Chapter 12. Machine Money and People Money

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At the outset of the Great Depression, John Maynard Keynes penned a remarkable economic prognostication: that despite the ominous storm that was then enfolding the world, mankind was in fact on the brink of solving “the economic problem”—that is, the quest for daily subsistence.

The world of his grandchildren—the world of those of us living today—would, “for the first time…be faced with [mankind’s] real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”

It didn’t turn out quite as Keynes imagined. Sure enough, after a punishing Depression and a great World War, the economy entered a period of unparalleled prosperity. But in recent decades, despite all the remarkable progress of business and technology, that prosperity has been very unevenly distributed. Around the world, the average standard of living has increased enormously, but in modern developed economies, the middle class has stagnated, and for the first time in generations, our children may be worse off than we are. Once again, we face what Keynes called “the enormous anomaly of unemployment in a world full of wants,” with consequent political instability and uncertain business prospects.

But Keynes was right. ...

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