The Hindu Business Line : Was Malthus right for the wrong reasons?

With global food prices rising at an alarming rate, Malthusian theory has started attracting attention again. But history shows that the kind of crisis Malthus warned of has always been pushed back by technological advances and human ingenuity. And there is no reason to believe that the long-term trend will be any different, says ALOK RAY.

Thomas Malthus was an English clergyman and an economist. Writing in the late 18th century (1798, to be precise) Malthus painted a dismal picture for mankind in the years to come. In fact, economics — largely for predictions like Malthus’ — came to be known as a ‘dismal science’. His logic was simple.

Limited land

According to him, land — a gift of God — is limited. Hence, production of food cannot be expanded indefinitely. But the population will go on increasing at a steady rate. So, per head availability of food will go on shrinking.

The imbalance between the growth in food production and the growth in population will be eventually corrected through the forces of nature (or God?) in the form of famines, epidemics and war. These forces will increase the death rate and, thereby, cut down the population growth rate.

He, therefore, postulated a long run average standard of living of mankind around the subsistence level. If wages tend to go above subsistence, the reproduction rate of population will shoot up and the per capita availability of food would return to subsistence.

In the converse case of wages going below the subsistence mark, some people will die and per head food availability would come back up again. Future events proved Malthus wrong on two counts, at least for the industrialising West.

Proved wrong

First, the limit on the supply of food was broken by the movement of people and spread of agriculture in new lands such as the US, Australia and Argentina. The cheaper food produced in the new colonies with abundant land came to be imported into the rest of the world. Technological advance in agriculture was an additional factor increasing productivity from the same plot of land.

Second, as industrial revolution along with cheaper food improved the average standard of living, the population growth rate came down, instead of going up, in the industrialised countries.

For the overpopulated agrarian countries like India or China, the dismal picture drawn by Malthus remained valid for a longer time. The birth rate as well as the population growth rate remained high. But agricultural production was not able to keep pace due to shortage of arable land and near stagnant technology.

Cheaper grains could not be imported either since these countries had little to export in return. In fact, the situation became worse as the advances in medical science (especially vaccinations and antibiotics) were cutting down the death rate, thereby pushing up the population growth rate. But, even for such countries, change came, though later.

Green revolution

Spread of large-scale irrigation, introduction of high yielding varieties of seeds and use of chemical fertilisers (Green Revolution) significantly boosted agricultural productivity from around the 1960s. The spread of education and the taste of higher standard of living induced more and more people to reduce the birth rate to maintain their better standard of living.

Moreover, as the infant mortality rate came down substantially due to advances in medical technology, even the poor uneducated people no longer considered it necessary to have a high birth rate to reach a targeted number of living children. The ideas of Thomas Malthus were put into the cold storage of oblivion everywhere.

Fresh interest

Of late, though, Malthus has started to attract attention again as food prices are rising at an alarming rate all over the world giving rise to food riots in some countries. Is Malthus right, after all?

The global population growth rate is currently at around 1.2 per cent — much lower than the peak rate of 2 per cent reached some four decades back. But neo-Malthusians would argue that there is not much scope left for increasing the area under cultivation anywhere in the world, especially given the environmental concern over extending agriculture into forest lands.

Hence, food production cannot keep pace with even the currently low rate of population growth. The bottomline: The days of cheap and abundant food are over. Even if the conclusion may seem broadly right at this moment, the reasons behind the recent spurt in food prices are totally different from what Malthus suggested.

For one, the steady rise in the standard of living (as distinct from Malthusian subsistence) for millions of people in overpopulated countries such as China and India, as expressed in their switch from basic grains to meat is causing — rather paradoxically — a net rise in the demand for grains. The amount of grains needed as animal feed to produce a kg of meat is many times higher than a kg of grain.

Further, the steady rise in the price of oil is causing an increasing diversion of food crops such as corn and sugarcane to production of ethanol which is reducing the supply of such crops as food. Governments in countries such as the US are, in fact, massively subsidising corn to be used for producing ethanol, as they want to reduce their dependence on foreign supply of oil — especially from the volatile Middle East.

None of these developments could be foreseen by Malthus. Wheat producing countries such as Australia and rice producing ones like Thailand and Vietnam are putting restrictions on the export of grains to keep the domestic prices of foodgrains low. This, in turn, is reducing the supply of such commodities in the rest of the world and pushing up their global prices. The steep rise in the price of petrol and diesel is also increasing the cost of production and transportation of food articles all over the world.

Finally, technological advances may still counterbalance these recent developments. More use of solar, wind, nuclear and hydro power, instead of fossil fuel or bio-fuel, may reverse the diversion of food crops to production of fuel.

Genetically modified (GM) crops have the potential to increase agricultural productivity many times the current level. Once the apprehensions about the possible adverse reaction of GM crops on environment and health are taken care of, the world may very well return to the earlier days of cheaper food.

So, even if Malthus may seem to be somewhat right at this point of time, it may be so for the wrong reasons.

The law of diminishing returns (reducing the per head availability of food as more and more labour is applied to fixed land) — so much emphasised by Malthus — has been pushed back by technological advances and human ingenuity throughout human history. There is no reason to believe that the future long-term trend would be any different.

Uneven prosperity

However, there is another basic problem embedded in the uneven spread of economic prosperity between nations and between different sections of population within a nation. As people’s incomes rise — especially when they start from a low standard of living — they consume more food (both directly and indirectly through animal feed).

This puts upward pressure on food prices. The people whose income does not rise at the same rate suffer a reduction in real income. So, it is not surprising that the high growth in countries such as China and India may make life more difficult for low-growth areas like sub-Saharan Africa as well as for some people (like landless labour and urban poor) in even China and India, where money income is not keeping pace with the rise in food prices.

(The author, a former Professor of Economics at IIM-Calcutta, is a Visiting Professor at the University of Pittsburgh, US. Email: alokray15@yahoo.com)

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