Did Keynes Underestimate Greed?

We’re getting wealthy at the rate that the great economist predicted, but there’s a reason why haven't we traded more consumption for leisure.
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Question: Keynes foresaw the possibilities of economic problems becoming less important. Are we on schedule for that?

Robert Skidelsky: That's a great question, I've been thinking a lot about it.  In one way, we're on schedule for it because we are getting wealthier at roughly the rate Keynes predicted, we haven't quite got there yet.  I think he thought that within the next 20 years we'd have, on the whole, each person in the west, west and developed countries, would have about $60,000, as sort of household income, not average, but that's a lot of people would have more.  But that's what people would have got to, be able to get to, and that would be enough, they'd sort of ease off work.

Now, I think we are, I mean, we have been getting rich at roughly the rate Keynes suggested we would.  But our hours of work haven't been falling by nearly as much as he thought they would and so the question is, why not?  Why haven't we started, why haven't we traded more consumption for leisure, why do we still seem to want more consumption and more consumption?  And I don't know the answer, did Keynes underestimate greed?  Did he think that wants were satiable, that is that there was some limit beyond which your wants would sort of tail off?  And it was very easy to think of that, especially in the old days, when wants consisted much more of demands for physical things.  I mean, food and clothing and you know, you could almost add up and say, "Well, look, how much is enough?"  And then you could sort of, you could carry it a bit further and say, "Well, look, you don't really want 50 motor cars, do you?  I mean, 2 would be enough, or maybe 3."

But when you then think of everything in terms of just money, then almost nothing is enough.  I mean, how much money is enough?  Because it's hard to translate money into goods.  And I think people, once, I think there's a lot things can believe, and once they start thinking about wealth in terms of money, they lose the idea of enough-ness.

I think the other thing he underestimated was keeping up with the Jones, you know, just envy.  Not ordinary straightforward greed, but just envy, the fact that some other family has a bit more than you do, makes you envious and you want to get it, and then they get envious about someone else.  So that somehow you never got this escalator of mounting wants.  And he didn't really give a good answer to that, Keynes.  But I think the answer is you do just have to go back to moral philosophy and you've got to say, okay, there is greed, people do want more and more, but then what restrains them and what restrained them in the past was a view of life in which one's satisfaction wasn't the most important thing, that you just, you needed enough and you could say, "Enough is enough."  Maybe religion will get you there, maybe just classic moral philosophy, but you have to have some of that, or else you're always on the gravy train.

Recorded on December 16, 2009