ECO475

Thomas Robert Malthus (1766-1834)

Birth: February 13, 1766 (Surrey, England)

Death: December 23, 1834 (aged 68)
Nationality: British
Field: Demography, Macroeconomics, Evolutionary Economics.
Influences: Adam Smith, David Ricardo
Opposed: William Godwin, Marquis de Condorcet, Jean-Jacques
Rousseau, David Ricardo
Charles Darwin, Francis Place, Garrett Hardin, John
Influenced: Maynard Keynes, Pierre Francis Verhulst. Alfred Russel Wallace
Contributions: Malthusian growth model

Major Publications: An essay on the Principle of population (1798)

Principles of Political Economoy (1820)

Malthus’s Major Contributions to the Economic Thought

1. Malthus is the founder of modern demography. Malthusian theory of

population has become a starting point for all modern studies of the
problem.
2. The Malthusian theory of population is important from the fact that it
enabled Darwin to formulate his theory if natural selection.
 3. Malthus collected a lot of historical and statistical data to illustrate his
theory. So in a way he may be regarded as one of the founders of historical
economics. Before Malthus, most of the economic analysis was based on
the assumption of “other things remaining same”. But Malthusian theory of
population made it unrealistic assumption for population was always
changing.
4. Malthus was the forerunner of many under-consumption theories of trade
cycle.
5. Malthus emphasized the maintenance of the level of aggregate demand.
Keynes, who believed that the level of employment depended on the level
of aggregate effective demand, hailed Malthus as a pre-Keynesian. Malthus
was the only classical economist who ignored the classical assumption of
full employment equilibrium based on Say’s law of markets. In this respect,
Malthus was far superior to that Ricardo’s abstract logic.
In the history of economic thought Malthus is the most underrated economist. He
has never got his due as a first rate analytical economist either from his
contemporaries or from his successors although he was well known for theory of
population. In the thirties, Maynard Keynes recognized Malthus as one of the
greatest economist. Though Malthus was a classical economist, he differed from
the other members of the classical school or some of the important economic
principles.
Unlike Smith Malthus looked at economic realities with great concern especially it
came to the poor people. For example, while Smith was ignoring the severe
impact of rising food prices Malthus did not choose to do so. Malthus believed
that the economic system, as it was working, needed some remedial action. If
there arises any imbalance between the population and means of subsistence,
there is a need to remedy the shortage of effective demand. Malthus is basically
known for his contributions on the theory of population and the theory of
economic crisis, but Malthus’s theory of population overshadowed all the rest of
his contributions. Keynes picked up his theory of deficiency of effective demand
and elaborated systematically.
Malthus’s philosophy was a mixture of his religious morality and cold blooded
reality of the world. He was an old member of the group of utilitarians. He was
quite conservative regarding the structure of the society although the utilitarians
were in general radical. He was a pessimist. Malthus, in particular, became
famous for his pessimistic predictions regarding the future of humanity.

Theory of population
Social background of the Theory of population
Malthus published his “Essay on population” in 1798. By then people noticed
some of the evil effects of the Industrial revolution. Unemployment, poverty and
disease became serious problems and called for immediate attention. Taxes were
put on the property owners to provide the poor relief and property owners
considered those taxes burdensome. The landlords were attacked by others; on
the ground that the “landlords loved to reap where they had not sown.”
Landlords were described as an exploiting class. And the merchants and the
manufacturers started challenging the political power enjoyed by the landlords.

Theory of population
His major contribution to economic thought came in the essay “The principles of
Population.” Originally, Malthus wrote the piece in response to utopian
utilitarians who suggested that population growth constituted an unmitigated
blessing. He brings us his theory of population directly. Malthus took the position
that there was something like natural law which forced the increase in population
at a rate faster than the increase in the food supply. Essentially, Malthus
predicted that the demand for food inevitably becomes much greater than the
supply of it. This prediction is rooted in the idea that population increases
geometrically while food stuffs grow at an arithmetic rate.

Malthusian theory of population is based on two assumptions:

(a) Food is necessary for human existence
(b) Passion between the sexes is necessary and will remain in its present state.
“’….in all societies, even those that are most vicious, the tendency to a virtuous
attachment is so strong that there is a constant effort towards an increase of
population. This constant effort as constantly tends to subject the lower classes of
the society to distress and to prevent any great permanent improvement of their
condition.”
“The way in which, these effects are produced seems to be this. We will suppose
the means of subsistence in any country just equal to the easy support of its
inhabitants. The constant effort towards population..increases the number of
people before the means of subsistence are increased. The food, therefore, which
before supported seven millions must now be divided among seven millions and a
half or eight millions. The poor consequently must live much worse, and many of
them be reduced to severe distress. The number of laborers also being above the
population of the work in the market, the price of labor must tend toward a
decrease, while the price of provisions would at the same time tend to rise. The
laborer therefore must work harder to earn the same as he did before. During this
season of distress, the discouragements to marriage, and the difficulty of rearing
a family are so great that population is at a stand. In the mean time the cheapness
of labor, the plenty of laborers,…… encourage cultivators to employ more labor
upon their land, to turn up fresh soil, and to manure and improve more
completely what is already in tillage, till ultimately the means of subsistence
become in the same proportion to the population as at the period from which we
set out. The situation of the labor being then again tolerably comfortable, the
restraints to population are in some degree loosened, and the same retrograde
and progressive movements with respect to happiness are repeated.”
“The power of population is so superior to the power of the earth to produce
subsistence for man that premature death must in some shape or other visit the
human race. The vices of mankind are active and able ministers of depopulation.
They are the precursors in the great army of destruction, and often finish the
dreadful work themselves. But should they fail in this war of extermination, sickly
seasons, epidemics, pestilence, and plague advance in terrific array, and sweep
off their thousands and tens of thousands. Should success be still incomplete,
gigantic inevitable famine stalks in the rear, and with one mighty blow levels the
population with the food of the world.”
Malthus also saw that societies through history had experienced at one time or
another epidemics, famines, or wars: events that masked the fundamental
problem of populations overstretching their resource limitations:
To give a mathematical perspective to his observations, Malthus proposed the
idea that population, if unchecked, increases at a geometric rate (i.e. 1, 2, 4, 8, 16,
etc.), whereas the food-supply grows at an arithmetic rate (i.e. 1, 2, 4, 5 etc).

The projected population increase was expected to lead to a glut in the supply of
labor and hence a fall in the price paid to that labor. At the same time, the
growing demand for food and other provisions would surely raise the cost of
survival. Malthus postulated that population growth would come to a standstill
due to the increased price of supporting a family. The population then remains
stagnant until the excess laborers convert enough forest into farmland such that
“the means of subsistence become in the same proportion of the populations as
at the period from which we set out.” In other words, humanity goes back to
square one and the process repeats itself. The entire affair becomes a vicious
circle where improved conditions lead to an increase in numbers which in turn
nullifies any improvements that have been made. As a result, the income of
workers inevitably falls to subsistence level. In the long run Malthus expected that
forces such as war, pestilence, famine and plague would operate as checks on a
swelling population.

Malthus believed that the population of a country, when unchecked, would

double itself in every 25 years. But food supply will not increase as fast as
population on account of the influence of the law of diminishing returns on land.
Population outgrows the food supply. So, the growth of population needs to be
checked. This can be done by the application of some checks by nature or by man
himself or by both. He was in favor of two types of checks: (a) Preventive Checks
and (b) Positive checks.
Preventive checks are in the form of moral restraint, postponement of marriage
and so on. The preventive checks cause the birth rate to fall. Malthus suggested
that those who could not afford children should either postpone marriage or
never marry. Malthus disapproved vice as a preventive check. This included
prostitution and control, both of which reduced the birth rate.

Positive checks are imposed by the war, famine and disease. They increase death
rate. It is natural punishment for the poorer classes because they have failed to
restrict their numbers. It follows from the above view that the government should
not provide relief to the poor by means of poor laws. If aid is given for the poor,
then more children would survive and aggravate the problem of hunger and
misery. He suggested the gradual abolition of poor laws.
Since 1800, global food production has generally kept pace with population
growth, but increasing numbers of humans call for new ways “to increase yields
while preserving natural habitats and biodiversity.”
Eight major points regarding evolution appear in the 1798 Essay:
1. Subsistence severely limits population-level
2. When the means of subsistence increases, population increases
3. Population-pressures stimulate increases in productivity
4. Increases in productivity stimulate further population-growth
5. Since this productivity can not keep up with the potential of population
growth for long, population requires strong checks to keep it in line with
carrying-capacity
6. Individual cost/benefit decisions regarding sex, work and children
determined the expansion or contraction of population and production
7. Checks will come into operation as population exceeds subsistence-level
8. The nature of these checks will have significant effect on the rest of the
socio-cultural system- Malthus points specifically to misery, vice, and
poverty
Malthus theory has had great influence on evolutionary theory and in the social
sciences. Malthus population theory has also profoundly affected the modern-day
ecological-evolutionary social theory. He can thus rank as a key contributing
element of the cannon of socioeconomic theory.
Limitations
In forming his dark forecast Malthus failed to take several factors into
consideration. The industrial revolution transformed the very nature of Western
society, So that his principles, which assume that agriculture forms the center of
the economy, lost their validity by mid-nineteenth century. Focusing exclusively
on the birth rates of economically thriving communities, he failed to consider that
part of his projected ‘populations explosion” would come from a reduction in
death rates. This oversight throws Malthus’s theories into disarray. An increase in
the elderly population would not have significant repercussions in the labor
market. Essentially, wages would not fall to the extent that Malthus originally
predicted. In an era where children entered the work force at an early age, an
increase in birth rates would have more profound implications than a decrease in
deaths.
A more forgivable mistake by Malthus involves his failure to anticipate the growth
of technology. The advancements made in agricultural science allowed farmers to
make greater use of their lands. The development of effective contraception also
made “restraint’ a non-issue in terms of checking population growth. Because of
these scientific breakthroughs the theories of Malthus have little relevance in
regards to Western society. Many underdeveloped nations, never adopted
improved farming techniques or new methods of contraception. The results of
this failure have mirrored Malthusian predictions to a startling degree.
Overpopulation, famine, pestilence and war continue to ravage the third world.
These events constitute an unhappy vindication of many of Malthusian doctrine.
Thomas Carlyle, a great social scientist called Malthus’s political economy the
‘dismal of science’.
Population does not grow as Malthus has suggested. His ratios have been proved
wrong by history. In some countries (France) some decades back population
actually declined. It is true that in some countries population has increased at a
rapid. But food supply has also increased and people had not died of hunger in
those countries. In face the standard of living today is much higher than it was a
century ago.
Malthus theory was based on the law of diminishing return. He overlooked the
possibility of scientific improvement in agriculture.
This is an age of international trade and commerce. If a country does not grow
enough food grains for itself it can import from other countries.

Malthus’s Theory of Population and the Developing Countries

Though the Malthusian theory of population does not apply to most of the
western countries which are highly industrialized, it applies to most of the
developing countries like Bangladesh, India, China etc., which are dominated by
agriculture. In the poor countries of the world, over-population is a real danger. If
we look at the total population of the world and total food supply, it can be seen
that after some time there will be a shortage of food if the growth of population is
not checked by some means or other. That is why many countries of the world
today have adopted birth control measures and other family planning programs.
Malthusian theory must be taken as a statement of tendency.

Malthus Theory of Gluts (Depressions)

Malthus is best known for his theory population. Much less known is that Malthus
was one of the first economists to address the phenomena of economic crises,
which he referred to as gluts.
Like Smith and Ricardo, Malthus concerned himself with the causes of wealth and
poverty. In contrast to Ricardo, Malthus believed that gluts result from a decline
in profits owing to insufficient demand. In turn, insufficient demand is caused by a
disproportion in the distribution of income. In Malthus’ view, saving by capitalists
reduces demand; consumption by landlords increases demand. Hence, a
redistribution of income from landlords to capitalists could precipitate a crisis.
Like Ricardo, Malthus finds the key to the accumulation of capital in the
distribution of income. In order to eliminate gluts and promote economic growth
Malthus advocates redistributing income to the rentier and increasing
government spending. Malthus believed that the capitalists produce more then
they consume so that landlords can consume more than they produce.
Malthus was in favor of unproductive consumption in order to maintain and
increase effective demand.’’ It is absolutely necessary that a country with great
power of production should possess a body of unproductive consumers’’. Since
the wages of workers are so low that they can demand many goods. The
capitalists, if they want they can consume the excess of products. But the
capitalists are more interested in saving and accumulation of capital. Their actual
habits and mode of living do not give them enough opportunities for
unproductive spending on a sufficient scale. Malthus was not against saving as
such. But he suggested that a proper balance must be maintained between saving
and consumption.
In the class of unproductive consumers he included landlords, menial servants,
statesmen, soldiers, judges and lawyers, doctors and clergymen.
Malthus used the concept of effective demand to show that the economic system
was not self-adjusting. Unless a large body of unproductive consumers was
maintained, there would be periodic over-production, glut in the market and
stagnation. Thus Malthus was the first economist who pointed out the possibility
of crisis in the form of trade cycle because of the inherent defects of the capitalist
system. Many modern writers regard Malthus as the forerunner of many under-
consumption theories. Malthus had some insights into one of the most important
problems of the modern economy; the maintenance of the level of aggregate
demand.
Not surprisingly, J. M. Keynes considered Malthus’ ideas“ more likely to lead to
right conclusions than the alternative approach of Ricardo. But it was Ricardo’s
more fascinating intellectual construction which was victorious, and Ricardo who,
by turning his back so completely on Malthus ‘ideas, constrained the subject for a
full hundred years in an artificial groove.”
The specific historical factor that Malthus was addressing was addressing was the
depression following the Napoleonic was beginning in 1820. The depression
lasted 7 years, and Ricardo admittedly had no clue as to its cause.
 I. Assumptions
A. Effective demand determines the level of output. Effective demand
=government spending +consumption spending (spending on consumption by
landowner, capitalists, and workers)

B. Rejects Say’s law; saving =consumption by capitalists =effective demand

=output
C. land is fixed and differs in fertility
D. divided population into three classes

class Economic Income Determination of Income

Function

Workers work Wages Malthusian theory of population

(subsistence
wage)
Landowners Spend Rents Difference between the most and
least fertile lands in cultivation

Capitalists Save, Profits 1.Residual after paying wages

Accumulate and rents
Capital, and
Organize
2. Competition among capitalists
production
equalizes the rate of profit in all
industries

II. Short-run implications;

 A. The corn lows increase the price of agricultural products .This in turn
makes profitable the cultivation of marginal (inferior) land.
B. This increases competition for more fertile lands, bidding up rents.
C. Rents landowner spending effective demand output
D. Policy recommendation; Intervention. Keep the Corn Laws, thereby
redistributing income to the landowners, increasing rents, and increasing
spending. Malthus believed that the landowners are the key to economic
progress. God has put the landowners here as the provider of culture and
progress.
E. Income distribution (relations in distribution) is a way to influence capital
accumulation (and relations in production). This suggests that in some
sense relations in production and distribution are independent.
Distribution is used to influence production, but not the reveres

The Theory of Rent

The view of Malthus on rent are found in’’ An inquiry into the nature and progress
of rent’’ (1815). Malthus anticipated then Ricardian theory of rent. Malthus
regarded rent as a surplus that arose because of the bounty of nature. To
Malthus, rent arose because of the following factors;
(a) There was a shortage of fertile land
(b) This shortage demand the cultivation of inferior fertility.
(c) The produce in ease is sold at’’ the natural or necessary price’’.