> John Maynard Keynes,
> probably the most influential economist of the twentieth century as
> well as
> an accomplished controversialist, launched the most famous attack on
> Jevons's ”Coal Question•. While praising much of his economic work,
> Keynes
> mocked Jevons's concern about resource scarcity. Keynes attributed
> Jevons's book to personal eccentricities, which exhibited themselves in
> compulsive behavior, such as hoarding paper. Keynes mocked Jevons's
> mistaken belief in "the approaching scarcity of paper as a result of
> the
> vastness of the demand in relation to the supplies of suitable material
> (and here again he
> omitted to make adequate allowance for the progress of technical
> methods."
> He concluded that for this and other reasons, "there is not much in
> Jevons's scare which can survive cool criticism" (Keynes 1936a, p.
> 117).
> But, of course, scarcity was the farthest thing from Keynes's mind.
> Writing in the midst of the Great Depression, he was concerned that the
> wealth-creating capacity of the economy was bound to outstrip the
> capacity
> to consume in a purely market-driven economy. He expected that in the
> near
> future modern market economies would "have built all the houses, roads
> and
> town halls and electric grids and water supplies and so forth which the
> stationary population of the future can be expected to require" (Keynes
> 1936b, p. 106).
> Of course, Jevons was far more realistic than Keynes, at least in so
> far as
> the question of resources was concerned. Both wanted to see the
> build-up
> of productive capacity, but Jevons realized that to do so would
> eventually
> lead to serious problems, incapable of ultimate resolution.
> Jevons, however, was swimming against a current that he himself was
> instrumental in creating. While ”The Coal Question• was written for
> popular consumption, Jevons's theoretical works were highly
> influential in
> turning economics away from a concern about scarcity. His pioneering
> approach to economics shifted its perspective away from a dynamic
> analysis
> of the forces that determine the cost of
> production. Instead of beginning with production, Jevons called upon
> economics to concentrate on a theory of consumption (Jevons 1871). In
> effect, this new style of economics focused on how consumers' choices
> rather than production drive the economy.
In what sense was Jevons far more realistic? His expectations re coal and paper were mistaken. Moreover, they were mistaken for the reasons Keynes gives (behind which stands the difficulty created for long run forecasting by the fact of internal relations).
Keynes doesn't treat the "hoarding instinct" he invokes as a psychological explanation for Jevons's mistake (a mistake demonstrable on these other grounds i.e. by "cool criticism") as a "personal eccentricity" of Jevons. It's a trait "which many other people share."
In fact, he elsewhere claims that in capitalism its "the foundation of the necessary provision for the family and for the future," an idea elaborated in the account of the psychopathology of capitalist "purposiveness" I posted earlier.
"to me it seems clearer every day that the moral problem of our age is concerned with the love of money, with the habitual appeal to the money motive in nine-tenths of the activities of life, with the universal striving after individual economic security as the prime object of endeavour, with the social approbation of money as the measure of constructive success, and with the social appeal to the hoarding instinct as the foundation of the necessary provision for the family and for the future. The decaying religions around us, which have less and less interest for most people unless it be as an agreeable form of magical ceremony or of social observance, have lost their moral significance just because - unlike some of their earlier versions - they do not touch in the least degree on these essential matters. A revolution in our ways of thinking and feeling about money may become the growing purpose of contemporary embodiments of the ideal. Perhaps, therefore, Russian Communism does represent the first confused stirrings of a great religion." (Collected Writings, vol. IX, pp. 268-9)
The passage you quote from the General Theory is the mistaken objection Keynes has opponents of public investment raising against such investment i.e. he is denying their claim that we will soon be satiated with "houses, roads and town halls and electric grids and water supplies and so forth."
The immediate problem he's concerned with there is not the end of scarcity. It's the problem created for aggregate demand by this same "hoarding instinct." Though, from the perspective of the psychology of accumulation, accumulation is an end-in-itself, from the perspective of the actual use of the accumulated capital the accumulation is ultimately for the production of consumer goods and services. The operation of the "hoarding instinct" means, however, that the propensity to save increases with income so that given the functioning of the rest of the psychopathological complex of which the hoarding instinct is part - the psychological attitude to liquidity and the psychological expectation of future yield from capital assets - the accumulation of capital intensifies the aggregate demand problem.
He did anticipate an end to "scarcity" in the sense of an end to the need to leave the essence of the psychopathology of capitalism undisturbed, but that wasn't to be soon.
'When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession - as distinguished from the love of money as a means to the enjoyments and realities of life - will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease ... But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight." (Collected Writings, vol. IX, pp.329, 331)
This involves a conception of the "economic problem" and its solution radically different from Jevons's and the kind of economics derived from him, a kind which takes insatiable wants as a given (as in Robbins's definition of economics). For Keynes, the insatiable wants characteristic of capitalism are an expression of psychopathological greed. It's true he didn't foresee the staying power of this greed (or its development into "consumerism"), but that itself demonstrates the difficulty with long run forecasting.
Kleinian psychoanalysis provides the following explanation of greed as psychopathological consumerism.
"We have now to examine enforced splitting associated with a disturbed relationship with the breast or its substitutes. The infant receives milk and other creature comforts from the breast; also love, understanding, solace. Suppose his initiative is obstructed by fear of aggression, his own or another's. If the emotion is strong enough it inhibits the infant's impulse to obtain sustenance. ...
"Fear, hate and envy are so feared that steps are taken to destroy awareness of all feelings, although that is indistinguishable from taking life itself. If a sense of reality, too great to be swamped by emotions, forces the infant to resume feeding, intolerance of envy and hate in a situation which stimulates love and gratitude leads to a splitting that differs from splitting carried out to avoid depression. It differs from splitting propelled by sadistic impulses in that its object and effect is to enable the infant to obtain what later in life would be called material comforts without acknowledging the existence of a live object on which these benefits depend. Envy aroused by a breast that provides love, understanding, experience and wisdom, poses a problem that is solved by destruction of alpha-function. This makes breast and infant appear inanimate with consequent guiltiness, fear of suicide and fear of murder, past, present and impending. The need for love, understanding and mental development is now deflected, since it cannot be satisfied, into the search for material comforts. Since the desires for material comforts are reinforced the craving for love remains unsatisfied and turns into overweening and misdirected greed."
"The split. enforced by starvation and fear of death through starvation on the one hand, and by love and the fear of associated murderous envy and hate on the other, produces a mental state in which the patient greedily pursues every form of material comfort; he is at once insatiable and implacable in his pursuit of satiation. Since this state originates in a need to be rid of the emotional complications of awareness of life, and a relationship with live objects, the patient appears to be incapable of gratitude or concern either for himself or others. This state involves destruction of his concern for truth. Since these mechanisms fail to rid the patient of his pains, which he feels to be due to a lack of something, his pursuit of a cure takes the form of a search for a lost object and ends in increased dependence on material comfort; quantity must be the governing consideration, not quality." (Bion, Learning from Experience, in Seven Servants, pp. 10-11)
Ted