Lecture 2:
The Malthusian World
ECON 451
Fall 2012
Professor David Jacks

First, a quick look at the narrative evidence from the pre-modern era, looking across Eurasia.
To the right,
Albrecht Durer’s
Conquest, War,
Famine, and Death
Introduction

Introduction

Introduction

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?
Introduction

1000
World Population (millions) & Living Standards (1800=1) from 10000 BC to 1800 AD
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800 4
600
400
200
3
0
10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1000
0
2
1
Introduction

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, part of the classical economists who lived around c. 1800.
His name is synonymous with gloomy predictions…thanks to him, economics has been
The Malthusian model

His argument was that:
1.) Human population increased exponentially
(that is, at a constant growth rate).
2.) Food production increased
12
10
8
6
4
2
0
1 11
The Malthusian model
21 31 41

Because of this, humankind was doomed to face periodic mortality crises (“positive checks”) when population outstripped resources.
The only way out was for society to place
“preventive checks” on individuals—things like monogamy, no bastards, and infanticide—to stop population growth.
The Malthusian model

Because these preventive checks differed across the globe, each society faced its own equilibrium population.
In the long run, he predicted that economies would converge to their subsistence wage.
Also known as the Iron Law of Wages because wages were determined by
The Malthusian model

Note that this does not imply a universal and abysmally low wage rate, simply a long-run equilibrium wage for each society 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.
The Malthusian model

The best way to think of the Malthusian world is actually as 3 simple assumptions:
1.) The birth rate is mainly socially determined but will rise with real wages, or
Br=Br(w) and B'(w)>0.
2.) The death rate of a Malthusian economy declines as real wages increase, or
Dr=Dr(w) and D'(w)<0.
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
The Malthusian model

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; that is, technology only determines the level of population.
3.) the system converges back to this unique
The Malthusian model

Examples of “shifty behaviour”:
1.) a shift in the birth-rate schedule; for example, a ban on contraception.
2.) a shift in the death-rate schedule; for example, the introduction of vaccines.
3.) an improvement in technology; for example, the introduction of horse collars.
The Malthusian model

A shift in the birth-rate schedule

A shift in the birth-rate schedule

A shift in the death-rate schedule

A shift in the birth-rate schedule

A shift in the technology curve

A shift in the birth-rate schedule

NB: it is only changes in the demographic regime which result in permanent changes in the standard of living.
NB: The only variable which changes in technology affect is the equilibrium population which a Malthusian economy can sustain.
NB: the Malthusian model generates predictions which run counter
The Malthusian model

Thus, in a world of:
1.) stable cultural values
2.) stable disease environments
3.) and slow technological improvement… we expect no changes in standards of living and slow population growth.
But how is the Malthusian grip broken?
That is, what can account for the increase in
The Malthusian model

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.
This can be seen graphically as a perpetual NE
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 population.
But are the assumptions correct (possible to get the right answers from the wrong model, after
The Malthusian model

England, 1200-1800 AD