BCom 1st Year Theories of Population Notes Study Material
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BCom 1st Year Theories of Population Notes Study Material
Both for social and economic reasons, great interest is taken today in population problems. This, however, is not a new interest because for more than two hundred years economists have taken keen interest in the population problem, but “in a more or less vague form it has occupied the attention of thoughtful men in all ages of the world.”
Although in a vague form his predecessors were aware of the population problem, T. R. Malthus (1766-1834) is to be credited with the first economic analysis of population.
(1) Malthusian Theory of Population
Malthus “first developed his views while arguing at breakfast against his father’s perfectionist opinion that human race was always improving. ” The son became so agitated that he wrote an “Essay on the Principle of Population as It affects the future improvement of Society” in 1798. The Essay was revised live times during the course of his lifetime. His purpose was to demonstrate, in his own words,
“That the increase of population is necessarily limited by the means of subsistence. That population does invariably increase when the means of subsistence increase and that the superior power of population is repressed, and the actual population kept equal to the means of subsistence, by misery and vice.”
Malthus summed up his argument in the following three propositions:
(i) Population is necessarily limited by the means of subsistence.
(ii) Population invariably increases where the means of subsistence increase, unless prevented by some powerful and obvious checks.
(iii) These checks are all resolvable into moral restraint, vice and misery.
Malthus begins his Essay with the observation of Benjamin Franklin pertaining to American Colonies, where resources were abundant and population tended to double every 25 years or so. This observation formed the basis of his postulate about a universal tendency for population. He was also impressed by the rapid increase in population in Great Britain. His postulate about increase in population was that, unless checked by limited food supply, it grew expotentially, i.e., by a geometric progression-1, 2, 4, 8, 16, 32, 64……As a result of it population becomes so large that there will not be enough space in the world for all the people to stand.
Malthus was also impressed by the Law of Diminishing Returns as applied to agriculture. Each successive increase in population, he thought, required the bringing into cultivation of ever less fertile land. In his words, “The best land are taken up first, then the next best, then the inferior, at last the worst: at each stage the amount of food produced is less than before.” It is the case of extensive cultivation. Even in the case of intensive cultivation when existing cultivated land was farmed more intensively, the same Law of Diminishing Returns would operate. In his words,
“As population doubles and redoubles, it is as if the globe were halving and halving again in size-until finally it has shrunk so much that the supply of food falls below the level of necessary for life.”
This Law formed the basis for his another postulate that food supply tended to increase by arithmetic progression—1, 2, 3, 4, 5, 6, 7, 8….
“When the law of diminishing returns is applied to a fixed supply of land, food production tends not to keep up with a population’s geometric progression rate of growth.”
It is clearly a pessimistic outlook; economics is a dismal science. During his own lifetime Malthus noticed that the increased demand for wheat, consequent upon the growth of population, was causing wheat to be grown on inferior land where the yield per acre was low. But Malthus did not use the term geometrical progression and arithmetical progression with mathametical precision. His attempt was only to show that the means of subsistence placed a limit on the growth of population. So population would not necessarily increase at a geometric rate. “This was only a tendency if unchecked. ”
Malthus saw that population did not actually increase expotentially. So some checks were definitely operating. Positive checks in the form of famines and plagues, wars and infanticide-all resolved themselves into misery and vice-were imposed on the power of population to multiply itself.
In the second edition of his Essay, Malthus referred to another check—the preventive check-that is possible. This type of check is prudential or moral restraint–not birth control but late marriage (i.e., postponement of marriage) and abstinence after marriage.
Malthus’s views were adopted by later British economists. “They believed that there is an inevitable tendency to diminishing returns to labour in agriculture. With every mouth God sends a pair of hands, but new hands do not produce as much. The tendency to diminishing returns may be overcome for a time ‘the progress of civilisation’, but sooner or later it must prevail.
No last improvement in the conditions of the people would ever be possible, for as such as a temporary improvement took place, ‘the power of population’ would ass itself and the increase in numbers would drag standards of living down again. A lasting improvement would be possible only if people desired it strong enough to limit their numbers; in moral restraint lay the hope, the only hope for mankind. No wonder that economics was called the gloomy science.”
Positive checks restrain the growth of population by increasing the death rate. They are applied by nature. Preventive checks are applied by man by bringing down the birth rate. They arise from man’s foresight which enables him to see the distant consequences—the distress lying ahead of him in the form of large families and falling standard of living. So Malthus saw the hope for mankind in preventive checks.
Influence of Malthus
Malthus’s ideas had wide repercussions:
- His Essay was used to support the strong provisions of the revision of the English poor laws.
- His arguments were utilised to make poverty as uncomfortable as possible.
- His opinions were used to bolster the argument that trade unions could not improve the welfare of the workers because increased wages were to cause workers to reproduce until all were reduced to a bare subsistence.
Samuelson and Nordhaust say that the ghost of Malthus reappears today in “doomsday” economics in Meadows, Meadows and Randers, Limits to Growth (Potomac, 1972) and Beyond the Limits (Chelsea Green Publishing Company, Post Mills, Vt.,1992). These are modern-day Malthusians. Their predictions are even more dismal:
“If present growth trends in world population, industrialisation, pollution, food problems and resource depletion continue unchanged, the limits to growth on this planet will be reached within the next one hundred years. The most probable results will be a rather sudden and uncontrollable decline in both population and industrial capacity.” (The Limits to Growth, p. 23.)
Did History Prove Malthus Wrong?
It is generally believed that the history of the nineteenth century proved Malthus’s argument to be wrong. It was pointed out that the population of Great Britain increased since Malthus wrote from about 10 million to over 50 million. this expansion was accompanied by a marked upward trend in standards of living. It was due to
(a) the opening up during that period of many new lands—the USA, Australia, New Zealand, South Africa and some of the countries of South America, and
(b) the improvement in transport, which made it possible to bring food from the New World to the Old.
Similar movements in population and standards of living took place in most tries of the Western Europe and in the New World. Malthus could not foresee the extent to which technical progress and the growth of investment would raise output per head.
Here a pertinent question arises: does the opening up of the New World invalidate his arguments? Malthus argued that the effect of the agrarian revolution was temporary which merely was to postpone the evil day. Is it not reasonable to argue in the same manner and say that the effect of the development of the New World too would be temporary and ultimately the Malthusian crisis would occur at a higher level of population?
It cannot be denied that Malthus failed to foresee the almost limitless potential of world food production and the evidence that industrial areas could support dense populations. Hanson, however, argues that Malthus was undoubtedly wrong and his precis tions about population increase and the standard of living in Great Britain between 1800 and 1900 were proved to be incorrect.
But “for the world and whole the ideas of Malthus were revived with increased potency in the twentieth century, when the upsurge of population known as the “population explosion occurred.”! Many parts of the world today, such as China, India, Bangladesh, Japan and Southern and Eastern Europe are overpopulated. Their population are too large relatively to their resources of land and capital.
Criticisms of Malthusian Theory of Population
Malthus’s population theory suffers from the following main weaknesses.
(i) Malthus was pessimistic about the future of the world. His pessimism is not borne out historically by the economic development of the last two centuries. Increase in population has been accompanied by higher standards of living in the developed countries of the first world.
(ii) Malthus’s view about the law of diminishing returns in agriculture too did not materialise. Rapid technological advance took place in agriculture. The use of fertiliser, pesticides, improved (hybrid) seeds, mechanisation of farming has raised food production almost limitlessly. This has held the law of diminishing returns in check almost indefinitely.
(iii) Malthus was wrong in comparing population increase with food production alone. He could not foresee the immense potential of industrialisation in maintaining a large population at a higher level of living.
(iv) Similarly, Malthus could not foresee the large potential of resolution in transport and the growth in the importance of international trade in feeding large population in Europe.
(v) His forecast about population increase, if unchecked, by geometrical progression also did not materialise. Positive checks did not check the growth of population by raising the death rates or moral restraints. Birth control measures were still in the womb of the future. So Malthus could not foresee them. But then he also failed to visualise the ingeniusness of the human mind.
Malthus was very careful in his statistical studies. Yet to present day demographers, his views are oversimplified. In his discussion of the law of diminishing returns, Malthus failed to anticipate the technological miracle of after the Industrial Resolution. He did not foresee that the population growth af 1870 would begin to decline in most of the developed countries and so standar of living and real wages would grow rapidly.
In this way the Malthusian nightmare did not materialise. But for ana ing the population behaviour of densely populated developing countries, thus is still present to a substantial extent. Here there is a race betw population increase and food supply growth-a race in which population is ahead of food supply.
Thus, the spectre of Malthus clearly stalks many of the poor countries of the world. Many of the nations of Asia, Africa and South America are finding it difficult to raise their living standards because of rapid population growth. Africa is still caught in the Malthusian trap of high birth rates and stagnant incomes. China has been able to check its birth rate substantially, but India has not been so successful in this respect. Slowly, however, the birth rate in poor countries is declining from 42 per 1,000 in 1965 to 30 per 1,000 in 1990. But it is still for higher than the birth rate of 13 per 1,000 in higher income countries.
(2) Optimum Theory of Population
The essence of Malthusian theory was this: The population of a nation tends to outrun its capacity to produce the food and fibre needed to sustain itself. There is a maximum population which, if exceeded, will spell misery in the country. Fig. will help to understand this. The figure shows the law of diminishing returns in terms of average product and marginal product.
The MP curve reflects the increases in total product associated with each successive dose of labour. It can be seen in the figure that MP curve first rises, then falls and ultimately becomes negative. Law of diminishing returns operates along a falling MP curve. AP, the average product curve, is intersected by the MP curve at its highest point. Average product is output per unit of labour and reflects the same general “rising-maximum-falling” relationship between variable inputs of labour and output.
A society’s output per worker is its income per worker. A diminishing average product means a falling standard of living and the result is the Widespread misery and poverty, if population (and so the labour force) keeps on growing. NS is the subsistence level-of-living line in the figure. Now we can sum up the Malthusian position.
A persistent and substantial population increase-a rightward movement along the horizontal axis—will keep the level of living (measured on vertical axis) very close to the bare subsistence level (point R). Maximum population at this level is given by this point. Any increase beyond this level will invite disease, malnutrition and famine which will bring the population growth to a halt at OM.
“Numbers alone, however, do not show whether or not a country is under- or over-populated, a fact which Malthus himself seems to have realised,” says Hanson. Malthus’s realisation of this fact is expressed in his following words:
“A careful distinction should always be made between a redundant pulation and a population actually great.”
He was also aware of the fact, though vaguely, that a particular density of population per square mile might be too large for one country but not for another. It is so because the production of any commodity is the combined result of many factors of production, not only of labour. Therefore, modern economists, instead of speaking in terms of maximum population, developed the concept of optimum population.
“That particular population size at which real output or income per person is at a maximum is called the optimum population for society.” Thus, given the productive resources and technology of an economy, population that yields the greatest income per person is the on optimum population. It has been shown fig.
In this figure per capita output is measured along Y-axis and size population along the X-axis. It is evident from the figure that as population increases from O, per capita output in. Optimum creases. The increase continues till population reaches OM. At the level of OM, output per person is the highest being NM. Any increase in population beyond OM will cause the output per person to decline. At a population size of OM2, for example, per capita output falls to N2M2 which is lower than NM (N2M2 < NM). It is a state of over-population, i.e., there are more people in relation to productive resources. The remedy lies in reducing population.
Now suppose that population is less than OM and stands at OMı. Again we notice that per capita income (output) which is N1M1 is lower than NM (N1M1 <NM). But it is a state of under-population, i.e., there are less people in relation to productive resources and the remedy lies in expanding population.
Thus the theory of optimum population shows that population increase is not always bad but a mixed one insofar as economic growth in terms of increase in per capita output is concerned. Population may be either too large or too small. If the amount of labour combined with the other factors of production results in the maximum output per person, it is the optimum population for that particular country.
Thus the optimum size of population for any particular country depends on its natural resources and its stock of capital. If the population of a country falls short of the optimum, it can then be considered to be under-populated. On the other hand, population exceeding the optimum is clearly over-populated.
Now take the case of a country which is poor in natural resources and lacks capital; it is economically over-populated, even though its population is small in terms of numbers. Take another case. A country is under-populated if there is insufficient labour relative to other factors of production to make the best use of them.
But the optimum is not a fixed number. Over time economic conditions are liable to change and what was previously the optimum may not be so under the changed conditions. If it were possible to increase the supply of other factors proportionately to the increase in population or if technology makes an advance, the per capita output curve shifts upward and to the right and the optimum is raised. It has been shown in fig.
The per capita output curve PQ shifts to P1Q1, P2Q2,…as a result the increase in the quantity of capital and natural resources or technology advance. Consequently the optimum population shifts from OM to OM1, OM2,…
A formula is provided by Dalton to measure the mal-adjustment in populain that is, the deviation of the actual population from the optimum. The formula is written as
M = (A-O)/O
M = mal-adjustment in population,
A = actual population, and
O = optimum population.
A negative M stands for under-population, positive M for over-population and M equal to zero for absence of mal-adjustment, i.e., actual population equals optimum population.
Whether a decrease in the population of a country is good or bad in the long-run can be known only when we have the knowledge of the present population being above or below the optimum for that country. Obviously, if the population is above the optimum, a reduction in numbers will be an advantage became the result will be an increase in per head income. If, however, the present population is below the optimum, any reduction in numbers will result in a fall in per head output; desirable course is increase in population.
Another important point to note is that it is not very profitable to speculate on the “optimum” size of population of any particular country. “A large increase or decrease in its numbers would in practice take a considerable time to achieve. In the meantime, the situation might change.”Important changes are:
- discovery of oil or other important minerals;
- technical advance of an important kind;
- a change in tastes or knowledge (discovery of synthetic substitutes, for example) leading to a change in the demand for the export of this country.
Paish emphasizes that the consideration of optimum size of population is not entirely an economic question. The following non-economic factors should also be noted:
(i) Some countries may want a larger population because they wish their nation to play a more important part in world affairs, or
(ii) They may want enough manpower to defend their country against a potentially aggressive neighbour, or
(iii) Some may want a smaller population in order to secure more amenities, a quieter countryside, more parks and play fields, less traffic congestions, or
(iv) Some fear that the effect of declining numbers among western peoples will be to undermine the prestige and influence of the West and the maintenance and extension of Western values, ideas and culture.
Malthusian Theory of Population Compared with the Optimum Theory of Population
The following are the chief differences between the two theories:
(i) In analysing the numbers, Malthus considered only land and food production, while the optimum theory includes all productive resources, land as well as capital of all sorts.
(ii) Malthus was thinking of a maximum number for a country which when exceeded spells disaster for the country. Optimum theory proceeds in terms of an optimum population, not the optimum. Optimum is not a fixed number but varies with changing economic conditions.
(iii) Malthus’s theory proceeds in terms of positive checks to cure the evils of over-population. Optimum theory analyses the effects of over population in terms of a decrease in the per capita income.
(iv) Malthusian theory is pessimistic in outlook. Optimum theory is optimistic. “Malthus was obsessed by the fear of an impending economic hell; the propounders of the optimum theory are related with the hope of a coming paradise.”