Remember: Production factors
Labour (and Land)
• That’s us – everyone who produces
• Until c. 11,000 BC – that is for 99% of human history – humans were nomadic hunter-gatherers, that means collected or killed the resources of a large plot of land (c. 8-200 km² per head, depending on climate)
• In the neolithic revolution man started to become a food producer (agriculture and livestock breeding); until at least the 17th Century (in most cases much longer) the vast majority of humans worked in agriculture
• Changes in the number of people (due to higher or lower birth or death rates) affect the resources (land!) per person, and therefore their productivity
Some (optimistic!) numbers
about the world before 1820
• Between 1000 and 1820, growth was extensive,
this means that most of the increase in world GDP
(multiplied by factor 6) was used to sustain a
population that multiplied by factor 4.
• In Western Europe, population multiplied by 5 and
GDP by factor 15 (according to Maddison, others doubt that, and others doubt the doubts!)
• In the “non-Western world” population multiplied by factor 3.75, total GDP by factor 4.9.
• GDP per capita for the world grew on average 1.2% per year since 1820, which is 24 times the average growth rate in 1000-1820. In the West, the growth rate was much higher, around 1.7% (1.9% since 1870) in other parts of the world it was lower.
Calculating population growth
• Crude Birth Rate (CBR) = Births/Population*1000 (“Babies per 1000”)
• Crude Death Rate (CDR) = Deaths/Population*1000 (“Burials per 1000”)
• If CBR exceeds CDR, then population grows (we look at a
“closed population”, that is, there is no immigration or emigration)
• If CDR exceeds CBR, population shrinks
• ∆P/P=CBR-CDR (divided by 10 if you want it in percent) • Variables explaining the growth potential of population: - TFR (total fertility rate)=Births/Woman15-49 : a measure of reproduction
- E0 (life expectancy at birth): a measure of survival
Why did population grow faster than income per capita,
and can the latter have grown at all?
Why did he say that?
• Malthus wanted to argue that poverty was not caused by
bad government but a natural condition
revolutions were unnecessary and pointless
• Malthus wrote also against helping the poor: they would
increase poor’s fertility, thus lowering their real wages and worsening (not improving) their living standard
philanthropy was also ill-advised
• Bad or good institutions either were bad, or did not
make any difference to living standard
• However, since he died in 1836 world population increased to about six billion, food production has increased about ten times, and per capita production of food has almost
doubled in 200 years
modern economic growth
defeated Malthusian pessimism.
• His view proved wrong about the future. Was he right
about the past?
Some believe that his view explains all of human history
• One of them is Greg Clark. In his book “A Farewell to
Alms” he presents and intuitive model in the Mathusian
tradition and argues that
– “the average person before 1800 was no better off than the average person of 100,000 BC. Indeed in 1800 the bulk of the world’s population was poorer than their remote ancestors. The lucky denizens of wealthy societies such as eighteenth-century England or the Netherlands managed a material lifestyle equivalent to that of the Stone Age.” (Many people, e.g., in China and Japan, were actually poorer than cavemen)
– “The quality of life also failed to improve on any other observable dimension. Life expectancy was no higher in 1800 than for huntergatherers: thirty to thirty-five years. Stature, a measure both of the quality of diet and of children’s exposure to diseases, was higher in the Stone Age than in 1800”....
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