Keynes Goes to the Market

John Maynard Keynes, to the uninitiated, was the Numero Uno of Economics, the original thinker, with a particular bias to common sense.  Among his finest pieces of scholarship was the assertion that what is good for the individual need not be – often decidedly is not – good for the country’s economy.  An outstanding illustration of this is a recessionary economy.  When times are bad, people cut back on expenses and enter a state of monetary hibernation.  The country cannot and should not do that; on the contrary it must spend more, possibly on public goods and services.  Such an expenditure, though it creates a deficit,  acts as a stimulus to restart the process of development. 

In 1930, when Mahatma Gandhi was building the foundation for a fairer and ecologically just society, Keynes – possibly he was influenced by Gandhi, possibly not – wrote:

            “Now it is true that the needs of human beings may seem to be insatiable.  But they fall into two classes – those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above others, makes us feel superior to our fellows.”

            He went on to argue that if world output grew another ten-fold, humanity’s absolute needs would be abundantly satisfied, but because it is impossible for everyone to do better than everyone else, relative gains for everyone would remain as impossible as ever.  We can therefore, by the acquisition of things, be temporarily superior to another – perhaps for a day or even less – but we come up against someone in our peer group who is better off in a relative way.  What is meant to make us happy, he implied, actually does the reverse.

Prophetic.

At the start of the twenty-first century, most of the developed countries had indeed achieved a ten-fold increase in real income (that is, keeping the value of money at 1930 prices).  People who live in these countries, and in the glittering metropolis’ of the developing world (such as Bangalore) have an abundant supply of all sorts of products and services they could possibly want.  These things have been made at an immense ecological cost, a cost which is not counted or allocated to their bill of material.  It is a cost that has put our planet’s future at risk.

…and yet, here’s the funny part,  study after laborious study shows that rich people around the planet are rarely happy.

So, just what are we hurting ourselves for?

For eighty three years, we have not listened to the wisdom of John Maynard Keynes.  Can we start today?

Reduce your consumption – it’s the least you can do for your planet.