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2: The Logic of the Malthusian Economy

In human societies prior to 1800, economic life was shaped by a basic fact: over the long run, births had to equal deaths for the population to remain stable. And generally, the naturally occurring checks and balances had been successful in maintaining that balance. This is the essence of the Malthusian model: equilibrium between the population and the ability of the environment to sustain the inhabitants of an area - the same for human populations as for animals.

In terms of population, it is reckoned that women have the ability to give birth to twelve or more children - and in previous ages (and certain societies in the present day) it is not uncommon for a woman to give birth to more than six children. However, societies in which there are high birth rates also have high child mortality rates, such that the population does not grow significantly over time. The author provides figures taken from Europe countries in 1300 and 1800, and at both periods in time and over the course of five hundred years, the number hovers very closely around two - i.e., one to replace each parent and maintain a stable population. (EN: The numbers work out to an average of 2.005 - but the last fraction might be matched against accidental/unusual death; nature's way of dealing with a rounding error.)

The author also mentions life expectancy as a factor that impacts population stability, and it can be seen that in pre-industrial societies, nations that had a lower number of births also achieved a longer life expectancy.

The standard of living refers to the amount of goods and services a society consumes. It can be difficult to calculate, because resources can be directed to creating newspaper, porcelain, music, boots, or cornmeal. In aggregate, most societies consume all that they produce, but on an per-capital level there may be an increase or decrease in consumption depending on the proportion of the society that is engaged in productive work as well as how productive the work happens to be.

The author presents some graphs and mathematical proofs to illustrate basic logic: where the standard of living is sufficient to sustain a population on a subsistence basis, the population is in stasis. Where goods produce exceed the subsistence needs of the people, the birth rate increases to consume those goods. Where population exceeds the goods available, the death rate (infant mortality or shorter lifespan) increases to bring them back in line.

The author describes the way he determines "subsistence income": consider the daily wage, translate that into the amount of the staple food it would purchase(wheat or rice in most countries), and compare that to the minimum daily requirement of calories per day (1500 - possibly increase to 2400 to account for the fact that they must be fit for work) to determine whether the wages are sufficient for subsistence. In general, this works out to be about two pounds of grain per day. Thus considered, most preindustrial societies were subsistence economies - though in rare instances they became starvation economies or wealthy ones, even by the standards of modern societies.

(EN: This is subsistence of the worker, not any non-productive members of a worker's household such as spouse, children, or aged parent. It is also a bit low because it fails to consider any other necessity such as clothing, housing, etc. So likely it is not a number that has an inherent meaning, but still suffices as a basis by which comparisons among societies can be made.)

And while it would stand to reason that the increased needs of a large society would be counterbalanced by the increased productivity (each new person is both a consumer and producer of goods), there is not a straight-line relationship. Ricardo's law of diminishing returns indicates that each additional labor unit increases the amount of output, but by a degree that incrementally diminishes - which is the reason that very large populations (such as China and India) seem to coincide with very high levels of poverty in spite of the increased productive capacity. This problem is compounded when you take into consideration that an abundance of the labor supply decreases the amount of wages that need to be offered.

There's also an example that demonstrates that additional labor is used in a less productive manner: a peasant with a 50-acre farm might alone cultivate the land for the most productive crop (grain), but when additional laborers are hired, their effort is used to raise livestock or other crops that contribute less to sustenance. (EN: This seems reasonable, but overlooks the notion that production is managed intelligently - the land would not be diverted to the production of luxury or non-sustenance goods based on the number of workers available, but to the degree to which sustenance goods are demanded.)

Inefficient use of abundant resources is also an issue to consider: where land is plentiful enough to provide for the population, it is used less efficiently. The numbers the author presents to substantiate this seem a bit skewed (refers to the amount of crops per acre in one location and the number of acres per worker in another), but the assertion seems entirely reasonable.

Changes in the Birth Rate and Death Rate Schedules

It is observed that different societies have different birth and death rate schedules, given different levels of income, but there are commonalities among them: in the short run, any increase in birth rates without a corresponding increase in death rates decreases real income, which then may be seen to increase as the death rate increase to the point when equilibrium is reestablished. Where birth and death rates both remain high, life expectancy is shortened. The same can be seen if the death rate decreases without an immediate corresponding decrease in the birth rate.

As a result, any improvement in the welfare of an economy, such as improvements in sanitation or declines in violence and disorder, results in a reduced death rate and an increased life expectancy, but only at the cost of lower material living standards and a decreased birth rate.

The Malthusian model presents a counterintuitive logic: anything that increases the death rate or decreases the birth rate increases the living standards, whereas any measure that reduces the death rate or increases the birth rate decreases living standards.

Changes in Technology

The Malthusian model depends on a stability in the level of productivity: it creates and divides a pool of products among the labor and consumption of a population, based on the premise that the level of productivity is fixed and predictable. However, the productivity of individuals, as determined largely by the technology they leverage to create a given volume of necessary goods, causes major changes in the balance of production and consumption.

(EN: this is discussed here in abstract terms, but I can concretize it by considering the difference in the amount of food a single worker can produce by farming with his hands, with wooden tools, with metal tools, or with farm machinery.)

Prosperity, the author reckons, exists while the equation is attempting to rebalance itself in consideration of technology. That is, where a technology boosts productivity, it creates a larger quantity of goods to be shared among a given population, and it takes time for this individual prosperity to lead to increased birth rates or decreased death rates that would produce enough additional people such that the resources divided out return to the previous per-capita amounts. As such, there might be an increase in living standards, but it is temporary.

The Malthusian Model and Economic Growth

In the years prior to the industrial revolution, the pace of technology advancement had been extremely slow. Consider that it took nearly two millennia for Europeans to move from the bronze age into the iron age, and even then the change was not dramatic: for the most part, men used the same tools made of a different metal. The growth in the population of Europe was correspondingly slow over this long period of time. After the industrial revolution, the increase in productivity and population was dramatic. Consider the following population statistics for England:

There's a brief consideration of "the iron law of wages," which insisted that wages would always be drawn to the subsistence level - which seems "absurd" for modern economies, but was a fairly accurate description of all societies prior to 1800.

(EN: I don't think that it is so absurd, even today, to suggest that wages are drawn toward subsistence. It seems axiomatic to me that, regardless of population size, an individual will labor only as much as necessary to provide him with the things that he wants, and no more, whether he is producing the objects of his own consumption or producing for a wage with which he will buy the objects of consumption. In direct production, spending effort to produce goods in excess of your own needs is blatantly wasteful, though when wages are substituted the aberration is obscured. The difference is in the gap between "want" and "need" - in which a person may choose to be happier with fewer products in exchange for less toil, or accept the necessity of more toil to enjoy more products. It is far more psychological than mathematical.)

The Malthusian principles suggest that so long as fertility remains unchanged, economic growth cannot in the long run improve the human condition: increased production will lead to an increase in population that consumes the "excess" goods that were produced. That is, in the preindustrial world, technological advances did not produce wealth - they produced population.

Human and Animal Economies

Before 1800 there was no fundamental distinction between the economies of humans and those of plant and animal species, a point which Malthus considered explicitly: in spite of man's intellectual facilities, he is still subject to the "physical laws" of nature to which any creature is subject.

As such, the population of an animal species is dependent on the quality of its habitat, whether directly (a herd depends on the amount of grass available to sustain themselves) or indirectly (a predator must depend on the size of the herd, which in turn depends on the amount of grass).

While man's intellect alone does not exempt him from the laws of nature, his productive faculty often does. Unlike animals who depend solely on the providence of nature, man undertakes action to improve his environment, to cause it to yield greater abundance, to make better use of what it can be made to yield, etc.

In that sense, the industrial revolution after 1800 represented the first break of human society from the constrains of nature. (EN: I don't think this is the first break, but merely the most dramatic one - the Malthusian assumption seems ill-suited even to an agrarian society. I have no objection to the suggestion that a primitive hunter-gatherer society is completely dependent on the providence of nature, but a herding-farming society begins to overcome these limitations.)

Political Economy in the Malthusian Era

Malthus's essay was, at least in part, a response to the assertion by utopian writers such as Godwin and Condorcet that misery and vice were not the result of unalterable human nature but of bad government. Malthus stressed the limitations of natural resources, which are independent of political institutions, as an inevitable restriction existing regardless of political institutions.

Specifically in regard to the poor, the Malthusian model regards charity as being harmful: population increases to consume its resources, therefore taking resources from the wealthy to support the poor diverts them from production to consumption and swells the ranks of consumers. Other economists of his time echoed this sentiment.

It's further asserted that the economic principles of government in the present age would have made no difference to material prosperity in the Malthusian era. Ultimately, there is a balance against supply and demand in the market place, and while acts of law can create temporary inequities, the equation will in the long run result in a balance between production and consumption. (EN: The author expounds on this further, but another basic principle of economics explains it: more money does not mean more goods.)

Aside of economic policy, government can take other actions that shift the balance of production and consumption: war, genocide, and the like reduce the population and have a short-term benefit to the population, as there are fewer consumers than goods - but the decreased production causes this excess to be consumed and the balance to be restored. It's further suggested that governments such as Rome and China, which maintain public granaries to hedge against harvest failures did themselves more harm than good by sustaining a population at a level above that which could be supported by production, at least until the reserves ran out and famine resulted.

Income Inequality and Living Standards

Preindustrial societies differed in their degree of income inequality. It is reckoned that foraging (hunter-gatherer) societies were egalitarian in consumption, there being no method to store wealth nor a method to amassing more than was necessary for immediate or near-immediate consumption. It is likewise reckoned that agrarian societies had much greater inequality, with the landowner class gaining the benefit of the farm laborers on his estate, contributing little effort but enjoying a disproportionate share of the harvest.

While the Malthusian model takes no account of inequities in distribution, increasing the capital of the wealthy classes (who amass wealth rather than consuming it) has less of an effect on population that increasing the capital of the mass of the population (who consume it immediately). That is, in terms of the availability of consumption goods, the wealth of a few has no impact on the welfare of the many (the rich do not horde food and starve the lower classes).

Therefore it is historically evident that the Europeans during the nineteenth century had a higher income per person that more primitive societies, but achieved it through greater income inequality (the working classes made greater income by producing non-consumption goods), but this did not correspond with the welfare of the people

An odd shift in topics: the author lists the vices and virtues of Malthusianism: fecundity is preferred to infertility, cleanliness to bad sanitation, peace to violence, public granaries to harvest failures, health to disease, inequality to equality, charity to selfishness, indolence to hard work. But the two remain balanced by each: back to the principle that excess consumable goods leads to population growth that consumes the excess and returns to a state of balance, and that shortage leads to population shrinkage.

The Neolithic Revolution and Living Standards

Prior to the industrial revolution, the most transformative economic change was the "Neolithic revolution" - the move from nomadic hunter-gatherer society to one based on cultivated crops and domesticated animals in fixed settlements.

There is some debate among anthropologists as to whether this revolution was to the benefit or detriment of mankind. Obviously, the move to an agrarian society offers greater stability and predictability of the food source, but there are also drawbacks: conflict and war over land ownership; a faster spread of disease in denser populations; the risk of having sufficient food between harvests; etc. The author's take seems to be that it was a wash that left mankind no better off before.

(EN: This is all highly speculative, based on a time when historical records were nonexistent, and I'm not really buying the argument ... any more than I buy into the suggestion that we'd be better off if we undid the industrial revolution and went back to living on pre-industrial farms. My general sense is that if agricultural practices didn't leave mankind better off, societies would have dropped their shovels and dusted off their spears - and the fact that agriculture was tried and chosen so broadly suggests that those of the time thought it a good idea, even if we do not presently understand their reasoning.)

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