Notes on Economic History (11)
The Theory of Population
As Adam Smith’s doctrine spread, it was elaborated and modified. Attempts to develop his ideas led to endeavours to explain the poverty and misery of the working class and all the defects that had become apparent during the rapid development of Capitalism, from the time of publication of his Wealth of Nations.
Two contrasted attitudes appeared. One was a condemnation and a criticism of conditions—this led to ideas about Socialism. The other was a pessimistic resignation, accepting the conditions and declaring them to be the result of the working of natural laws. This was the views held by Malthus. Malthus was responsible for two important works; in 1820 his Principles of Political Economy was published preceding by some 22 years his Essay on the Principle of Population, first published in 1798, and for ever associated with his name.
Malthus begins his statement on population with an account of the “tendency of all life to increase beyond the amount of nourishment available to it.” In illustration he quotes Benjamin Franklin—”It is observed by Dr. Franklin that there is no bounds to the prolific nature of plants or animals, but what is made by their crowding and interfering with each other’s means of subsistence. Were the face of the earth, he says, vacant of other plants, it might be gradually sowed and overspread with one kind only, as, for instance, with fennel; and were it empty of other inhabitants, it might, in a few ages, be replenished from one nation only as, for instance, with Englishmen.” It follows from this, he says, that population has a constant tendency to increase beyond the means of subsistence.
Studying the increase of population in America, where there was an ample supply of good fertile and virgin land, and where there were few natural checks to growth of numbers. Malthus arrived at the conclusion that during about one hundred and fifty years the population had doubled itself every 25 years. The natural increase of population therefore took place like the increase in a series of numbers—1, 2, 4, 8, 16, 32, 64, 128, 256. In short, population, when its growth is unhindered, tends to increase in geometrical progression.
On the other hand, says Malthus, it is impossible to increase the produce of the soil in such a ratio. Under favourable conditions we may suppose that by improving the land already under cultivation, and by utilising the comparatively poor and neglected land, it would be possible to increase yields considerably. But the increase in twenty-five year periods (those in which population can double) could not be expected to be more rapid than is represented by the series of numbers—1, 2, 3, 4, 5, 6, 7, 8, 9. “It may be fairly pronounced . . . that, considering the present average state of the earth, the means of subsistence, under circumstances the most favourable to human industry, could not possibly be made to increase faster than in an arithmetical ratio.” To sum up, whereas population can increase in geometrical progression, the means of subsistence can increase only in arithmetical progression.
Population for Malthus, therefore, is limited by the means of subsistence. As a result of the tension inherent in the contrast between these two rates of increase, there is a tendency for population to increase beyond the means of subsistence. The result is that population increases in any country when the means of subsistence increase, whether as a result of more intensive agriculture, the import of food, or changes in the distribution of national wealth. Insufficiency of the means of subsistence, on the other hand, makes itself felt in the form of checks. These checks are of two kind—positive and preventive.
The positive checks are those which set by destroying existing population: the most obvious are wars, diseases, and famines, but they include every cause, whether arising from ignorance, vice or misery, which in any way helps to shorten the natural span of life. Preventive checks are those which are deliberately undertaken, such as refusal to marry and what Malthus calls the postponement of marriage, moral restraint. “By moral restraint I . . . mean a restraint of marriage from prudential motives, with a conduct strictly moral during the period of restraint.”
The fact that the produce of land is uncertain and irregular was embodied in the “Law of Diminishing Returns.” In the cultivation of land, assuming that the technique remains unchanged, Malthus argued that each successive addition of capital and labour applied to it beyond a certain amount (the optimum expenditure upon a particular technique) produces a smaller increment of yield. Accordingly, beyond the optimum expenditure further increments of capital and labour no longer produce equal additions of yield, but progressively diminishing ones. To put the matter in more general terms—the conditions remaining unchanged, additions of expenditure prove less profitable. If, for instance, the expenditure of 1,000 of additional capital produces an additional product of 500, the expenditure of a second 1,000 will produce an additional product of only 300: that of a third 1,000 will produce no more than 200, and so on.
This “law” has in fact been shown to be fallacious. It assumes that the productive technique remains unchanged, an assumption which is contrary to all evidence. In fact, Malthus himself says that this “law” is valid only so long as agricultural techniques remain unchanged. It would be difficult to find a period since Malthus wrote the essay, during which advanced countries’ techniques of production has not been continuously changing and must, as man’s knowledge increases, continue to change.