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13 December 2007updated 27 Sep 2015 5:20am

. . . and a prosperous New Year?

Is the accumulation of wealth for its own sake disgusting, as Keynes believed - or is it simply huma

By James Buchan

In an essay published in 1930 under the title “Economic Possibilities for our Grandchildren”, John Maynard Keynes (who often wrote for the New Statesman) looked forward to an age when humanity would be so well-off it could retire.

Keynes imagined that about a hundred years on – or, to us, fairly soon – barring a great war or a population explosion, capital returns and technical advances would raise Europe and the United States to such a standard of living that men and women would devote their energies “to non-economic purposes”. The age-old struggle for subsistence would be resolved and economic history would come to an end.

In the 2020s, Keynes wrote, the pursuit of wealth for its own sake “will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease”.

From our vantage, eight decades later, it looks as if Keynes was wrong. Despite the wholesale destruction of capital in the Second World War, and an unprecedented rise in population, western standards of living measured in Keynes’s terms (“houses, transport, and the like”) have improved out of all recognition. Yet the pursuit of wealth for its own sake, far from being viewed as a disgusting morbidity, has never been more widespread or celebrated. Science and compound interest have not brought history to an end. The satisfaction of needs has not brought contentment, let alone what Keynes and his Bloomsbury friends valued above all: a life of leisure and moral and intellectual improvement.

Economists, like royal children, are not punished for their errors. Yet there is something interesting about Keynes’s wrongness that sheds light on modernity and one of its chief perplexities. Why, amid the ease and superfluity of modern British and American life, are we so doggone discontented? Why, on the golden streets of London and New York, are there in every face those marks of William Blake’s weakness and woe?

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At the heart of Keynes’s mistake is a problem that has troubled philosophers since Aristotle, and that is luxury, or consumption beyond need. Adam Smith, the greatest British philosopher, believed that in a free and secure society bodily and even social needs could be satisfied. But desires, in his beautiful phrase, “seem to be altogether endless”. People can and will wish for the world. Smith, who sought to clear the scholastic cobwebs from the study of wealth and to disenchant and unmoralise what we now call the economy, was obliged to accord a starring role to the imagination.

The dividing line between wish and need was never clear. Smith observed that shoes were a necessity to poor Scotsmen, but a luxury to Scotswomen, who went barefoot. In modern society, where most people live in cities, and where both needs and wishes are absolved through the same remote agency – money – the distinction between wishes and needs has altogether vanished. Listen to the conversations around you: “I will die if I do not have that dress”; “I have to go to hospital”; “You really must see the new Pinter.”

Where the distinction has dissolved, there can be no contentment. We work hard and long to accumulate indiscriminate property. Above all, we accumulate money. For while real or personal property is good for a particular purpose – a house to live in, a car to get from place to place, a coat to wear – money is good for all those things and everything else the imagination can contrive.

The paradox of fashion

Yet however much money we accumulate, the fellow from the hedge fund will have more. Where consumption is both conspicuous and competitive, humanity will never run out of new wishes. All the while, industry creates new desires that are marketed, in the great fashion paradox, as both novelty and need. You would have thought that humanity had been for centuries in want of an iPhone, which has now – not before time, thank you! – been invented. As Voltaire recognised, luxury is need: Le superflu, chose très nécessaire.

Economists have never claimed that pecuniary wealth, beyond a certain minimum, necessarily increases contentment. Smith himself was sceptical. He described riches “as enormous and operose machines to produce a few trifling con veniences”. They “keep off the summer shower, not the winter storm”. Those who achieve great fortunes are “as much and sometimes more exposed than before, to anxiety, to fear, and to sorrow; to diseases, to danger and to death”.

What he meant was that you may travel business class to New York and enjoy seven hours of very moderate comfort, but the expense of thousands will not rescue you, once you have arrived in New York, from that great leveller of degree, the US immigration and naturalisation service. Delivered at last from its hands, you can pay $25,000 for a sundae at Serendipity 3 on East 60th Street, but that will not protect you (in the words of the New York City Department of Health and Mental Hygiene) from “rodent and fly infestation and conditions conducive to pest infestation, including stagnant water in the basement, a live mouse . . . and piles of mouse droppings, flies and more than 100 live cockroaches”.

What the economists did believe, even before they were called economists, was that the rich, with their incessant demand for footling commodities and trivial services, would feed and clothe the labouring poor. As the rich became richer, so the poor would become poor by a different measure.

A poor British family, once defined as unable to afford the bread and potatoes of a workhouse diet, is now one that cannot pay for household contents insurance or two pairs of all-weather shoes per adult. It is just and fair that our standard of deprivation should vary with our standard of possession, but the consequence is that the poor are set to work the same treadmill of desire. They are no nearer to contentment than the well-off. They are not like the Scottish beggars Smith used to watch sunning themselves beside the highway and enjoying “the same security that kings are fighting for”. In these conditions of superfluity, charity has long ceased to be charity, but is simply another form of fashionable public consumption. Actually, it is what used to be called avarice.

Nostalgia for parsimony

Economists will tell us that British gross domestic product per caput has increased fourfold since Keynes wrote “Economic Possibilities for our Grandchildren”. Unfortunately, we inhabit not GDP, but rather the United Kingdom (or, to be precise, a place fashioned in our imaginations out of the United Kingdom). For all those who rejoice in living in a new Gilded Age or belle époque, there are others who look back in a sort of nostalgia to the parsimony of the 1960s, where a man might be made perfectly content by a deckchair on a windy beach, and an ice cream and one cigarette.

GDP can estimate or approximate the money value of the products and services sold in this country during the year, but gives no clue as to the amenity of life or the welfare of the nation. A view of mountains that has given pleasure to generations enters the calculation of GDP only when it is concreted over at such and such a price. The value of silence is recognised only at the point when it is abolished by a new airport runway. In a famous sentence of Robert F Kennedy’s, GDP (he was in fact talking about gross national product) “measures everything, except that which makes life worthwhile”. “It has not been entirely easy,” wrote Rousseau (1755), “to make ourselves so miserable” – Ce n’est pas sans peine que nous sommes parvenus à nous rendre si malheureux. Let us deafen ourselves with new airports, blind ourselves with street light, choke ourselves with traffic, lest the economy suffer!

This is the sacrificial or even penal GDP of modern times, where we are whipped by prosperity like prisoners, where opulence increases and amenity decays. What appeared as paradoxes at the beginning of this article turn out to be no such thing. There is nothing contrary to reason in being at the same time rich and unhappy or poor and unhappy. There is no contradiction between rising GDP and a diminished public amenity, any more than there is between their opposites.

Keynes may have been wrong in one other respect. Could it be that it is not the pursuit of subsistence, but of luxury, that is the force that runs through history, supplies our triumphs as well as our sorrows, gives us the splendours as well as the disasters of our civilisation? Happiness, the great discovery or invention of the 18th century, is for the birds. It is just a desirable and subjective state of consciousness, mere metaphysics. Only the iPhone is real, and the proper subject of philosophy. Karl Marx sits up and topples his tombstone.

We cannot all be Maynard and Virginia. Were we not pursuing wealth, we might be engaged in activities far less sociable and hygienic. As Dr Johnson put it in 1775, “There are few ways in which a man can be more innocently employed than in getting money.”

Revert to values

It is tempting to close the subject there. Yet, in recent years, there has been a change in temperament in the western public. We have come to suspect that what brought the advances in living standards was not so much technology and compound interest as the mining, from about 1860 onwards, of a great deal of fossilised carbon. The mined carbon has been moved into the air, where it is distorting our climate. That is a drawback to luxury that economists, in all their reasonings, unaccountably omitted to mention.

It is in the very nature of human beings to care for their posterity and there can be no happiness in this generation if it compromises that of the next and the one after that. Whatever the economists say, the welfare of our grandchildren is more than the sum of their purchases discounted to present value by the long-term rate of interest on money. Keynes had no grandchildren, but could nevertheless imagine them. Not since the 1960s, or maybe even the years after the Great War, has there been such uncertainty about the worth of our western civilisation. According to some people, indeed, we have like feckless gulls fouled our own nest and, in pursuit of what we did not need or much want, turned all nature into a slum.

Blinded by advertising, hectored by political economy, what can we do? I think we revert to values. By that, I do not mean a John Majorish back-to-basics, or an indiscriminate nos talgia. I mean we recognise that there are values which cannot be reduced or condensed or cast up into prices.

While security (in the antique sense of freedom from care) and independence may not have the prestige or precision of a money sum, we have a vague sense that they are valuable. Whe ther such values are still within reach of a thoroughly commercialised public is the question of our age and of this season.

James Buchan is the author of “Adam Smith and the Pursuit of Perfect Liberty” (Profile Books, £7.99)