How is growth constrained by population according to Malthus? What factors are missing from the Malthusian Trap model?

Introduction Thomas Robert Malthus had a keen interest in Populations. His essay on the principle of population concentrates on population as being a key factor in a production function; its magnitude being directly related to per capita income. It is the aim of this essay to understand Malthuss theory of Population as a constraint to economic growth by analyzing the Malthusian trap model. Through this analysis the various factors missing from the model shall also be deciphered and a select few shall be expanded upon. The Malthusian Trap Model is based on two assumptions. In Malthuss words First, That food is necessary to the existence of man. Secondly, That the passion between the sexes is necessary and will remain nearly in its present state.1 Keeping these in mind Malthus came to the conclusion that the power of population is indefinitely greater than the power in the earth to produce subsistence for man. In other words, natural resources are limited and when the number of people grows there will come a point when these resources will be insufficient for all. According to him, Population grows in a geometrical ratio while output only increases in an arithmetical ratio. However, since every man requires food to live, it is essential that increase in output matches the increase in population. He explained that there exist checks on population, Preventative and Positive, which keep population in control. Preventative checks refer to behavior that reduces fertility rate whereas Positive checks refer to happenings that increase the mortality rate. In the Malthusian model population is a function of income. As income rises, it leads to better conditions of living which in turn leads to increase in fertility, the number of marriages increases, level of hygiene improves and people lead better lives. Exactly the opposite occurs when there is a fall in income. It is observed that when output increases there is an increase in income per head. This temporary rise in prosperity leads to an rise in population through greater number of births and lesser number deaths and such a growth in population inevitably pushes the economy back to subsistence level of existence. This is because a rise in population implies that a larger number of people have to be supported by the same means and leads to abundant and distressed labour. Such a scenario then proves to be a disincentive to reproduction till subsistence and population return to the same proportion. This is the Malthusian Trap. Malthus truly believes that the economy cannot escape this cycle and the income of the poor cannot be raised in the long run. In this model growth is extensive, population is the defining factor in the production function. Consider an economy in the 18th century; the production function is very basic and primitive as a large majority of the population is involved in agriculture. Such a production function can be given by Q = (K, L, R) Where,

K-Capital (very basic agricultural tools and machines) L-Labour R-Resource (Land available for cultivation) Since the natural resource available to mankind are fixed and inevitably so is capital, increasing the amount of labour working on fields will eventually lead to a decline in output (the change in Q will show decreasing returns). Through this we can interpret the Malthusian Trap. As population rises, the demand for food also goes up, an increase in labour inputs is also observed. However by Law of Diminishing Marginal Product as more and more labour get to work on what is essentially fixed amount of land the Total product starts to diminish eventually. This implies a reduction in the amount of food and triggers the checks to population. Although there is evidence of the Malthusian trap pre 1750s however the theory fails miserably in light of the population explosion that followed. The prime reason for this is that Malthus does not take into account several crucial factors while constructing his theory and making future predictions. First the Malthusian model assumes a closed economy. No weight is given to International trade. In the late 18th century trade in Britain was flourishing and a large number of trade relations with foreign nations had been established. Not only this, many British companies had been set up foreign lands such as the East India Company and the Royal African Company. Malthus questioned the possibility of trading large quantities and leaned to the pessimistic side when he overlooked a system of established and growing trade. Second Malthus failed to account for growing productivity through technological improvements and specialization. This failure to predict advancement in technology proved to be a great blunder as industrialization soon followed which lead to enormous growth in both population and output due to innovations in manufacturing that made possible mass production. There is no weight given to technology, which despite being rare during the era was seen in the form of simple pesticides, farm equipment and refrigeration. Third, Malthuss theory can be argued by alternative theories of Boserup and Adam Smith. According to Boserup improvements in agriculture would increase with a rise in population, as such an increase would prove to be an incentive for increased productivity. His model does not assume productivity improvement to be exogenous unlike Malthuss. Malthus also ignored the importance of specialization highlighted by Adam Smith. As number of workers rise, it leads to division of labour, which eventually increases labour productivity through repeated performance of the same activity. According to Adam Smith specialization would lead to increased growth and income thus increasing aggregate demand. In such a scenario growth is self-sustaining as increasing population ensures growing demand and also reinforces improvements in productivity. Four, Malthus also failed to foresee the fertility transitions to lower level as incomes continued to grow. Eventually families were faced with a trade off

between a large number of children with lesser resources or a few children with a better quality of life. Parents would take into consideration spending on a childs upbringing, education and health. They were more likely to have very few children and provide them with all the means to lead a more fulfilling life than to have a large number of children. Malthus assumes that a family would continue to reproduce till they could afford it, however this does not hold true. Finally the role of Institutions in fostering conditions for economic growth is another possibility Malthus didnt account for. Institutions are human devised constraints that shape human interaction and promote innovation, technological improvements and as such free and fair trade. In todays world, Institutions of all kinds play a central role in improving productivity, increasing coordination and thus increasing output. Therefore after careful analysis of factors that were overlooked by Malthus while developing his model, it can rightly be said that Malthuss theory provides a very simplistic view of the world. Even though his work was one the first to try and explain persistent poverty in the world, his failure to grasp small developments such as basic technological improvements, productivity gains and scope for specialization prove to be major flaws of his theory, which essentially lacks any convincing evidence.

Bibliography Thomas R Malthus (1776) An Essay on the Principle of Population, Chapter1-5 J.L Anderson (1995) Explaining long term economic change Ch-1 Douglas North (1990) Institutions, Institutional change and Economic Growth Ch-1 Matt Rosenburg (2011) Thomas Malthus on Population (Article) http://geography.about.com/od/populationgeography/a/malthus.htm http://www.ucmp.berkeley.edu/history/malthus.html http://www.blupete.com/Literature/Biographies/Philosophy/Malthus.htm (2011) EC 104-Lecture Notes Long Run trends in Population and per capita income