Making the case that population growth does not hinder economic progress and that it eventually raises standards of living, Julian Simon became one of the most controversial figures in economics during the past decade. This book gathers a set of articlestheoretical, empirical, and policy analyseswritten over the past twenty years, which examine the effects of population increase on various aspects of economic development in less-developed economies. The studies show that within a century, or even a quarter of a century, the positive benefits of additional people counterbalance the short-run costs. The process is as follows: increased numbers of consumers, and the resultant increase of total income, expand the demand for raw materials and finished products. The resulting actual and expected shortages force up prices of the natural resources. The increased prices trigger the search for new ways to satisfy the demand, and sooner or later new sources and innovative substitutes are found. These new discoveries lead to cheaper natural resources than existed before this process began, leaving humanity better off than if the shortages had not appeared.
Originally published in 1992.
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Population and Development in Poor Countries
By Julian L. Simon
PRINCETON UNIVERSITY PRESSCopyright © 1992 Princeton University Press
All rights reserved.
The Effects of Population on Nutrition and Economic Well-Being
This essay delineates and describes a variety of relationships between population and nutritional well-being. Most of these relationships are explored in depth in other chapters in the volume. This essay ties the strands into a loose general framework that aims to explain how it is that, contrary to Malthusian predictions, increased famine and poorer nourishment have not been the secular outcome as population has grown historically.
The model described in chapter 3 fits closely into this framework but is not mentioned here because it had not yet been developed when this chapter was written. This review essay comes first in the volume because it sets the stage for much of the work to come. Such a review is inherently less exciting to write or read, however, than is an article that develops a single core idea. And I believe that (like so many other writings of similar provenance), this one suffers from being the product of a specific invitation, rather than having been written on its own inspiration. From an aesthetic point of view it would have been better to begin the book with chapter 3. Logic wins out over aesthetics this time, however.
* * *
Why has there not been increased famine and poorer nourishment on average as the world's population has increased? Malthusian theory, with its elements of fixed land and diminishing returns to additional labor, provides no explanation. One escape route from the Malthusian trap is an increase in the supposedly fixed supply of land, and this has been the most important avenue of total food increase throughout history. But without an accompanying change in technology (including transportation), increases in the land supply must surely lead eventually to a lower standard of welfare, due both to the additional time and effort necessary to make smaller plots of land produce a living, and to the poorer harvest thereby produced. And it must be more and more difficult to increase the effective supply of land within given geographical bounds.
Thomas Malthus therefore introduced a deus ex machina—the spontaneous invention of new farming practices that increase the possible food supply until consequent increases in population literally eat up the additional produce. This Malthusian device has led many writers to think that food and population growth have historically run a race in which the racing forces were independent. It has only been lucky chance, they have thought, that has kept food supply mostly in the lead.
This essay develops the quite different theoretical scheme that food production and the way food is produced are very much affected by the demand for food, whereas effective demand depends mainly upon the size and the economic level of the population. This scheme suggests that an increased demand for food eventually leads to a more plentiful supply than would have resulted had demand remained at a lower level. But the long-run benign trend should not obscure the short-run scarcities that have occurred in history before agricultural economies could respond to the increased demand.
This essay does not present a systematic survey of the complex web of relationships through which population affects food supply (fig. 1.1), but rather presents data on the strands in figure 1.1 marked with Roman numerals, corresponding to sections of the article. In addition, section 6 speculates about the effect of the loosening connection between land and nourishment upon conflict among nations.
I. Population and Adoption of Innovations in Subsistence Agriculture
The idea that the demand for food influences the choice of agricultural technique—either the choice among already used techniques, or the choice about whether to adopt an available technique for the first time—constitutes a challenge to the Malthusian system and conclusions. Malthus implicitly assumed that inventions are adopted immediately upon their discovery, a sequence that may be diagramed as in figure 1.2a.
Von Thunen pointed out, however, that the type of agricultural technology in use in a particular location depends upon the distance to the nearest city and therefore upon the population density. Engels argued, on the basis of Justus von Liebig's research, that, because of the possibilities of technical advance, humankind was not doomed by fixity of resources to live near subsistence level between population-increasing improvements in agriculture. But such views did not enter economic theory. Anthropologists, in their turn, have found considerable evidence that population density influences the mode of agricultural technique in use in primitive societies. But it was Boserup who fully developed the idea that, ceteris paribus, the length of fallow and the associated techniques and labor input depend upon population density, and that population growth leads to a shift to more labor-intensive techniques that are already known but are not in use at the time, and to a shortening of fallow.
Boserup deals only with techniques that, at the time of invention, require additional labor to produce additional output, and therefore must usually await an increase in population density for adoption. Different crop rotations are the prime example. This view, diagramed in figure 1.2b, we may call the "population-push" hypothesis.
Although there clearly are techniques (such as more intensive crop rotations) that fit the population-push hypothesis, there also are some other inventions (such as a better calendar) that save labor immediately, or that immediately increase output with the same labor, and for which there is accordingly no bar to immediate adoption. These latter inventions fit nicely with a Malthusian or "invention-pull" view of population growth and technical change. Chapter 3 shows important instances of both in economic history. It also shows the microeconomics of the adoption of these two different classes of techniques.
The upshot is that both Malthus and Boserup tell part of the total story. The inventions that immediately save labor are adopted as soon as people recognize them for what they are, and they lead to a spurt in population. Those inventions that require more labor for more output under existing conditions are only adopted later when population increase forces such adoptions by making them economical. Together the population-push and invention-pull theories provide a more sound and comprehensive view of demographic-economic history than does either above. Together they are consistent with a situation in which population growth increases misery by decreasing each person's share of an inelastic supply of food, but also with a situation in which the supply of food expands sharply to provide for more people.
II. Population and Adoption of Innovations in Market Agriculture
Boserup's population-push technique change operates because of an inability of the semi-fixed quantity of land to produce the increased amount of food necessary to meet the new demand with the old technology. In such a context of subsistence agriculture there is no market wage to fall with increased population. Nor is there new movable capital being purchased; this last point is the most important distinguishing characteristic for our purposes between subsistence agriculture and an industrial economy.
In contrast, in an industrial economy the technical change decision that follows a ceteris paribus increase in population and demand is not whether simply to expend (or hire) more labor to work together with the existing capital in order to increase production to the new profit-maximizing point. Rather, the decision is whether to buy new (and different) machinery, and this decision is affected by the cost of labor (and raw materials).
The common view seems to be that an increase or plentitude of workers retards the adoption of new devices by making it more profitable to use additional workers than to buy new capital. This is the converse of the view that a shortage of workers leads to the adoption of new technology by way of an increase in the price of labor, with consequent substitution of capital (embodying new technology) in place of workers.
The contemporary source of this view is the writing of Habakkuk with respect to different degrees of labor scarcity in, for example, the United States and Great Britain during the nineteenth century. Habakkuk traces this view to the nineteenth-century writers themselves, and then to Rothbarth. A chain of inference runs reasonably straightforwardly from the idea that labor scarcity induces innovation, to the idea that slower population growth, with concomitantly fewer persons of working age in the current cohort compared to the prior cohort, induces relatively faster innovation than does faster population growth.
This theory fits with the United States, a land of high wages by almost any measure, which has developed and adopted much labor-saving technology in advance of other nations (although cross-national comparison is treacherous ground from which to infer an answer to the question posed here). This theory, however, does not fit the history of Europe before and after the fourteenth century. The period from C.E. 1000 to C.E. 1300 was a time both of rapid population growth and of great advances in agricultural (and construction) techniques. After the Black Death (although perhaps beginning with the preceding great famine or earlier), when population ceased to grow and then declined, whereupon wages rose, advances in technique also slackened or ceased. This theory also does not fit the data showing that since World War II the less developed countries—where population growth has been rapid by any measure—have increased productivity proportionally as fast or faster than more developed countries.
There is, however, another force at work. An increase in total labor supply increases total output, which is roughly the same as an increase in total demand for goods. And an increase in demand, all else equal, is likely to lead to additional investments in productive capital.
Chapter 4 shows geometrically what may happen when the two opposing forces are both at work. Under reasonable assumptions, either effect can dominate. But the outcome of the geometry is easy to understand and accept intuitively. Population growth can lead to the faster adoption of new technology even though it also leads to a decline in wages. Whereas the wage change has a depressing effect upon the adoption of innovations, the demand change has a stimulative effect. But the analysis does not impy that under all conditions population growth will lead to faster adoption of new technology, just as it contradicts the clear negative effect on innovation assumed by those who have focused only on the wage effect. Rather, the outcome of population growth is indeterminate, and depends on the parameters of the demand function and of the cost function.
For the purpose of this article as a whole, the important implication is that population growth does not necessarily slow down the adoption of new agricultural innovations, and may actually speed such adoption.
III. Population and the Advancement of Technology
This section discusses the relationship between population and the invention of agricultural (and other) techniques, in contradistinction to the previous sections, which discussed the adoption of inventions. The context is urban or modem society rather than subsistence agriculture.
Population size can affect technology through the supply of potential inventors, which in turn affects the supply of inventions. The idea that a larger population would produce more knowledge than a smaller society because of a larger number of potential inventions goes back at least to Petty:
As for the Arts of Delight and Ornament, they are best promoted by the greatest number of emulators. And it is more likely that one ingenious curious man may rather be found among 4 million than 400 persons.... And for the propagation and improvement of useful learning, the same may be said concerning it as above-said concerning ... the Arts of Delight and Ornaments.
This point was expressed more recently by Kuznets, and it was implicitly formalized by Phelps in his discussion of research and development.
Population can also affect technology through the demand for goods. The idea that more people increase the flow of productivity-boosting inventions through the stimulating effect of increased industry volume is implicit in the cross-national analyses of productivity first done by Rostas, as well as in the learning-by-doing studies of Wright, Alchian, and Arrow. But these writers do not draw attention to the role of population size in influencing the size of industry.
Exploring the theoretical ramifications of these ideas, Steinmann and I have found satisfactorily rich formulations that embody both supply-side and demand-side effects and fulfill the desire of economic theorists for mathematical tractability and steady-state properties. These analyses yield conclusions quite the opposite of the main body of economic growth theory, which expresses Malthus's central idea dynamically and reaches the same conclusions as does his static analysis.
Because inventions are more often recorded, historical data are more readily available for discoveries than for adoptions. Because a long span is necessary when one is searching for a possible relationship, analyses of the relationship of population to technological discovery must reach far back in history; population changes too slowly for a mere few decades to suffice.
The case of Greece has special interest. Many have argued that ancient Greece's small population and great accomplishments prove that a relatively large population is not necessarily conducive to a relatively fast increase in knowledge. Figure 1.3 graphs the total number of "discoveries" in each period as a function of the population size in each period, and also computes the rate of population growth in the last period. From only one rise-and-fall event, one can draw little statistical assurance of a connection, but this single event certainly is consistent with the hypothesis of a positive relationship between population size and discovery rate.
A similar display for Rome in figure 1.4 shows much the same results as for Greece, which should bolster our confidence that there is indeed a relationship.
Work done jointly with Richard Sullivan (chapter 16) relates books published on agricultural production methods in England from 1500 to 1850, and agricultural patents from 1611 to 1841, to population size and agricultural prices. Our main measure of books published is a bibliography by Perkins, because it covers the longest period; we also have a bibliography by Fussell and one for the Goldsmiths' collection. The three bibliographies are in general agreement on ups and downs with each other and with the patent series.
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Table of Contents
- FrontMatter, pg. i
- Contents, pg. vii
- Acknowledgments, pg. ix
- Introduction, pg. xi
- 1 .The Effects of Population on Nutrition and Economic Well-Being, pg. 3
- 2. Demographic Causes and Consequences of the Industrial Revolution, pg. 24
- 3. An Integration of the Invention-Pull and Population- Push Theories of Economic-Demographic History, pg. 43
- 4. Some Theory of Population Growth's Effect on Technical Change in an Industrial Context, pg. 78
- 5. Population, Natural Resources, and the Long-Run Standard of Living, pg. 89
- 6. Robinson Crusoe Was Not Mainly a Resource Allocator, pg. 122
- 7. There Is No Low-Level Fertility-and-Development Trap, pg. 127
- 8. Population Growth May Be Good for LDCs in the Long Run: A Richer Simulation Model, pg. 143
- 9a. The Relationship between Population and Economic Growth in LDCs, pg. 180
- 9b. On Aggregate Empirical Studies Relating Population Variables with Economic Development, pg. 199
- 10. The Positive Effect of Population Growth on Agricultural Saving in Irrigation Systems, pg. 209
- 11. "Population Pressure" on the Land: Analysis of Trends Past and Future, pg. 223
- 12. The Effect of Population Density on Infrastructure: The Case of Road Building, pg. 242
- 13a. The Effect of Population Growth on the Quantity of Education Children Receive, pg. 259
- 13b. The Effect of Population Growth on the Quantity of Education Children Receive: A Reply, pg. 284
- 14. Does Population Growth Cause Unemployment, or Economic Development, or Both?, pg. 289
- 15. The Effects of Population Size, Growth, and Concentration on Scientific Productivity, pg. 317
- 16. Population Size, Knowledge Stock, and Other Determinants of Agricultural Publication and Patenting: England, 1541-1850, pg. 334
- 17. Population Growth, Economic Growth, and Foreign Aid, pg. 363
- 18. The Welfare Effect of an Additional Child Cannot Be Stated Simply and Unequivocally, pg. 389
- 19. On the Evaluation of Progress and Technological Advance, Past and Future, pg. 411
- 20. Lebensraum: An Essay on Peace in the Future; or, Population Growth May Eventually End Wars, pg. 423
- Epilogue: Some History and Reflections on Population Economics, pg. 435
- Index, pg. 455