Yesterday's brighter tomorrow: evaluating John Maynard Keynes' 100-year economic forecast.

• Position: Economics - Essay

IN 1930, DURING the early grim days of the Great Depression, British economist John Maynard Keynes, considered by many scholars to be the most influential economist of the 20th century, published the futuristic essay, "Economic Possibilities for Our Grandchildren" which expresses an optimistic narrative of economic and social predictions for Europe and North America to be achieved by 2030. Since then, some of his conclusions have proven to be wrong. Two of Keynes' baseline assumptions--no more devastating wars or further increases in population--have gone by the boards. Nonetheless, Keynes was correct in predicting that the West would resume its dazzling economic progress after the lost decade of the 1930s, but it was not until 1936, with the publication of "The General Theory," that he provided the intellectual framework used by Western economists to evaluate economic conditions from 1945-75. By the mid 1970s, Keynesianism had withered under severe attacks.

Keynes and his contemporaries fully were aware by 1930 that they were witnessing an economic crisis far more significant than those that had preceded it. Unlike many economists of this period, Keynes rejected his academic peers' "bad attack of economic pessimism," because he believed that uncertainty had biased their judgment of the potential of capitalism to generate substantial gains in economic welfare. Although national income statistics were rudimentary and economic growth theory had not yet been developed, Keynes boldly predicted that "the economic standards of life in the progressive Western nations one hundred years hence would be between four and eight times as high [as in 1930]" was on target, although perhaps not for all the right reasons.

Keynes' basic conjecture looks to be confirmed--average real income for Americans is about five times more than the 1930 level, although who knows if the next 19 years will undo those gains? Later in "The General Theory," Keynes states that the effects of the Great Depression could be overcome, but that a vigorous recovery would require a "very active and determined policy" by the government to restore a faltering economy. Up until the present day, strong intervention polities by the government have become the defining characteristic of Keynesian macroeconomics in all of its modern variants--traditional Keynesianism, neoclassical Keynesian synthesis, New Keynesianism, and Post Keynesianism.

Living the easy life

Although Keynes' forecast for...