ECONLOG POST

Dec 25 2024

bourgeois virtues, Christopher Freiman, interventionism, John Maynard Keynes, luxury

Making Keynes's Vision Reality

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Making Keynes's Vision Reality
Categories: Economic Growth Economic History

By Art Carden, Dec 25 2024

Over a century ago, John Maynard Keynes, an economist and critic of unregulated, unmanaged markets, pointed to the miracle  that one could order the wonders of the world over the phone while lying in bed and have them delivered:

The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he may see fit, and reasonably expect their early delivery upon his doorstep…

That’s from Keynes’s 1919 book The Economic Consequences of the Peace, and at the time, Keynes described a fantastic privilege reserved for the richest of the rich who could afford phones and phone calls and buy on credit from people they couldn’t see and couldn’t see them.

Keynes’s dream has come true in the 21st century for the poor and middle class, and not because of the interventionism he and his intellectual descendants thought was necessary. Whatever you want can be had with a few flicks of your thumb. With some planning, you can automate many of your groceries through Amazon’s Subscribe and Save and similar services. All the payment processing, ordering, and so on are automated and handled without you having to pay much attention to them.

Paper towels? You can subscribe to them. Chocolate? Coffee? Shaving gear? Subscription box services will replenish you every month. People who earn higher incomes will have an easier time of it, but subscription boxes and subscribe-and-save services are widely available and largely affordable to just about anyone.

By this point, someone is probably sneering and saying, “Great. My life has meaning now because I can get my groceries delivered.” If that’s you, then you expect the market to do something it can’t. The market can deliver bananas and spring rolls. It can’t deliver existential meaning–though you can support Amazon workers you might think are being oppressed by buying more stuff from Amazon.

As Christopher Freiman pointed out on Twitter, even poor people today are richer than the Rockefellers in all the ways that matter. If you can get a cheap digital wristwatch, what does it matter that Elon Musk can wear a Rolex on each wrist? Elon Musk’s net worth might be many multiples of mine, but even a $200 billion net worth can’t buy him a smartphone and mobile service that is hundreds of thousands of times better than mine.

A little later in the passage quoted above, after he has described the Londoner’s financial opportunities, Keynes continues: 

But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it aberrant, scandalous, and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.

Would that this life of peace and prosperity were the reality for everyone, everywhere. There is good news, though: as we embrace the Bourgeois Deal and (ironically) reject coordinated Keynesian macroeconomic management, it’s turning that way.

 

Art Carden is Professor of Economics & Medical Properties Trust Fellow at Samford University.

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READER COMMENTS

Richard W Fulmer
Dec 25 2024 at 10:31am

Capitalism delivers what socialism only promises. For instance, Marx claimed that socialism would put the means of production in the hands of workers, but it was capitalism that made it happen. Today, the “means of production” increasingly translates into a worker’s knowledge, her laptop and cellphone, and, perhaps, a 3D printer.

Mass production in a free-market system enables even complex products to be made cheaply enough for people of even modest means to afford them. In the future, many more capital goods, such as robots, will be just as affordable as laptops and cellphones are today. Such tools will increasingly allow workers to start their own businesses, bypassing corporate bureaucracies.

Marx envisioned a socialist utopia in which he “could fish in the morning, hunt in the afternoon, rear cattle in the evening and do critical theory at night, just as I have a mind, without ever becoming hunter, fisherman, shepherd or critic.” Again, it was capitalism that made Marx’s dream a reality by increasing productivity so much that people no longer must spend all their waking hours just trying to scratch out a subsistence living.

Capitalism, by fostering continuous incremental growth and improvement and rewarding innovation and individual initiative, has delivered material prosperity on a scale Marx could not have imagined.

David Henderson
Dec 25 2024 at 11:13am

Nicely done, Art. Merry Christmas.

Ghost
Dec 27 2024 at 5:32am

This is too harsh on Keynes.  He didn’t favour intervention in product or service innovation, and he understood fully that the opportunities open to wealthy Londoners in 1913 had been created by free-market capitalism.

In the 1930s he viewed slow-to-shift mass unemployment, with reason, as a threat to the whole liberal capitalist order.  He diagnosed a cause (inflexible prices) and proposed a solution (budget deficits) that was about as un-interventionist in a micro sense as possible.

It’s absolutely fair to question both Keynes’s diagnosis and his solution (not least because it leads to the creation of a bigger role for the state).  But he certainly didn’t think that detailed intervention would create mass affluence.

 

 

were the result of is paean in praise for the world writing or inat the microeconomic

Richard W Fulmer
Dec 27 2024 at 4:31pm

I didn’t read Professor Carden as saying that Keynes recommended micro level market intervention by the government. In fact, he explicitly recommends that we “reject coordinated Keynesian macroeconomic management.” What Carden pointed out was that Keynes back in 1919 – prior to the implementation of macroeconomic policy – wrote that free market capitalism was working pretty well for the rich. Granted, nearly any economic system works reasonably well for wealthy people, but capitalism soon delivered to the poor all the creature comforts about which Keynes boasted and far more besides.

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