An Exuberant Experience

Keynes Thought in comic book form

Keynes for Beginners by Peter Pugh and Chris Garratt

In the British economy, at present, there is in theory little unemployment. The great battles of the past century were fought over jobs and pay. Who had the work, whether there was enough work to go around; who got paid what, and by whom. In the realms of the abstract, these questions have all been answered — at least for modern Britain. I say answered, of course, and not solved. For there is no solution to be found, no matter how hard you look.

What is the contemporary British answer? It is to abridge the wage problem by paying everyone the same, by order of the courts and the ever-rising national minimum wage; and to massage the unemployment figures by placing, at a remarkable rate, those out of work into a new category among the long-term sick and disabled. Any ‘labour shortages’ that emerge in consequence can be ameliorated, not by increasing automation and workplace productivity, but by importing — legally and illegally, off the books and on — as many foreign slaves as the boss could desire.

The market mechanism, the price mechanism, even meaningful state supervision of the economy, all are sacrificed, thrown away, handed off — to arms-length bodies, to courts and tribunals, to individual criminal employers who can dissolve their limited companies and reincorporate whenever the law decides to get interested in their activities.

John Maynard Keynes would have had much to say about it all.

And thus the cycle continues, until collapse.

So many of the major questions of the early twentieth century economy seem out of step with the times in which we live. Inflation verses deflation, for instance, has been taken off the board — in a way. Modern western economies have significant implied inflation — artificially low interest rates for decades on end, profound, intractable supply constraints, ceaseless increases in the money supply in the form of QE and borrowing and the issuing of credit by banks — but the headline inflation figures do not appear to reflect this.

Why is that, when particular economic factors like land keep up their incredible, unprecedented increases in price?

Someone with the mind of Keynes would be required to disentangle the obfuscation required to run the machine so hot for so long.

Productivity and overproduction: this, too, appears to be an issue upon which the world has decided. If deflation was once caused by overproduction — or, perhaps more accurately, by the difficulty in transporting goods around the world to every market that might want to buy them — the modern world has supposedly turned the page.

As tech losers will tell us, the total addressable market of every app is apparently everyone on earth. We can get fresh peaches, from an imaginary glut harvest somewhere, to anyone on the planet in refrigerated containers. And in only a week or so.

And as for consumer demand, it seems it can never, in fact, be satisfied.

Those who said it could were wrong! Wrong! Wrong!

The desired level of spending on, for instance, healthcare, is infinite — not just in theory but in fact. Thus there can be no great deflation if that logic can play itself out; if anything, production in European economies is not rampant but grotesquely constrained. Modern Britain manages to afford the expectation of and, for some, the trappings of wealth with none of the means of creating or sustaining wealth. And if the means of creating wealth just came along — are granted to us by advances in technology, say — that would be swallowed up, too, by the all-consuming jaws of the treasury, with almost no external benefit to be seen.

There is no end to which the abundance theoretically produced by advances in artificial intelligence or power generation might not be disappeared and spent in the same way. Just as there is no end to the possible productivity gains that would be skimmed or taxed or raked off by the modern state and its adjuncts in the theoretically private sector. No end to the amounts the courts and tribunals might force every business to dish up in compensation and back pay.

There is no end to the growth in GDP that would be swallowed up by the insurance companies in the United States and the British NHS.

In theory, our world is rich. In theory, our world is growing. But all of this might be an illusion, a prelude, an overture to another situation entirely — one which our economic managers have badly prepared us to face.

Keynes wrote, in The Economic Consequences of the Peace, a beautiful sketch of a similar world, one which was brought to an ultimately temporary, but nonetheless shattering, end in August 1914.

Escape from mediocrity ‘was possible, Keynes writes, ‘for any man of capacity or character at all exceeding the average, into the middle and upper classes, for whom life offered, at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages.’

‘The inhabitant of London,’ he noted,

could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality, could despatch his servant to the neighbouring office of a bank for such supply of the precious metals as might seem convenient, and could then proceed abroad to foreign quarters, without knowledge of their religion, language, or customs, bearing coined wealth upon his person, and would consider himself greatly aggrieved and much surprised at the least interference. But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalisation of which was nearly complete in practice.

All of that came to an end with the war, of course. Just as a new war or new crisis could well book-end our own bizarre era. One in which our economists believe themselves above the questions of the vexed twentieth century, and in which, because the country pretends it is rich, there is no freedom to move, no freedom to build, no freedom to try to live.