What Keynes got wrong

at 02:00 PM ET, 05/02/2012

Mike Beggs considers the economist’s mistaken forecast of a future in which we all work three hours a day:

Keynes believed that people had “absolute needs” which could be sated, and could be morally improved to stop caring so much about “relative needs,” which are only enjoyed to the extent that we have more than others. As the marginal utility of commodities fell, people would react to the income effect of productivity gains by steadily expressing a preference for more leisure....[But] to live with the 1930 commodity bundle in 2012 is not to get 1930 satisfactions, but to feel a lack of everything we have come to expect since then — a lack which the extra leisure will not make up for. So hardly anyone chooses to do it.

 
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