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Home Field Trips Rural Life and Agriculture Tour Thomas Malthus and the Law of Diminishing Returns

Theories

Thomas Malthus and the Law of Diminishing Returns

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In 1798 the Reverend Thomas Malthus examined the impact of population growth and reached the somewhat gloomy conclusion that population growth would naturally check itself in the form of famine, wars and disease.

He based this view on the idea that populations tended to grew geometrically (assuming couples had two or more children)

2,4,8,16, 32, 64

while the capacity of land to produce food tended to increase arithmetically (the ability to cultivate more land was less rapid)

2,4,6,8,10,12

The inevitable conclusion for him was that the population growth rate outstripped the capacity of land to provide food for the people, ergo starvation and famine. The theory was based upon what has become known as the law of diminishing returns.

The laws states that as increasing amounts of a factor input such as labour or fertiliser are added to a fixed factor such as land then the marginal product of the input would eventually diminish i.e. the increase in the output of land, the crop yields, would progressively decrease.

All factors of production have a capacity determined by their physical and technological capability. Simply adding more inputs of labour to an area of land will not continually increase the output of land proportionately. There comes a time when the capacity of the land is reached and diminishing returns sets in. No extra fertiliser or extra labourers can change the physical composition of the soil to increase its fertility. Indeed the diminishing returns suggest additional factor inputs would reduce productivity of the land.

As with all theories and models, their strength can be tested according to the extent to which they enable predictions to be made about the real world. Has the population of the world or regions shown signs of cataclysmic famine? On a global scale one has to conclude not. The weaknesses of Malthus's analysis were that he assumed a given state of technology. The technological changes that have enabled the development of improved fertiliser and pesticides and more sophisticated machinery and horticultural techniques generally have ensured that agricultural yields has increased dramatically.

The law of diminishing returns is a short run concept. It assumes that there is a fixed factor and that the state of technology is constant. In reality the productivity of the factor of production land and the state of technology has increased.

Nevertheless, perhaps, in the case of rural Zambia where the population is growing at a rate of between 2 and 3% per annum with a doubling rate of every 20-30 years and limited access to the technologies that enable the productivity of land to be expanded, the worsening levels of poverty are omens to some of Malthus's gloomy predictions being realised.

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