Keynes Thought Scarcity Would Disappear in the Near Future. Boy, Was He Wrong

For many people, though not, to be sure, readers of The Austrian, John Maynard Keynes ranks as the greatest economist of the twentieth century; but for Zachary D. Carter, this is a restrained understatement. Carter, a writer on economics at the HuffPost, says this about Keynes:

No European mind since Newton had impressed himself so profoundly on both the political and intellectual development of the world. When the [London] Times wrote Keynes’ obituary, it declared him ”the greatest economist since Adam Smith.” But even praise so high as this sold Keynes short, for Keynes was to Smith as Copernicus was to Ptolemy—a thinker who replaced one paradigm with another. In his economic work he fused psychology, history, political theory, and observed financial experience like no economist before or since. (p. 368)

Those who make their way through this long book will likely come away puzzled with Carter’s enthusiasm. Keynes held bizarre beliefs, far stranger than the familiar underconsumptionist fallacy that the government needs to bolster insufficient aggregate demand. Though he wrote his most famous book about economic theory in the midst of the Great Depression, he thought that scarcity was no longer a problem. The potential for abundance was at hand, or soon would be; the real economic problem was to distribute this abundance so that selfish speculators would not take it all for themselves, leaving the masses in poverty.

This sounds unbelievable, but Keynes really did claim this. Summarizing Keynes’s position, Carter says,

Prior to The General Theory, economics was almost exclusively concerned with scarcity and efficiency. The very word for the productive output of society—economy—was a metaphor for making do with less. The root cause of human suffering was understood to be a shortage of resources to meet human needs…. This was the worldview of what Keynes called the “classical economists.”… But the sheer productive power of modern capitalism and the “miracle of compound interest” had rendered the portrait obsolete. Technological advances now allowed people to produce so much more with so much less effort than they had in the past that scarcity was no longer the overriding problem of humanity. (pp. 258–59)

 
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Πηγή: mises.org