would be acknowledged as a “disgusting morbidity.” Instead of engineering credit default swaps and selling ShamWows, people could be free to pursue the arts and sciences at their own leisure.

If this all sounds a little utopian for the economist who made his name during the Great Depression, it probably is. Today, for the billion in the Third World who still live in abject poverty, the solution to the economic problem remains out of reach. Even in developed countries, it is hard to see an end to the economic rat race: As the hysteria of Black Friday can attest, even in a land of plenty people feel the need to fight over flat screen TVs. The economic problem may simply be an inextinguishable feature of human nature. As a descriptive theory, Keynes’s thesis is a failure.

But I am partial to the normative side of Keynes’s vision. The end goal of the economic project should not be the endless accumulation of wealth, but the furthering of human freedom. Determining the ideal post-scarcity existence is above my pay grade (and the pay grade of any economist), but my field has taught me to be suspicious of any command-and-control dictum directing people’s lives. Once the economic problem is solved, people should have the liberty to experiment with how to live—in Keynes’s words, to “cultivate…the art of life”.

I began this column this semester on a note of humility. Economics is a young field, and after over two hundred years of formal research there is still much we cannot explain. But good economic ideas—including Keynes’s—have done much to advance a solution to the economic problem. In the past (and, for the most part, in the present), contemplating how best to live was a privilege reserved for the rich. Aristotle thought that eudaemonia—human flourishing—was only possible if one had the material resources to support it. Extending that opportunity to all seems like a noble project.

Solving the economic problem is comparatively easy. Figuring out how we should live will be hard.

Oliver W. Kim 16, a Crimson editorial writer, is an economics concentrator living in Leverett House.

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