John Maynard Keynes’s generation of economists assumed that as people became more efficient at satisfying their wants, they would, and should as rational agents, work less and enjoy life more. Yet power relationships and the insatiability of human wants are such that we have maintained an ethic of acquisitiveness.

International rivalries add fuel to the acquisitive fire. We are constantly being told to gear up to face further challenges, particularly from the Chinese and other poor but industrious peoples. But why, if we already have enough, should we strive for a larger presence in emerging markets?

It is worth recalling that the ideal of economic growth as an end without end is of fairly recent origin. When British Prime Minister Harold Macmillan told the voters in 1959 that they had “never had it so good,” he was echoing the widely held view at the time that the capitalist countries of the West were rapidly approaching a consumption plateau, and the main problem of the future would be to ensure that the fruits of the new abundance were democratically distributed.

Nevertheless, the perception of imminent bliss in the 1960s led to the restoration of Darwinian capitalism in the 1980s. And economic growth quickly and decisively came to trump all other objects of economic policy.

Market Faith
Margaret Thatcher (elected prime minister of the U.K. in 1979) and Ronald Reagan (elected president of the U.S. in 1980) added an essential ingredient to the philosophy of growth: an ideological faith in the market system. Faster growth would come from markets freed of red tape, lighter taxes and weaker trade unions. The Thatcher-Reagan philosophy also viewed increasing income inequality as acceptable insofar as it improved the incentives of the “wealth creators”: There would be a “trickle down” from rich to poor.

It was the shift to a market-based philosophy of growth that inflamed the insatiability of wants -- by abandoning any interest in the social outcome of growth. The market was bound by the rule of law, but there was no longer any moral, political or cultural restraint on the individual pursuit of wealth. Keynes’s notion of satiety had no place.

Such a system cannot work according to plan. It is both economically and morally inefficient. The Anglo-American system of the past 30 years, dominated by the financial-services industry, has been retained for the benefit of a predatory plutocracy that creams off the riches in the name of freedom and globalization.

So, what intellectual, moral and political resources still exist in Western societies to reverse the onslaught of insatiability and redirect our purposes toward the good life?

In many ways, the political economy of the first half of the 20th century was admirably tailored to realizing the good life. The problem was that it lost the language for describing itself in these terms. This is the main reason why it failed to survive the economic and social troubles that beset Western societies in the 1970s. The historian Peter Clarke has usefully distinguished between “moral” and “mechanical” reformism. Moral reformism saw improvements in material conditions as ways of elevating the moral condition of the people; mechanical reformism simply aimed to increase their prosperity.

Efficiency Rules
Deprived of their ethical language by the collapse of religion and the strongly individualist fashion in economics and political philosophy, by the second half of the century, “moral” liberals were forced back on purely “mechanical” arguments. They stressed the positive effect on productivity of a better-fed, better-housed, better-clothed, healthier and better-educated workforce. This was almost certainly true. However, once the commonly accepted language became one of efficiency, the moral reformers were vulnerable to the charge that their reforms had created inefficiency by lessening the incentives to work and save, and by stealing resources from the productive sector.

The social liberalism of the 1950s and ’60s had nothing left to put in place of the profit motive, no defenses to offer against the philosophy of untrammeled self-interest. Tax rates tumbled, the welfare state was reined in, state industries were privatized, and the financial sector was set free.

The coup de grace was delivered by the fall of communism. In the Cold War era, the West had to proclaim its own concept of the good life to counter the appeal of communism. This necessity was now gone. Market individualism remains the only game in town.

What would an economic organization geared to realizing the basic goods for every citizen -- economic and personal -- look like? It would have to produce enough to satisfy everyone’s basic needs and reasonable standards of comfort. It would also have to reduce the amount of necessary work, freeing up time for leisure.

Just as important, it would have to ensure a less unequal distribution of wealth and income, not just to diminish the incentive to work, but also to improve the social bases of health, personality, respect and friendship.

How far should policy be pushed toward these aims? We favor a sort of non-coercive paternalism: encouraging or discouraging certain behaviors, without limiting individual freedoms. We must find ways to reduce the pressure to consume and hence, indirectly, the pressure to work.

To begin, the aim of policy should be to maintain full employment, not full-time employment. Earning a living is an important means to the basic goods of respect and security. But it needn’t imply working eight hours a day, or five days a week, or 1800 hours a year, in a soul-destroying job. Our goal should be stable employment with fewer hours worked, but with more people employed.

Working Less
The simplest approach would be a progressive reduction in work hours by limiting weekly hours and/or increasing vacation times. Such a framework would allow employers and employees to negotiate flexible retirement and work-sharing arrangements. There is no reason why a general reduction in working hours should bring about a drop in wages. The Dutch, for example, work shorter hours than the British but enjoy a higher average income per head ($48,000 as against $35,000) with a more equal distribution of wealth and income.

Productivity may even go up as workers pack more punch into shorter hours. This seems to have happened in places where the experiment has been tried. Hardly any production was lost in the two months that Edward Heath put the U.K. on a three-day week in 1974, for instance. Moreover, there is plenty of evidence that people are willing to trade income for leisure if they are allowed to and if the fall in income is not too great.

Despite their attractions, however, work-sharing schemes are not affordable to many lower-paid workers. It is in this context that the idea of a basic income -- an income paid by the state, independent of any obligation to work, to each citizen -- becomes appealing.

Two major objections are raised against basic-income proposals: that they would provide a disincentive to work, and that society cannot afford them. Yet when the goal is not to maximize growth but to secure good lives, the aim is precisely to reduce the incentive to work by making leisure more attractive. Furthermore, a rich society can increasingly afford to pay its citizens a basic income.

An unconditional basic income, in the form of a single capital endowment or a guaranteed annual income, would start to give all workers the same choice as to how much work to do, and under what conditions -- a privilege now possessed only by the wealthy.

In the future, education would be informed by the understanding that one’s job would represent a decreasing fraction of one’s waking hours. It would prepare people for a life of fulfillment outside the job market.

Consumption Tax
The state can also help reduce the pressure to consume. The economist Robert Frank has suggested doing this via a consumption tax, patterned after a 1955 proposal by Nicholas Kaldor. All spending above $7,500 per person would be subjected to an escalating rate of tax.

Such a tax would be redistributive, striking a blow at inequality; it would reduce the pressure to consume; and it would induce saving for retirement. It would also divert resources from conspicuous consumption to spending on behalf of society as a whole -- for such benefits as freedom from traffic congestion, time with family and friends, vacation time, better air quality, more urban parkland, cleaner drinking water, less violent crime and more medical research.

The pressure to consume is inflamed by advertising, which today works mainly to make us want things we otherwise would not have thought of wanting. Advertising could be restricted, for example, by removing its tax deductibility. Companies would simply no longer be allowed to write it off as a business expense.

These proposals are not free of problems. They are indications of direction, not blueprints for legislation. Whatever readers may think of them, they are at least an attempt to develop a collective vision of the good life. To instead simply blunder on without considering what wealth is for is an indulgence we can no longer afford. The greatest waste confronting us is not one of money but of human possibilities.



Too Much Faith in Markets Denies Us the Good Life - Bloomberg

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Truth, Justice and the American way

What I got from the article is work less and consume less. Well, if that were to take place we would have fewer jobs as there would be less demand for products. This would have the effect that many companies would go out of business and we as consumers would have fewer choices.

So let's see if I got this right....

Fewer jobs
Less money
Fewer choices
Fewer companies
But more time to vacation.....

By God, now I can see how Keynesian economics works........

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And so, my fellow Americans: ask not what your country can do for you - ask what you can do for your country.

John F. Kennedy January 20th 1960

I think you missed something.

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Truth, Justice and the American way

And some of this is why I want out of the market. And I will give my last penny stock till mid Dec., to break even or take the lost.

Also why I am considering slowly taking my savings out of my bank and burying it in my back yard..

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"There are two ways to conquer and enslave a nation... One is by sword... The other is by debt."

John Adams 1826

Markets CREATE the good life...

Keynesian economics (an oxymoron) demand the world lives like a Smurf village where everyone gets appointed to do their duty for the good of all...

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"You get the respect that you give" - cnredd

Isn't that kind of Obama's & the Progressives plan?

BTW I did very well in the market till I sold some to buy this stock which dropped 15 cents a while after I bought it. I haven't bother to check it in a while cause the last time it was down 20 cents.

But the stocks I sold to buy these and put cash into my savings paid off quit well.

My fear is my bank when thru the roof while others went out of business. It is now rated at number 5 of the top ten. And with this economy I don't care to chance it.

Spain just asked for a big bail out. That alone will affect our markets. And maybe some banks.

From what I read they alone need more than the smaller 3 that got bailouts And Cyprus is close to ask for one to. Unless the left wing party wins it;s election later this month, as it doesn't want any bail outs.. Unlike our left wingers...

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"There are two ways to conquer and enslave a nation... One is by sword... The other is by debt."

John Adams 1826

Where did you see this as Obama's plan?

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Truth, Justice and the American way

Mikeyy I hinted at it. But isn't most of what the progressives want another economic system?

Which I have said several times. And you come along with this John Maynard Keynes’s generation of economists dork ideas. Which is based on assumptions in the first place.

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"There are two ways to conquer and enslave a nation... One is by sword... The other is by debt."

John Adams 1826

Actually, I didn't say what I thought about the story. I just posted it. I don't know where you keep getting this info about what progressives want or believe. It's usually defined by people who want to define their enemy. Keynesian theory has been misrepresented so much it is likened to socialism or communism. It isn't anything like either. Keynesian economics advocates a mixed economy. We have a mixed economy. In the end we always will. Other systems are learning this lesson as well. Take China for example. A communist country. It is also a capitalist country. Look at the amount of entrepreneurs they are creating. Look at Grand Cooley dam. It was a government funded project that helped us win WWII. Without the government investment we would not have had the ability to build the planes we needed. Over and over I can show you where government spending has created the ability for other companies to flourish. That is Keynesian. It has been in place since the country began actually. The first congress of the U.S. started the first bank. We invested in exploring the and opening the west. The best government is a hybrid. Pure capitalism is a bad system without proper oversight and intervention by government.Labeling this as progressive or whatever is really just partisan oversimplification

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Truth, Justice and the American way

All we need is more redistribution of wealth and we're on the gravy train eh Mikeyy. Just a little more government and a little less individualism and it's steak for dinner and lavish vacations for all. Ummhmm. Never mind the fact it's never worked and never will.

Your WWII analogy is sorely lacking in what suffering actually occurred and what it meant for people at the time. You also seem to ignore the poverty in China as if that doesn't exist either.

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"I swear- by my life and my love of it- that I will never live for the sake of another man, nor ask another man to live for mine"- Ayn Rand, Atlas Shrugged

Republicans believe every day is the Fourth of July, but the democrats believe every day is April 15. ~ Ronald Reagan