ABSTRACT
Pre-1870 classical economics had as its core a subsistence wage and a limited supply of land. Surprisingly, the pre- and post-Malthus writers failed to articulate how the long-run population level had to be endogen-ously affected by the composition of landowners’ demand for luxury consumptions. It is proved here that population is maximal (minimal) when consumption concentrates on good(s) with maximum (minimum) ratio of augmented embodied labor relative to augmented embodied land - where “augmented” means we count in for each good both its required direct and indirect primary inputs and those same primary inputs required for the subsistence fodder of its labor inputs. There results for the pre-neoclassical world a basic Cantillon-Samuelson Non-Substitution Theorem of post-neoclassical type.
When Thomas Carlyle called economics “the dismal science,” he had in mind the classical Malthusian prophecy that population would always expand to offset any technological progress and to thwart any rise in real wages above a definable minimum of subsistence level. So to speak, the ultimate real wage rate was exogenously set by man's biological super-fecundity. And just as rabbits grow up to the determinate carrying capacity of Darwin's jungle, so will there be for each stage of technology an asymptotic population level in classical economic theory.
339My present little theorem demonstrates what may not have been explicitly noted in the writings of David Ricardo, Adam Smith, Stuart Mill, Karl Marx, or Malthus himself:
Namely, that variations in tastes of landowners and capitalists toward wanting to spend on luxury goods that are land intensive (directly and indirectly) will lower the steady-state equilibrium population. Contrariwise, and this may have been vaguely glimpsed at places in the classical literature, if landowners and other possessors of discretionary income alter their tastes in direction toward goods of little ultimate land content, there will be a release of scarce acres to the production of more subsistence wage goods that will keep alive a larger population.
A corollary of the theorem, and one that will seem intuitively plausible, is that discovery of new subsistence wage-goods that economize in all the many stages of their production on land-inputs – as for example when the potato could substitute for grain as human fodder in eighteenth-century Europe – will increase the long-run equilibrium population.
Also, in terms of post-neoclassical economic theory, I am propounding a new Non-Substitution Theorem valid for a land-labor technology.
To sum up, I shall deduce that the size of equilibrium population is an endogenous variable in the 1959 Ricardo-Cantillon-Samuelson land-theory- of-value system – (Samuelson 1959: 7–18), which is dependent on the composition of non-laborers’ demands.
The range within which population can fall is not unlimited: a maximal population would obtain when all discretionary consumption consisted of the good(s) that are “relatively most land sparing;” a minimal population would obtain when all such consumption was directed toward good(s) “most land requiring;” and of course anything that reduces the land embodied in the Malthusian market-basket of subsistence wage goods would be conducive toward a higher equilibrium population level.
The first section describes the properties of the canonical classical equilibrium of Malthus et al. in the simplest corn-and-cloth scenario sans positive long-run profits and ignoring time-phasing.
The second section sketches the general case of many goods. Its exposition is primarily verbal and graphic, leaving to the Mathematical Appendix detailed derivations.
The third section establishes that the present theorem(s) essentially encompass the canonical classical system of Smith, Malthus, Ricardo,340 Mill, and Marx – or, for that matter, Cantillon and pre-Smith writers. Surprisingly the complete picture seems never to have been written down in the pre-1870 literature, even though aspects of it can be pretty clearly recognized in various Smith-Ricardo-Mill passages. It is less strange that neoclassical writers such as Jevons, Menger, Walras, Marshall, Clark, Pareto, and Wicksell never completed the classical picture. (They had newer fish to fry!)
But I do confess to some surprise that modern historians of economic analysis – Schumpeter, Cannan, two Hollanders, Taussig, Seligman, Viner, Sraffa, Stigler, Blaug, and other stalwarts – never paused to dig out the full classical corpus in its interconnected whole. (I had wrongly thought from the account of Thomas Chalmer's work given by A.M.C. Waterman (1991) that Chalmers (1808, 1832) had enunciated the theorem about dependence of Malthusian population level on composition of demand for luxuries. Alas, Professor Waterman in personal communication dashes my hopes in this regard.)
Only in the Mathematical Appendix have I faced up to capital theory aspects, which arise in time-phased systems involving produced inputs and a positive long-run interest rate in the steady state. This discussion spells out how to define goods’ “augmented embodied land contents.”
