Economic Possibilities for our Grandchildren, Revisited

In his essay "Economic Possibilities for our Grandchildren," John Maynard Keynes made the case for optimism (definitely a daring view in 1930!)

The prevailing world depression, the enormous anomaly of unemployment in a world full of wants, the disastrous mistakes we have made, blind us to what is going on under the surface - to the true interpretation of the trend of things. For I predict that both of the two errors of pessimism which now make so much noise in the world will be proved wrong in our own time - the pessimism of the revolutionaries who think that things are so bad that nothing can save us but violent change, and the pessimism of the reactionaries who consider the balance of our economic and social life so precarious that we must risk no experiments.

The basis for his optimism: continuously compounding growth in the capital stock - "the power of compound interest over two hundred years is such as to stagger the imagination," he wrote.

I draw the conclusion that, assuming no important wars, and no important increase in popluation, the economic problem may be solved, or at least within sight of solution, within a hundred years. This means that the economic problem is not - if we look into the future - the permanent problem of the human race.

Why, you may ask is this so startling? It is startling because - if, instead of looking into the future, we look into the past - we find that the economic problem, the struggle for subsistence, always has been hitherto the primary, most pressing problem of the human race - not only of the human race, but of the whole of the biological kingdom from the beginnings of life in its most primitive forms.

Thus we have been expressly evolved by nature - with all our impulses and deepest insticnts - for the purpose of solvingsolving the eocnomic problem. If the economic problem is solved, mankind will be deprived of its traditional purpose....

Thus for the first time since his creation man will be faced with his real, his permanent problem - how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest have won for him, to live wisely and agreeably and well.

Seventy-seven years later, how are we doing?
Two of the New York Times "Economic Scene" columnists have revisited Keynes' essay. Today, Hal Varian discusses trends (0r lack thereof) in leisure time:

When you account for the much longer time in school, the more or less constant amount of time spent on housework, and make a few other adjustments, hours spent on purely enjoyable activities haven’t changed that much in the last century. Keynes may have been right that future generations will have a lot of time on their hands, but I wouldn’t bet on that happening anytime soon.

Last year, Robert Frank argued that Keynes missed the importance of the desire for higher quality goods, which he says is insatiable since we always care about relative quality:

Decisions to spend are also driven by perceptions of quality, the desire for which knows no bounds. But quality is an inherently relative concept. The same car that would have been deemed as having brisk acceleration and sure handling by drivers in Keynes’s day, for example, would be much less charitably evaluated by today’s drivers — even those with no desire to outdo their neighbors.