Monday, August 8, 2011

The Age of Abundance

Again, the remarkable thing is we have indeed reached an age of abundance. Not for everyone, of course. The Keynes essay has often been criticized for ignoring the problem of unequal distribution. A billion people still live close to bare subsistence and starvation. And environmentalists can object that satisfying people's basic needs may not be ecologically sustainable.

But if you think about the typical Walmart, say, there are vast amounts of material goods available extremely cheaply, a dazzling fairytale abundance of things which would have amazed earlier generations.

Manufactured goods like clothing or electronics have generally got much cheaper and much higher in quality in our lifetimes.

We actually have too much of many things. We throw much of our food away unused, as it gets forgotten at the back of the refrigerator. One of our main medical challenges is soaring levels of obesity - too much food, not too little. We throw away cellphones or iPods just a few years old.

Perhaps a lot of our basic problems in the economy stem from the fact we don't know how to deal with abundance very well, certainly in the developed countries.

A lot of commentary, such as in the recent collected essays by major economists Revisiting Keynes: Economic Possibilities for Our Grandchildren, focuses on why Keynes got his expectations for work versus leisure so wrong. And I will have a lot to say about that.

But much of the criticism overlooks why Keynes obviously thought such an outcome may not come about because of the 'old Adam' in us, our need for purposive activity.

This means we have to put purpose, people's desire to fill their days, at the very heart of the whole nature of the economy and our daily lives.

The trouble is, as Joseph Stiglitz points out in his essay in that book, mainstream economics takes people's preferences as fixed, as given. Many of the interesting questions are therefore passed over. They are relegated to the realm of moral philosophy.

And one of the most common definitions of economics as a discipline is the science of the allocation of goods under scarcity. Lionel Robbins' definition was "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses."

What if we do not have scarcity for most needs? The problem is more the nature of our needs when we could - if we chose - eliminate scarcity and leave immense amounts of leisure left over.

Why do we want what we want? Are our purposes and wishes consistent, or self-conflicting? Why is it in an age of abundance we end up working sixty hour weeks and living by the blackberry? Do we actually want or choose that?

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