Keynes’s General Theory of Employment, Interest, and Money, published in 1936, equipped governments with the intellectual tools to counter the unemployment caused by slumps. In this earlier essay, however, Keynes distinguished between unemployment caused by temporary economic breakdowns and what he called “technological unemployment” – that is, “unemployment due to the discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour”.
Keynes reckoned that we would hear much more about this kind of unemployment in the future. But its emergence, he thought, was a cause for hope, rather than despair. For it showed that the developed world, at least, was on track to solving the “economic problem” – the problem of scarcity that kept mankind tethered to a burdensome life of toil.
Machines were rapidly replacing human labour, holding out the prospect of vastly increased production at a fraction of the existing human effort. In fact, Keynes thought that by about now (the early 21st century) most people would have to work only 15 hours a week to produce all that they needed for subsistence and comfort.
Developed countries are now about as rich as Keynes thought they would be, but most of us work much longer than 15 hours a week, although we do take longer holidays, and work has become less physically demanding, so we also live longer. But, in broad terms, the prophecy of vastly increased leisure for all has not been fulfilled. Automation has been proceeding apace, but most of us who work still put in an average of 40 hours a week. In fact, working hours have not fallen since the early 1980s.
At the same time, “technological unemployment” has risen. Since the 1980s, we have never regained the full employment levels of the 1950s and 1960s. If most people still work a 40-hour week, a substantial and growing minority have had unwanted leisure thrust upon them in the form of unemployment, under-employment and forced withdrawal from the labour market. And, as we recover from the current recession, most experts expect this group to grow even larger.
What this means is that we have largely failed to convert growing technological unemployment into increased voluntary leisure. The main reason for this is that the lion’s share of the productivity gains achieved over the last 30 years has been seized by the well-off.