Michael Prowse's article in yesterday's Financial Tmes continues the theme set by the anonymous author of the Economics article attached to yesterday's "050. Why leisure time is squeezed". This is that, given the choice, people will prefer income to leisure in order to buy more consumer goods, but the goods themselves are not intrinsically important -- only in respect of having more of them than your neighbour. In other words, as will be the principal theme of my book: economics is a status game.

It is fascinating to read what writers on economics are saying today with what Keynes was saying only half a century ago. Keynes and his Bloomsbury circle of aesthetes really rather despised the habits and mores of working class people but they saw a benefit in looking after them in a kindly way. If they could provide reasonably full employment for the masses and also give them some sort of minimum health care and a decent old age pension at the end of their days, then the masses would be grateful enough to be taxed more than they needed to be in order to pay for state aid to the arts -- the opera, ballet and the theatre. In other words, he wanted to playing a status game on a national scale -- a junior version of the nomenklatura system that was already going on in Soviet Russia.

To some extent this same attitude continues today. While Chancellor George Brown continues to devise evermore ingenious 'stealth taxes' in order to pay for an ever larger, and increasingly centralised civil service, the lottery, given a monopoly by the state, sweeps in the money of the poor and the credulous all over the country in order to spend lavishly on arts projects disproportionately in the south and in supporting 'village' cricket clubs in the stockbroker belt in Essex. Precious little is going to where the money is really needed -- youth clubs, sports facilities and skill-training centres in the employment black spots in the country. But, increasingly, people are rumbling all this, and the liberal welfare-state is going to fail just as certainly as Soviet Russia did. The leading politicians of the present Labour government, and also those of a possible Conservative one to follow, are more than a little desperate to know what to do and what policies to prescribe.

But it's no use blaming capitalism or the entrepreneurs because it's the people who've decided that they want the material gewgaws that the rich and upper middle class used to have (apart from ballet and opera, that is!). And they've wanted them for exactly the same reasons -- to give an outward sign of their status -- that they have 'arrived'. The problem is that the mass of the people don't really have a local community any longer. We live in a schizophrenic world in which we attempt to show our status to our local neighbours, many of whom we have actually never met or spoken to and, in order to belong to what passes for a 'real' community, we consent to travel long distances to work, sometimes taking hours a day to do so.

In my book I will be hoping to show that the seeking of status is what has been driving the economic systems of man right from the beginning. Once that is accepted by economists and politicians then, hopefully, we can move to the next lesson -- that our desire for status is only part of an equally strong desire for real community, and not the split-version that we have today.

KH

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WHY CAPITALISM WILL NEVER PERMIT US TO LIVE A LIFE OF LEISURE

Michael Prowse

During the depressed 1930s, John Maynard Keynes tried to raise the spirits of his contemporaries by arguing that the human race's "economic problem" might be solved within a century or so. By then economic growth would have created enough wealth to satisfy most material wants. He even speculated that our changed situation would cause a radical rethinking of conventional mores. With capital accumulation no longer a priority, people would care less for the austere virtues that underpin the "work ethic" and be captivated instead by those with a flair for spontaneously enjoying the present moment. Workaholics would have to reinvent themselves as "lilies of the field, who toil not, neither do they spin".

We are well on the way to completing Keynes's century; and yet his post-economic paradise still appears remote. In fact, the great economist might be perplexed by today's headlines. Higher incomes seem not to be generating the stress-free leisurely lifestyle that he envisaged. Pundits on both sides of the Atlantic continue to argue that working hours are excessive and that a macho corporate culture makes unreasonable demands on many professional staff. In Britain, health and safety officials have just issued their first "enforcement notice" -- against a National Health Service hospital charged with failing to protect its staff from excessive stress.

Following recent legislation, many employers could now face criminal prosecution if they fail to tackle the causes of stress in the workplace. Trade unions, meanwhile, have taken up the issue of "work/life balance" with the energy they once reserved for pay disputes. What has gone wrong? Why do income protection insurers report sharp increases in stress and mental health claims? Why do many employees feel compelled to work through their lunch breaks, as well as in the evenings and at weekends? And why do so many high-achieving women find themselves childless in their 40s because brutal corporate work regimes leave no time for a family life?

You might assume that Keynes was just too optimistic on growth prospects. In other words, people are still working frenetically because average incomes have not increased at the pace that he assumed, and so many economic wants remain unmet.

Yet in his essay*, Keynes merely assumed that per capita real incomes would grow at an average annual rate of 2 per cent -- an assumption that subsequent economic history has proved about right for western democracies. But 2 per cent growth for a century translates into an eightfold increase in incomes, which Keynes thought might be sufficient to persuade people to focus their efforts on non-economic pursuits.

Yet he perhaps underestimated the capacity of profit-seeking entrepreneurs constantly to create new material wants. And although he understood that people care not just about their absolute living standards but also about their standards relative to others, he perhaps did not appreciate the potency of this factor. As long as capitalism retains its dynamism, there will always be new things to buy. And most people's living standards will always fall short of those of wealthy elites. They will thus always feel pressure to work harder in order to earn the money needed to close the gap. What psychologists call the "hedonic treadmill" is likely to be a feature of capitalism for as long as it lasts.

I was reminded of the dimensions of the first problem -- the ever-expanding universe of consumer goods -- while 'reading. Daniel Dennett, the US philosopher. In passing, he recalls aspects of what sounds like an idyllic New England childhood in the early 1950s. He describes the delight of "singing round the piano" and playing "hunt the thimble".

And yet how deprived he must have been by the standards of today's children: no compact discs, no computers, no surfing the internet, no video games, no text-messaging. At school, the young Dennett would have had to use a slide rule, or his capacious brain, rather than a pocket calculator. And yet, were children in the 1950s any less happy than today?

I am not denying the obvious: that economic growth since the 1930s has helped satisfy many genuine needs, especially for poorer families. The most striking gains are perhaps in medical technology. And yet a significant portion of output -- and hence of work effort -- has been squandered. In effect, we have worked to create commodities that simply offer different ways of satisfying the same human needs. There is less singing round the piano because most families have television and videorecorders. But perhaps the older ways of entertaining ourselves, being less passive, were superior. If we cannot scrap the hedonic treadmill, can we at least ensure that it runs at a slower pace? Can we try to strike a better balance between production of commodities (and hence work intensity) and quality of life? Perhaps; but only if we also recognise the other aspect of the problem: the fact that humans, being social animals, care so much about their status and prosperity relative to others. One powerful work incentive will always be a desire to afford what the better off in one's society already possess, regardless of what this involves in material terms.

If second homes on the Moon became the norm for wealthy elites, you can be sure that people will work round the clock in order to afford this status symbol. Stress is thus inherent to capitalism.

Some pundits have noted that working hours are substantially shorter in Europe than in the US and have tended to decline in recent decades rather than rise. They see this as evidence that Europeans are idle and conclude that Europe's economy will never be as dynamic as America's. But I would be tempted to interpret the difference more positively.

European parliaments have merely taken a different view of the hedonic treadmill. They have understood the difference between consumption and quality of life and thus opted for longer holidays, less intense work practices, more generous maternity leave and so on. And in doing so they have constructed a gentler form of capitalism -- one that allows a little more time for such unproductive pursuits as singing round the piano.

*Economic Possibilities for Our Grandchildren, reprinted in Essays in Persuasion (Macmillan, 1931)

Financial Times 9 August 2003