Malthusian Population Theory Model

Malthusian Population Theory

In the period following the publication of Ricardo's Principles, economists, being deeply concerned with the population problem, had begun to suggest that the only way to avoid the dire consequences of overpopulation suggested by the Malthusian theory was for families to use some form of contraception. These conclusions were always subtly stated because of the strong reaction by the church and the general public against contraception. There is ample evidence that the private views of the leading economists of this period, with the exception of McCulloch, had been in favor of some form of contraception, but their public statements supporting contraception were made with caution.

Nassau Senior was typical of the economists of his time in his simultaneous acceptance and rejection of the Malthusian population theory. Although he characterized this theory in 1836 as one of the pillars upon which the science of economics was founded, as early as 1829 he had published correspondence between himself and Malthus, together with lectures he had given the year before, that seriously questioned Malthus's proposition that population tends to increase faster than the food supply. Senior had concluded that historical evidence indicated instead that the food supply increased faster than population. In the Ricardian analytical scheme, Malthus's theory of population was an essential element. Ricardo held that the major purpose of economics should be to explain the forces that determine the distribution of income, and he was particularly interested in the forces causing changes in the distribution of income over time. He had solved this problem by means of a residual theory of income distribution. The rentless margin determines rent; the remainder of output is composed of wages and profits. It is at this point that Malthusian population theory plays a crucial role. The long-run wage rate is fixed at a subsistence level by the Malthusian theory, and therefore the residual can be easily divided into wages and profits. Ricardo assumed (1) that the long-run level of real wages was fixed and known, and (2) that at this level of real wages, the long-run supply of labor was perfectly elastic. Suppose that the long-run level of population and the size of the labor force are not solely dependent on the real wage rate. Under these circumstances, the distribution of income at a point in time, or changes in the distribution of income over time, cannot be determined in the Ricardian system., the level of subsistence wages (EN) was given by Malthusian population theory. If the subsistence level of wages cannot be determined, then the curve EN has an infinite number of possible positions and shapes, and the calculation of profits and wages at a point in time or changes in the distribution of income over time are indeterminate. Thus, Ricardian distribution theory was fundamentally dependent upon Malthusian population theory. But by the middle of the 1830s, enough historical evidence had been accumulated to completely discredit this theory—and along with it Ricardian economics, which could no longer fulfill its avowed purpose: to explain changes in the distribution of income over time.