Lord Robert Skidelsky: You can't cut your way out of a slump; you have to grow your way out.
28 March 2013, Nexus Institute organized a symposium on the (non) need for consumption, titled 'How Much is Enough?' in the presence of Lord Skidelsky and others. Lord Robert Skidelski, born 25 April 1939, is a British economic historian of Russian origin and the author of a major, award-winning, three-volume biography of British economist John Maynard Keynes (1883–1946). He read history at Jesus College, Oxford and is Emeritus Professor of Political Economy at the University of Warwick, England.

The purpose of Robert and Edward Skidelsky’s How Much Is Enough?, a well-written and fascinating book, is to persuade the reader that the good life does exist and can be known, and that we ought to strive to live it. In the introductory chapter the authors explain that this also has consequences for economic policy, since its main goal – economic growth – does not necessarily contribute to the good life – quite the reverse: growth does not make us happier and is environmentally disastrous. But the most important objection is that economic growth is senseless. The authors therefore argue against insatiability.

<- Lord Robert Skidelsky: You can't cut your way out of a slump; you have to grow your way out.


Capitalism has intensified insatiability by inflaming status-driven consumption. Economics provides an intellectual barrier to change, because its emphasis is on efficiency at all cost. But the social importance of efficiency, and hence of economics, has declined.

The economist John Maynard Keynes predicted in the first decades of the 20th century that after 100 year of economic growth, scarcity would disappear and we would have to work no more than 3 days a week. Although his forecast of economic growth turned out to be correct, Keynesforecast of hours of work did not: since 1930 the average has fallen by only a fifth.

The Skidelskys give several explanations for this: work gives joy; people are put under pressure to work because median income has not risen as much as average income due to increasing inequality; and people always crave to have more than they have.

This characteristic is rooted in human nature and the social character of man, but capitalism has inflamed this innate tendency through advertisements, income inequality, free market ideology hostile to the idea of enough and monetization.

These developments are characterized as a Faustian bargain. Capitalism, for all its success in giving us wealth beyond measure, has taken away the chief benefit of wealth: the consciousness of having enough. The thinkers of the pre-modern world were free from such an illusion.

Aristotle had a well-defined idea of the good life. Nowadays, the idea of the good life is just a matter of opinion. This leaves us with no more than positional struggle: if there is no mark of what is good, it is best to be ahead. Modern liberal theory and neoclassical economics have a virtual monopoly on public discourse. Ever since John Rawls, liberal thinkers have insisted on public neutrality between rival conceptions of the good. The distinction between needs and wants has disappeared. Economists take people as they are, not as they should be. It is not just any academic discipline, it is the theology of our age. In a world devoted to the satisfaction of private wants, the good life can at best be a marginal concern.

According to the Skidelskys, environmental concerns cannot be the primary reason for limiting economic growth, as it is not self-evident that global warming requires us to abandon growth. The more fundamental reason is a positive one, namely that satiability is necessary for preservation of the good life itself. But if we are to recover an understanding of what it means to have enough, we must relearn to ask the question: what is living well?

The authors propose a list of basic goods that form the good life: health, security, respect, personality, harmony with nature, friendship and leisure (defined as that which we do for its own sake). These goods are plural: lack of one cannot be offset by abundance of another.

The first goal of the individual is to realize the good life for himself. The first duty of the state is to realize, as far as this lies within its power, the good life for all citizens, and it has a legitimate role in creating the material conditions under which these goods can flourish. The authors propose some concrete policies. They prefer a non-coercive paternalism. The fruits of productivity must be shared more equally, and the pressure to consume must be reduced. Possible policy measures are putting a maximum hours of work, and introducing a basic income, a consumption tax, a Tobin tax, restrictions on advertising and limitations to free trade and flows of hot money.

I largely agree with the message of the Skidelskys. Yet, I have quite a number of questions. The first is about work. Although the Skidelskys admit that working may have similar characteristics as leisure, I doubt whether securing the basic goods requires working substantially less hours. While working too much certainly crowds out the good life, a good balance between work, family life or friendship does not require a shorter than standard working week. In this regard, it would have been helpful if the authors had benefited more from Alasdair MacIntyre’s virtue theory, because MacIntyre’s notion of internal goods of practices (and the virtues one needs to develop them) gives ample room to the intrinsic value of working in the context of practices.

The authors therefore would have don better to focus on how to raise the quality of work (rather than to reduce working hours to three days a week) in order to increase the share of leisure-like work.

Furthermore, the Skidelskys seem to ignore that work is not only valuable because of its intrinsic good for the worker, but also because work in many cases provides a service to others. That is why work is sometimes seen as the calling of a person.

Another question is to what extent the Skidelskys think it is possible to reduce positional competition. As they state themselves, it is part of human nature to compare oneself with others. We might change institutions in order not to inflame this kind of competition, but realistically it will not be possible to ban it. The Skidelskys themselves note that it was Herbert Marcuse’s error that he closed his eyes to the obvious fact of original sin, but it seems that they partly fall into the same trap, although they rightly note that moral discipline is important here.

Regarding the basic goods that the Skidelskys propose, a question that pops up is whether we can safely conclude that Western welfare is sufficient to meet them. Some of these goods, such as health, are related to income per capita. Health is a continuous variable that increases with income as more income makes it possible to live a healthier life. Recent cross-country happiness research confirms that happiness increases with income, also in rich countries. Therefore, it is not obvious that preservation of basic goods requires elimination of economic growth. I would argue that it requires selective economic growth that raises the quality of life rather than harming it (J.J. Graafland, The Market, Happiness and Solidarity. A Christian Perspective, London, Routledge, 2010).

Furthermore, although I share with the Skidelskys some of their philosophical criticisms on the concept of happiness used in happiness research, I think this kind of research is still useful because data on happiness are widely available and provide a good means for economic analysis that corrects some of the standard economic analyses that focus merely on material welfare. Moreover, some of the criticisms apply particularly to individual data on happiness, but cancel out in macro averages of happiness, which are therefore more reliable.
I am a bit surprised that the Skidelskys do not classify worship as a leisure good.
Augustine already classified the enjoyment of God as fruit. In my own experience, worship is a liberating activity that believers perform for its own sake. A related point is that the list of basic goods the Skidelskys propose is still quite liberal or individualistic in nature. Communitarian elements are included under the heading of friendship, but are still weakly represented. Friendship is in most cases the result of free choice, whereas community is mostly a given for the individual. Commitment to one’s community can therefore not properly be equated to friendship. I therefore doubt whether this list can really be taken to be universal.

Finally, regarding the concrete policy proposals, I think the weakest one is the provision of a basic income. The disincentive effects are potentially extremely large. The Skidelskys only focus on receiving a basic income, but hardly pay attention to the other side of the picture, that other people should provide for the financial means to finance the basic income. From a justice point of view, one can seriously doubt whether it is fair to let others work and pay for the basic income of those who want more leisure.

how much is enough, Nexus symposium 28 March 2013 with R. Skidelsky


The Great Depression  
The Great Depression bottomed out at the end of 1932, with British unemployment having reached 20%, American unemployment even higher. Keynes wrote The General Theory in 1936 to explain why the recovery was so feeble. His revolutionary proposition was that following a big shock - usually a collapse in investment - there were no automatic recovery forces in a market economy. The economy would go on shrinking until it reached some sort of stability at a low level. Keynes called this position "under-employment equilibrium".

The reason was that the level of activity - output and employment - depended on the level of aggregate demand or spending power. If spending power shrank, output would shrink. In this situation it was the government's job to increase its own spending to offset the decline in public spending - that is by running a deficit to whatever extent necessary.

John Maynard Keynes would argue that the cuts implemented by the Coalition government will not aid the UK's economic recovery. Keynes's theory was forged in the Great Depression of 1929-1932 - the biggest economic collapse of modern times. As their economies contracted, governments responded to their mounting budget deficits by raising taxes and cutting spending.
To cut government spending was completely the wrong policy in a slump. When an economy is booming, a hair shirt at the Treasury is the right policy, when it is stagnating it is the wrong policy. Keynes's message was: you cannot cut your way out of a slump; you have to grow your way out. Eighty years on we have still not fully learnt the lesson. Three years after the collapse of 2008, our economy is flat: there are no signs of growth, nor can the Osborne policy of a thousand cuts produce any.

It was Friedrich Hayek (*) , who represented the orthodox theories which Keynes attacked. According to Hayek the main cause of slumps was excessive credit creation by the banks leading to overspending. The boom was the illusion; the slump the reality. The situation following an injection of money by the banking system would be similar to that of a people on an isolated island, if, after having partially constructed an enormous machine… they found they had exhausted all their savings before the new machine could turn out its products. They would then have no choice but to abandon, temporarily, the work on the new process and to devote all their labour to producing their daily bread without any capital.

That is, go back to growing their own food - much as the Russians did when their economy collapsed in the early 1990s. Keynes was scathing in his comment on Hayek's book, Prices and Production, which he called "one of the most frightful muddles I have ever read". "It is an extraordinary example of how, starting with a mistake, a remorseless logician can end in Bedlam."

Hayek gave up serious economics, though not serious writing. He and Keynes developed a wary respect, and even liking, for each other. "We get on very well in private life", Keynes wrote. "But what rubbish his theory is." Keynes's magnetism made a deep impression on Hayek, but he never stopped believing that his influence on economics was "both miraculous and tragic".
Le mont Pèlerin


Hayek belonged to the Austrian economists, who not only defended the interests of the market, but more important to them was the culture that the market needed for functioning. The Viennese economists had to deal with turbulent social, political and economic developments: an emancipating working class in large numbers turned away from the liberal movements and total erosion of support for the free market during the interwar. This made the Austrian economists extra aware of the necessity of the cultural context of an economy. It was clear to the Austrians that the workers would not easiliy accept the political and economic system, fears fueled further by the rise of Marxism. Ideals of fairness, deliberation and common interests seem to have gone completely. On the left side there is an irrepressible belief in the making of the society. A new generation of scientific socialists wanted society rationalized and redesigned, strengthened by belief in scientific progress. Right seeks a strong leader and gives growing criticism on the liberal values ​​of moderation, reasonableness and civil liberty. Fueled by the ideas of Freud and Nietzsche, among others, civilization is increasingly seen as a burden that should be dropped. Hayek begins to use his Viennese experiences for a new theory about the market. His conclusion is that markets are cultural institutions that can only exist if they are supported by the majority of the population and when the outcome of market processes is accepted as a more or less fair. Markets, he argues, constitute a framework within which people can express themselves more able to handle, and achieve their goals. But to make this possible, these institutions should be well maintained and perceived by the people as legitimate. Markets, according to Hayek, can only function as people share certain standards, like language contributes to communication as vocabulary and grammar are shared. This means, in other words, that markets can only exist because of certain shared values ​​and norms. the social goods.