Optimistic Keynes

There was a time when relatively famous  British economist J. M. Keynes had rightly or wrongly predicted that the technology gains could deliver an eightfold increase in living standards in the coming one hundred years. 

But now the IMF head Kristalina Georgieva has been reacting that he was too optimistic about how the benefits of growth would be shared equally.

Keynes also predicted that technology gains driving up productivity would allow for more leisure time with a fifteen-hour working week.

Georgieva said the world could expect either a low-ambition path with the global gross domestic product about three times larger and living standards twice as high as today.

However, she mentioned that the proceeds of growth had been too heavily restricted among the particular groups and in a few rich countries. Was it not so practical?

Most of us did not, of course, have enough money to shop on the markets but about noting how we would have been putting together the daily needs. 

Till today we try to find the shops which are where we could do our shopping in less expensive ways.

No doubt, economic inequality remains too high, within and across countries, she said adding that we simply cannot get to the high ambition scenario for growth unless we foster a fairer global economy.

She warned that the only way to gain global economic growth over the next century is by tackling soaring inequality to achieve a ninefold increase in living standards.

Global leaders had a responsibility to future generations to build an economy that really deals with various new things like global heating, deploy AI technology responsibly and slash elevated levels of inequality.

 

In a speech at King’s College, Cambridge, she argued the world was a turning point, making a comparison with the Great Depression of the 1930s when the leading British economist John Maynard Keynes wrote his seminal essay Economic Possibilities for Our Grandchildren.

She said Keynes had been right to predict that technology gains could deliver an eightfold increase in living standards in 100 years, but that the founding father of modern economics had been too optimistic about how the benefits of growth would be shared.

Keynes, who was a fellow and academic administrator at King’s and played an integral role in the creation of the IMF after the Second World War, predicted that technology gains driving up productivity would allow for more leisure time with a 15-hour working week.

However, Georgieva said the proceeds of growth had been too heavily concentrated among particular groups and in rich countries. “He [Keynes] was also too optimistic about how the benefits of growth would be shared. Economic inequality remains too high, within and across countries,” she said.

Setting out two possible scenarios for the next 100 years, developed by IMF staff, Georgieva said the world could expect either a “low ambition” path with global gross domestic product about three times larger and living standards twice as high as today.