Keynes on “The Means to Prosperity”

Here’s Keynes from the opening of his 1933 pamphlet “The Means to Prosperity”. You can read the whole thing here.

“If our poverty were due to famine or earthquake or war—if we lacked material things and the resources to produce them, we could not expect to find the Means to Prosperity except in hard work, abstinence, and invention. In fact, our predicament is notoriously of another kind. It comes from some failure in the immaterial devices of the mind, in the working of the motives which should lead to the decisions and acts of will, necessary to put in movement the resources and technical means we already have. It is as though two motor-drivers, meeting in the middle of a highway, were unable to pass one another because neither knows the rule of the road. Their own muscles are no use; a motor engineer cannot help them; a better road would not serve. Nothing is required and nothing will avail, except a little, a very little, clear thinking.

So, too, our problem is not a human problem of muscles and endurance. It is not an engineering problem or an agricultural problem. It is not even a business problem, if we mean by business those calculations and dispositions and organising acts by which individual entrepreneurs can better themselves. Nor is it a banking problem, if we mean by banking those principles and methods of shrewd judgement by which lasting connections are fostered and unfortunate commitments avoided. On the contrary, it is, in the strictest sense, an economic problem, or, to express it better as suggesting a blend of economic theory with the art of statesmanship, a problem of Political Economy.

Keynes was writing this at the height of the Great Depression, and although the circumstances were somewhat different than today, there are many similarities in the way Governments (sadly) are reacting today and how they reacted in the 1930s.

David Cameron’s speech on the economy this week included the claim that external factors were preventing a recovery while the Government’s policies were having no negative impact on growth. While Cameron received a rebuke for this from OBR chairman Robert Chote, Cameron’s underlying message of “there’s no alternative” still seems to resonate. This was just the kind of wrong-headed thinking Keynes was trying to rail against in the 1930s, and his key messages about positive government action remain as relevant today as they were then.

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