In an earlier column, I asked why economic growth has been so sluggish in recent years, and I suggested that the economist John Maynard Keynes might have had part of the answer, writes Henry Haslam.
In 1930, when he was aged 47, Keynes wrote an essay entitled 'Economic possibilities for our grandchildren'.
In it, he predicted that once we had solved the economic problem of making sure that everyone had enough for their basic needs, we would be able to discard the “distasteful and unjust” money-centred values and practices that govern so much of how we live together.
We would be “free to return to some of the most sure and certain principles of religion and traditional virtue – that avarice is a vice – and the love of money is detestable”.
Keynes thought that the time would come when people would spend less of their time and energy earning and spending money.
Isn't that what is happening, a hundred years later?
Doesn't that explain why, whatever governments may say or do, economic growth remains at a lower level than it was before 2008?
There are still a lot of people who want to earn and spend as much as they can, but there are also many who do not.
Once they have enough money coming in, they turn down opportunities for extra work, or they work part-time, or they retire earlier than they have to.
Their reasons are many and various, but they want to spend more of their time on other things.
This is easily understandable.
It’s a question of values.
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Numerous studies tell us what we know already.
To quote Teresa Belton in her book Happier People, Healthier Planet, “It is not material wealth but non-material assets, such as strong relationships, active engagement, and thriving communities, that enrich our personal and social well-being”.
Some economists don’t see it this way, because they fall into the trap of assuming that human behaviour is motivated entirely by money.
Richard Thaler, an economist himself, divides people into Econs and Humans.
Econs are rational in the sense that they live their lives in accordance with economic theory, focusing on earning and spending.
Humans make up their own minds.
Even if they understand economic theory, they don’t feel bound to conform to it.
Included in activities that cost little and are good for human well-being would be the arts, sport and an appreciation and enjoyment of the natural world.
Keynes had a particular interest in the arts (he was the first chairman of the Arts Council), and he would have been pleased to see that between 2010 and 2024 the contribution of the creative industries to the economy grew by 39 per cent, compared with 24.3 per cent in the economy as a whole.
To sum up, perhaps the reason the economy isn’t growing as fast as some would like is that many people have better things to do with their lives than keep working and spending in order to satisfy government growth targets.
This sounds good for the environment, and good for human well-being too.
Let’s hear more about it.
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