Malthus has a very mixed reputation these days. Among the “sustainable development” crowd, he is revered and provides the intellectual foundation for their beliefs. Among mainstream economists, he is often considered discredited. While his theory is incomplete, with some valuable corrections, Mathus provides valuable insights into patterns in human economic history.
Malthus’ insight: Resource Scarcity
The natural resources on our planet have either been relatively stable or declining over time. One of the fundamental scarcities that any species faces is food. Food is limited by ecological factors, such as arable land, rainfall, availability of fertilizer and types of crops available. Malthus looked at the available land and performed a simple calculation. If a given amount of land can produce a certain amount of food, and the land is fixed, the more people you have, the less food will be available for each person. Secondly, he observed that species tend to increase exponentially until they start to hit resource constraints. He concluded that unless populations were controlled, they would expand until they were restrained by available resources and then people would continually be on the edge of starvation.
Mathus’ correction: Self Control
Many of his modern critics do not know that Malthus himself offered a way out of his dismal dilemma. He personally advocated marrying later and having fewer children. In fact, birth rates have been falling quite dramatically throughout the last century, implying that Malthus’ hope was not completely unfounded. Based on current patterns in birth rates, it is plausible that the world’s population will stabilize well short of our maximum available food supply without extreme interventions being necessary.
Simon’s refinement: Technology
In 1968, Paul Ehrlich published The Population Bomb, a book arguing that humanity was on the verge of massive famine. He was taken seriously at the time, and drew the attention of an economist named Julian Simon. Simon argued that continual scientific discoveries would overwhelm any resource scarcity humanity faced and would allow the population to continue expanding without massive hunger. If increased population did cause increased scarcity, that would be reflected in higher prices for various commodities. If scientific advancement allowed humanity to economize on resources, the prices of those goods would fall. Simon and Ehrlich agreed to a bet to decide which one of them was right. In 1990, Simon won the bet and in the meantime, the world’s population had expanded by about 840 million people.
Simon was right because he saw that each new person adds new potential for new ideas. Ideas, being non-rival, can improve the lives of everyone simultaneously. The more people there are, the more ideas there will be and the faster science will advance. Economic incentives reinforce this phenomenon, since higher resource prices encourage people to find ways to use resources more efficiently. Eventually, humans do run up against fundamental physical limits. Technology is not magic. However, these limits are tremendously huge and we are nowhere close to hitting them on many margins. When the Earth becomes too crowded, we can expand into the stars. The amount of energy created by the Sun could easily support trillions of humans. Perhaps eventually humanity will face a true resource constraint, but not for a long long time. Right now, famine is a matter of distribution rather than absolute scarcity. Malthus had correct reasoning, but his arguments failed because his premises were false – technology has grown far faster than population over the last 200 years.