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The Economics of Thomas Robert Malthus

The Economics of Thomas Robert Malthus

Copyright Date: 1997
Pages: 1280
  • Book Info
    The Economics of Thomas Robert Malthus
    Book Description:

    Hollander investigates the relation of Malthusian economics to that of the other great classicists - particularly Smith, Ricardo, J.B. Say, and the French physiocrats. He redefines our common perception of Malthus's method and character.

    eISBN: 978-1-4426-8115-6
    Subjects: Economics, Philosophy, History

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-xii)
    (pp. xiii-xvi)
    (pp. xvii-2)
    (pp. 3-10)

    This book I think of as a natural partner to myEconomics of David Ricardo(1979). It should have been written next in sequence, though for various reasons I chose to turn first toThe Economics of John Stuart Mill(1985). My mode of interpretation is the same as in those earlier volumes: I keep very close to the text as a means to the end of discerning ‘authorial intent.’ My procedure is not simple-minded. It does not preclude an interest in ‘rhetoric’ and other literary devices designed to persuade readers (the ‘arithmetic’ and ‘geometric’ ratios provide a prime instance)....

  6. I Early explorations in growth and development theory

    • ONE The Essay on Population, 1798–1807
      (pp. 13-69)

      Malthus’s intentions in his celebrated ‘arithmetic ratio’ of food increase and ‘geometric ratio’ of population increase remain in dispute. It has long been a matter of debate whether this formulation reflected the principle of diminishing returns. We have Cannan’s insistence upon the absence of the law in any meaningful sense: ‘that law remained practically unknown till near the close of the Great War. Malthus may, perhaps, display some inkling of it here and there in the first edition. In the second he certainly uses one of the principal ideas on which it is based as an incidental and subsidiary argument....

    • TWO The Malthus–Ricardo correspondence, 1813–1814
      (pp. 70-94)

      As I show in section II, below, when the Ricardo-Malthus correspondence opens in 1813 – an exchange initiated by Ricardo in a response to Malthus’s review of one of Ricardo’s monetary contributions entailing Say’s Law of Markets – we find Malthus denying any effect on the profit rate deriving from the conditions of agricultural productivity. Land scarcity exerts its effect on the real wage, not on the profit rate. Profits areinsulatedfrom decline and depend, rather, on ‘the state of capital compared with the demand for it,’ countering the Law of Markets. It is argued, in fact, that agricultural protection and...

    • THREE The Inquiry into Rent (1815)
      (pp. 95-113)

      On 29 December 1814, Malthus informed Ricardo that he was busy on hisInquiry into Rentand hoped to publish it before Parliament met (Ricardo, 1951–73, VI, 167). The pamphlet – in part based on notes, some of which had been written as far back as 1807¹ – was published in February, and Ricardo had read it in print by 6 February 1815 (172). This chapter deals with the theory of growth as it emerges in theInquiry.² Other aspects of the pamphlet are taken up in chapter 8.

      In section II, we consider the function of diminishing returns in ‘separating...

    • FOUR The Malthus–Ricardo correspondence, 1815–1819
      (pp. 114-172)

      We consider next the Malthus–Ricardo exchange immediately following the appearance of the latter’sEssay on Profits(1815). In July 1814, it will be recalled, Malthus had proposed that agricultural protection and domestic expansion of farming may actuallystimulatethe profit rate. This linkage involves the contraction of manufacturing capital and output, which reverses the downward pressure of prices and profits, characterizing regular secular expansion, or Smithian ‘competition of capital’ (above, chapter 2: II). This sequence is absent from theInquiry on Rent.But in the reaction to Ricardo’s ownEssay,a new case for a positive effect of agricultural...

    • FIVE The Essay on Population revised (1817)
      (pp. 173-214)

      The 1817 edition of theEssay on Populationcontains a considerably sharpened analysis of the land-based growth model – the ‘canonical’ classical model (Samuelson, 1978) – with particular reference to the falling trend paths of the corn-wage and the profit rates. This contrasts with earlier versions of theEssay,where only the declining wage is allowed. The 1817 version abandons the hesitancy documented above, in chapter 4, to allow adirecteffect on the profit rate emanating from land-productivity conditions, and has nothing to say about theindirecteffect involving an impact on population growth and demand formanufactures.

      Much of relevance...

  7. II Value, distribution, and growth

    • SIX Price theory
      (pp. 217-271)

      This chapter and the next two deal with a number of issues raised in the historiography of Malthusian price theory. Schumpeter took an extreme view of the contrasts with Ricardian theory. He denied that cost prices were understood by Ricardo as reflecting equilibrium between demand and supply, that is, to be market-clearing prices, whereas Malthus went even beyond Say, ‘nicely indicat[ing] the locus of cost of production, which “only determines the prices of commodities, as the payment of it is the necessary condition of their supply” (Principles,chapters 2, 3) – a turn of phrase that points far ahead toward Jevonian...

    • SEVEN Value measurement
      (pp. 272-352)

      Malthus’s increasing concern with value measurement after 1820 indicates a preoccupation with thecostdimension, and provides further evidence of the inappropriateness of designating him a ‘Subjective Theorist.’ The topic is too important to be given short shrift, though its complexity has daunted many commentators.¹ Although it turns out that the debate was unprofitable, it is essential to see exactly why. We cannot ignore the fact that Malthus believed that he was making profoundly significant and innovative contributions to cost theory.

      Malthus followed Smith in adopting a ‘labour-commanded’ measure of value and it is inviting to identify the two perspectives,...

    • EIGHT Surplus vs scarcity: A physiocratic dimension
      (pp. 353-411)

      This chapter investigates an agricultural bias pervading T.R. Malthus’s economics, pre-eminently manifested in the notion of a ‘surplus’ unique to agriculture. The question arises whether and to what extent the bias reflects a debt to the Physiocrats. That Malthus was aware in 1798 of the French literature, though possibly only at second hand, is clear; that by 1803 he had encountered it at first hand is also certain. I shall show that, though Malthus was sometimes critical – a prime example is his objection to the Single Tax proposal – it was because he regarded the French economists as failing to work...

    • NINE Wages and employment
      (pp. 412-434)

      Malthus’s growth model in its mature form emerges in the chapter ‘Of the Wages of Labour’ in thePrinciples,though full-fledged statements are given in the formal analysis of the profit rate and its secular trend in the chapter ‘Of the Profits of Stock.’ Our discussion follows the same order, the present chapter dealing with wages and employment with reference, respectively, to labour supply (section II) and labour demand (section III), the latter in the sense of society’s aggregate labour requirements. While the discussion proceeds, following Malthus, on the provisional assumption that aggregate-demand problems may be set aside, the complication...

    • TEN Profit-rate analysis
      (pp. 435-502)

      This chapter opens with a major classical preoccupation – the effect of increasing land scarcity on the returns to labour and capital. Malthus’s analysis ‘Of the Profits of Capital’ in hisPrinciplesprovides one of the finest statements of the downward secular path of the corn wage and profit rates, as we show below, in section II. The model is further elaborated in section III, where we consider the formal transition to a mixed economy and the transmission from the agricultural to the manufacturing profit rate. We there demonstrate that Sraffa’s famous interpretation of the early Ricardo (1951, xxxi; 1960, 93)...

  8. III Employment, aggregate demand, and money

    • ELEVEN Sustainable growth: Accumulation and the aggregate-demand problem
      (pp. 505-585)

      The last and longest chapter in thePrinciples– ‘On the Progress of Wealth’¹ – analyses the problem of constrained growth, notwithstanding high growth potential: ‘There is scarcely any inquiry more curious, or, from its importance, more worthy of attention, than that which traces the causes which practically check the progress of wealth in different countries, and stop it, or make it proceed very slowly, while the power of production remains comparatively undiminished, or at least would furnish the means of a great and abundant increase of produce and population’ (1820, 345; 1836, 309).² The issue at hand is distinguished from stationariness...

    • TWELVE Macro-economic stabilization and applications
      (pp. 586-629)

      The theory of sustainable growth was applied to the interpretation of British experience over the two war decades 1793–1813, as we show in section II of this chapter. Conspicuous here is allowance for expanded capacity – reflecting in part new technology – a successful expansion because accompanied by the requisite growth of markets. By contrast, the postwar depression illustrated the theme that the mere existence of capacity was insufficient to assure its full use, let alone its expansion (section III). But though, in Malthus’s estimate, Britain had undertaken a successful program of investment during the war itself, the postwar depression was...

    • THIRTEEN Money and banking
      (pp. 630-676)

      Our concern in this chapter is with money and banking, particularly from a policy perspective, having in mind both the inflationary full-employment war years and the postwar depression. Malthus’s early contribution to the so-called Bullionist literature is found in twoEdinburgh Reviewarticles – ‘Depreciation of the Paper Currency’ (February 1811) and ‘Review of the Controversy respecting the High Price of Bullion’ or, as it is often referred to, ‘Pamphlets on the Bullion Question’ (August 1811). In these articles he maintained the moderate position characterizing the Bullion Committee Report written under the chairmanship of Francis Horner.¹ Section II of this chapter...

    • FOURTEEN Two issues in international monetary economics
      (pp. 677-736)

      This chapter continues the story of Malthus’s Bullionism, with the focus now on international monetary economics, specifically the Transfer Problem and the Theory of International Prices. As background to the first issue, we establish in section II the positions of Thornton inPaper Credit(1802) and Ricardo inThe High Price of Bullion(1810) on the effect of remittances, and then examine Malthus’s position in theEdinburgh Reviewof February 1811, whereby, following Thornton, emergency corn importation or subsidies to allies generate a payment imbalance met by bullion, even though (paceRicardo) there may be no currency redundancy. Ricardo’s reaction...

  9. IV Some empirical estimates

    • FIFTEEN Agricultural productivity: Past and prospective
      (pp. 739-783)

      It is received doctrine that the expositions in 1815 by Malthus, Ricardo, West, and Torrens of the principle of diminishing returns were intimately related to contemporary circumstances. Cannan has written that ‘the early nineteenth-century English economists deduced their doctrines, not from study of the works of their predecessors, but from the actual experience of England during the war’ (1917, 117). Jacob Hollander observed similarly regarding Malthus’sRent: ‘To what earlier influences [than the corn-law controversy of 1814], if any, is the genesis of the law of diminishing returns, as stated therein, referable? The general answer is, of course, to that...

    • SIXTEEN Demographic trends: The population problem
      (pp. 784-804)

      In his presidential address to the American Economic Association, Gary Becker alludes to Malthus’s ‘great contribution,’ represented as including: (1) diminishing returns to increases in employment ‘when land and other capital are fixed’; (2) population growth positively related to the wage, the lower population growth at low wages turning on reduced birth rates (the preventive check) and increased death rates (the positive check); and (3) a long-run equilibrium wage at which population is constant at a level determined by the production function (1988, 1–2). Becker emphasizes the stability of the equilibrium wage in the face of disturbances. A catastrophic...

  10. V Trade policy and social welfare

    • SEVENTEEN Agricultural protection
      (pp. 807-871)

      Lionel Robbins wrote of the English classical economists as the ‘intellectual spearhead’ of the general movement for freeing spontaneous enterprise and energies (1952, 19). To this generalization he attached a note regarding Malthus: ‘It may be thought that an exception in this respect should be made for Malthus, who, as it is well known, was not in favour of the free importation of corn. But too much should not be made of this exception. In general, Malthus was at one with the Classical Economists, in wishing an extensive removal of the barriers to trade.’ What motivated the exception?¹ We are...

    • EIGHTEEN Social reform and the role of government
      (pp. 872-916)

      Marx identified the Malthusian population doctrine with the ‘iron law of wages’ and read it as precluding social improvement under any form of institutional arrangement, whether capitalist or socialist (see Baumol, 1983, 306). The notion of an infinitely elastic labour supply at an exogenous wage is alive and well even in the non-Marxian literature, leading to the obvious question: ‘Why did [Malthus] devote so much effort in thePrinciplesto analysing the causes of economic progress, if any increase in material wealth is soon to be overtaken by an increase of population which reduces the average standard of living back...

    • NINETEEN Utilitarianism in a theological context
      (pp. 917-948)

      Whether Malthus was a ‘Utilitarian’ is still a debated issue. D.P. O’Brien, for example, maintains that ‘only the two Mills, part from Bentham himself, were really Utilitarians’ (1975, 25). Against this we have the view of Lord Robbins: ‘The principle that the test of policy is to be its effect on human happiness ... is common to all the English Classical Economists. We get the picture badly out of focus if we conceive that reliance on the principle of utility was confined to Bentham and his immediate circle’ (1952, 177). The justice of Robbins’s perspective has been demonstrated in chapter...

    (pp. 949-1008)

    Reactions to Malthus’s procedures were reviewed at the outset of this investigation. They range across the spectrum, from the attribution to him of a peculiarly inductive method to the discernment of the typically deductive procedures of the Ricardians – even extending to the charge by Horner that he practised what later came to be designated the ‘Ricardian Vice.’ This Conclusion draws on the foregoing chapters to provide a summary statement of Malthusian method.

    We establish first (section II) Malthus’s own strong formal case for deductive theory; we also review his actual practice, involving a predilection for long-run equilibrium analysis which extends...

    (pp. 1009-1026)
    (pp. 1027-1050)
    (pp. 1051-1053)