rationalskepticism.org

In the long run we are all dead, but not all at the same time. Keynes’ message was simple: extrapolate conservatively the economic growth rate of the modern age so far, and imagine the wonders one hundred years hence: 2030. His audience would not live to see it, but many of their grandchildren would. The great-grandchildren, born in the last quarter of the twentieth century, would climb a stairway to heaven and bask in unknown pleasures from middle age. The generation after that would be born into paradise.

In the best traditions of science fiction, the author fudged the precise workings of the technology behind the wonders. Keynes evidently had little growth theory to draw on: he talks in monetary terms of the wonders of compound interest. Investments simply grow at around 2 percent a year – ask not why. Technology improves, for an improvement in “technical efficiency” of 1 percent a year. Making generous room for more of the “disastrous mistakes” that had brought forth the depression, he predicted that living standards would “in the progressive countries” be four to eight times higher a century on. There would be a phase of “technological unemployment” as labor productivity outpaced the finding of new uses for labor, but ultimately we would work out how to spread the dividends so that everyone worked an average of three hours a day.