Download Thomas Malthus - History of Economic Thought - Lecture Slides and more Slides Economics in PDF only on Docsity! Thomas Malthus docsity.com Thomas Robert Malthus (1766 – 1834) • An Essay on the Principle of Population 1798 • Principles of Political Economy 1820 docsity.com Iron law of wages • If, on the other hand, the wage falls below the subsistence wage, population would fall rapidly owing to hunger. • This fall in population would tend to increase wages. • As a result, wages would in the long run be equal to the subsistence wage. docsity.com Only moral restraint can help the workers • Neither technological progress nor government generosity would make any difference to the workers’ standard of living. – Why? • According to Malthus, only “moral restraint” would help. docsity.com Only moral restraint can help the workers • Suppose the subsistence wage is currently 2 tons of wheat a year. – That is, suppose this is the wage at which the working population stays constant; at any higher wage the population grows and grows. – As a result, the workers’ long run wage would be 2 tons of wheat per year. • Now suppose that, as a result of moral restraint exercised by workers, the subsistence wage increases to 3 tons of wheat a year. – That is, now the working population would grow only if the wage rose above 3 tons of wheat a year. • In this case, the long run wage would also rise to 3 tons of wheat a year. • In this way, Malthus argued that only “moral restraint” by workers could improve their standard of living docsity.com We are flawed and imperfect • Malthus may have been rebelling against his father, Daniel Malthus, who had been influenced by the utopian writings of William Godwin, the Marquis de Condorcet and Bishop Paley. • These writers had argued that human beings would figure out the right way on their own. • Paley, in particular, welcomed the prospect of a larger population. • Malthus saw this optimism and this belief in the perfectibility of human society as seriously misguided. docsity.com Assessment • Malthus's theory of population has by and large been proven wrong. • Far from running out of food, there have been astonishing increases in agricultural productivity in advanced countries. • However, Malthus was right in the sense that the problems of overpopulation and famine have not disappeared entirely. • Besides, even rich countries may be faced with a different version of the Malthusian scare in the ruin that their growth has wrought on the earth's environment. docsity.com theory of market gluts • Malthus also proposed a theory of market gluts in which an excess of supply over demand was regarded as possible. – Such market gluts are unwelcome because they lead to unemployment • Malthus felt that the key to avoiding such gluts lay in the amount spent by the land-owning class. • If they spent freely, there would be adequate demand, gluts would be avoided and unemployment would be low. • One way to ensure this, Malthus argued in his contribution to the debate on the Corn Laws that had imposed tariffs on imports of cheap corn, was to retain those tariffs. • This would raise the price of British agricultural produce, raise the incomes of the landlords, increase their spending and thereby avoid the occurrence of a market glut. docsity.com
