The Meaning of Economic Growth: Sluching Toward Utopia

Dan Kohn (
Sun, 11 Jan 1998 19:29:10 -0800

Brad De Long has fantastic stuff here. These are things I've been
thinking for a while, which (of course) it turns out Keynes articulated
better 50 years ago. I think this transition from looking for happiness
in economics (and consumerism) to psychology (and spiritualism and life
and human relations) is going to be one of the most important things for
our generation to learn.

- dan

Keynes' conclusion was that "a point may soon be reached... when these
[absolute] needs are satisfied, in the sense that we prefer to devote
our further energies to non-economic purposes." In that case:

the day is not far off when the Economic Problem will take the
back seat where it belongs, and that the arena of the heart and head
will be occupied... by our real problems---the problems of life and of
human relations, of creation and behavior and religion.

More important, Keynes's predictions have not come to pass. He expected
society to undergo a profound change as attention shifted from working
hard to keep the wolf from the door to living a good life. But we today
do not feel that material acquisition is about to go out of style, we do
not appear to be on the threshold of converting en masse from full-time
to half-time or quarter-time work, and we have not begun to rank and
applaud people by how they spend their leisure as opposed to what they
do at work. The dividing line between useful necessity and pointless
luxury always comes at roughly twice one's current standard of living.
After all, Americans could subsist--healthily--off of wheat flour,
evaporated milk, cabbage, spinach, and navy beans for less than fifty
cents a day. But, as George Stigler wrote:

such a diet would not be to the satisfaction of either the
population or the students of nutrition.... Man insists upon luxuries
such as meat, and should we somehow fully address his desire (despite
his penchant for shifting from sow belly to pheasant), he will no doubt
insist upon shifting to another and more expensive food.... [T]he
economic system has as its purpose forcing people to find new
scarcities... the alteration of a host of circumstances and policies
that deprive large numbers of people of eminently desirable things that
a more efficiently organized society could afford.

So there is no real reason to expect "satiation" at any level of per
capita income that I can foresee. The level of luxury at which people
imagine satiation is always three times the value of their current

It is significantly more pleasant to eat broiled sole at Chez Panisse
than to munch on a tuna sandwich while sitting on the concrete wall by
the North Gate to the Berkeley Campus. It is more fun to write on a
powerful laptop PC, while sitting at a tile table in an air-conditioned
cafe and drinking cappucino, than to write on a manual typewriter in a
small, hot office while drinking a combination of dishwater and sludge
made from instant coffee--or to write with bad ink on parchment by the
light of a single candle.

We cannot approach utopia in terms of material welfare because we can
always imagine how increased resources could give us a more comfortable
and rewarding life. Or perhaps it is better to say that from the
standpoint of every previous century we have surpassed utopia, but
failed to stop and properly appreciate the accomplishment.

An equally important answer, of course, is that Utopia does not require
merely command over nature. It requires command over self, and command
over society as well. Command over self is a matter of psychology. [W]e
have not achieved utopia--in spite of immense material wealth--because
we have approached it as a problem of engineering, and it is in fact a
problem of psychology.