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The End of (Economic) History?

PARIS -- Some academic works, for reasons that are at least partly obscure, leave a persistent trace in intellectual history. Such is the case with John Maynard Keynes’s paper “Economic Possibilities for our Grandchildren.”

The importance of Keynes’s paper consisted not so much in how he answered the questions he posed, but in the nature of the questions themselves. Could the very functioning of the capitalist system bring an end to the problem of scarcity – and hence to capitalism itself? What might people’s lives in such an era reasonably be expected to look like?

Keynes began to examine these questions with the calculus of compound interest and its spectacular outcome when applied to long periods. At a 2% rate of growth, any figure, including GDP, will increase 7.5-fold in a century. So, would the problem of scarcity – which underlies all economics – be resolved by such an increase?

For Keynes, the answer was a straightforward yes, because such an increase would allow the satiation of what he calls “absolute needs.” True, Keynes was well aware that relative needs – “keeping up with the Joneses” – will never be satiated, but he thought that these needs would become of second-order importance, so remote from the search for the good life that seeking to satisfy them would be recognized as a form of neurosis. According to Keynes, we would instead progressively learn how “to devote our further energies to non-economic purpose.”