Good morning.
“We are suffering just now from a bad attack of economic pessimism. It is common to hear people say that the epoch of enormous economic progress which characterised the (redacted) century is over; that the rapid improvement in the standard of life is now going to slow down – at any rate in (redacted); that a decline in prosperity is more likely than an improvement in the decade which lies ahead of us.”
Sound familiar? To all intents and purposes, this could be a description of the world as it is today, and the author could well be someone like Lawrence Summers, the prophet of secular stagnation. In fact, the quotation dates from 1930, the country being talked about was Great Britain, and the author was John Maynard Keynes.
However, the old master, free from concerns about ageing populations, came to a radically different conclusion from his Harvard disciple.
“I believe that this is a wildly mistaken interpretation of what is happening to us. We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another.”
(Hat-tip to Berenberg Bank’s Kallum Pickering for digging up the reference, which he puts at the center of a very succinct summary of the case for optimism regarding technological progress, which he squares with the frustrating stagnation in productivity visible since the financial crisis. Productivity does indeed appear to progress in super-cycles rather than cycles, but the gains of technological advances are never felt until they’re properly dispersed and mastered.)
“History tell us to be very, very optimistic” Pickering concludes. “Looking back in 100 years’ time, we have every reason to believe that the history books will summarise our current period of frustration to a mere sentence on a page.”
Amen to that – even if the history books have a lot more to say about the 15 years that followed Keynes’s prediction than about the disruption he was celebrating.
Geoffrey Smith
@geoffreytsmith
geoffrey.smith@fortune.com
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