Chapter 4.3

CHAPTER Four
4.3
Thomas Malthus
.
Outline
Malthus's population theory,
 Life
 The theory of general Gults,
 The LDR, differential Rent,
 The alternative cost of land,
 Land as a factor of production

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T.M …..Life
 Malthus was born the son of Daniel Malthus, a distinguished
country gentleman and a close friend of such leading

intellects as Jean-Jacques Rousseau and David Hume.
 He established an enduring fame from his work:
 An Essay on the Principle of Population which appeared in 1798

and reappeared 1803.
 His principles of Political Economy, which was published in

1820
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What influenced Malthus's thinking
Historical setting
 Two major controversies attracted Malthus’s attention during the

period:
1. The first was an increase in poverty and the controversy over what
to do about it.
 Negative effects of industrialization following growing
urbanizations start to be observed, unemployment and poverty
were increasingly visible problems.
 Following this ‘poor lows’, the poor should have a minimum
income irrespective of their earnings, were implemented as a
remedial and this created a disagreement between those doesn't
like redistribution of income.
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Historical setting
2. The other controversy was over the so-called corn laws.

2. These laws placed tariffs on imported grain and effectively
placed a minimum price on grain imported to England
from abroad.
3. The landlords favored these tariffs but were under attack by

the growing groups of merchants and industrial capitalists.
4. Following the captive of Napoleon in 1813, fearing the

surge of crop importation the group demanded the raise of
price floor on imported grains.
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Intellectual setting
 Malthus’s father, Daniel, subscribed to the optimistic

belief of the perfectibility of people and society.
 This faith is based on the works of Godwin and
Condorcet.
 These thinkers were key influences on the younger
Malthus in that he purposely set about to challenge their
theories.
So, what did the say?
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Intellectual setting … Godwin
 William Godwin (1756–1836),,
(1756–1836), was novelist, and political
philosopher who turned anarchist and atheist and whose doctrines
resembled those of the French revolutionaries.
 In 1793 he published his influential book, An Enquiry Concerning
Political Justice and Its Influence on General Virtue and Happiness.

 This work was among the first to formulate the philosophy of
anarchism.
anarchism
 Godwin was an extreme individualist who opposed not only all
coercive action by the state but also collective action by the
citizenry.
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Intellectual setting … Godwin
 He relied entirely on the voluntary goodwill and sense of justice of the
individual guided by the ultimate rule of reason.

 According to Godwin, the human race is perfectible through a
continuous advance toward higher rationality and increased well-being.
Because a person’s character depends on the social environment instead
of being immutable and determined by heredity, a perfect society will
produce perfect people.
 The major obstacles to progress, Godwin said, are private property, economic
and political inequality, and the coercive state.
 Population growth, he believed, would not be a problem. When the population
limit is reached, humanity will refuse to propagate itself further.
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Intellectual setting … Condorcet
 The Marquis de Condorcet (1743–1794), an eminent French
mathematician of an aristocratic family, was a skeptic in religion, a

democrat in politics, a physiocrat in economics, and a pacifist.
 Condorcet favored universal suffrage for men and women.
 His most important work, Sketch of the Intellectual Progress of
Mankind,
Mankind was written when he was fleeing from prosecution by
the French revolutionary junta.
 Condorcet’s theme was the idea of social progress based on

three fundamental principles:
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(1) Equality among nations,

 Ultimately the equality of nations, he wrote, would abolish war
“as the greatest of plagues and as the greatest of crimes.
(2) Equality of individuals within nations

(1) The equality of individuals would be won when differences in
wealth, inheritance, and education were eliminated.
 The perfectibility of humanity
 The only inequalities that should be permitted, he thought,
are those that derive from natural abilities.

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 Condorcet favored the wide distribution of property, social security, and

he believed that the natural order tends toward economic equality but
that existing laws and institutions encourage inequalities.
 Equality would overcome the social evils of the day and lead to
perfection.
 Population would increase as a result of these beneficent reforms, but

the food supply would increase even more rapidly. If the problem of
subsistence could eventually no longer be solved this way, Condorcet
favored birth control to limit the population.
 These were the ideas against which young Malthus rebelled.

MALTHUS’S POPULATION THEORY
 Malthus’s basic principle, established in the first edition of his essay, was
founded on two assumptions:
(1) that food is necessary for the existence of humankind, and
(2) that passion between the sexes is necessary and will remain unchanged.
 He concluded that population tends to grow at a faster rate than the

food supply.
Malthus contended that human beings, in the absence of checks on population,
will tend to increase their numbers geometrically (1, 2, 4, 8, 16 ...), but that the
food supply can only increase arithmetically (1, 2, 3, 4, 5 . . .).
preventive checks
 Malthus identified two types of checks to population growth: those he

called “preventive checks” and those he called “positive checks.”
preventive checks
 These are checks to population growth are those that reduce the birth
rate.
 The checks Malthus approved was termed moral restraint.
 People who could not afford children should either postpone marriage or
never marry; conduct before marriage should be strictly moral.
 The preventive check of which Malthus disapproved he called vice. This

included prostitution and birth control, both of which reduced the birth rate.
Positive Checks
Positive Checks
 Positive checks are those that increase the death rate.
 These were famine, misery, plague, and war.
 Malthus elevated these to the position of natural phenomena or laws;

they were unfortunate evils required to limit the population.
 These positive checks represented punishments for people who had not
practiced moral restraint.
 If the positive checks could somehow be overcome, people would face

starvation because a rapidly growing population would press upon a
food.
Policy Implication: The Poor Laws
 According to Malthus, then, poverty and misery are the natural

punishment for the failure by the “lower classes” to restrain their
reproduction.
 From this view followed a highly significant policy conclusion:
 there must be no government relief for the poor. To give them aid would
cause more children to survive, thereby ultimately worsening the problem of
hunger.
 Malthus’s ideas were adopted in the harsh Poor Law Amendment of

1834. The law abolished all relief for able-bodied people outside
workhouses.
MALTHUS’S MARKET GLUTS
 Malthus developed a theory of potential insufficiency of effective
demand.
 He assumed that workers receive a subsistence wage. Employers
hire these workers because they produce a value greater than that
which they receive as wages; that is, the employer makes a profit.
Because the workers cannot buy back the total output, others must.
 The profit cannot be returned to the workers in the form of higher
wages because the disappearance of profits causes production and
employment to cease.
MALTHUS’S ..MARKET GLUTS
so who will purchase the extra output?

Capitalists will buy some of it in the form of capital goods. Spending
on capital goods stimulates production and employment, as does

spending on consumption goods.
The consumption by workers employed in productive labor can never
alone furnish a sufficient motive to the continued accumulation and

employment of capital.
Investment is undertaken only to provide consumption, and if the final

products cannot be sold, no investment will be forthcoming.
MALTHUS’S …MARKET GLUTS
The Need for Unproductive Consumption
 Since the central object of capitalists lives is to amass a fortune,
and they are too busy in the countinghouse to consume it all:
there must therefore be a considerable class of persons who have both the
will and power to consume more material wealth than they produce, …in
this class the landlords no doubt stand pre-eminent.
 Spending by landlords is essential to avoid a glut of goods on
the market that in turn would produce economic stagnation.
The Need for Unproductive Consumption
 Rent, said Malthus, is a surplus based on the difference between the price
of agricultural produce and the costs of production (wages, interest, and
profits).
 Its expenditure therefore adds to effective demand without adding to the
cost of production.
 The other forms of income—wages, interest, and profit—increase
purchasing power, but also raise production costs, and costs must be
kept down if a nation is to maintain its competitive position in world
markets.
Policy Implications
 This theory of market gluts and the need for unproductive
consumption had several policy implications.
 The most important one was that the corn laws must be retained.
 These tariffs on imported grain enrich the landlords and consequently
promote unproductive consumption. The latter is necessary to avoid
economic stagnation.
 But he also opposed excessive unproductive consumption financed
by the government.
Policy Implications
 He indicated spending on public servants may lead to national debt
necessitate higher taxes, which might impede the increase of wealth.
 Society should consider private property sacred, and it should not allow
the redistribution of wealth through excessive taxation. Nor is a growing
government debt desirable, because the inflation it promotes will hurt
those on fixed incomes.
 He also recommended war as a means of solving glut problem.
Government finance on public works like road and bridges were
recommended to.

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CHAPTER Four

Malthus's population theory,

 The theory of general Gults,

 The LDR, differential Rent,

 The alternative cost of land,

 Land as a factor of production

 Malthus was born the son of Daniel Malthus, a distinguished

country gentleman and a close friend of such leading

 He established an enduring fame from his work:

 An Essay on the Principle of Population which appeared in 1798

 His principles of Political Economy, which was published in

 Two major controversies attracted Malthus’s attention during the

2. The other controversy was over the so-called corn laws.

3. The landlords favored these tariffs but were under attack by

4. Following the captive of Napoleon in 1813, fearing the

 Malthus’s father, Daniel, subscribed to the optimistic

 This faith is based on the works of Godwin and

 These thinkers were key influences on the younger

Malthus in that he purposely set about to challenge their

Political Justice and Its Influence on General Virtue and Happiness.

 He relied entirely on the voluntary goodwill and sense of justice of the

individual guided by the ultimate rule of reason.

 The Marquis de Condorcet (1743–1794), an eminent French

mathematician of an aristocratic family, was a skeptic in religion, a

 Condorcet’s theme was the idea of social progress based on

(1) Equality among nations,

(2) Equality of individuals within nations

 The perfectibility of humanity

 The only inequalities that should be permitted, he thought,

are those that derive from natural abilities.

 Condorcet favored the wide distribution of property, social security, and

 Population would increase as a result of these beneficent reforms, but

 These were the ideas against which young Malthus rebelled.

 He concluded that population tends to grow at a faster rate than the

 Malthus identified two types of checks to population growth: those he

 The preventive check of which Malthus disapproved he called vice. This

 Positive checks are those that increase the death rate.

 These were famine, misery, plague, and war.

 Malthus elevated these to the position of natural phenomena or laws;

 If the positive checks could somehow be overcome, people would face

 According to Malthus, then, poverty and misery are the natural

 Malthus’s ideas were adopted in the harsh Poor Law Amendment of

 Malthus developed a theory of potential insufficiency of effective

 He assumed that workers receive a subsistence wage. Employers

wages because the disappearance of profits causes production and

so who will purchase the extra output?

on capital goods stimulates production and employment, as does

The consumption by workers employed in productive labor can never

alone furnish a sufficient motive to the continued accumulation and

Investment is undertaken only to provide consumption, and if the final

 Since the central object of capitalists lives is to amass a fortune,

and they are too busy in the countinghouse to consume it all:

this class the landlords no doubt stand pre-eminent.

 Spending by landlords is essential to avoid a glut of goods on

the market that in turn would produce economic stagnation.

of agricultural produce and the costs of production (wages, interest, and

 Its expenditure therefore adds to effective demand without adding to the

 The other forms of income—wages, interest, and profit—increase