Lecture 4: The Malthusian World

1
Lecture 4 The Malthusian World
2
Introduction

• A quick look at economic history texts from the
  pre-modern era

3
Introduction

• Life in Eurasia (and everywhere else) was pretty
  precarious from the earliest of times
• Sometime around c. 1750 much of Europe ceases to
  experience mortality crises like famine and
  plague.
• The question for this week is what mechanisms
  were potentially at work in keeping the globe in
  the grip of such crises?
• Or in other words, why were people so poor?

4
(No Transcript)
5
The Malthusian world

• One of the most powerful explanatory devices
  developed by economic historians is the idea of a
  Malthusian economy (or world or trap).
• Name refers to Thomas Malthus, an Anglican parson
  and of the classical economists who lived around
  c. 1800.

6
The Malthusian model

• It was Malthus gloomy prediction which led to
  economics being dubbed the dismal science since
  his argument was that
• Human population increased exponentially (i.e. at
  a constant growth rate).

7
The Malthusian model
8
The Malthusian model

• Because of this inevitable calculus, humankind
  was doomed to face periodic mortality crises
  (positive checks) when population outstripped
  resources.
• Unless society placed preventive checks on
  individuals (monogamy, no bastards,
  infanticide)to stop population growth.

9
The Malthusian model

• Thus, each society faced its own equilibrium
  population.
• In the long run, he predicted that economies
  would converge to their subsistence wage.

10
The Malthusian model

• Note that this doesnt imply a universal and
  abysmally low wage rate, simply a long-run
  equilibrium wage at which population remains
  constant.
• Thus, the demographic regime (birth and death
  rates) of a country determined how high or low
  the actual subsistence wage was.

11
The Malthusian model

• The best way to think of the Malthusian world is
  actually as 3 simple assumptions
• The birth rate of a Malthusian economy is mainly
  socially determined but will rise with real
  wages, or BrBr(w) and B(w)gt0.
• The death rate of a Malthusian economy declines
  as real wages increase, or DrDr(w) and D(w)lt0.

12
The Malthusian model

• The best way to think of the Malthusian world is
  actually as 3 simple assumptions
• The real wage declines as population increases,
  or ww(pop.) and w(pop.)lt0
• Again, this assumes that wages are determined by
  the marginal product of labor.

13
The Malthusian model

• This corresponds to the following set of graphs
  (with the real wage on the x-axis)
• 1.) an upward-sloping birth rate schedule
• 2.) a downward-sloping death rate schedule
• 3.) a downward-sloping technology curve which
  relates wages to population levels

14
The Malthusian model
15
The Malthusian model

• Characteristics of the system
• 1.) the demographic regime determines standards
  of living due to slowly evolving technology
• 2.) the technology curve relates this unique
  standard of living to a given population level,
  i.e. technology does not determine the SOL.

16
The Malthusian model

• Examples
• 1.) a shift in the birth-rate schedule
• 2.) a shift in the death-rate schedule
• 3.) an improvement in technology

17
A shift in the birth-rate schedule
18
A shift in the death-rate schedule
19
A shift in the technology curve
20
The Malthusian model

• NB Again, notice that it is only changes in the
  demographic regime which result in changes in the
  standard of living.

21
The Malthusian model

• Thus, in a world of
• 1.) stable cultural values, i.e. a stable
  birth-rate schedule
• 2.) stable disease environments, i.e. a stable
  death-rate schedule
• 3.) and slow technological improvement
• we expect no changes in the SOL and slow
  population growthprecisely the world summarized
  last week.

22
The Malthusian model

• But how is the Malthusian grip broken, or more
  exactly, what can account for the increase in
  both standards of living and population after
  1800.
• The only variable capable of affecting this is
  continuous and rapid technological improvement.
• Technological improvement occurring so quickly
  that the system remains out of equilibrium
  indefinitely.

23
The Malthusian model

• Another big question is whether the Malthusian
  model really fits the facts?
• Superficially, it captures the constancy of
  living standards and the slow growth of
  populationbut are the assumptions correct (its
  possible to get the right answers from the wrong
  model, after all) and does it fit micro-level
  data?
• (By way of conclusiona quick look at some data)

24
England, 1200-1800