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2
ECONOMIC
POSSIBILITIES
FOR
OUR
GRANDCHILDREN
This essay
was
first presented in
1928
as
a talk to sevetal small societies,
induding the Essay Soeiety ofWinehester College and the Politieal Eeonomy
Qub
at Cambridge.
In
June
1930
Keynes expanded his notes into a leeture
on 'Eeonomie Possibilities for our GrandehiIdren' whieh he gave at Madrid.
It
appeared in literary form in two instalments in the
Nation
and
Athenaeum,
11
and
18
Oetober
1930,
in the midst
of
the slump.
I
We
are suffering just now from a bad attack
of
economic
pessimism.
It
is
common to hear people
say
that the epoch
of
enormous economic progress which characterised the nineteenth
century
is
over; that the rapid improvement in the standard
of
life
is
now going to slow
down-at
any rate in Great Britain;
that a decline
in·
prosperity
is
more likely than an improvement
in the decade which lies ahead
of
uso
I believe that this
is
a wildly mistaken interpretation
of
what
is
happening to
uso
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. And even
so,
the waste and
confusion which ensue relate to not more than
71
per cent
of
the national income;
we
are muddling
away
one and sixpence in
the
["
and have only
18s
6d,
when
we
might,
if
we
were more
sensible, have
[,1; yet, nevertheless, the
18s
6d
mounts up to
as
much
as
the [, I would have been
five
or
six
years
ago.
We forget
that in
1929
the physical output
of
the industry of Great Britain
3
21
THE
FUTURE
was
greater than ever before, and that the net surplus
of
our
foreign balance available for new foreign investment, after paying
for all our imports, was greater last year than that of any other
country, being indeed
50
per cent greater than the corresponding
surplus
of
the United States.
Or
again-if
it
is
to be a matter
of
comparisons-suppose that
we
were to reduce our wages
by a half, repudiate four-fifths
of
the national debt, and hoard
our surplus wealth in barren gold instead
of
lending it at 6 per
cent or more,
we
should resemble the now much-envied France.
But would it
be
an improvement?
The
prevailing world depression, the enormous anomaly
of
unemployment in a world
full
of
wants, the disastrous mistakes
we
have made, blind us to what
is
going on under the
surface-
to the true interpretation
of
the trend
of
things. For I predict
that both
of
the two opposed errors
of
pessimism which now
make
so
much noise in the world
will
be proved wrong in our
own
time-the
pessimism
of
the revolutionaries who think that
things are
so
bad that nothing can
save
us but violent change,
and the pessimism of the reactionaries who consider the balance
of our economic and social life
so
precarious that
we
must risk
no
experiments.
My purpose in this essay, however,
is
not to examine the
present or the near future, but to disembarrass myself
of
short
views and take wings into the future. What can
we
reasonably
expect the level
of
our economic life to
be
a hundred years hence?
What are the economic possibilities
for
our grandchildren?
From the earliest times
of
which
we
have
record-back,
say
to two thousand years before
Christ-down
to the beginning
of
the eighteenth century, there
was
no
very great change in
the standard of life of the average man living in the civilised
centres
of
the earth. Ups and downs certainly. Visitations
of
plague, famine, and
war.
Golden intervals. But
no
progressive,
violent change. Some periods perhaps
50
per cent better than
others-at
the utmost
100
per cent
better-in
the four thousand
years
wh
ich ended
(say)
in A.D.
1700.
3
22