We are suffering just now from a bad attack of economic pessimism. It is
common to hear people say that the epoch of enormous economic progress
which characterised the nineteenth century is over; that the rapid improvement
in the standard of life is now going to slow down –at any rate in Great Britain;
that a decline in prosperity is more likely than an improvement in the decade
which lies ahead of us.
common to hear people say that the epoch of enormous economic progress
which characterised the nineteenth century is over; that the rapid improvement
in the standard of life is now going to slow down –at any rate in Great Britain;
that a decline in prosperity is more likely than an improvement in the decade
which lies ahead of us.
I believe that this is a wildly mistaken interpretation of what is happening to us.
We are suffering, not from the rheumatics of old age, but from the
growing-pains of over-rapid changes, from the painfulness of readjustment
between one economic period and another. The increase of technical efficiency
has been taking place faster than we can deal with the problem of labour
absorption; the improvement in the standard of life has been a little too quick;
the banking and monetary system of the world has been preventing the rate of
interest from falling as fast as equilibrium requires. And even so, the waste and
confusion which ensue relate to not more than 7½ per cent of the national
income; we are muddling away one and sixpence in the £, and have only 18s.
6d., when we might, if we were more sensible, have £1 ; yet, nevertheless, the
18s. 6d. mounts up to as much as the £1 would have been five or six years ago.
We forget that in 1929 the physical output of the industry of Great Britain was
greater than ever before, and that the net surplus of our foreign balance
available for new foreign investment, after paying for all our imports, was
greater last year than that of any other country, being indeed 50 per cent greater
than the corresponding surplus of the United States. Or again-if it is to be a
matter of comparisons-suppose that we were to reduce our wages by a half,
repudiate four fifths of the national debt, and hoard our surplus wealth in
barren gold instead of lending it at 6 per cent or more, we should resemble the
now much-envied France. But would it be an improvement?
We are suffering, not from the rheumatics of old age, but from the
growing-pains of over-rapid changes, from the painfulness of readjustment
between one economic period and another. The increase of technical efficiency
has been taking place faster than we can deal with the problem of labour
absorption; the improvement in the standard of life has been a little too quick;
the banking and monetary system of the world has been preventing the rate of
interest from falling as fast as equilibrium requires. And even so, the waste and
confusion which ensue relate to not more than 7½ per cent of the national
income; we are muddling away one and sixpence in the £, and have only 18s.
6d., when we might, if we were more sensible, have £1 ; yet, nevertheless, the
18s. 6d. mounts up to as much as the £1 would have been five or six years ago.
We forget that in 1929 the physical output of the industry of Great Britain was
greater than ever before, and that the net surplus of our foreign balance
available for new foreign investment, after paying for all our imports, was
greater last year than that of any other country, being indeed 50 per cent greater
than the corresponding surplus of the United States. Or again-if it is to be a
matter of comparisons-suppose that we were to reduce our wages by a half,
repudiate four fifths of the national debt, and hoard our surplus wealth in
barren gold instead of lending it at 6 per cent or more, we should resemble the
now much-envied France. But would it be an improvement?
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 opposed 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.
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 opposed 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.
My purpose in this essay, however, is not to examine the present or the near
future, but to disembarrass myself of short views and take wings into the
future. What can we reasonably expect the level of our economic life to be a
hundred years hence? What are the economic possibilities for our
grandchildren?more
future, but to disembarrass myself of short views and take wings into the
future. What can we reasonably expect the level of our economic life to be a
hundred years hence? What are the economic possibilities for our
grandchildren?more
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