“Keynes was a homosexual and had no intention of having children. We are NOT dead in the long run … our children are our progeny.” This tirade came from Niall Ferguson, the financial historian, Harvard professor and pundit, speaking in the third capacity at an investor conference two weeks ago. Though largely misguided, part of that comment is interesting. The idea that fertility has something to do with economics is due for a revival.
The sexual slur, for which Ferguson apologised, is tedious, as is the wilful misunderstanding of John Maynard Keynes’s quip: “in the long run we are all dead”. That was a complaint about the glib willingness of rival economists to endorse temporary suffering, which Keynes thought was largely unnecessary, for the sake of some distant good, which he thought was far from certain to arrive.
But Ferguson’s comment assumes, correctly, that our economic activity cannot be separated from an almost biological desire to create a good society which will endure into the future. In other words, there is a valid analogy between our biological drives to survive and reproduce and the economic desires to satisfy our needs and to thrive, now and in the future. Economists have captured the close ties of biology and society with two different images: growth and fertility.
Start with growth. We desire healthy and fast growth for the economy, just as we do for our progeny. The analogy is helpful and apt when economies are still in some sense young. Much as a child becomes more capable as well as larger as he or she follows their own version of the path to adulthood, an economy produces more and better goods and services as it catches up with more developed economies.
Eventually, though, human and economic childhoods both end. The child grows up; the economy becomes, in the professional jargon, developed or mature. The analogy suggests that growth should no longer be relevant to economics. So when economists hope for perpetual growth, as they generally do, they have abandoned this biological parallel.