J. Bradford Delong in Project Syndicate:
John Maynard Keynes was not off by much when he famously predicted in 1930 that the human race's “economic problem, the struggle for subsistence,” was likely to be “solved, or be at least within sight of solution, within a hundred years.” It will take another generation, perhaps, before robots have completely taken over manufacturing, kitchen work, and construction; and the developing world looks to be 50 years behind. But Keynes would have been spot on had he targeted his essay at his readers' great-great-great-great grandchildren.
And yet there are few signs that working- and middle-class Americans are living any better than they did 35 years ago. Even stranger, productivity growth does not seem to be soaring, as one would expect; in fact, it seems to be decelerating, according to research by John Fernald and Bing Wang, economists in the Economic Research Department of the Federal Reserve Bank of San Francisco. Growth prospects are even worse, as innovation hits gale-force headwinds.
One way to reconcile the changes in the job market with our lived experience and statistics like these is to note that much of what we are producing is very different from what we have made in the past. For most of human experience, the bulk of what we produced could not be easily shared or used without permission. The goods we made were what economists call “rival” and “excludible” commodities.
Being “rival” means that two people cannot use the same product at the same time. Being “excludible” means that the owner of a product can easily prevent others from using it. These two traits put a great deal of bargaining power in the hands of those who control production and distribution, making them ideal for a market economy based on private property. Money naturally flows to where utility and value are being provided – and those flows are easy to track in national accounts.
But much of what we are producing in the information age is neither rival nor excludible – and this changes the entire picture.