As Karl Marx rightly said

WILL we run out of things to consume? John Maynard Keynes thought so. He explained his reasoning in an essay, Economic Prospects for our Grandchildren.

Written in 1929-30, with tens of millions out of work and the world economy mired in the Depression, that essay is striking for its message of hope. It is the mark of a great social scientist that he is willing to make statements that are precise enough to be proved wrong. In that essay, Keynes met that test, boldly predicting "the standard of life in progressive countries 100 years hence will be between four times and eight times as high as it is today".

A four to eight-fold increase implies an upper-bound annual growth rate of 2.1 per cent. This is very close to the unweighted average of national annual growth rates of per capita gross domestic product for the period from 1929 to 2006, which is 2.04 per cent. Keynes may not have got it precisely right, but it is difficult not be to awed by the brilliance of his attempt, especially when the credibility of our economic soothsayers lies in tatters.

Keynes erred, however, in assessing the consequences of rising living standards. Greater wealth, he thought, would bring a time when needs would be satiated; when our desire for greater consumption would reach itslimit.

The conclusion was that with all important needs met, production could be undertaken "with a quarter of the human effort to which we have been accustomed". Working time could fall to 15 hours a week, leaving ample time "to pluck the hour and the day".

How far that seems from the world of today. As the willingness of Australia's population to engage in frenzied consumption clearly shows, satiation of human desires is no closer now than it was in 1930, not only in the economies where poverty remains pervasive but even in the world's richest countries. As we seek to finance our consumption habit, working hours, far from shrinking, have lengthened in many countries and only declined slightly in others.

How did Keynes get it so wrong? Simply put, he greatly underestimated the ability of markets to devise new goods and patterns of consumption.

In the pre-capitalist era, luxury was the jealously guarded preserve of the few. As economic growth got under way in the 17th and 18th centuries, after millennia in which per capita incomes averaged less than $2 a day, the aspirations of the emerging urban middle class to share in better quality goods were viewed as a threat to good order.

Sumptuary laws, such as the edicts of Louis XIII prohibiting anyone but princes and the nobility from wearing gold embroidery or lace, became widespread, and philosophers such as Jean-Jacques Rousseau deplored the urban taste for frivolous objects of little utility, for which he coined the term colifichet.

The genius of capitalism lay in transforming those aspirations into opportunities. As the prohibitions on consumption collapsed, the road to riches came to involve providing ever more elaborate goods to ever wider parts of the population, rather than in pandering to the the elite. Although there may be limits to how many goods each of us can consume, there are no obvious limits to their quality and performance. The result has been a race without an ending, in which competing suppliers strive to identify and exploit new sources of willingness to pay.

Unbounded, too, has been capitalism's ability to devise new means of distribution that increase the efficiency with which we consume, that is, that reduce the time and effort required per unit of consuming. From the development of packaging, branding and advertising in the 19th century, to the invention in 1916 of the first self-service grocery store by US entrepreneur Clarence Saunders with his Piggly Wiggly chain, the history of capitalism is that of making it steadily easier for people to meet goods and finance purchases. Internet shopping is the latest in that long line of innovations, harnessing ingrained hunter-gatherer instincts while sparing us the risk of becoming the tasty morsel of savage beasts.

At the same time, the ever greater scale of markets, now global for manufactured items and services that can be provided online, makes for ever greater product variety, as it allows suppliers of highly differentiated products to recoup their costs from users worldwide. The result has been an emancipation of minority tastes.

Karl Marx, who opened Das Kapital with the observation that "the wealth of those societies in which the capitalist mode of production prevails, presents itself as an immense accumulation of commodities", proved far more discerning of these potentialities than was Keynes. Marx saw the development of mass consumption, and the incessant efforts of the capitalist to "give his wares new charms and to inspire (consumers) with new needs", as lying at the heart of capitalism's "civilising moment", because they were inherently democratic, universal and unbounded.

Yet that dynamic creates an ever starker contrast: between boundless improvement in the supply of private goods -- the goods we consume individually -- and the difficulties that characterise the supply of public goods.

Milton Friedman best captured the underlying predicament when he said it is "the great advantage of the market that it permits wide diversity. It is a system of proportional representation. Each man can vote for the colour of tie he wants and get it; he does not have to see what colour the majority wants and then, if he is in the minority, submit." In contrast, "the characteristic feature of action through political channels is that it tends to require or enforce substantial conformity".

Inevitably, that collective action creates disappointment, as fine aspirations give way to shabby compromises, while its outcomes, far from hoped-for ideal states, dissolve into less than satisfactory halfway houses. Little wonder then that we tend, in that wonderful phrase of John Kenneth Galbraith, to private affluence amid public squalor. And the fact that good governance remains the most stubbornly untradeable of goods -- try benefiting from Swiss public administration while living in the Sudan -- means those improvements that there are, are spread glacially, if at all.

Albert Hirschman, economist and historian of ideas, may have been right to say "no disappointment with a specific meat dish, no matter how severe it may be, can fully explain the decision to become a vegetarian"; but it is surely understandable why experience with collective provision turns us into (at times painfully naive) supporters of privatisation, all the more so as the search for better ways of providing public goods remains a will-o'-the-wisp.

Will we run out of things to consume? Not as long as we live in market economies. But will public goods keep up private needs and hopes? Not in my lifetime.

It is that tension, between private dynamism and public inertia, that will continue to frame our lives in ways not even Keynes could have imagined.