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Population Economics and Thomas Robert Malthus

The fate of humankind has always fascinated social scientists. Usually the predictions are quite gruesome. For hundreds of years such predictions were accurate, but not in recent times.

WAS MALTHUS RIGHT?

In 1798, a little-known English minister named Thomas Robert Malthus published An Essay on the Principle of Population, As It Affects the Future Improvement of Society. The uncomfortable and, indeed, depressing conclusion of that 50,000-word treatise was that "population, when unchecked, goes on doubling every 24 years or increases in the geometric ratio," while, according to Reverend Malthus, food production--or more generally, the means of subsistence--only increases at an arithmetic rate. We can see what Malthus meant about geometric as opposed to arithmetic rates by looking at Figure 9-2.

Figure 9-2: The Malthusian Dilemma

Here the curved line represents something--say, population--rising at a geometric rate. Compare this with the straight line, which represents, say, food growing at an arithmetic rate. It remains equally steep throughout its path.

POSITIVE AND PREVENTIVE CHECKS ON POPULATION GROWTH

In 1803, Malthus put out a second edition of his now famous essay on population. Instead of talking about population increasing at a geometric ratio, he indicated that the human species was destined to poverty and a life of misery unless the rate of population growth was retarded by positive checks and/or preventive checks. He listed as preventives such things as late marriages or no marriage at all, sexual abstinence, and moral restraint. Malthus put much more faith in such "positive" checks as wars, pestilence, and famine. (Preventive checks decrease the birthrate, and positive checks increase the death rate.)

As you can imagine, Malthus was criticized severely. His fellow clergymen thought he was crazy; politicians and journalists called him a heretic. But others, especially a famous economist of the time named David Ricardo, made much use of the Malthusian theory. Let’s delve a little more deeply into why Malthus came up with such heretical ideas. We will see that although his theories didn’t describe the industrial society of his own time very well, they did do a good job of describing preindustrial Europe (and perhaps certain less developed countries today).

A PRODUCT OF TRADITIONAL EUROPE

Although the Reverend Malthus grew up during the Industrial Revolution, he was a product of traditional Europe--that is, preindustrial, pregrowth society. He believed that economic life depended on the productivity of land, so that ultimately it was the land that determined the level of existence.

POSITIVE CHECKS

Malthus was convinced that the "passion between sexes" would cause men and women to procreate, and as long as there was enough food around to feed a growing family, the family size would increase. We depict the Malthusian cycle, as it is called, graphically in Figure 9-3.

Figure 9-3: The Malthusian Cycle

Here we show the population size on the horizontal axis and the real wage rate per family on the vertical axis. Notice here the emphasis on the word real. The real-wage rate is essentially the wage rate expressed in purchasing power over real goods and services. Real wage rates are therefore an indication of a family’s ability to purchase the things it wants. By using real wage rates, we don’t have to worry about problems of inflation, or general changes in the price level.

Notice that we have drawn in a straight line that we call subsistence. This is the so-called subsistence level of income, or subsistence real wages--the amount necessary for a family to survive. Presumably, if the family does not obtain at least this level of income, some of the children will die because the parents cannot feed or clothe them. Real wages first increase, but after diminishing marginal returns set in, they fall. Once they fall below point D, widespread famines occur and there are numerous deaths in the society, according to the Malthusian doctrine. This was the period of "positive checks"--disease, famine, and wars--plus a preventive check, such as an increase in vice (including birth control!) that, according to Malthus, was degrading but resulted in fewer births.

KEY ASSUMPTION

The key assumption that Malthus made was that there was a very slowly improving technology. As we said before, Malthus grew up in the Industrial Revolution, when this assumption certainly did not hold, but he was a product of an era when technology in fact had not changed very quickly. This was certainly true in agricultural societies, in which technological changes were very slow. For example, English crop rotation and fertilization methods were only slowly adopted during the commercial revolution. This is one of the reasons that Malthus viewed agricultural output as growing at an arithmetic rate, instead of at a geometric rate like the population. But, according to Malthus, even if there were some once-and-for-all increase in the food base of a society, it would only lead to inexorable pressure of the population on the increased resources. He felt that when everything got sorted out, the average level of living would be just as low as it was before the great increase in the food base.

WHAT WENT WRONG?

What was wrong with Malthus’s thesis was that he assumed, as we mentioned, a fixed technology. He also assumed that population size was a function only of real income, and that survival rates were in fact a function of the income level. As to the first assumption, we know that starting in the seventeenth and eighteenth centuries the technological capacity of society increased; whether it was due to the Industrial Revolution, to increased schooling, or to other determinants, it did increase.

Malthus also ignored the possibility that the real-wage curve in Figure 9-3 could rise. Look at Figure 9-4.

Figure 9-4: Possibility of Improved Technology

Here we show three separate curves, each with a different productivity of the population. The increases in productivity that are indicated are a result of increases in technology. The real per capita income of the population can rise even though the population is growing, if the curves shift up fast enough. In this particular simplified model, there need never be a Malthusian positive check as long as the curve keeps shifting upward.

Additionally, in many situations, as real income rises, the survival rate of children may increase, but the demand for children may fall or at least not rise as fast as income does. Stable populations are not unknown in the world today--witness, for example, Japan. We do, however, still find the Malthusian cycle acting in various less developed countries today.

"PASSION BETWEEN THE SEXES" NOT THE REASON

Remember that Malthus maintained that passion between the sexes produced population growth at a geometric rate, whereas food production would grow only at a arithmetic rate. This isn’t what has really happened in less developed countries. In fact, the developed nations may be more at fault for the rapid population rise in these countries than the countries themselves.

Consider three selected less developed countries: Mexico, Mauritius, and Barbados. The birthrate in Mexico has been steady; the one in Mauritius has started to fall, as it has in Barbados. However, the big change has been in the death rate. It has fallen dramatically and persistently since the 1930s. Obviously, if the birthrate remains fairly constant and the death rate falls, the rate of population growth is going to rise dramatically, just as it has done. Population increases of 1 percent a year were considered fairly high in years past, but today in countries like Costa Rica, Mexico, Pakistan, and Venezuela, growth rates of 3 and 4 percent a year are not uncommon. It all has to do with the improved chances of people to live a longer and healthier life. Death rates in some developing countries are lower than in European countries. And in a number of these developing countries, life expectancies have risen by one year or more per year for two decades. In Taiwan, for example, the life expectancy is well over 70 years for men and women. In Puerto Rico, it is over 70 for women and not much less for men. Mortality and morbidity have decreased so rapidly because public-health knowledge has been imported into the third world to eradicate disease and pestilence. Also, developed countries have exported their knowledge of nutrition.

FALLING MORTALITY RATE A MIXED BLESSING

In other words, developed countries have transmitted their health technology to less developed countries. Consequently, less developed countries now have healthier living environments and better medical treatment for those in need of it. Fewer babies die at birth, and fewer individuals die at an early age in less developed countries now. The crude death rate therefore has fallen because of our humanitarian assistance to these countries. The result, given little reduction in birthrates, is a population boom in many of these countries. In other words, one might argue that a falling mortality rate due to improved health and medical conditions has been a mixed blessing to these countries.

GOVERNMENT ACTIONS

In some periods certain government policies have also been the cause of reduced food availability for the world’s poor. For example, in Africa many governments neglected investment in agriculture. Rather, they sought to increase industrialization and military strength. Many African governments spend at least four times as much on their military arsenals each year as they do on agriculture. Ethiopia has been a case in point: That country continually asks the rest of the world to give it more food, yet in 1990, 43 percent of Ethiopia’s government budget went to its oppressive military establishment.

FREE FOOD AND LOW PRICES

Humanitarian foreign aid packages from the United States and other countries have at times included massive food giveaways. The result has often been a benefit to developing countries with food problems in the short run but not in the long run. Long-run local food self-sufficiency requires more investment in agriculture. When the United States provides food at zero cost to developing nations, the relative prices of food versus other commodities is altered. Signals to potential investors in agriculture are discouraging rather than encouraging. The same can be said for developing countries’ policies of sustaining low prices for agricultural commodities. Again, this low-price policy diminishes the incentives to actual and potential farmers to increase production.

MALNUTRITION: THE TRUE CAUSE OF POVERTY?

When Malthus wrote his famous essay on population, one-fifth of the French and British populations were too malnourished to work. The poor consumed only enough calories to maintain body functions. They were also parasite-ridden and diseased. They had no calories left over to transform into work. Today the developing nations have a population whose average calorie consumption is about what it was in France and Britain at the beginning of the 1800s. In developing countries, 10 to 15 percent of the population spend nearly all of their income on food but are still unable to work or attend school regularly because they are too weak due to inadequate diet.

New research on malnutrition and development shows that a significant proportion of the growth in per capita GDP in Britain and France over the past century has been due to declining malnutrition. The very poor were able to join the work force--the large class of paupers and beggars was eliminated. Also, the rise in the number of calories consumed by workers in those countries increased their efficiency.

What can we conclude from this information? Government policies might well be aimed at improving the nutrition and health of the poorest of the poor. Rather than creating a futile "attempt to reverse the laws of nature," as Malthus thought, such a policy would swell the labor force and boost productivity. The very poor in developing nations would then become potential resources rather than a burden.

PEOPLE--THE ULTIMATE RESOURCE

Economist Julian Simon has pointed out that increases in population do not always bode ill for a nation. Indeed, he argues that population growth is an asset to countries where people’s talents are allowed to develop freely.

Consider the three possible paths that a nation can take regarding population expansion relative to its resource/knowledge/technology base. Consider these three possibilities in conjunction with Figure 9-5.

Figure 9-5: Population Growth Can Be Desirable

We start on productivity curve 1 at point A.

  1. Increasing its population with no expansion of the resource/knowledge/technology base--a movement from point A to point B.
  2. Increasing its population along with improvements in its resource/knowledge/technology bases--a movement from point A to point C.
  3. Increasing its resource/knowledge/technology base with no population expansion--a movement from point A to point D.

The Malthusian cycle is given in the first possibility--the movement from point A to point B. Julian Simon’s contention is that if people’s talents are allowed to develop freely, situation 2, the movement from point A to point C, is most likely. Advocates of population control contend that we must not allow population to increase, so that we can go from point A to point D, the third scenario.




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