Malthus and the Dismal Science of Economics Population Growth Diminishing Return

Population Growth + Diminishing Returns = Starvation The law of diminishing returns has potentially cataclysmic implications for the future populations of the world. If the population of the world grows rapidly, then food output may not keep pace with it. There will be diminishing returns to labor as more and more people crowd on to the limited amount of land available. This is already a problem in some of the poorest countries of the world, especially in sub-Saharan Africa. The land is barely able to support current population levels. Only one or two bad harvests are needed to cause mass starvation. Witness the appalling famines in recent years in Ethiopia and the Sudan. The relationship between population and food output was analyzed as long ago as 1798 by the Reverend Thomas Malthus (1766-1834) in his 'Essay on the Principle of Population' . This book was a bestseller and made Robert Malthus perhaps the best known of all social scientists of his day. Malthus argued as follows: I say that the power of population is indefinitely greater than the power in the earth to produce subsistence for man. Population when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio. A slight acquaintance with numbers will show the immensity of the first power in comparison with the second. What Malthus was saying is that world population tends to double about every 25 years or so, if unchecked. It grows geometrically, like the series: 1,2,4,8,16,32,64 etc. But food output, because of diminishing returns, cannot keep pace with this. It is only likely to grow at an arithmetical rate, like the series: 1, 2,3,4,5,6,7, etc. It is clear that population, if unchecked, will soon outstrip food supply. So what is the on population growth? According to Malthus it is starvation. As population grows, so food output per head will fall until, with more and more people starving, the death rate will rise. Only then will population growth stabilize at the rate of growth of food output. Have Malthus' gloomy predictions been borne out by events? There are two factors that have mitigated the forces Malthus described: ·         The rate of population growth tends to slow down as countries become more developed. Although improved health prolongs life, this tends to be more than offset by a decline in the birth rate as people choose to have smaller families. ·         Technological improvements in farming have greatly increased food output per hectare. The growth in food output has thus exceeded the rate of population growth in advanced countries. The picture is much more gloomy, however, in developing countries. There have been advances in agriculture. The 'green revolution ', whereby new high-yielding crop varieties have been developed (especially in the case of wheat and rice), has led to food output growth outstripping population growth in many developing countries. India, for example, now exports grain. Nevertheless, the Malthusian Spectre is very real for some of the poorest developing countries, which are simply unable to feed their populations satisfactorily. It is these poorest countries of the world which have some of the highest rates of population growth. Kenya, for example, has a population growth of nearly 3 percent per annum. World Population Levels and Growth: Actual and Projected Year World Population Average annual rate of increase (%) World More developed regions Less developed regions 1950 1960 1970 1980 1990 2000 2010 2020 2030 2.5 3.0 3.7 4.4 5.3 6.2 7.0 7.9 8.7 1.8 2.0 1.8 1.7 1.5 1.3 1.1 1.0 1.2 1.0 0.7 0.6 0.4 0.2 0.2 0.1 2.1 2.4 2.2 2.1 1.8 1.6 1.3 1.2

The law is also known as the law of eventually diminishing returns to factors. It states that as we go on employing more of one factor of production other factor remaining the same, its marginal productivity will diminish after some point. For example, if we employ more of labor, capital remaining the same, the marginal productivity of labor will at first increase but start decreasing after reaching a high. The shape of the marginal product curve is therefore inverted-U.

I can be seen that if the law holds then the total product curve will also behave in a similar manner. It will initially be upward rising and then after some point start sloping downwards. In the upward sloping portion it is convex to the origin and later after reaching a peak it is concave to the origin. Then operation of the law of diminishing returns to factors is subject to three assumptions.

Firstly, it is assumed that the state of technology is given.

Secondly, it is assumed that one factor of production must always be kept constant at a given level. Thus this law is not applicable when all the factor inputs are variable.

Thirdly, this law is not applicable when the two inputs are mused in a fixed proportion. This amounts to say that the law of applicable only to varying ratios between the two inputs.