Thomas Robert Malthus

History of Economic Thought

Thomas Robert Malthus
• Son of a comfortably well-to-do English family
• Studied at Cambridge University
• Held first British Professorship of Political Economy
Malthus lived in tumultuous times of intense class
conflicts.
1. The industrial Revolution
• Made possible through the sacrifices and
suffering of the working class
2. Intense conflict between landowners and
capitalists
• Battle for control over parliament
• Should England remain self-sufficiently agricultural or
become an island devoted to industrial production?
 The Conflicts of Malthus’s Times:
The Industrial Revolution
The social cost of industrialization was paid by the poor.
• Growth in capital goods production meant less resources devoted to consumer goods production
forced decreased consumption.
• Poor experienced mass deprivation- a subsistence existence- while the middle class and the rich got obscenely richer.
• The new factory system destroyed laborers’ traditional way of life, pride of workmanship, and close
personal relations of handicraft industries.
• Relationship with employer was now through an impersonal market or cash nexus
• Factory employment brought “the tyranny of the clock”
• Transition: machines as appendages of workers workers are appendages to machines.

• The Luddite revolts: revolts of the late 18th- 1813. against the new factory system
• workers saw machines as responsible for their plight, smashing and destroying machines and factories.
• Many workers hanged and deported
• The extension of the division of labor in the factory factory employment of women and children.
• Accepted lower wages. Whole families had to work in order to earn enough to eat.
• Preferred by factory owners because they could be reduced to a state of passive obedience more easily than men.
• Widespread ideology” “the only good woman was a submissive women” worked in employer’s favor.
• Children endured the cruelest servitude- isolated, at the mercy of capitalists and managers.
Industrial Revolution II
Rapid Urbanization
• 1750 1850: 2 cities have populations > 50,000 21 cities
• Conditions in cities were terrible
• Air pollution and water pollution
• public services couldn’t keep pace with mass migration
• Cholera and typhoid epidemics
• Often 15-20 men and women in single rooms
• Social upheaval, riots, and rebellion all for the first half of the 19 th C
“Industrial capitalism was erected on the base of wretched suffering of the
laboring class- denied access to the fruits of the rapidly expanding economy and
subjected to the most degrading of excesses to increase the capitalists’ profits.”
The Conflict of Malthus’s Times:
Landowners vs Capitalists
Landlords wanted Britain to remain a predominantly agricultural economy to perpetuate their position, income,
and power.
Industrial capitalists wanted Britain to specialize in manufacturing to expand their income and power and reduce
the portion of their surplus that accrued to landlords.
• The abolition of the Speenhamland system of poor relief of 1795- campaigned by proponents of laissez-faire
capitalism.
• Entitled “unfortunates” to a certain minimum living standard regardless of employment.
• Established originally as a result of the Christian paternalistic ethic.
• General mass opposition to any government aid of the poor- many arguments based on the ideas of Malthus.
• 1790s: The wars England fought cut its food imports and the price of grain rose.
• Money wages couldn’t keep pace with food price increases.
• Wages grew faster than the price of manufactured goods.
• CORN LAWS (1815): Landlord class used its social, political, and intellectual influence to lobby for tariffs on
foreign grains
• British Industrial Capitalists opposed the corn laws for 2 reasons:
1. Grains/grain products were necessary for worker subsistence, so high grain prices higher money wages
2. Increased efficiency made prices of manufactured goods low. If there were free international trade, British manufactured
Landowners vs Capitalists II
Landlords and Capitalists fought over control of the surplus value
created by workers.
• Corn Laws passed in 1815: Landlords won the 1st round.
• Industrial capitalists had economic dominance, but landlords
controlled parliament.
• But “the dominant economic class has always eventually extended its
dominance to political dominance.”
• 1846: total abolition of the corn laws the political dominance of
industrial capitalists.
Class Conflicts of Malthus’ Times

I. Industrial Revolution: Labor v. II. Landowner v. Capitalist

Capitalist
~Agrarian Society v. Industrial
~Social Upheavals,
*Landlords want Britain to remain agrarian in
Riots, and Rebellions: order to perpetuate their position, income, and
• Late18th/Early 19th Century Luddite Rebellion, 1811-1813,
1815-1817, 1819, 1826, 1829-1835, 1838-1842, 1843-1844, power.
1846-1848
The social cost of industrialization was paid by the
poor *Industrial Capitalists want Britain to specialize in
• Growth in capital goods production meant less the production of manufactured goods in order
resources devoted to consumer goods production to expand their income and power and reduce
• Poor experienced mass deprivation- a subsistence the surplus value accruing to the landlords.
existence.
• While the middle class and the rich got much (“The Dominant Economic Class has always extended its
richer. economic dominance to political dominance”)

Chapter 4 - 1
 The Evolution of Malthus’s Ideas

I. Early Malthus II. Later Malthus

1790s – Early 1800s
During and After the 2nd
• Concerned with the social
upheavals and labor strife of
Decade of the 19thCentury
the age. • Concerned with the conflict
• observed that the welfare/happiness of between the two antagonistic
workers could only be achieved through the classes of proprietors – the
erosion of the wealth and power of capitalists and the landlords
capitalists and landlords.
• An outspoken champion of the wealthy. *Based on his Principles of Political Economy,
Malthus argues that in the long run, the well
• Based on his Theory of Population, Malthus argues that being of the capitalist and laboring classes is
schemes to redistribute would be fruitless due to the promoted by the short run well being of the
immoral and profligate ways of the poor. landowning class.

Chapter 4 - 3
 Early Malthus vs Radical Intellectuals
Deplorable working class conditions and labor unrest inspired intellectual champions of the working class.
• Marquis de Condorcet (1743-1794)
• Esquisse d’un tableau historique des progress de l’spirit humain :Human progress would reach its highest stages after the French Revolution, but this
required greater economic equality and security achievable through 2 basic reforms:
1. Income insufficiency of the working poor could be eliminated through a government established welfare fund for the elderly and
women and children who’ve lost their husbands and fathers.
2. Limiting the amount of credit available to the powerful capitalists and extending credit to ordinary working people to foster the
independence of workers from capitalists.
• William Godwin (1756-1836)
• The perceived laziness and depravity of the working class were defects attributable to corrupt and unjust social institutions.
• Capitalism made fraud and robbery inevitable: “if every man could with perfect facility obtain the necessities of life… temptation would lose its
power.”
• Men could not obtain the necessities of life because of private property laws.
• Justice: the abolition of capitalist property relations. Property should belong to those it would benefit most.
• The poor cannot turn to the government to correct injustices of the system.
• The law is the means by which the rich oppress the poor.
• Two Main Ideas:
1. Capitalist social and economic institutions (esp. private property rights) were the causes of evil and suffering within the system.
2. Government in a capitalist system can never correct these evils because it is controlled by the capitalist class.
• SOLUTION: abolish government, laws, private property, and social classes.
 Malthus’s Theory of Population
Two dominant themes of the first Essay
1. No matter how successful reformers were in their attempts to alter capitalism, the present class
structure of wealthy proprietors and poor laborers would prevail.
• This class division was a consequence of natural law.
2. Abject poverty and suffering was inevitable for the majority of people in every society.
• Attempts to alleviate poverty and suffering would only make things worse.
Malthus’s Population Theory: most people were driven by insatiable desire for sexual pleasure and
as such, rates of production (when unchecked) would lead to geometric increases in population.
• … and population in any given territory is limited by food availability.
• ... And increases in food production from increased labor and productive efficiency would get
successively smaller from generation to generation.
• General idea: population growth would outpace growth in food production.
• Starvation would thusly limit population growth
 Malthus’s Population Theory II
Population was always “checked” by some combination of preventative and positive
phenomena that kept population within the bounds of food availability.
• Preventative checks reduce the birth rate
• Sterility, abstinence, birth control
• Positive checks increase the death rate
• Famine, misery, plague, war, ultimate inevitable starvation
Checks that suppress population arise as a result of moral restraint, vice, and misery.
 If the wealth and income of everyone in society increased, the majority would have so many
children that everyone would inevitably face bare subsistence living anyway.
• The wealthy can exercise moral restraint, but the poor lack sexual restraint and squander any wages
remaining after on “drinking, gaming, and debauchery.”
• Where moral restraint was absent, population would be checked by either vice or misery….
• And a good Christian worker would denounce vice and accept misery to keep population from outpacing the
ability to subsist. YIKES
 Malthus’s Population Theory III
Therefore, Malthus rejected all schemes that would redistribute wealth or income…
• This would only increase the number of poor workers and push them back to subsistence, perhaps not even
raising their welfare if they don’t have children
• Receiving more money would “make every man fancy himself comparatively rich and able to indulge himself in many hours
or days of leisure” which would act as a “strong and immediate check to productive industry” “the nation would be
poorer” and the lower class “much more distressed” than they were before receiving more income.
…and any proposed legislation aimed at alleviating the suffering of the poor.
• “the poor laws of England tend to depress the general conditions of the poor”
1. The poor’s “obvious tendency is to increase population without increasing the food for its support”
2. “the quantity of provisions consumed in work-houses” reduces “the shares that… otherwise belong to more industrious
and more worthy members” i.e., the WEALTHY
The only escape from anarchy and total insecurity was the establishment of property rights and marriage.
• Persons with high moral character would begin to accumulate, while the lower class would squander their
property because of their nature.
• Then, with the poor with no means to continue existing, the “moral, wealthy” elite can share their
accumulated funds, but the wealthy must pick the subset of the poor with which they will share their funds.
Malthus’s Population Theory IV
A system of private property and the class inequality it generates were responsible for all great
cultural achievements of humanity
“The administration of private property… “ distinguishes the civilized from the savage state” and we should
not expect our nature to enable man to “safely throw down the ladder by which he has risen to this
eminence.”
Malthus even argued that instead of encouraging the poor to behave like the “morally
superior” the wealthy,
“we should encourage contrary habits. In our towns we should make the streets narrower, crowd more
people into houses, and court the return of the plague… we should build villages near stagnant pools… above
all, we should reprobate specific remedies for ravaging diseases.”
Harsh for even the most hardened conservative, he appeals to religion and God’s will at the
end of the first Essay.
“Life… is a blessing.. The partial pain, therefore, that is inflicted by the supreme Creator… is but the dust of
the balance in comparison of the happiness that is communicated, and we have every reason to think there is
no more evil in the world than what is absolutely necessary as one of the ingredients in the mighty process.”
 Malthus’s Response to Condorcet and Godwin

I. If the suggested reforms were ever imposed, the present class

structure would return because the class structure is an inevitable
consequence of Natural Law.
II. Abject Poverty is inevitable, therefore efforts to alleviate poverty
will actually make conditions worse rather than better.

Chapter 4 - 5
 Growth in Population, Food Production, Economic Production, and
Energy Use, 1961-2013
7

4
Index (1961=1)

0
6 0 6 5 7 0 7 5 8 0 8 5 9 0 9 5 0 0 0 5 1 0 1 5
19 19 19 19 19 19 19 19 20 20 20 20
Population Food Production
Gross World Product Energy
Sources: Population, food production, and gross world product from the World Bank, World
Development Indicators database; energy data from the U.S. Energy Information
Administration, International Energy Statistics.
 Later Malthus:
The Economics of Exchange and Class
Conflict
• Two States of Society: the rude uncivilized state and the civilized state.
• Malthus’s view is ahistorical.
• Assumes forever and always a money-exchange, commodity-producing society where labor power is already
considered a commodity.
• Examines the process of exchange, not the process of production no insights into the nature
and origins of surplus value.
Smith
• The perspective of production class conflict view of the economy
• Perspective of exchange social harmony view.
Malthus
• The perspective of exchange class conflict is based on ignorance about how a capitalist
economy worked. Understanding roles in the system would lead to social harmony.
• When the laws of ownership and distribution of property rights are taken for granted, every
exchange appears mutually beneficial to both parties.
Later Malthus:
The Economics of Exchange & Class
Conflicts
“Every exchange which takes place in a country, effects a distribution of its produce
better adapted to the wants of society. It is with regard to both parties concerned,
an exchange of what is wanted less for what is wanted more, and must therefore
raise the value of both the products.”
• Technically, Malthus is arguing that class conflicts are conducive to a socially
harmonious solution.
• Argued that the interests of capitalists and laborers are best promoted by promoting the
interests of landlords.
Malthus rejected the idea of “unproductive labor” because it suggests that labor is
socially unimportant. Instead, he refers to this as “personal services”
• Like Smith, he believed the Quantity of Labor Commanded was the best
measure of value.
 The Concern of Later Malthus

Malthus Accepts Smith’s Cost-of-Production Theory of Pricing with Two Modifications:

1. While Smith viewed Labor as the only socially necessary social cost of production,
Malthus believed that wages, rents, and profits were equally necessary.
• “it is not correct to represent as Adam Smith does, the profits of capital as a deduction from the produce of
labor”
• “possessors of land… conduct themselves with regard to their possessions exactly in the same way as the
possessors of labour and capital.”
2. Market forces would not necessarily move the market price toward the natural price.
• “The worth of a commodity… is its market price, not its natural price.”
• Market price is “determined by the extraordinary or accidental relations of supply and demand.”
• This is the basis for his most important contribution to economic theory: his theory of GLUTS
*Both principles are applied in defense of the necessary
existence of the landowning class.

Chapter 4 - 7
Later Malthus: The Theory of Gluts
The circulation of money and commodities: In order for the nature value of all produced
commodities to be realized through money exchange, there must be affective money
demand for these commodities that was equal in value to the natural value of the
commodities.
• in order the market to be equal to the natural price of a commodity, the three classes
have to be willing and able to spend their collective income on the commodities
produced in each production period.
• Income can be spent 2 ways: buying commodities for consumption and buying
commodities that were accumulated as capital.
• Remember the idea of savings=investment? What isn’t used to consume will be saved and what is
saved by economic actors is used to purchase capital for production.
• OVERALL: for aggregate demand and aggregate supply to be equal, savings must equal
investment.
Theory of Gluts II
Whenever market forces have been relied on the regulate the production of
commodities and the allocation of resources, the result has always been
recurring economic crises (depressions).
• A result of insufficient aggregate demand
• Malthus was very aware that depressions not only could, but would
happen in a capitalist economy.
• Principles was focused on promoting an understanding of gluts and
proposed policies to mitigate them.
• with emphasis on the role of the landowner, as "the interest of no other class in
the state is so nearly and necessarily connected with its wealth, prosperity, and
power as the interest of the landowner. "
 Theory of Gluts III
To understand the lack of sufficient effectual demand, Malthus analyzed the expenditure patterns of the three classes:
• Laborers spent their income on subsistence, Capitalists spent on the accumulation of capital, Landlords were gentlemen
of leisure and got their income from rents and spent al of their incomes on servants, arts, luxury, and culture.
Malthus believed there was a tendency for capitalists to receive too much income they couldn’t possibly invest it all into
capital accumulation.
Why could capitalists not continually employ more workers and make more profits to expand their capital at highest rate
possible? A:
1. The new capital would embody the same technology as the old
• Capital grows faster than labor supply capital would remain idle with no labor to employ it.
• Temporary labor shortages force capitalists and landords to increase wages
• Capitalists would rather hold their income in cash than reduce their profits on existing capital by accumulating more capitalinsufficient
effectual demand.
Malthus contradicts his theory of population!
2. or it would embody technical innovation that made workers more productive
• Labor saving capital= a substitute for labor
• Displacement of workers reduced effectual demand.
OVERALL: the cause of gluts was excessive profits leading to an unsustainable rate of capital accumulation.
MALTHUS’s SOLUTION: policies that alter the distribution of income… and directed more income to landlords!
 Malthus Regarding the Necessary Existence of
Rent

I. Rent exists because of the differences in the fertility of soil.

~Therefore the following relationship exists between
economic activity, fertility, and rent,

1.Low Population → 2. Fertile Land → 3. Low Cost Food Production →

4. Capital and Population Growth → 5. Less Fertile Land Use → 6. Rising Food
Production Cost → 7. Rising Rents

~Rising Rents reflect economic and social prosperity.

Chapter 4 - 8
Relating back to Farrington…
Hunt writes, “When a significant and powerful thinker makes a
seemingly obvious error of logic, it frequently illustrates the degree to
which the social orientation or the class loyalty of the thinker, rather
than pure logic, determines his or her conclusions.”