Thomas Robert Malthus-5b

7/28/2019 Thomas Robert Malthus-5b

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Thomas Robert Malthus

(1766-1834) an Essay on thePrinciple of Population, 1798 &1803


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Classical:

Favored free, unregulated markets and

maximum individual freedom.

Economic freedom provided a means by whichthe economy could function most efficiently.

Individuals and businesses should be free totrade without government interference.

Classicals perceived that political and economic

freedom to be inseparably bound.


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THOMAS ROBERT MALTHUS (1766-1834)

The Malthusian Population Doctorine:population increases faster than thefood supply.

Not original with him Adam Smith &Benjamin Franklin.

It was Malthuss presentation of the population

problem that significantly influenced existingsubsequent economic thinking.


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The theory was formulated based onthree factors:

Population pressure on Englands food supply.Until 1790, England largely self-sufficient began toimport food & prices rose noticeably.

The increasing poverty of the lower-income classes.England was becoming urbanized. Factory production

replaced home production. The growth of the townincreased the misery/suffering/poverty of the lower-income class.

An argument between Malthus & Daniel (father) - the firstedition of his essay on population (1798). Povertyand misery were not the result of social andpolitical institutions. Changes in theseinstitutions would not remove the ills of thesociety.


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Population Theory poverty & misery.

Pop when unchecks increases geometrically & food

increases arithmetically.

Poverty and misery are the natural punishment for thefailure of the lower classes to restrain their reproduction.

2 types of checks to population growth: preventive checks &positive checks

Preventive check - moral restraint (postponing marriage ornever marry reduce birth rate)

Positive checks famine, misery, plague & war (increasedeath rate) limit pop. natural phenomena

punishments for not practiced moral restraint.

If positive checks were overcome starvation.

Checks will develop (pop=food).


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No G relief for the poor.

Rejected the Poor Laws - more children survive

worsening the problem of hunger.Poor Law Amendment of 1834 (Malthuss).


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There was an inherent tendencyin the aggregate economy toward

under-consumption.

Too much saving & invest willcause difficulties (oth function of$???)

S-I cannot go indefinitely without

leading to long-run stagnation.


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The Theory of Market Gluts.

Potential insufficient of effective demand.

spending by landlords is essential toavoid a glut of goods on the market, which inturn produce economic stagnation.

Rent a surplus; the difference price of agr &cost of prod (wages, interest & profits).

Rent adds to effective demand without addingto the cost of production.

Wages, interest & profit increasing purchasingpower but also raise prod costs.

Costs must be kept down if to maintaincompetitiveness in world market.


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Therefore corn laws must be retained.

Tariffs on the imported grains enrich the landlords

& consequently promote unproductiveconsumption.

This is necessary to avoid economic stagn.

Consumption by landlords (hiring large number s of

menial servants) keep increase the value of theproduce & enable the increase in qtty more than tocounterbalance the fall of its price.

Opposed excessive unproductive C by the G officials, soldiers, sailors national debt;necessitates higher taxes & inflation; impede theincrease of wealth.


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Assessment of Maltus Contributions

Population Theory

free the wealthy from responsibility of poverty.

The poor had only themselves to blame.

Poor laws if abolished reduced taxes on

property. Defense of corn laws serves the interest of

landlords.

Overrate the significance of rents & spending byl/lords.

Distinction between productive * unproductiveconsumption is inaccurate.


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The theory of gluts show an awareness of thepotential problem ofu from a lack of agg

demand. It was a significant insight the prob of a

capitalistic economy expanded by Keynes1930s.

Overrated the rate of population growth relative tothat of subsistence.

Plausible theory but not supported by evidence.

Pop has increased a far lower than 25yrgeometric progression.

Worlds output has increased even faster, hencethe growth of per capita world output & income.


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Diminishing returns in agr underestimated thepossibilities of enlarging agr prod from technologicalinnovation, capital accumulation & fewer workers.

Pop growth failed to recognize birth control viacontraceptive method. Increases in output may reducebirth rate in those societies.

Opp costs of having children rise when real hourly

wages increase & many people respond by limiting thesize of family.

still relevant 70% worlds pop live in developingnations. 20% lives on < than $1 per day. For some of

the poor countries Malthusian prediction of famine, war,malnutrition & disease are all too real. These are theprob of dis & prod, demanding solution rather than asinevitable & largely unavoidable results of natural laws.

Pop theory & market gluts noteworthy.


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The Population Thesis:

Population grows at a faster rate than thefood supply. Population increases

geometrically (1,2,4,8,16,.) but thefood supply increase arithmetically(1,2,3,4,5,.). This is the cause ofpoverty and suffering.

J ustify diminishing returns in agriculture


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Checks will developed to keep pop growth in linewith growth of food supply.

The rate of population will be in line with the rate ofgrowth of the food supply if :

Increases in death rate (positive)- wars, famines (foodshortage), disease and similar disasters.

Preventive check - lowering of the birth rate,accomplished by postponing marriage. But,postponement of marriage resulted misery & vice duefrom the premarital sexual relations.

Changing the institutional structure would notremoved misery as long as humans requiredfood and sexual drives were strong.


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Controversy:

Dissatisfied with his initial ideas in his first essay,published 2nd edition of his essay (1803).

The argument was supported by statistical data.It was scientific in method as well as purpose.

Most importantly, the argument & conclusionswere changed.

A new check - Moral restraint (control) or thepostponement marriage without premaritalsexual activities.


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Several Flaws of the Theory:

Never discussed the feasibility of controlling population

via contraceptive measure (neo-Malthusians).

Confused the instinctive desire for the sexualrelationships with the desire to have children. Althoughsexual drive is strong among people, increasing level of

affluence and education tend to introduce adistinction between sexual desires and the decision tohave children.

Failed to consider the possibility of development in

agricultural technology might permit sufficientincreases in food supply to support an increasedpopulation.


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However, economists have never developeda theory explaining the rate of technological

development.

Application in Classical Theory & Policy:

an increase in the real wage of laborincreases population, which, eventuallybring the wage back to its former level. Any

attempt to improve the economicwelfare of lower-income groups would befrustrated by the increase in the population.


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Debate on Corn Laws

Poor Laws

Market Gluts

Opposed Says Law


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Spending by landlords isessential to avoid a glut of

goods on the market that inturn would produceeconomic stagnation.


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Corn Laws

Protection of British agriculture from

foreign competition caused grain imports todecline & output of grain in England toincrease.

Corn Laws accelerate the processof redistribution of income toward

the landlord, slowing downeconomic growth & hastening thestationary state.


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The Corn Laws imposed a floor on the price of

grain 50 shilings per quarter.

Landlords demanded a floor of 80 shilings perquarter prompted an extensive controversy.

Ricardo - higher tariffs resulted in higher

grain prices.

Higher tariff encourage greater Inv inagriculture, increased output supply & P

fall.

Higher P of grain was the results ofhigherrents. Rents were price-determined


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Diminishing returns L fixed, land farmedmore intensively, marginal physical productdecreases, equivalent to say marginal cost

increasesgrain prices rises.

Increase in the cost of producinggrains Higher grain prices.

Higher grain prices demand more realwages for workers to maintain a subsistencestd of living higher grain P & cost of grain wasa major part of L food budget.

W Pop demand for more foodincrease grain prod demand for more Landdiminishing marginal returnrents & MC


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Thomas Robert Malthus-5b