Introduction

In its original form, the ‘social question’ referred to the welfare of workers in the Second Industrial Revolution. As the scale of production grew in the late 19th century, and as people increasingly left the countryside to perform wage labour in urban areas, fundamental questions of social democracy and equity came to the fore. How would the rights of labour be established against the power being concentrated in the hands of capital? Would working class people have the right to vote? Should workers have bargaining power through unions? All of these questions grew from the underlying question of what share of the total output the workers deserved and whether (or how) they would receive that fair share.

At the same time, another set of nascent social questions arose about the welfare of workers that went beyond the basic question of their right to a fair share of what they helped produce. The second social question arose from the tendency of capitalist economies to cycle through periods of boom and bust. Periods of boom drew workers into the huge new factories, and periods of bust threw them into unemployment. Thus, in addition to the questions about workers’ basic rights in the new vertically integrated industrial landscape, there were questions of the fate of those displaced by the cyclical nature of capitalist production.

The third social question, relating to inclusion and sustainability in the 21st century, provides a chance to consider how traditional Keynesian ideas once again bear relevance in the continued attempt to balance our economic and social life, with capitalism again plunged into another crisis from the COVID-19 pandemic. The social questions, then, are the focus of this chapter.

The first social question

The economic theories of the early 19th century offered little hope that workers could earn higher wages. In the models of the classical economists such as David Ricardo and T. Robert Malthus, wages were always driven down to the subsistence level. Hence, the idea of economics as the ‘dismal science’.

One of the most significant changes in the economic and political life of the twentieth century was the introduction of demand management in the industrialized democracies. From Japan to the United States, and from Sweden to Italy, national governments took on responsibility for a kind of economic function that had not previously been seen as a regular part of their brief: they began to use fiscal and monetary policy to try to stabilize the business cycle by stabilizing the total demand for goods and services.

Fiscal policy consists of the government's expenditures on goods and services (from pens and paper to fighter bombers), and monetary policy consists of controlling the creation of money and the level of interest rates. Both of these functions existed and were discussed in the previous two centuries, but they took on a new life in the twentieth century as a part of electoral politics and understood as a means to stabilize the swings in output that constitute the business cycle. Banking policy and government debt had been issues well before the twentieth century, but they had not been conceived of in a systematic way as the means to achieve economic stability. Inevitably, this revolution in economic management (indeed, in economic self-understanding) bears the name of John Maynard Keynes.

PORTRAIT OF THE ECONOMIST AS A YOUNG MAN

On 21 June 1921, Maynard Keynes delivered the presidential address to the annual reunion of the Apostles - a secret society of the Cambridge University students and alumni which included such luminaries as Alfred North Whitehead, Bertrand Russell, G. E. Moore and Henry Sidgwick. What had united the Apostles of Keynes's own generation were their commitments, learned from G. E. Moore, to absolute truth and to the search for friendship and beauty. The ideal career for Keynes's cohort of Apostles would have been to become an artist, creating beauty and living in a community of other artists with whom one had close bonds of friendship. But what should one do if one simply did not have the talent to become an artist? In his address, Keynes seems to suggest that the best option for those who lack artistic talent may be to use their talents to pursue a career in finance or business. Quoting Ben Jonson, Keynes argued that the true reward of such activity lay not in wealth itself so much as in the 'the cunning purchase of . . . wealth'.