Tag: Keynes

Why aren’t we working less?

Posted on by Emrys Westacott

by Emrys Westacott

Back in 1930, the economist John Maynard Keynes predicted that the continuous increase in productivity characteristic of industrial capitalism would lead within a century to much more leisure for everyone, with the typical working week being reduced to about fifteen hours. UnknownThis has obviously not come about. To be sure, in virtually all relatively prosperous countries the average number of hours worked annually has fallen over the last few decades. Between 1950 and 2010, in the US, for instance, this number dropped from 1,908 to 1,695, in Canada from 2,079 to 1,711, and in Denmark from 2,144 to 1,523. Even in Japan, famed for its workaholism, the average number of hours worked per year went from a high of 2,224 in 1961 to 1,706 in 2011.[1] But even the lackadaisical Danes are still working twice as hard as Keynes predicted.

Given the increases in productivity and prosperity in the industrialized world, one could have reasonably hoped for more. People in the UK are now four times better off than they were in 1930, but they work only twenty percent less, and that is fairly typical of other advanced economies. The rich, who used to relish their idleness, now boast about how hard they work, while for many of the poor unemployment is a persistent curse.

Moreover, according to economist Staffan Linder, economic growth is typically accompanied by a sense that we have less time available for the things we wish to do. This feeling is not mistaken, but the lack of time is in large part due to the fact that members of affluent societies will opt for more money over more leisure if given the choice. They then start to carry the mentality and values of workplace productivity into every part of their lives, resulting in what Linder calls the "harried leisure class."[2]

So why was Keynes wrong? According to Robert and Edward Skidelsky in How Much Is Enough? his mistake was to underestimate the difficulty of reining in the forces unleashed by capitalism, particularly people's desire for ever increasing wealth and the things it can buy. Our natural concern for improved relative status, hardwired into us by evolution, is inflamed by the capitalist system, complete with incessant advertising and free market ideology, so that we always want more than we have and more than we really need.[3]

Read more »



Monday, April 14, 2014

The conflict between competition and leisure

Posted on by Emrys Westacott

by Emrys Westacott

ScreenHunter_590 Apr. 14 11.15In 1930 the economist John Maynard Keynes predicted that increases in productivity due to technological progress would lead within a century to most people enjoying much more leisure. He believed that by 2030 the average working week would be around fifteen hours. Eighty-four years later, it doesn't look like this prediction will come true. Most full-time workers work two, three, or four times, that: and many part-time workers would work more hours if they could since they need the money.

So why haven't we come closer to realizing the expectations of Russell and Keynes? In their recent book, How Much Is Enough? Money and the Good Life (Other Press, 2012), Robert and Edward Skidelsky offer an interesting answer. According to them Keynes' mistake was his failure to realize that capitalism has unleashed forces that can't be brought under control. Specifically, it has greatly inflamed a natural human desire for recognition and status, turning it into an insatiable desire for ever more wealth—wealth being the number one determinant of status in our society. If we could just settle for a modest level of comfort, we could work far less. But the yearning for more wealth and more stuff now leads people to spend far more time working than they need to. The same insatiability characterizes our society as a whole. Every politician and most economists take for granted that we should be striving with all our might to achieve economic growth without limit. The wisdom of this relentless, endless pursuit of economic growth is rarely questioned.

The Skidelskys' explanation of why we still work much more than Keynes predicted isn't entirely wrong, but I don't think it's the whole story or even the most important part. It's no doubt true of some people that they are driven to work more than they need to by insatiable greed. But I suspect that far more people work the hours they do because of circumstances beyond their control. For instance, many people work long hours simply because their hourly wage is quite low, so they work overtime, or perhaps take a second job, just in order to have enough to live on. Some live in expensive metropolitan areas like Boston or San Francisco, so even though they make a good wage, they actually need a full time job even to secure a fairly modest level of comfort, given the cost of housing. Many people keep working full time, even though they'd like to retire or go part time, because only a full time job will provide indispensible benefits like health insurance and a pension. And lots of people would like to cut back the hours they work but can't for a simple reason: their boss won't let them.

But there's also another factor preventing us from achieving a more leisured and balanced lifestyle, and that is the intensely competitive social environment in which we live.

Read more »

Monday, November 1, 2010

To Spend or Not To Spend: The Austerity vs. Stimulus Debate

Posted on by Nick Werle

Greek unions protest

Public sector austerity has come back to the West in a big way. Governments throughout the European Union are wrestling against striking civil servants, a stagnant private sector, and an entrenched public welfare system to drastically reduce spending. The budget cuts are broad, and they run deep. Under pressure from global financial markets and the European Central Bank to reduce public deficits, Spain, Italy, Portugal, and Greece have issued “austere” budgets for the coming year that simultaneously raise taxes and slash government spending. David Cameron’s new Conservative government has violated its campaign pledge to spare Britain’s generous middle class subsidies in an attempt to close a budget gap that is among the world’s largest, at 11 percent of GDP. Supposedly confirming the wisdom of austerity, the financial press has trumpeted the re-election of Latvia’s center-right government, which passed an IMF-endorsed budget with austerity reductions equal to 6.2 percent of GDP. Prime Minister Valdis Dombrovskis won his “increased mandate” – “an inspiration for his colleagues in the EU” – against a backdrop of 20 percent unemployment and a cumulative economic contraction of 25 percent in 2008 and 2009, the most severe collapse in the world.

Latvian electoral politics notwithstanding, austerity has been a tough sell worldwide. Both the protests that broke out across Europe at the end of September and the general strikes mounted against Socialist governments in Portugal, Spain, and Greece attest to the resistance all governments face in cutting public spending. And opposition has not been confined to the streets. At a G20 summit in Washington DC on April 23, the finance ministers and central bank governors of the world’s 20 largest economies agreed that extraordinary levels of public spending should be maintained until “the recovery is firmly driven by the private sector and becomes more entrenched.” Indeed, Larry Summers, the departing Director of the White House National Economic Council, still argues that the United States must continue its policy of economic stimulus in the form of deficit spending on infrastructure rather than pull back public resources, lest it cede the small gains of the nascent recovery.

Read more »