Malthusian trap

The Malthusian trap, named after political economist Thomas Robert Malthus, suggests that for most of human history, income was largely stagnant because technological advances and discoveries only resulted in more people, rather than improvements in the standard of living. It is only with the onset of the Industrial Revolution in about 1800 that the income per person dramatically increased in some countries, and they broke out of the Trap.^[1]

Malthus' theoretical argument

It was Thomas Malthus who first made the argument that in "every age and in every state" that population increases are limited by the means of subsistence, and that when the means of subsistence increases, population will also increase, and that the population increase will be limited by "misery and vice." This pessimistic view on the impossibility of real progress was first made^[2] in 1798, ironically, just as the industrial revolution was getting underway.

Evidence

In accordance with the theory, cross-country evidence indicates that technological superiority and higher land productivity had significant positive effects on population density but insignificant effects on the standard of living, during the time period 1-1500 A.D (Ashraf and Galor, 2010). In addition, scholars^[3],^[4] have reported on the lack of a significant trend of wages in various places over the world for very long stretches of time. In Babylonia during the period 1800 to 1600 BC, for example, the daily wage for a common laborer was enough to buy about 15 pounds of wheat. In Classical Athens in about 328 BC, the corresponding wage could buy about 24 pounds of wheat. In England in 1800 AD the wage was about 13 pounds of wheat.^[5] In spite of the technological developments across these societies, the daily wage hardly varied. In Britain between 1200 and 1800, only relatively minor fluctuations from the mean (less than a factor of two) in real wages occurred in Britain. They peaked at around 1450 and in 1800 they were actually significantly worse.

Theories for the break out

Causes for the Malthusian Trap and theories for the causes of the Industrial Revolution have been as multifarious as the theories of the fall of the Roman Empire. The transition from the Malthusian epoch to an era of sustained economic growth is explored by Unified growth theory^[6] One branch of Unified growth theory is devoted to the interaction between human evolution and economic development. Some argue that natural selection during the Malthusian epoch selected beneficial traits to the growth process and brought about the Industrial Revolution.^[7] Consistent with the theory, evidence shows the survival of the richest in England during the 17th century.^[8]

See also

Economics portal Feudalism Capitalism Serfdom History of Economic Thought Industrial Revolution Spontaneous order Notes ^ Galor (2005); Clark, ch. 1-5 ^ Malthus, ch VII ^ Allen, R. C. The Great Divergence in European Wages and Prices from the Middle Ages to the First World War Explorations in Economic History 38 411-447 (2001).available online at [1] ^ Clark, ch 2 ^ Clark, p 50 ^ Galor (2005) ^ Galor and Moav (2002) ^ Clark (2007) References Ashraf, Quamrul and Oded Galor (2010), ``Dynamics and Stagnation in the Malthusian Epoch, American Economic Review, (forthcoming). http://ideas.repec.org/p/wil/wileco/2010-01.html Clark, Gregory (2007) A Farewell to Alms: A Brief Economic History of the World Princeton University Press ISBN: 978-0-691-12135-2. Galor, Oded (2005) ``From Stagnation to Growth: Unified Growth Theory, Handbook of Economic Growth, volume 1, pages 171-293 Elsevier. http://ideas.repec.org/h/eee/grochp/1-04.html Galor, Oded and Omer Moav (2002), ``Natural Selection and The Origin of Economic Growth, Quarterly Journal of Economics, M 117(4), 1133-1191. Malthus, Thomas Robert (1826). An Essay on the Principle of Population: A View of its Past and Present Effects on Human Happiness; with an Inquiry into Our Prospects Respecting the Future Removal or Mitigation of the Evils which It Occasions (Sixth ed.). London: John Murray. http://www.econlib.org/library/Malthus/malPlong.html. Retrieved 2008-11-22.  Pomeranz, Kenneth (2000). The Great Divergence: China, Europe, and the Making of the Modern World Economy. ISBN 0-691-09010-6.  Rosen, William (2010). The Most Powerful Idea in the World. New York: Random House. ISBN 978-1-4000-6705-3.