Economists ofer a range of explanations for the failure of Keynes’s prediction, some of which are close to being circular. One explanation is that work is itself a source of utility—surely that must be so, the reasoning goes, or else why would people not choose to cut their hours? Alternatively, material wants must indeed be insatiable—why else would people choose income over leisure? Other explanations ofered are more substantive: consumption under conditions of afluence becomes driven by status-seeking one-upmanship, and the demand for positional goods (which index relative position in a status hierarchy) can never be exhausted; growing inequality induces a widespread fear of downward social mobility and so increases the incentive to work in order to close the income gap; higher income creates new needs, such that needs are not fixed but rather change with economic growth. These explanations surely have something to them. No one could sensibly deny that some people find some value in activities for which they happen to be paid, nor would it be wise to underestimate concerns about status and the role of conspicuous consumption in status competition. However, the explanations ofered do not, for reasons set out in the next chapter, satisfactorily account for the dramatic degree to which Keynes’s vision of the future failed to come to pass.6 Indeed, the very fact that there is such disagreement between the economists on why, in the wake of growing afluence, work failed to retreat more than it did, indicates the dificulty of the puzzle.
Introduction
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